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Hilcorp waiting on three units Company takes Kasilof offline, keeps Stump Lake offline and asks for another year to monitor the North Trading Bay unit Eric Lidji For Petroleum News
Hilcorp Alaska LLC wants to suspend three Cook Inlet units for another year.
The local subsidiary of the Houston-based independent wants to pause its operations at the Stump Lake unit, Kasilof unit and North Trading unit, according to recent plans of development filed with the Alaska Division of Oil and Gas. Typically, a plan of development presents a summary of work completed during the previous year and work planned for the year to come. An operator must make a case for suspending operations.
Counter-intuitively, the request to continue suspending operations at the North Trading Bay unit could be a sign of optimism. Hilcorp says it hopes to someday return the unit to production, which would keep the company from paying to dismantle the two platforms.
Texaco installed the Spark and Spurr platforms off the coast of the west side of Cook Inlet in 1967 and formed the North Trading Bay unit in 1971. The platforms were designed to last for some 20 years. Oil production stopped in 1991 and natural gas production ended in 2005. The two platforms have been in “lighthouse” mode ever since.
The question of whether the platforms were ready to be dismantled hung over the head of operator Marathon Oil Co. in 2011, before it sold the unit - and the eventual responsibility for dismantling it - to Hilcorp. Since taking over, Hilcorp has asked the state for permission to keep the platforms in lighthouse mode, rather than dismantle them.
When Hilcorp asked for a similar reprieve, in early 2014, the company had said it was conducting reservoir engineering and geological studies in the area through 2017. The work, Hilcorp said, might identify future drilling opportunities in the area. Among the opportunities Hilcorp mentioned was the possibility of using the Spurr platform to further develop the Kokanee fault block located outside the North Trading Bay unit boundaries.
In October 2014, Hilcorp drilled the A-31 exploration well from its Monopod platform at the neighboring Trading Bay field. The well encountered “productive hydrocarbons in the Hemlock and Tyonek E zone formations but did not find hydrocarbons in the Tyonek C or D zones,” according to the company, which said it “is now working to reevaluate potential in the Kokanee fault block that would be used to justify platform reactivation.”
Kasilof offline Similarly, Hilcorp is pegging the future of the Kasilof unit on future exploration.
Marathon brought the Kasilof unit into production in November 2006, using an extended reach dual-lateral development well drilled from an onshore pad on the Kenai Peninsula.
Initial drilling proved the producing area to be smaller than expected, and Marathon subsequently requested a contraction at the unit, to 329 acres down from 13,289 acres.
Hilcorp acquired the unit from Marathon in February 2013 and suspended production from April through October 2013 because of “the seasonal lack of market demand for gas” in the summer in Southcentral. When it presented its plans for 2014, the company told the state it “anticipates limited production of KAS-1” because “no new drilling programs are justified, and current opportunities to enhance production are limited.”
Those predictions came true.
In April 2014, Hilcorp once again suspended production. The unit remains offline, and “some of the production equipment was moved to other producing fields.” Hilcorp wants permission to keep production suspended through at least May 2016. “At this point in the field’s development, no new drilling programs are justified, and current opportunities to enhance production from existing well bores are limited,” the company wrote in its plan.
In 2014, Hilcorp told the state that it might use the Kasilof facilities to assist another asset, probably the nearby Ninilchik unit, where Hilcorp has been rapidly expanding exploration and development activities. “Existing facilities may be downsized to accommodate the reduced production capacity of the (Kasilof participating area) while benefitting the production of Hilcorp’s other assets that are currently not producing,” the company wrote. No such language appeared in the current plan of development.
The northern west side While Hilcorp has been diligently reviving aging fields since arriving in Cook Inlet in 2012, some areas have seen considerably more activity and investment than others.
The area with the least activity is the northern end of the west side of Cook Inlet, where Hilcorp operates the Stump Lake, Ivan River, Lewis Creek and Pretty Creek units.
Gas production from the Stump Lake unit was suspended in 1978, shortly after the unit was formed, and restarted in 1990. After a brief increase, production fell drastically until 2000, when the unit was suspended. Chevron returned Stump Lake to production in 2009 by sidetracking the original discovery well. Hilcorp added perforations to the SLU 41-33RD well but suspend production again in 2012 because of a build-up of solids.
In its recent plan of development, Hilcorp said there are currently few opportunities to revive existing wells and no justification for drilling additional wells, which is why the company wants to continue suspending operations for another year, through May 2016.
That said, the region could soon see activity. This year, Hilcorp will continue a “comprehensive field study” at Ivan River and conclude similar studies of Lewis River and Pretty Creek. Whether those studies will lead to development remains to be seen.
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