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Vol. 15, No. 52 Week of December 26, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Chevron hopes to close sale of Cook Inlet holdings by mid-2011

Chevron’s plans for disposing of its oil and gas holdings in Alaska’s Cook Inlet basin are beginning to come into sharper focus.

The company announced in mid-October that it planned to market its Cook Inlet assets owned by subsidiaries Union Oil Company of California and Chevron U.S.A. Inc. Chevron said the producing properties would be “offered as a single package,” and that it expected marketing efforts would begin “in the near future.”

Now new details of the potential sale are emerging.

In a routine eighth plan of development, or POD, for the Deep Creek unit submitted Dec. 14 to the Alaska Division of Oil and Gas, Chevron discussed plans not only for that property but also its broader Cook Inlet goals.

“Due to the changing market conditions over the past couple of years, Union has re-evaluated its exploration and development portfolio for the Cook Inlet (for both oil and gas),” the Deep Creek POD said.

The company said it has no plans through March 2012 for any exploration drilling in the southern Deep Creek unit acreage, outside of the Happy Valley participating area.

“Union plans to continue its efforts to farmout the southern Deep Creek exploration acreage during the 8th POD Plan period and will keep the Division apprised of same,” the POD said. “Union will be opening a data room in January to market our Alaska assets. If we are successful in finding a qualified buyer, we are optimistic to close the sale around the middle of 2011. The southern Deep Creek exploration acreage is an integral part of the Deep Creek asset and we are marketing it as such.”

The POD, which covers the period from April 1, 2011, to March 31, 2012, said Union plans to continue operating its Happy Valley wells to optimize production from the Deep Creek unit. But the company has no plans to drill any new development wells within the unit during the period.

Chevron was one of the original explorers and developers in the Cook Inlet basin. Many of the basin’s oil and gas assets, however, are now well beyond their prime.

Other assets the company intends to divest include interests in 10 offshore platforms; the Granite Point, Middle Ground Shoals, Trading Bay and McArthur River fields; onshore gas fields including the Ninilchik and Beluga River units; two gas storage facilities; and the Cook Inlet Pipe Line Co. and Kenai Kachemak Pipeline LLC.

Chevron put net production from its Cook Inlet assets at about 4,000 barrels of oil per day and 90 million cubic feet of natural gas per day.

—Wesley Loy



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