Phillips approves $2.5 billion capital budget

Posted: Thursday, December 21, 2000

Phillips Petroleum Co. has approved $2.5 billion for capital projects in 2001, up from $2 billion this year, excluding the $6.7 billion spent to purchase Arco's Alaska assets.

Phillips will allocate 87 percent, $2.2 billion, to exploration and production. Some 53 percent of that will be spent in the United States, including $914 million for Phillips' Alaska business. Alaska spending includes continuing a study on the potential North Slope natural gas pipeline to the Lower 48 and the 2001 spending for construction of four tankers to ship North Slope crude oil. It also includes development of the Alpine and Meltwater fields and of Prudhoe Bay and Kuparuk satellite fields.

In the Lower 48, Phillips plans to develop coalbed methane in the San Juan, Powder River and Uinta basins and natural gas fields in north Louisiana.

Phillips will spend $1 billion for international projects, including the Hamaca heavy-oil development in Venezuela, the PL19-3 field in China's Bohai Bay, and the Bayu-Undan liquids recycle and regional gas pipeline projects in the Timor Sea. North Sea projects include development of the Jade field in the United Kingdom sector, the Eldfisk waterflood project and further exploitation of the Ekofisk field in the Norwegian sector.

"We are building on our legacy asset positions in Alaska and Norway and moving forward with the development of our three international legacy projects -- Hamaca, Bohai Bay and Bayu-Undan," said Jim Mulva, Phillips' chairman and chief executive. "We're excited about the long-term potential these assets offer our company."

Ten percent of the capital budget will go to the refining, marketing and transportation business, for which Phillips plans to pursue a 50/50 joint venture in late 2001 or 2002. Three percent will go for general corporate purposes. Phillips expects cash from continuing activities to fund the capital program and continued debt reduction.

Homer Electric fills board vacancy

Homer Electric Association says Patrick S. Cowan will fill the seat representing Soldotna, Sterling and Kasilof on its board of directors.

Cowan replaces Soldotna Mayor Ken Lancaster, who resigned from the HEA board after his recent election to the Legislature. Cowan has been an HEA member for 32 years and has experience with the Soldotna City Council, the Petersburg Planning & Zoning Commission, the Kenai Peninsula Borough Economic Development District, Alaska Independent Insurance & Brokers Inc., the Soldotna National Bank of Alaska advisory board and board of directors.

"We are delighted to have Mr. Cowan join our board. He brings an extensive background in business and economic development, which compliments the dynamics of the existing board," said Roseleen Moore, president of the HEA board.

FAA recognizes Homer staff

The Federal Aviation Administration recognized its Homer Flight Service Station staff Tuesday with its Flight Service Station of the Year award.

In 1999, the Homer staff -- Paul Grubb, Michael Halstead, Laura Plamondon and Kimberly Tyner -- delivered 52,721 services such as weather briefings, flight planning advice and assists to pilots in trouble. The Homer staff assisted a pilot whose plane caught fire in the air, forcing him to ditch the plane in Chinitna Bay. It also kept the station open all night to help firefighting aircraft during a spring wildfire and helped develop the Digital Aviation Weather Network and Alaskan Region Weather Cameras.

"1999 was a milestone year for the crew in Homer," said Trent Cummings, manager of the Alaskan Region Air Traffic Division. "They exhibited a high degree of professionalism while providing quality services, public emergency support, planning and preparation for Y2K, all without any operational errors."

Chugach Electric mails capital credit checks

Chugach Electric Association says it soon will distribute $3.75 million in retail capital credits to its members. Active Chugach members who are due less than $75 will receive credits to their bills. Those due more will receive checks.

Chugach is a cooperative owned by its members. Capital credits are members' shares in utility margins, similar to profits in a for-profit business.

Chugach assigns members capital credits in proportion to the amounts they pay for electric service. It records individual members' capital credits annually and returns them when the board of directors authorizes a retirement of capital credits. The coming retirement will return the remainder of retail margins from 1984 and about 19 percent of the margins from 1985. Capital credits from earlier years already have been retired.

Fish and Game seeks stream nominations

The Alaska Department of Fish and Game is accepting nominations until Jan. 31 for revisions to the Catalog of Waters Important to the Spawning, Rearing or Migration of Anadromous Fishes and its associated An Atlas to the Catalog of Waters Important to the Spawning, Rearing or Migration of Anadromous Fishes.

The state lacks information about the presence and distribution of anadromous fish in many areas. Nominations may be submitted to add new streams and lakes, add species to previously cataloged streams, extend species distribution in cataloged streams, delete streams or parts of them, update survey data on cataloged streams, revise stream channels, label errors or identify barriers to fish movement. Comments also are welcome on the introductory text and how to make the catalog and atlas easier to use.

