|
Tyonek Deep delayed by low oil prices Drilling complete on three-well project, evaluation of reservoir continuing Kristen Nelson PNA Editor-in-Chief
Phillips Petroleum Co. said Jan. 6 that it is taking a $71 million write off for costs associated with the Tyonek Deep prospect in Alaska.
But, Phillips’ spokeswoman Kristi DesJardais told PNA, the project has not been canceled. “We’re just going to wait on oil prices to improve in order to commercialize the project,” she said Jan. 6.
Jim Konst, Phillips’ Alaska operations manager, told PNA that drilling is complete at the Tyonek Deep prospect. Phillips has been working on three Tyonek Deep wells.
“We’ve finished our testing of the B-1 sidetrack,” he said. “We have tested two wells and run completion tubing in the third well that we’ve identified for the project. They’re essentially ready for production.” Reservoir evaluation ongoing Konst said the company is still evaluating the reservoir and how to make a viable project out of it. “It isn’t viable under today’s conditions,” he said, “but we are still working on making it a viable project.” He said that the write off occurred essentially due to low oil prices.
Phillips has been working on pipeline permitting from the Tyonek platform to the west side of Cook Inlet where the oil would be processed at Unocal facilities. Some additional facilities would also be required on the platform. Current gas production from the Tyonek platform goes to the east side of Cook Inlet.
Phillips has been drilling to the Tyonek Deep oil accumulation in the vicinity of its Tyonek gas production platform in northern Cook Inlet, to determine if it can reach commercial quantities of oil from the platform. Phillips was ARCO Alaska Inc.’s partner in the Sunfish discovery, which found oil near the Tyonek platform, but not farther south, and not in sufficient quantities to warrant a stand-alone development.
ARCO drilled Sunfish and North Foreland exploration wells in the early 1990s from jackup rigs. Phillips has said that if it develops the prospect, now called the Tyonek Deep, it would do so from the Tyonek platform, and has drilled its Tyonek Deep wells from the platform.
The $71 million write off of Tyonek Deep costs was part of a statement in which Phillips said that it 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 jobs elsewhere in the United States and 550 positions in foreign operations, with a goal of producing annual savings of about $230 million.
Konst said that Phillips will be making operation cost reductions to improve the profitability of Alaska operations, but said there wasn’t an immediate impact in the state. Alaska, he said, is still viewed as a growth area for the company.
The Associated Press contributed to this story.
| 