ANCHORAGE, Alaska — Chevron announced plans Tuesday to sell its assets in Cook Inlet -- but what does that mean for the future of oil and gas development in the inlet?
Chevron's decision comes as production in Cook Inlet oil and gas fields is on the decline. Large energy companies like Chevron typically lose interest in such investments -- and that's when smaller operators jump in.
“We had been discussing these plans with Chevron for some time now, so it was not a surprise,” said Kevin Banks, director of the state’s Division of Oil and Gas.
Banks says the inlet still contains large amounts of oil and natural gas, but exploration and production have declined.
“Their leaving Cook Inlet is a sign of the times, and an opportunity now for someone else to come in and inject good investment here that, I think, will be good for the state in the long run,” Banks said.
According to Chevron, it plans to sell its interest in several offshore and land-based oil and gas fields, 10 offshore rigs and two gas tank farms. The company also plans to sell its interest in the companies that operate two regional pipelines.
According to Chevron, the properties will be sold as a single package.
Chevron's production in Cook Inlet represents only a tiny fraction of the company's worldwide production.
“A company like Chevron, as large as it is, is looking for much bigger elephants to develop around the world,” Banks said.
Chevron has approximately 450 employees and contractors working in Alaska. According to Banks, if another company purchases Chevron's assets that company will likely hire those workers.
“The folks that are operating on the platforms know those facilities better than anyone else,” Banks said. “There are people that work here in Anchorage -- the geologists, the commercial people -- that have considerable experience and it would be certainly in the interest of any buyer to keep those folks working here.”
Banks also confirmed there are multiple oil and gas companies already showing an interest in what Cook Inlet has to offer -- but he says Chevron will probably be picky about choosing a buyer.
“They're looking for qualified buyers, they'd like to see a little competition, I'm sure, so it could be months and months before any kind of deal is consummated,” Banks said.
In recent years, Chevron faced some risks and challenges in Cook Inlet. Mount Redoubt's eruption in late 2008 shut down production for a while, costing the company millions of dollars.
Chevron also faced another challenge in 2008, when Cook Inlet beluga whales were listed as an endangered species. A possibility still exists that the inlet could be designated critical habitat for belugas.
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