For information, contact Edward W. Weiss, Habitat & Restoration Division, Alaska Department of Fish and Game, 333 Raspberry Rd., Anchorage, AK 99518-1599, phone 267-2305 or fax 267-2464.

Homer chamber solicits award nominations

The Homer Chamber of Commerce is taking nominations for its Citizen of the Year and Outstanding Community Service by a Business awards.

The Citizen of the Year award recognizes public service with a variety of organizations and causes that benefit the community. The Outstanding Community Service by a Business award recognizes support of community activities and organizations beyond what normally would be expected from a business.

Nomination forms are available from the chamber and city offices and many area businesses. Nominations will go to a public vote in January. The chamber will announce the winners on Jan. 26. For information, call 235-7740.

Contractors present awards

The Associated General Contractors of Alaska has given Pat Riley of Rain Proof Roofing in Anchorage its 2000 Hard Hat Award.

During its recent annual meeting, the group also recognized Mike Houle of Spenard Builders Supply as Supplier of the Year, Hardrives Inc. of Anchorage as Subcontractor of the Year, Dave Argetsinger of Argetsinger & Kulawik in Anchorage as Volunteer of the Year, and Aurora Construction Supply Inc. of Anchorage as Associate of the Year.

In the Excellence in Construction awards, Unit Co. of Anchorage took the award for projects under $5 million for the Alaska Airlines hangar renovation. Alcan General Inc. of Anchorage took the award for projects over $5 million for the West Valley High School renovation and addition. Kiewit Construction Co. took the award for heavy earth-moving, transportation and marine work for the Whittier tunnel segment.

Kiewit Pacific Co. took the award for using partnering principals for the Anchorage International Airport landside phase I. Fike Brothers of Anchorage took the safety award for more than 20 no-lost-time projects from 1997 to 2000.

Phillips sheds UK refinery

Phillips Petroleum Co. and Imperial Chemicals Industries have agreed to sell their joint venture company, Phillips-Imperial Petroleum Ltd., to Petroplus International N.V.

PIP operates a Teesside, U.K., refinery with a capacity of 117,000 barrels per day. That provides feedstocks for the petrochemical complex at Wilton, Teesside, and processes North Sea crude, including crude from Phillips' Ekofisk fields. It is one of the largest producers of ultra-low sulfur diesel in Europe.

The sale includes marketing and distribution operations and related U.K. infrastructure. The total transaction value is expected to be approximately $110 million, of which Phillips will receive half in cash.

"As part of the company's worldwide strategy, Phillips' European Division is reviewing and rationalizing its assets in order to concentrate on its exploration and production portfolio," said Henry McGee, president of Phillips' European Division. "The sale to Petroplus is an excellent commercial proposition for Phillips, ICI and Petroplus and positions Phillips to focus more intensively on our core U.K. E&P operations."

Phillips buys Coastal gas stations

Phillips Petroleum Co. says it will buy the midcontinent region gasoline marketing assets of Coastal Mart Inc., Coastal Mart of Oklahoma Inc. and Coastal Refining & Marketing Inc., all subsidiaries of Coastal Corp.

The purchase includes 101 of Coastal's company-operated gasoline sites and the assignment of 53 branded marketer supply contracts to Phillips covering an additional 205 retail units. The deal allows Phillips to use the Coastal gasoline and related trademarks for up to 10 years in 15 states. Terms were not disclosed.

"This transaction enhances Phillips' strategy to grow our business through the branded marketer channel of distribution," said Steve Percy, Phillips' senior vice president of refining, marketing and transportation.

"Phillips' strength lies in the relationships we have developed with our marketers and their ability to serve Phillips' customers," said David Bairrington, Phillips' vice president of marketing. "To continue to capitalize on this strength, it is our intent to allow marketers to acquire and operate the existing Coastal company-operated units."

Phillips markets gasoline in the United States through approximately 300 company-operated gasoline units and to more than 880 gasoline marketers who resell through 5,700 branded gasoline units.

Phillips to sell Alberta oil and gas properties

Phillips Petroleum Co. has agreed to sell certain Canadian properties to Apache Corp. for $490 million. The transaction is expected to close as soon as regulatory approval is obtained.

The sale includes Phillips' oil and gas producing properties and related infrastructure in the Zama area of northwest Alberta. Phillips will retain various non-operating interests in Alberta and British Columbia.

"This sale is part of Phillips' ongoing effort to rationalize our exploration and production portfolio, focusing on legacy assets and divesting properties that are not core to our business," said Bill Parker, executive vice president of production and operations. "An added benefit is a reduction in debt and a strengthened financial position."

Phillips expects to realize approximately $470 million in after-tax proceeds from the sale, increasing net income by about $110 million.

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