Unocal shutting down two Cook Inlet rigs

Posted: Thursday, October 31, 2002

KENAI (AP) -- Two Cook Inlet Unocal oil platforms will shut down within the next six months as the company reduces its scale.

The company is taking a look at how to downsize in an effort to become more profitable, according to Unocal spokeswoman Roxanne Sinz.

''We have functions in Kenai and Anchorage that are redundant,'' she said Tuesday.

As a result of restructuring, the company will ''shut in'' operations at its Dillon platform by the end of the year and cease operations at the Baker platform by the close of the first quarter of 2003, Sinz said. This will directly affect six crew members working seven-day shifts on Baker and six crew members assigned to two-week periods on Dillon, she said.

Unocal employs 260 people in Kenai and 87 in Anchorage, as well as approximately 165 independent contractors. Sinz would not say how many or which employees would be affected by restructuring.

''All of these plans for implementation are still being developed,'' she told the Peninsula Clarion. ''We're hoping to begin rolling this out sometime in early November.''

Sinz said employees will be offered a position within the new organization, transferred to an alternate position within the corporation or offered a termination package.

''Our focus is going to be on values and earning margins,'' Sinz said. ''Our intent is to pursue smaller and more profitable exploration.''

Sinz said plans are still in the works for the soon-to-be-closed platforms in the Middle Ground Shoal oil and gas field west of Nikiski.

Bill Van Dyke, petroleum manager with the Alaska Division of Oil and Gas, said the oil company could either sell the platforms or shut down. He said shutting down could be costly. Dillon has eight active oil wells and four shut wells. Baker has 10 producing oil wells and one producing natural gas well with two inactive oil wells and two inactive gas wells.

''I suspect at the end of the day, it would cost a couple hundred thousand dollars per well just to abandon the platform,'' he said.

As part of the leases oil and gas companies have with the state, companies ultimately must remove platforms completely from the space they occupy. Van Dyke said this could cost between $5 and $10 million per platform, which would include bringing in barges and cranes either from overseas or the Gulf of Mexico and eventually returning them.

''It doesn't have to be on the day that they abandon, but there has to be a plan,'' Van Dyke said. ''But we haven't seen a specific proposal from Unocal yet. We would hate to see those platforms abandoned if there was someone willing to take over the existing operations or to use those platforms for new explorations.''

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