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Vol 21, No. 23 Week of June 05, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

Light load at Beluga unit

Hilcorp plans no new wells, no rig workovers at legacy Cook Inlet field

ERIC LIDJI

For Petroleum News

Hilcorp Alaska LLC has a light workload as it takes over the Beluga River unit.

The local subsidiary of the Texas independent is planning no wells or sidetracks and no rig workovers at the Cook Inlet field over the coming year, although the company told federal officials it might pursue such work “as the need or opportunity arises.”

Instead, over the coming year the company will “conduct routine repairs and replacement of facilities as needed or required to maintain and increase field production,” according to the 54th plan of development for the field, filed with the U.S. Bureau of Land Management in late April. The potential projects on the docket this year could include small pipeline work, expansions to existing production facilities and the installation of additional disposal, injection or processing equipment “where necessary.”

When previous operator ConocoPhillips Alaska Inc. filed the 53rd plan of development for the Beluga River unit, in May 2015, it called the legacy field “fully delineated,” suggesting that drilling more wells would fail to yield a worthwhile increase in production rates. The Sterling reservoir had declined to 25 percent of its original pressure, down from 30 percent a year earlier, and deliverability had also declined.

Maintenance projects over the previous year did yield a bump in production. The unit produced 25.1 billion cubic feet in 2014, up from 22.4 bcf in 2013.

Heavy program

But an equivalent maintenance program last year failed to produce similar results. The unit produced 21.2 bcf in 2015, down 15.5 percent over 2014 and 5.3 percent from 2013.

Between the summer of 2015 and this summer, ConocoPhillips exceeded the maintenance program it had originally proposed in its plan of development for the unit.

ConocoPhillips installed artificial lift on the 212-35T and 232-26 wells and identified 224-34 and 214-26 as future artificial lift candidates. The company also installed velocity string on 232-23. The company cleaned-out 212-25 and a portion of 212-35 and returned 244-04 to intermittent gas production by resolving a sand production issue in the well.

Other projects were less successful. An effort to mill a plug and swab 244-23 was “unsuccessful,” although the company re-established production from upper zones. An effort to swab and flow test 211-03 resulted in a flow that was “not sustainable,” forcing the company to shut in the well and postpone flowline installation pending evaluation.

New management

Earlier this year, ConocoPhillips sold its stake in the Beluga River unit to Anchorage Municipal Light & Power and Chugach Electric Association Inc. for $152 million.

While Hilcorp retained its one-third interest in the field, the company became the operator of the unit almost by default, as its two partners are both electric utilities.

The utilities said their stake in the unit - now 56.67 percent for ML&P and 10 percent for Chugach - will meet a significant portion of their gas needs over the next decade.

For Hilcorp, taking over the field provided another opportunity for applying economies of scale in Cook Inlet. Earlier this year, the company suggested that the future of the struggling Stump Lake unit to the northeast might depend on activities at Beluga River.

Hilcorp has publically worried about the fate of legacy Cook Inlet fields in the current economic climate. In its Stump Lake unit plan of development, the company asked officials “to evaluate regulatory and policy changes that, going forward, will extend the useful life of similarly situated legacy fields while minimizing waste, maximizing existing infrastructure and promoting sound environmental and economic policy.”

While the Beluga River unit is approaching its 50th anniversary, and production is declining, the annual production rate is high enough to make its situation better than the marginal Stump Lake unit or other old, small fields scattered throughout the basin.



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