Hilcorp finds Trading Bay gas

Asks Department of Natural Resources to add 2 held-by-production leases to the Trading Bay unit to avoid redundancies

Eric Lidji

For Petroleum News

Hilcorp Alaska LLC is looking to add two leases to the Trading Bay unit to accommodate production from a recent natural gas discovery at the offshore field in the Cook Inlet.

The local subsidiary of the privately held Houston-based company is asking the state to expand the unit on the west side of Cook Inlet to include ADL 18731 and ADL 392193.

The leases cover 5,289 acres and are currently held by production.

Although Trading Bay is historically an oil field, Hilcorp is looking to develop a “newly discovered natural gas deposit” from the Monopod platform, which is located on ADL 18731. The other lease is adjacent to it. Without expanding the unit to include the leases, Hilcorp will be required to “install duplicative infrastructure and operation systems,” according to the company. The duplication could have environmental impacts, and the time needed to install the systems could result in lost royalties to the state, and lost resources too, if Hilcorp has to flare excess gas during the interim, the company said.

Hilcorp is asking the state to expedite its decision.

The state is taking comments on the application through August 12.

The request extends the saga of ADL 18731.

The Union Oil Company of California and the Ohio Oil Co. acquired the lease in June 1962 and before the end of the summer Marathon Oil Co. acquired the Ohio Oil interest.

In 1965, Unocal and Marathon discovered the Trading Bay field, and the state certified the Trading Bay No. 1A well, located on ADL 18731, as capable of producing in paying quantities. The state included the lease in the Trading Bay unit in February 1967.

The Department of Natural Resources contracted the lease out of the unit in 1972, but the certified status of the Trading Bay No. 1A well protected the lease from expiration.

A sidetrack Unocal drilled from the Monopod platform in 2002 produced from the Trading Bay unit, leading the state to expand the unit in 2003 to include a segment of ADL 18731. The new request would bring the remainder of the lease into the unit.

Because Unocal and Marathon both sold their Cook Inlet assets to Hilcorp in recent years, Hilcorp now has full ownership of the Trading Bay unit and the un-unitized leases.

The state created ADL 392193 in 2011, segregating it from an existing lease.