Story last updated at 3:18 p.m. Thursday, October 31, 2002

Unocal closing 2 rigs in inlet

'Redundant' positions to be eliminated by restructuring

by Marcus K. Garner
Morris News Service-Alaska

Two Cook Inlet oil platforms will go off line within the next six months as one of the oil and gas companies operating on the Kenai Peninsula reduces its scale.

Unocal spokesperson Roxanne Sinz said Tuesday that in an effort to become smaller and more profitable, the company is taking a look at how to shrink its business unit.

"We have a business case being developed for consolidation of critical office functions to Anchorage," she said.

"We have functions in Kenai and Anchorage that are redundant."

In addition, Sinz said as a result of restructuring, the company will "shut in" operations at its Dillon platform by the end of the year and cease operations at the Baker platform by the close of the first quarter of 2003.

This will directly affect six crew members working seven-day shifts on Baker and six crew members assigned to two-week periods on Dillon, she said.

Unocal employs 260 people in Kenai and 87 in Anchorage, as well as approximately 165 independent contractors.

Sinz would not say how many or which employees would be affected by restructuring and said Unocal is still working out the details of the plan.

"All of these plans for implementation are still being developed," she said. "We're hoping to begin rolling this out sometime in early November."

She said

employees will be offered a position within the new organization, transferred to an alternate position within the corporation or offered a termination package.

"Our focus is going to be on values and earning margins," Sinz said. "Our intent is to pursue smaller and more profitable exploration."

As for the the soon-to-be-closed platforms in the Middle Ground Shoal oil and gas field west of Nikiski, Sinz said plans are still in the works as for what will be done with them.

"We're still in the middle of those plans," she said.

Bill Van Dyke, petroleum manager with the Alaska Division of Oil and Gas offered some insight on options Unocal could consider. He said the oil company could either sell the platforms or shut down.

"One thing they're looking at is selling the platform to somebody else like XTO, who operates the other two platforms in Middle Ground Shoal field," he said.

Van Dyke said shutting down could be costly, however. Dillon has eight active oil wells and four shut wells. Baker has 10 producing oil wells and one producing natural gas well with two inactive oil wells and two inactive gas wells.

"I suspect at the end of the day, it would cost a couple hundred thousand dollars per well just to abandon the platform," he said.

As part of the leases oil and gas companies have with the state, Van Dyke said Alaska requires that companies ultimately remove the platform completely from the space it is in. He said this could cost between $5 and $10 million per platform, which would include bringing in barges and cranes either from overseas or the Gulf of Mexico and eventually returning them.

"It doesn't have to be on the day that they abandon, but there has to be a plan," Van Dyke said. "But we haven't seen a specific proposal from Unocal yet. We would hate to see those platforms abandoned if there was someone willing to take over the existing operations or to use those platforms for new explorations."

Marcus K. Garner is a reporter for the Peninsula Clarion.