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Phillips Petroleum Co. plans of Cook Inlet operations Recovering oil prices haven’t changed strategy for coming months; maintenance at forefront of plans Tracy Wilson PNA Staff Writer
Despite a recent upturn in oil prices, Phillips Petroleum Co. is embarking on a conservative approach to its operations in Alaska by hewing to plans made when those prices hit rock-bottom.
“We looked for an area of relatively low pricing for some time to come and that’s how we’ve geared ourselves,” said Jim Konst, Phillips Petroleum’s Alaska operations manager. “We still think the relatively low pricing is what we need to gear our projects toward.”
That cautious stance means the company will keep its Tyonek Deep project on hold until a way is found to either bring the cost down or produce more oil. Phillips announced Jan. 6 it was taking a $71 million write-off for costs associated with the Tyonek Deep prospect.
“We’re still trying to find a way to make it commercial,” Konst said.
Gas pressure falling Konst said the Phillips’ biggest upcoming project is the replacement of large gas compressors on the North Cook Inlet field’s Tyonek platform.
The $3 million project will begin in September and take about a week or two to complete. Konst said replacement of the compressors ensures the company can maintain pressure. Another such replacement is expected in 2001.
And, Konst said, the company was buoyed by the U.S. Department of Energy Office of Fossil Energy’s approval of an export license extension for exports from the Nikiski liquefied natural gas plant. The extension is for 2004 to 2009. Cuts won’t affect Alaska immediately Phillips expects a loss of 1,400 jobs worldwide as it takes steps to reduce costs and increase available cash flow in 1999. Phillips said it is eliminating 400 jobs from company headquarters in Bartlesville, Okla., 450 elsewhere in the United States and 550 positions in foreign operations. The goal is to produce annual savings of about $230 million.
Konst said Phillips will be making operation cost reductions to improve profitability of Alaska operations, but said there wasn’t going to be an immediate impact in the state.
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