Chevron announced on Tuesday that it's selling all of its Cook Inlet assets owned by Union Oil Company of California and Chevron U.S.A. Inc.
According to a company spokesperson: "Chevron's Cook Inlet assets are not a strategic fit within Chevron's global portfolio."
These assets include interests in the Granite Point, Middle Ground Shoals, Trading Bay and MacArthur River Fields; interests in 10 offshore platforms; interests in onshore gas fields including the Ninilchik Unit and the Beluga River Unit; and two gas storage facilities.
Additionally, Chevron will divest its interests in the Cook Inlet Pipe Line Company and the Kenai Kachemak Pipeline, LLC.
Chevron spokesperson Roxanne Sinz said via e-mail that the sale would impact approximately 300 Chevron employees in Alaska and about 150 contractors.
"Until a buyer is identified, we will not know the details," Sinz wrote. "However, we expect an interested buyer would need an experienced and talented workforce like ours to operate these assets."
Chevron has said producing properties will be offered as a single package.
Sinz said they expected a data room -- an area where a company provides information necessary for prospective purchasers to make an informed offer -- to be open in January.
If there is a successful bidder, Sinz said Chevron would expect closing to occur around mid-year 2011.
When asked about the interim operation of Chevron's assets she wrote: "In the meantime Chevron will continue to operate the assets with the current workforce."
This is not the first time Chevron has exited Cook Inlet.
In 2005, the company sold producing assets earlier, including two platforms now operated by XTO Corp., but then purchased Unocal, a long-time Inlet producer.
After its Unocal acquisition, Chevron announced a $300 million investment program to revitalize the aging Unocal producing properties including the platforms, but then ended the program after the eruption of Mount Redoubt two years ago, which caused production to be shut in for several months.
The extended shutdown may have created problems in restarting some older wells.
Chevron's decision came as no surprise to Alan Dennis, an asset manager with the Department of Natural Resources Division of Oil and Gas.
He pointed to previous comments made by the company indicating that they wouldn't redevelop their assets, as well as the fact that Chevron's Inlet production of 4,000 barrels per day doesn't account for 1 full percent of its 2009 global production, reported at 2.7 million net oil-equivalent barrels per day.
"This is a tiny part of Chevron's portfolio and they have a number of projects around the world they're working on," he said.
Dennis said he did believe Chevron would be able to find a company that would buy its assets, saying they had likely been talking with, "a number of different parties."
He would not speculate whom, though.
One prospective buyer might be Apache Corp., which recently acquired undeveloped Cook Inlet leases. In a briefing in Anchorage in late summer, David Allard, Apache's new ventures and exploration manager, said the company is looking to expand its small base in Cook Inlet with new acquisitions.
Bill Mintz, a spokesperson for Houston-based Apache said on Tuesday, however, that the company doesn't comment on business development activity.
Dennis said that despite some of Chevron's ageing facilities -- the future owner of Chevron's off shore platforms will eventually need to abandon and dismantle them at a cost of hundreds of millions of dollars -- the sale also includes some lucrative assets.
He also did not anticipate a similar sale issue encountered a year ago by Long Beach Calif-based Pacific Energy, which could not find a buyer for its west-side assets and was forced to abandon them to the state.
"(Pacific) had a huge debt so the cash flow was all going to pay bank loans," Dennis said. "In this situation I think what you'll find is that somebody will come in and they won't have huge bank loads to pay for these assets."
He also said Chevron would be unlikely to sell to a financially troubled company that might result in its re-acquiring of the assets.
Dennis was in fact, optimistic about that sale.
"Chevron brings with it certainly lots of very good things," Dennis said, "What comes along with that is a lot of overhead. And whoever the new guy is, they will likely have a greater focus on Cook Inlet being a more material part of their asset base."
He pointed to companies such as XTO and Cook Inlet Energy, who have picked up assets formerly run by larger companies and reduced overhead while boosting production.
"It's our hope that the new company will do something like XTO did," Dennis said, "Re-invest and create a lot of value both for themselves and the citizens of the state here."
As for what impact this sale will have on Chevron employees, Dennis acknowledged that those choices are up to Chevron. But he did say that those working in the field held a greater likelihood of hanging onto their jobs after a sale, while those farther removed in offices, for example, were more at risk.
Chevron continues to hold important North Slope assets, including a major share of the Point Thomson gas and condensate field east of Prudhoe Bay where a condensate and gas cycling project is now under development.
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