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Hilcorp seeking Ninilchik expansion Asking state to expand Falls Creek participating area; requests for Grassim Oskoloff, Susan Dionne/Paxton expansions to come ERIC LIDJI For Petroleum News
After several years of exploration delineation drilling at the Ninilchik unit, Hilcorp Alaska LLC is proposing the first in a series of administrative changes at the unit.
The local subsidiary of the Texas-based independent is asking to expand the Cook Inlet unit by approximately 40 acres to accommodate a proposed expansion of the Falls Creek participating area. The proposal would expand both the aerial and vertical extent of the Falls Creek participating area to accommodate information from recent wells at the unit.
The state Division of Oil and Gas is taking comments through Jan. 4.
The company expects to submit similar proposals for modifying the Grassim Oskoloff and the Susan Dionne/Paxton participating areas sometime in the coming year. “After this unit-wide delineation process is complete, Hilcorp and (the Alaska Department of Natural Resources) can cooperatively address issues related to mandatory unit contraction,” the company wrote in its filing. The state has held off contracting undeveloped portions of the Ninilchik unit while Hilcorp has been pursing delineation.
2014 drilling work According to Hilcorp, the aerial expansion would accommodate recently drilled wells currently produced outside the existing Falls Creek participating area. The proposed vertical expansion is needed, according to the company, because various Tyonek formation wells in the participating area have been recompleted into the Beluga formation. The vertical expansion would align the participating area with associated Alaska Oil and Gas Conservation Commission pool rules at the Ninilchik unit.
Given that this would be the first revision to the Falls Creek participating area, “Hilcorp anticipates that the revised participating area boundary will also involve the re-allocation of production retroactive to first Falls Creek PA production in 2003,” the company wrote.
The Ninilchik unit follows the coastline of the Kenai Peninsula between Clam Gulch and Ninilchik. Many of the onshore drilling pads at the unit target offshore accumulations.
Chevron formed the original Falls Creek unit after discovering a Tyonek gas field in the area in June 1961. Marathon formed the Ninilchik unit in 2001 and discovered two nearby fields in 2001 and 2002. In 2003, the state expanded the Ninilchik unit to include the former Falls Creek unit. Also in 2003, the state formed the three participating areas: Falls Creek, Grassim Oskoloff and Susan Dionne-Paxton (from north to south).
After acquiring the unit, Hilcorp launched a major exploration and delineation program at Ninilchik. Those activities have already led to several new drilling pads across the unit, as the company targeted accumulations outside of the economic reach of existing pads.
A three-well program in the Falls Creek area in 2014 convinced Hilcorp to pursue an expansion of the participating area. The company drilled the 12,870-foot Frances No. 1 well in early 2014 to target oil. The well was non-commercial for oil, but showed a “strong potential” for natural gas production, according to the company. In August 2014, the company proposed a five-well development program. While the company permitted the Frances No. 2 and Frances No. 3 well, neither had been drilled through this year.
Also in early 2014, Hilcorp completed the 9,725-foot Falls Creek No. 5 well. The well encountered natural gas in both the Tyonek and Beluga formations. After the results of Frances No. 1 and Falls Creek No. 5, the company first suggested expanding the Falls Creek participating area to accommodate Beluga production. Toward the end of 2014, Hilcorp drilled the 9,060-foot Falls Creek No. 6 well to further appraise the Tyonek and Beluga formations area north of the Falls Creek drilling pad.
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