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Anchorage

Anchorage exploring bid on ConocoPhillips properties in Cook Inlet

  • Author: Devin Kelly
  • Updated: September 28, 2016
  • Published September 11, 2015

Anchorage Mayor Ethan Berkowitz is asking Assembly members to support a city bid for ConocoPhillips gas properties in Cook Inlet.

In documents submitted Friday, Berkowitz asked the Assembly to authorize "one or more bids" to purchase some or all of the oil and gas company's interests in the region.

Those interests include: a one-third interest in in the Beluga River gas field on the upper west side of Cook Inlet; the North Cook Inlet gas field, operated from the Tyonek platform in the northern Cook Inlet; and 5,700 acres of leased lands in and around Cook Inlet.

ConocoPhillips announced in July that it was in the early stages of marketing the properties.

"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," the company said in a statement on its website. "The focus will be on the company's current North Slope operations, including the Alaska LNG project."

According to the Assembly documents, ConocoPhillips is looking to sell "preferably to a single buyer for cash."

The Municipality of Anchorage, through its gas and electric utility, already owns one-third of the Beluga River gas field, a key natural gas source for the city. The city bought the interest in 1996 for $120 million, financed mostly by electric revenue bonds. ConocoPhillips and Hilcorp Alaska split the remaining two-thirds ownership of the gas field.

For the ConocoPhillips properties, the Berkowitz administration is considering submitting "one or more bids" in a variety of ways, including jointly with other entities, according to the documents.

The documents estimated that ratepayers saved $239 million since the city's 1996 investment in the Beluga River gas field, though it wasn't clear how the estimate was calculated. The documents also state that Municipal Light & Power has invested $69.1 million in infrastructure improvements in the Beluga River gas field since 1996 without passing on charges to ratepayers, and cite an additional $90.7 million available "for the benefit of future ratepayers," plus the value of gas reserves still in the ground.

A market risk would be associated with a purchase of the properties, the documents say, with the production rate of the North Cook Inlet gas field exceeding ML&P's requirements for gas.

"Accordingly, the municipality anticipates that a successful bid may necessitate its selling excess gas (or excess power) into the Southcentral Alaska market at then prevailing prices," the document states.

Little information was immediately available beyond the public documents. City spokesman Myer Hutchinson declined comment Friday, citing a legal agreement.

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