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Hilcorp continues southern Kenai work Company planning development activities at Deep Creek and Ninilchik; Nikolaevsk remains in holding pattern ERIC LIDJI For Petroleum News
Hilcorp Alaska LLC is continuing to propose sizeable development programs at its onshore units in the southern Kenai peninsula, particularly Deep Creek and Ninilchik.
The company expects to drill six stratigraphic test wells in the vicinity of the Deep Creek unit over the coming 18 months. The first four would be drilled before June 2017. The remaining two require the public winter trail system and are currently being planned for a brief window in the late third quarter of 2018 after freeze-up but before snowfall.
Based on the results of the program, Hilcorp intends to prepare a new round of exploration drilling in 2018 and 2019, targeting the Sterling and Beluga formations.
The company outlined its plans for its onshore east side Cook Inlet units in a series of plans of development submitted to the Alaska Department of Natural Resources in early March. The state is still reviewing the completeness of the plans. The federal government manages the Beaver Creek, Birch Hill, Kenai, Sterling and Swanson River units.
The proposed 2017 program for Deep Creek once again defers activity at the proposed Middle Happy Valley pad and the proposed C Pad. The company initially proposed the project in its 2014 plan of development and even began permitting portions of the program in recent years. “Hilcorp continues to progress plans to drill at Middle Happy Valley and C-Pad (within the Happy Valley PA), but cannot commit to drilling until the operational and economic risk associated with such exploratory efforts is reduced.”
As proof of its commitment, Hilcorp noted that it completed seismic programs in 2013 and 2016 and a remote sensing data program in 2015 in the southern end of the unit.
The state had previously threatened to contract the unit unless Hilcorp explored the area.
Hilcorp deferred plans to drill the HVB-18 well in 2016. The well would have delineated a target in the Tyonek formation discovered in the previous HVB-17 well. The company decided it had no need to delineate the prospect. The company plans to keep the HVB-18 well as a potential for further exploration, in addition to the proposed C Pad program.
The Deep Creek unit produced 6.25 million cubic feet of natural gas per day in 2016, down from more than 6.9 million cubic feet per day in 2015. The 2015 production rates were split relatively evenly between the Happy Valley participating area and tract production. The 2016 rates production came entirely from the participating area.
Ninilchik Hilcorp is focusing its 2017 program at the Ninilchik unit on the Kalotsa pad.
The company drilled the Kalotsa No. 1 and No. 2 wells in late 2016 and early 2017 and plans to complete both wells in the second quarter. The company expects the wells to have initial completions in the Tyonek and “significant” Beluga potential. The company plans to continue the program in the third quarter with the Kalotsa No. 3 and No. 4 wells.
The program took precedence over others planned for the unit. In a previous plan of development, Hilcorp said it would drill the Kalotsa No. 1 and GO No. 9 wells in 2016.
Hilcorp eventually replaced the GO No. 9 well with the Kalotsa No. 2 well. The company said it still might drill the GO No. 9 well this year or might defer it for other projects.
Although the Ninilchik unit has been online for more than a decade, Hilcorp launched a major exploration program within the unit boundaries after acquiring it from Marathon in 2013. The goal is to expand existing participating areas vertically and geographically.
The first stage in that effort began in 2016 with the expansion of the Falls Creek participating area. The company expects to continue the process this year at the Susan Dionne participating area and potential at the Grassim Oskoloff participating area.
The Ninilchik unit produced between 23.2 million and 27.5 million cubic feet of natural gas per day in 2016, down from approximately 40 million cubic feet per day in 2015.
On March 2, the Alaska Department of Natural Resources agreed to expand the 25,869-acre Ninilchik unit to include portions of three fee mineral lands leases totaling some 40 acres.
The expansion is associated with activities around the Falls Creek participating area.
Nikolaevsk and Cannery Loop The Nikolaevsk unit remains in a holding pattern.
As in recent years, the Red Well No. 1 will produce as weather or demand allows.
Hilcorp is not planning any additional drilling activity at the unit this year. But it does plan to hydraulically fracture the Tyonek formation in the well and expects that the workover project will increase productivity by 1 million to 3 million cubic feet per day.
To the north at the Cannery Loop unit, Hilcorp plans to sidetrack the CLU-10 well this year to the Upper Tyonek and workover the CLU-05RD well to the Upper Tyonek.
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