Hilcorp looks ahead
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Prudhoe Bay gets a new operator, one with North Slope success already at Milne
Hilcorp took over as operator at Prudhoe Bay July 1, upon completing acquisition of BP Exploration (Alaska)’s upstream assets.
The acquisition included BP’s interests at Prudhoe Bay, Milne Point and Point Thomson, as well as the operatorship at Prudhoe. The midstream portion of the transaction is expected to close in the third quarter, pending regulatory approval.
The $5.6 billion deal was announced last August.
The Alaska Department of Natural Resources and the Alaska Department of Environmental Conservation approved transfer of leases and permits needed for the upstream transfer on June 29, in advance of the June 30 date the companies had targeted for the asset transfer. The Regulatory Commission of Alaska has set a Sept. 28 date for its decision on transfer of the midstream assets.
What’s next?“Today we are significantly growing and strengthening our footprint in Alaska,” Jason Rebrook, president of Hilcorp Energy Co., said in a July 1 statement following the upstream closing. “I’m especially proud of the team that’s worked diligently over the past 11 months to close this transaction and put us in a position to be ready for day one operations.”
Hilcorp has major operations in Cook Inlet and on the North Slope, making it “one of the largest oil and gas producers in Alaska,” the company said. On the North Slope, where it acquired some of BP’s assets in 2014, the company highlighted its work at Milne Point where it has invested more than $700 million and doubled production, reaching 36,000 barrels per day of production from Milne in April. Hilcorp said that was the highest production at the field since May 2008. It expects to reach 40,000 bpd by the end of the year.
The company has nearly tripled its Alaska workforce as a result of the recent transaction, growing from some 550 employees to more than 1,450, with more employees expected to be added in the coming months.
“We look forward to continuing to drive economic growth, create Alaskan jobs and contribute to local economies for decades to come,” said Greg Lalicker, Hilcorp Energy Co.’s chief executive officer. “Hilcorp is committed to safely and responsibly developing Alaska’s natural resources.”
Operating mature fieldsThe general sense from Petroleum News sources is that Hilcorp will cut costs at Prudhoe - it is known as a lean operator - and, once that is done, that it will drill more wells, increasing production.
A lean operation and drilling are things the company brought to Cook Inlet when it took over from Chevron and then Marathon in 2011 and 2012. While Hilcorp has worked to increase oil production in Cook Inlet, the main focus there has been natural gas, which feeds local needs in Southcentral Alaska.
Asked what he expects to see from Hilcorp in its new role of Prudhoe Bay operator, Tom Stokes, director of the Alaska Department of Natural Resources’ Division of Oil and Gas, told Petroleum News: “Hilcorp is known for operating mature oil fields - known for increasing output from those fields - and that’s exactly what we need.”
“Hilcorp has proven itself at Milne Point,” Stokes said. “They doubled output after they took over operatorship from BP. They bring innovation and creative processes to existing fields, such as use of polymer to increase production.”
“Additional throughput is beneficial while new larger fields are being developed on the North Slope, such as Pikka and Willow.”