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Hilcorp seeking new MGS pool rules Changes accompany plans to consolidate all three Middle Ground Shoal fields into a single unit; platforms could be restarted ERIC LIDJI For Petroleum News
Hilcorp Alaska LLC is proposing a series of changes to the pool rules at the oldest offshore development in Alaska in an effort to extend the life of the aging fields.
The changes are part of a larger effort to consolidate three neighboring offshore fields - the North Middle Ground Shoal field, the Middle Ground Shoal field and the South Middle Ground Shoal unit - in a single unit to be called the Middle Ground Shoal unit.
The local subsidiary of the Texas-based independent asked the Alaska Department of Natural Resources earlier this year to expand the unit to include all three properties.
The current request with the Alaska Oil and Gas Conservation Commission includes some administrative byproducts of that proposed unit expansion, such as changing the boundaries of the Conservation Order to match the expanded unit boundaries, but also an attempt to modernize operations with a series of changes to the existing pool rules.
Hilcorp acquired the North Middle Ground Shoal field and its Baker platform and the South Middle Ground Shoal unit and its Dillon platform through its acquisition of Marathon Oil Corp.’s assets in the Cook Inlet region in 2012. Both platforms have been inactive for several years, although Hilcorp told the AOGCC - and has previously told the state - that it is “actively evaluating various opportunities” to resume production.
One of those opportunities came in 2015, when Hilcorp acquired the Middle Ground Shoal field and it’s A and C platforms from the ExxonMobil-subsidiary XTO Energy Inc.
The acquisition gave Hilcorp an important regional asset. The Middle Ground Shoal field accounted for approximately one-eighth of total Cook Inlet oil production that year.
It also gave Hilcorp an opportunity to combine all three Middle Ground Shoal fields into a single unit, allowing the company to seek the administrative and operational efficiencies it has pursued at other neighboring properties across the Cook Inlet basin.
If it receives a request by Sept. 8, the AOGGC will hold a public hearing on the request on Sept. 20. Otherwise, it will make its decision based on a review of the application.
Pool rule changes Hilcorp wants to revise most of the nine rules in Conservation Order No. 44, which the AOGCC approved for Shell Oil Co. and Pan American Petroleum Corp. in 1967.
The changes include:
• eliminating all well spacing restrictions except two: prohibiting any oil well within 500 feet of the order boundaries and any gas well with 1,500 feet of the order boundaries unless the leaseholder and the landowner are the same on both sides of the boundaries.
• designating new geologic descriptions of the oil pool and the gas pool at the unit.
• allowing Hilcorp to consolidate production into a single oil pool and a single gas pool, and allowing comingled injection, too. Over time, the AOGCC has creating three co-mingling groups from the seven oil pools at Middle Ground Shoal, as the field has aged.
“Over the last 50 years, approximately 80 percent of the field’s recoverable oil reserves have been produced. The field’s regulatory history demonstrates a clear trend towards consolidation of multiple oil pools to promote and enhance ultimate recovery. Full consolidation of field’s oil-bearing formations into a single oil pool will maximize field life, reduce administrative burdens and efficiently promote ultimate recovery,” Hilcorp wrote, making a similar argument for consolidating gas production into a single pool.
Even though Hilcorp is also seeking permission to comingle injections in a single well bore, the company said it would continue to track and manage injections at the field using the historic oil pool designations, “in accordance with good engineering practices.”
• eliminating a restriction against drilling any wells on the boundary between ADL 17595 and ADL 18754, which were leased by different companies until the 2015 acquisition.
• using current regulatory standards for casing and cementing oil wells and allowing Hilcorp to propose alternative methods for completing gas wells, on a case-by-case basis.
• eliminating bottom-hole pressure surveys and gas-to-oil ratio tests, which Hilcorp believes are no longer useful given the age of the field and the volume of existing data.
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