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Vol. 14, No. 40 Week of October 04, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

State hires contractors to secure wells

Pacific Energy’s abandoned assets need ‘winterizing’ to stave off problems, preserve value; cost could range up to $200,000

Wesley Loy

For Petroleum News

Alaska officials have hired two oilfield contractors to “winterize” Cook Inlet wells a California oil and gas producer recently abandoned as part of a liquidation plan in U.S. Bankruptcy Court.

Alan Dennis, of the Alaska Division of Oil and Gas, on Sept. 29 told Petroleum News the state let a couple of emergency contracts with a starting value of $25,000 each.

One contract went to Anchorage-based Peak Oilfield Service Co. and the other went to Chumley’s Inc. on the Kenai Peninsula, Dennis said.

The contractors will drain out water and oil and perform other work to safeguard wells and other facilities formerly operated by Pacific Energy Resources Ltd., he said. The goal is to prevent spills and preserve the value of the properties through the approaching winter freeze and ensuing spring thaw.

Some former Pacific Energy employees are working with the contractors and are familiar with the facilities, Dennis said.

Pacific Energy’s operated assets included some 18 wells, he said. The company also abandoned another collection of holdings, but Chevron operates the wells in that group.

The state’s total outlay under the winterizing contracts could exceed $100,000 but probably will stay under $200,000, Dennis said.

Pacific Energy’s fall

Citing millions of dollars in mounting losses, Pacific Energy, based in Long Beach, Calif., in September walked away from nearly all its Cook Inlet assets. The company now is attempting to shed its assets in California.

Pacific Energy filed for Chapter 11 bankruptcy reorganization in Delaware on March 9, citing a “dramatic decrease in the market price of oil” in the preceding months.

Alaska-operated assets the company abandoned, all located along the west side of Cook Inlet, include state oil and gas leases, the West McArthur River field, the Redoubt Shoal field with its offshore Osprey platform and Kustatan onshore production facility, and the West Foreland field with two producing natural gas wells.

The company earlier abandoned probably its single most valuable asset, a minority stake in the Chevron-operated offshore Trading Bay unit and field.

Pacific Energy said it was forced to dump all the properties because it couldn’t work out quick deals to sell them.

Leftover assets, details

Pacific Energy still has some Cook Inlet assets to dispose of, including “a bunch of state leases over there with no facilities on them,” Dennis said.

Pacific Energy intends to hold, in effect, a lease sale to spin off these holdings, he said.

The company has other lingering business in Alaska.

Digitel Data Joint Venture on Sept. 29 filed papers in the Delaware bankruptcy court saying it had entered into a licensing agreement with Pacific Energy Alaska Operating LLC in 2007 for the use of Digitel’s geophysical data.

Digitel wants the data back, arguing it’s a “trade secret” that Pacific Energy doesn’t own and shouldn’t try to sell.



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