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ConocoPhillips Looks to Unload 'Mature' Cook Inlet Fields

Just weeks after the Houston super independent announced it was scuttling its deepwater exploration spending for 2015 in an effort to endure lean times (see Daily GPIJuly 17), ConocoPhillips said Tuesday the Alaskan unit -- ConocoPhillips Alaska (COPA) -- has put its North Cook Inlet Field and it's one-third interest in the Beluga River Field on the market.

COPA said Tuesday the sales decision was arrived at following one of the company's regular reviews of assets to ensure the asset portfolio is optimized.

"While historically significant to the company’s investment in Alaska, the North Cook Inlet and Beluga River units are mature fields that are no longer considered core to Alaska operations," COPA stated. "The focus will be on the company’s current North Slope operations,” which include the Alaska liquefied natural gas (LNG) export project.

In late May the U.S. Department of Energy (DOE) issued conditional authorization for Alaska LNG Project LLC to export U.S. gas worldwide (see Daily GPIMay 28). Subject to environmental review and final regulatory approval, Alaska LNG, in the Nikiski area of the Kenai Peninsula, is authorized to export up to the equivalent of 2.55 Bcf/d for 30 years, the DOE order said.

 Alaska has 35 Tcf of proven reserves on the North Slope, and the potential for 200 Tcf more both onshore and offshore of the northern coast. Alaska also has a 44-year history of shipping LNG from Cook Inlet to Asia from Nikiski (see Daily GPIApril 14, 2014).

This year ConocoPhillips plans to invest more than $1.4 billion in capital projects, including CD5, Kuparuk Drill Site 2S and viscous oil development 1H NEWS (Northeast West Sak). "These projects will help offset production decline, sending new barrels of oil into the Trans-Alaska Pipeline System," the company said.

COPA said the North Cook Inlet and Beluga River units offer good opportunities for the right buyer. "Development of a data room for the sale is in progress, and is expected to open in early August," it stated.

The North Cook Inlet Gas Field was discovered in 1962 and primarily feeds the Kenai LNG Plant, also owned by ConocoPhillips that is not for sale. The field is operated by COPA with a 100% interest from the Tyonek platform in the northern waters of Cook Inlet.

The Beluga River Gas Field was also discovered in 1962 and is on the upper west side of Cook Inlet, about 35 miles from Anchorage. It serves major customers in South-Central Alaska, including local utilities and industrial consumers, and production from the field is also used as supplemental supply for the Kenai LNG Plant. COPA's partners in the field are Hilcorp Energy and Anchorage Municipal Light & Power.

The COPA sale announcement comes during a time when low oil and natural gas commodity prices have exploration and production companies tightening their belts worldwide through lower capital expenditure budgets, asset sales and significant cuts to their workforces. On Tuesday Chevron Corp. confirmed it is laying off about 1,500 employees and 600 contractors across the organization, with most of the job losses affecting Houston (see related story).

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