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Hilcorp worried about legacy fields Argues for regulatory changes to improve economic viability of renewal activities at marginal fields in Cook Inlet ERIC LIDJI For Petroleum News
Hilcorp Alaska LLC is still in a holding pattern at the northern west side of Cook Inlet, where it operates four units: Ivan River, Lewis River, Pretty Creek and Stump Lake.
The company has no drilling or rig workover operation planned at the units this year and is warning the state that legacy field could be in danger in the current economy.
The Ivan River, Lewis River and Pretty Creek units are currently in production. The Stump Lake unit, on the other hand, has been struggling over the past decade and its future might be dependent on activities at the Beluga River unit, according to Hilcorp.
The Stump Lake unit was formed in 1977 and production was suspended shortly thereafter. The unit produced from the 41-33 well from 1990 until 2000 and again from 2009 until 2012, when mechanical issues from a workover prevented production.
As part of negotiations over a 2015 plan of development for the unit, the Alaska Department of Natural Resources required Hilcorp to swab the 41-33 well and add perforations if the swabbing failed to restore production. The state also required the company to complete an ongoing field study at the unit. Although the company said it “met and exceeded” those requirements, its attempts to revive production failed.
New well or rig workover required Now, Hilcorp believes any future attempt to revive Stump Lake unit production will require drilling a new well or conducting a rig workover to fix the problems with 41-33.
Those conditions could prevent any progress at the unit in the near term. The unit is located within the Susitna Flats State Game Refuge, which means drilling can only occur between November and March. Any additional drilling opportunities at the unit “are known to be limited and are not economic under current market and regulatory conditions,” according to the company. Even so, Hilcorp has told the state it would study the economic and logistic feasibility of reviving production at the unit this coming winter.
Another possibility for the unit is to connect its operations with those at the Beluga River unit. Hilcorp currently owns a one-third working interest in the field and is in the process of becoming the unit operator after predecessor ConocoPhillips Alaska Inc. sold its one-third working interest to Municipal Light & Power and Chugach Electric Association.
“Hilcorp’s increased presence on the west side of Cook Inlet brings new opportunities to make rigs, equipment and manpower available to small-scale operations, such as the Stump Lake unit, that otherwise would not be economic,” the company told the state in a plan of development from March 2016. Without such “critical mass” of projects in the region, “the economic life of the Stump Lake unit has likely passed,” the company added.
Any development project at Stump Lake would “require substantial fiscal investment with declining economic returns. This situation will eventually spread to other legacy fields throughout Cook Inlet.” the company wrote and asked the state to consider that unpromising economic condition as it reviewed the proposed plan of development.
In a comment that is atypical for such a routine planning document, Hilcorp also urged 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.”
Producing unit The Ivan River unit produced some 1.8 million cubic feet per day from the Sterling-Beluga Gas participating area and 1.2 million cubic feet per day from the Tyonek participating area in 2015, according to Hilcorp. The company did not drill any wells or conduct any rig workover operations last year and has none planned for this year.
A previous operator established a gas storage operation at the unit in 2011 but Hilcorp relinquished the storage lease last year because of damage to the IRU 44-36 well.
The Lewis River unit produced some 206.5 million cubic feet from the LRU C-01RD well at the Lewis River Gas Pool No. 2 in 2015, according to the company. Hilcorp did not drill any wells or conduct any rig workover operations last year and has none planned for this year. The company did shut-in the Lewis River D-1 disposal well in 2015.
The Pretty Creek unit produced some 300,000 cubic feet from the Beluga participating area in 2015. Hilcorp did not drill any wells or conduct any rig workover operations last year and has none planned for this year. The unit includes a storage operation. Hilcorp injected 291 million cubic feet and withdrew 528 million cubic feet during 2015.
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