Hilcorp working to recover stranded gas

Production from North Trading Bay stopped in 2005; platforms no longer functional; gas from NTBU to be fuel gas for Monopod

Kristen Nelson

Petroleum News

The North Trading Bay unit in Cook Inlet formerly produced natural gas from the Spurr and Spark platforms, built in 1967 by former operator Marathon Oil. Production ceased in 2005 and the platforms are maintained in lighthouse mode. The Alaska Division of Oil and Gas said in a May approval of a 2023 plan of development for NTBU that the crane and helidecks on Spurr and Spark are functional, but crew quarters are not functional and no wells are active.

Hilcorp Alaska, which took over as operator in 2013, said in its 2017 POD for the unit that it would not be economically or technically feasible to return production from the platforms, but proposed drilling from the Monopod in the Trading Bay unit into the North Trading Bay unit.

By 2018, the company was proposing a sidetrack of the A-10 Monopod well into acreage not in the NTBU but geologically connected to acreage in that unit. It said it would petition for expansion of the NTBU to include that acreage if drilling was successful.

The division denied the 2019 POD and administratively terminated the NTBU, a decision overturned by the commissioner of the Department of Natural Resources in 2020 following a hearing. Hilcorp was invited to submit a new POD identifying targets for drilling within 16 months, which the company would then be required to drill.

In a proposed 2021 POD, Hilcorp committed to sidetracking the A-10RD into the Tyonek gas sands within the NTBU. The company attempted to drill the sidetrack but encountered mechanical challenges, and in 2022, the company notified DNR of alternative plans to drill the well.

That sidetrack was drilled into NTBU acreage this year using Rig 56 on the Monopod. Alaska Oil and Gas Conservation Commission records show the sidetrack, A-10RD3, was completed in early June.

Production expected in third quarter

The Monopod is gas deficient, Hilcorp said, and gas produced from A-10RD3 will provide fuel gas for Monopod operations, eliminating the need to transport gas from Steelhead to the Monopod, resulting in a net increase in natural gas sales from the Trading Bay unit.

Hilcorp said it would be required to pay royalties on fuel gas from the NTBU leases as that gas is moved across the Trading Bay unit boundary and said after sustained production from A-10RD3 is confirmed, it anticipates submitting a formal proposal to DNR to merge the North Trading Bay unit into the Trading Bay unit.

Expansion of the Trading Bay unit would benefit both the state and Hilcorp, the company said:

*Trading Bay field life would be extended by recovery of natural gas from the NTBU leases.

*The state would benefit from increased volumes of gas sales from Steelhead.

*The Trading Bay unit encompasses the McArthur River field and the Trading Bay field, geologically distinct structures which "share a common operator and operational network." The NTBU structures are also geologically distinct, but also share a common operator and operational network, the company said.

*Hilcorp said that without the proximity of the Trading Bay infrastructure and facilities, specifically the Monopod, "remaining NTBU gas reserves are subject to waste. They cannot otherwise be economically recovered."

*A pending appeal over segregation of lease ADL 17597 into ADL 392195 will be resolved.

*Administrative burdens to both the state and company will be reduced.

*The company noted that merger or consolidation of units has occurred in Cook Inlet, with similar consolidations at Middle Ground Shoal, Granite Point and Trading Bay.

In its 2023 POD Hilcorp said it is committed to maintaining the plug and abandonment program authorized by AOGCC, including continued P&A work at Dillon and Baker in Middle Ground Shoal unit this year, followed by Spark and Spurr in 2024.