Marathon sells its Alaska production assets

Another of Cook Inlet’s legacy petroleum companies will soon be gone from the scene. Marathon Oil Corp. will sell its Alaska producing properties in Southcentral Alaska to Hilcorp Alaska LLC, the Houston-based company announced April 9. 

Hilcorp, a privately owned independent, recently acquired Cook Inlet production assets sold by Chevron Corp.

The companies expect to close the transaction, subject to completion of the necessary government and regulatory approvals, by this fall, Marathon said in the statement.

Marathon now has 62 employees in Alaska.

“We expect Hilcorp will retain the vast majority of our employees but there will be a small group that will transfer to other Marathon assets,” said Wade Hutchings, Marathon’s Alaska manager.

The sale includes 17 million barrels of oil equivalent of net proved reserves across 10 fields in the Cook Inlet, as well as natural gas storage, and interests in natural gas pipeline transmission systems, the statement said.

In 2011 net production averaged about 93 million cubic feet of natural gas per day and 112 barrels of oil per day. Additionally, Marathon Oil had approximately 12.5 billion cubic feet of natural gas in storage at the end of 2011.

The sale does not include Marathon Oil’s Alaska onshore drilling rig, which is being marketed separately and is being used by companies exploring for natural gas in the Cook Inlet region.

Hutchings said Marathon’s mature producing assets in Alaska no longer fit the company’s long-term strategy, but that other companies have been interested in the properties.

“There has been significant interest shown by several parties in our Alaska resources. We are continually evaluating our assets to determine how they fit our overall strategy.  At this point Marathon is interested in liquids-rich opportunities, and at this point our Alaska natural gas assets no longer fit that long-term strategy.” Hutchings said.

Marathon has contracts to supply natural gas to three regional utilities, Enstar Natural Gas Co., Anchorage’s city-owned Municipal Light and Power and Chugach Electric Association.

The two larger gas-producing assets managed by Marathon include the Kenai and Ninilchik fields on the Kenai Peninsula, but the company has a number of smaller assets as well in the region. Chevron, and now Hilcorp, had a minority interest in the Ninilchik field, and after the Marathon sale is closed Hilcorp will own all of the field.

Marathon was one of the first companies to explore and develop oil and gas in Alaska in the 1950s. The company also worked with Phillips Petroleum to develop the first long-distance shipment of liquefied natural gas by sea, with development of the Kenai natural gas liquefaction plant in 1959.

The plant has operated continuously since then, shipping LNG to customers in Japan and, recently, to China. Marathon recently sold its minority stake in the plant to ConocoPhillips.

04/12/2012 - 8:34am