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RCA OKs pipeline transfers to Hilcorp Commission’s approval subject to DNR’s transfer of right-of-way leases; DNR working on multiple sale-related lease assignments
Kristen Nelson Petroleum News
The Regulatory Commission of Alaska has approved transfers in interests in Cook Inlet area pipelines from Union Oil Company of California to Hilcorp Alaska LLC, subject to approval of transfers by the Department of Natural Resources of interests in right-of-way leases.
Hilcorp’s acquisition of Chevron subsidiary Union Oil’s Cook Inlet assets was announced July 19. Hilcorp and Chevron did not disclose financial terms, but said the transaction was expected to close by year end pending customary regulatory approvals.
The RCA approval of transfer of Union Oil’s interests in Cook Inlet Pipe Line Co., Cook Inlet Gas Gathering System and Kenai Kachemak Pipeline LLC, is subject to transfer of leases by DNR.
DNR Deputy Commissioner Joe Balash told Petroleum News in a Dec. 13 email that the department has work under way in multiple divisions on various lease assignments related to the sale, including oil and gas leases, easements and other surface authorizations, as well as the Kenai Kachemak Pipeline lease.
“We are doing everything we can to help facilitate a closing by year-end, which we understand to be the goal of both companies,” he said.
Various interests Union Oil holds a 50 percent interest in Cook Inlet Pipe Line, or CIPL. Hilcorp will replace Union Oil as a 50 percent shareholder in CIPL and assume operating authority of CIPL.
RCA said Hilcorp Alaska “expects to retain the Alaska personnel who currently operate CIPL’s pipeline on a day-to-day basis.” CIPL has been operating its pipeline continuously since 1967, and RCA said that while throughput in the line as declined, the oil transportation service provided by CIPL is still in demand.
The other interests being transferred — in Cook Inlet Gas Gathering System and Kenai Kachemak Pipeline — are in Marathon Oil Co.-operated facilities.
Union Oil and Marathon each hold 50 percent interests in CIGGS. “Marathon is and will remain the operator of CIGGS,” RCA said.
Union Oil, through its wholly owned subsidiary GUT LLC, holds 40 percent interest in the Kenai Kachemak Pipeline; Marathon holds the other 60 percent. There will be no change in operatorship, as Marathon is and will remain the operator.
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