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Vol. 19, No. 16 Week of April 20, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Hilcorp goes big

Major gas exploration program follows disappointing oil exploration results

Eric Lidji

For Petroleum News

Even though its oil exploration activities last year yielded no commercial discoveries, Hilcorp Alaska LLC plans to drill as many as six exploration wells at the Ninilchik unit this year to follow up on recent gas discoveries made at the coastal Cook Inlet unit.

The local subsidiary of the Texas-based independent also plans to drill two exploration wells from a new pad at the Deep Creek unit located farther inland from Ninilchik.

The company is also planning workovers and development drilling across its portfolio, but an eight-well program would be the busiest in the Cook Inlet since Marathon Oil Co. drilled nine development wells in 2008 and one of the busiest Cook Inlet exploration programs in decades. By comparison, the Alaska Oil and Gas Conservation Commission issued nine drilling permits for exploration wells for the entire Cook Inlet basin in 2012.

Ninilchik in 2013

The Ninilchik program would follow up on gas discoveries.

Hilcorp drilled four exploration wells at the unit last year: the Susan Dionne No. 8, Paxton No. 5, Frances No. 1 and Falls Creek No. 5. The program targeted gas-producing horizons, but also included some of the first oil exploration in the area in decades.

The 12,000-foot Susan Dionne No. 8 well was non-commercial for oil, but Hilcorp completed the well for gas production from the Tyonek formation in the Susan Dionne participating area and from the Beluga formation on a tract basis within the unit.

The results led Hilcorp to drill the Frances No. 1 well later in the year from the new Bartolowitz pad. The well was also non-commercial for oil, but showed “strong potential” for gas production from the Beluga and Tyonek formations. Hilcorp now plans to test the well toward the middle of this year with the aim of starting production in the third quarter. The company expects to form a Falls Creek participating area next year.

The Paxton No. 5 well was a shallow well from the Paxton pad. Hilcorp completed the well as a producer from the Beluga formation on a tract basis and is considering additional activities, including the potential for further exploration activities. The company expects to form the Susan Dionne/Paxton Beluga participating area next year.

The Falls Creek No. 5 well encountered gas in the Tyonek and Beluga, and now Hilcorp plans to conduct additional testing this year to gauge the way forward for development.

Those exploration activities came alongside a significant workover program.

The 2013 program led Hilcorp to continue exploration activities through 2015, and the company wants the state to defer scheduled unit contraction until December 2015.

Ninilchik in 2014

The program for this year calls for six wells.

The 10,000-foot Frances No. 2 and Frances No. 3 wells would target the Tyonek and Beluga formations. The former would be east of the Falls Creek participating area and north of the Bartolowitz pad and the latter would be south of the Falls Creek participating area and east of the Bartolowitz pad. Hilcorp is describing both wells as “appraisal.”

The 9,000-foot Falls Creek No. 6 would follow up on the Frances No. 2 well to further appraise the Tyonek and Beluga formations in the area north of the Falls Creek pad.

The 10,000-foot Paxton No. 6 and Paxton No. 7 wells would also target the Tyonek and Beluga formations. They would both be south of the Paxton pad. Paxton No. 6 would be an “appraisal” well and Paxton No. 7 would “follow up” on the results of Paxton No. 6.

The 6,500-foot GO No. 8 would target the Sterling and Beluga formations above the existing Grassim Oskoloff participating area in the area west of the existing GO pad.

The program would likely require an expansion and noise abatement study of the Paxton pad this year. It would also require construction of a Bartolowitz gas facility to support Frances No. 1 gas production. The facility would in turn require boring a pipeline under the Sterling Highway connecting to the existing Kenai-Nikiski Pipeline. Hilcorp also plans to work over the Falls Creek No. 3, Paxton No. 1 and Grassim Oskoloff No. 7 wells

Deep Creek C Pad

The Deep Creek program would expand exploration at the inland gas field.

Hilcorp began exploring at Deep Creek in early 2013, drilling the Happy Valley B-14, Happy Valley B-15 and Happy Valley B-16 wells from the existing B pad.

The first wells two tested formations above the existing production at the unit, but Hilcorp was unable to reach the target depth of 5,560 feet with the B-16 well.

This year, Hilcorp plans to complete the B-16 well, potentially using a sidetrack.

The company also plans to drill two exploration wells from a newly constructed C pad south of the B pad. The 6,000-foot Happy Valley C-17 well and the 5,000-foot Happy Valley C-18 well would both target the Sterling and Beluga formations outside the Happy Valley participating area. If successful, the exploration program would likely justify a new participating area and a gathering line back to existing facilities, Hilcorp has said.

Hilcorp also plans to drill Middle Happy Valley No. 1 well in 2015. The exploration well would target the Sterling, Beluga and Tyonek formations. The program would require a new road and pad, plus associated facilities and pipelines to access state and Cook Inlet Region Inc. land.

The state mentioned the Middle Happy Valley prospect as early as 2004. Previous operator Union Oil Company of California took steps toward exploring it, but the plans never materialized, leading to talk of contracting the unit. Given the exploration program, Hilcorp is asking the state to delay the scheduled contraction until the end of 2015.

Hilcorp also plans to work over four existing wells at the Deep Creek unit this year: Happy Valley A-7, Happy Valley B-12, Happy Valley B-13 and Happy Valley B-14.

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