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Managers of a newly formed oil company operating on the west side of Cook Inlet say they're looking forward to restoring operations at formerly abandoned assets acquired earlier this month.
Anchorage-based Cook Inlet Energy LLC has acquired the facilities abandoned in September by Long Beach, Calif.-based Pacific Energy.
CIE paid Pacific $2.25 million after a Delaware bankruptcy judge vacated the abandonment order for all of Pacific's operated facilities, including the West McArthur River unit, the West Foreland gas field, the Kustatan Production Facility, the Osprey Platform, the Redoubt unit, a 30 percent interest in Aurora Gas's Three-Mile Creek field and more than 600,000 acres of exploration acreage in Southcentral Alaska.
According to CIE, independent auditors in March of 2008 valued the assets at $327 million.
CIE formed in January under the leadership of J.R. Wilcox as president and David Hall as CEO.
Both said they were involved with Pacific's Alaska operations.
Hall said the company plans to get the West McArthur facilities operational first.
"We're hoping to resume base levels of production at West McArthur within a week," Hall said Dec. 17.
Bringing the Osprey back online would require more time and resources, Wilcox said. Hall said he didn't expect to see the facility operational again for a year to 18 months.
The Osprey, located off of the West Forelands, was shut-in last April, along with other west side crude producers as a result of volcanic activity from Mount Redoubt.
In the meantime, the platform will continue to be "lighthoused," Hall said.
The company said the production there had fallen to 20 barrels of oil per day before it was shut in.
At its peak, the platform pumped out 4,850 barrels per day.
Production from the West McArthur unit peaked at 4,950 barrels per day, according to CIE, but had declined to less than 250 barrels per day at the time it was abandoned in September.
Wilcox said there were a number of factors that lead to the decline of both Pacific Energy and as a result the output of their Cook Inlet assets. The biggest, he said, was the economic meltdown.
"To paint it with a broad brush, Pacific was a casualty of the meltdown," Wilcox said. "They were highly indebted, needed cash and were backed by investment banks."
Hall called the eruption of Redoubt and subsequent west side shut down, "the final nail in the coffin," for Pacific.
The two said that the demise of Pacific's Alaska assets wasn't for lack of reserves, but a lack of capital investment, explaining that the company was spending its resources elsewhere.
"These are great facilities on great reservoir rock and we can increase production rapidly," Hall said.
To avoid some of the same pitfalls Pacific faced, the two said they plan to run a "lean operation."
The company didn't pick up all of Pacific's assets in the deal either, leaving behind a 46.8 percent share of the Chevron-operated McArthur River Field also known as the Trading Bay unit, the Trading Bay Field and the Trading Bay Production Facility, and a 50 percent share in the Cook Inlet Pipeline Co.
Hall said the company would focus on repairing "a couple of our champion wells," first. He said the company has plans to do more drilling in the future.
The two estimated the company would employ 12 or 13 field workers and said they were hoping to get some of Pacific's former workers back.