Production here started in the 1950s, helping to fund Alaska's transition to statehood. But for three decades, as oil gushed from Prudhoe Bay and elsewhere on the North Slope, Cook Inlet's industry was an afterthought. Experts for years have been predicting the imminent demise of the oil and gas industry here.

No more.

"We definitely have quite a bit of future ahead of us," said Kenai Mayor John Williams, whose city of 7,000 was known as the "Oil Capital of Alaska" in the pre-Prudhoe Bay days.

"Our wrapup date in the beginning was somewhere around 1990. And we stretched it to the year 2000," he said.

Now there are contracts running as long as 2010, Williams said, and "who knows what will happen?"

Cook Inlet oil production peaked in 1970 at 230,000 barrels a day and is now down to under 30,000 barrels a day - a mere trickle compared with the 1 million barrels produced daily on the North Slope.

Unocal Corp. , a longtime player in the region, says those numbers can be improved.

"We're hoping in the next three to five years to flatten the decline and perhaps reverse it," said Roxanne Sinz, spokeswoman for the company's Alaska office.

A few years after trying unsuccessfully to sell off its Cook Inlet properties, the company struck more oil at a site it calls the "Northern Nose," a newly drilled pocket of the MacArthur River oil field.

Unocal says the new oil pool could hold as much as 18 million barrels, extending the life of a field that has already produced more than 600 million barrels since it began operating in 1965.

Unocal is spending $83 million in Alaska this year, well over double what the company spent last year, Sinz said. Next year's Alaska spending is likely to be at least as high, she said. "We feel like we have a lot of great projects out in Cook Inlet."

Denver-based Forest Oil is also optimistic about the area.

Forest, which already produces more than a third of the inlet's oil, is doing exploration drilling from an offshore platform at a yet-unnamed prospect that it believes holds at least 50 million recoverable barrels.

As on the North Slope, where satellite discoveries around Prudhoe Bay and other large fields have extended production, the development of satellites could brighten the future for Cook Inlet production, said Rich Nelson, a Forest Oil geologist and Cook Inlet veteran.

Until now, Cook Inlet producers have concentrated almost entirely on fields with at least 100 million recoverable barrels, Nelson said. It should not be assumed that there is no other significant oil between those deposits, he said.

"That's not really a normal distribution. You've got to have some smaller stuff out there," he said.

Those potential accumulations have drawn small companies, like Fort Worth-based XTO Energy (formerly Cross Timbers Oil), that would not have the financial wherewithall to survive on the costly North Slope. XTO currently produces about 14 percent of the inlet's oil.

At least one heavyweight, too, is taking another look at the area.

Phillips Petroleum Co. , which became one of the top North Slope producers when it acquired Atlantic Richfield's Alaska assets last year, last month drilled a new well in Cook Inlet. The company is using extended-reach drilling from private land to explore its offshore Cosmopolitan unit, near the fishing town of Anchor Point.

To Mark Myers, director of the Alaska Division of Oil and Gas, the biggest news about Cook Inlet is the active search for gas.