Providing coverage of Alaska and northern Canada's oil and gas industry
September 2023

Vol. 28, No.38 Week of September 17, 2023

PRODUCERS PREVIEW: Division OKs MGS unit termination request

Hilcorp evaluating potential of gas production from area north of Baker which could be drilled from that lighthoused platform

Kristen Nelson

Petroleum News

Editor's note: This story is from the 2023 Producers' magazine, available in November

le Ground Shoal in Cook Inlet has been shut-in since April 2021, is no longer a unit and the company is studying the remaining leases for further natural gas development.

MGS was the first offshore discovery in Cook Inlet and in Alaska, with Amoco Production Co.'s MGS State No. 1 in 1963. The unit was formed in 1967 and produced oil and gas from four platforms: Baker, Dillon, A and C. Baker and Dillon were lighthoused in 2013 and 2003, respectively.

The shut-in occurred after Hilcorp discovered a leak in the Middle Ground Shoal Fuel Gas System. In March 2021, the last full month of MGS production, crude averaged 1,226 bpd, 11.5% of inlet production in that month, and gas averaged 218 mcf per day, 0.1% of inlet production.

Following the shut-in, the Division of Oil and Gas approved a suspension of production while the company considered whether to repair or replace the fuel gas pipeline.

When it submitted its 2023 plan of development for MGS in April, Hilcorp told the division it had determined the cost to repair or replace the pipeline was not economic as a standalone project and would not be pursued. It also said platform C had reached its economic unit and would not be returned to production, while platform A had potential for future reactivation, but only following a successful exploration program. Hilcorp committed to plugging and abandoning all the Dillon and Baker platform wells but said the platforms would be maintained as unmanned lighthoused facilities as the company explored potential utilization for commercial-scale alternative energy projects.

Termination request

On May 31, Hilcorp withdrew the 2023 POD, asked for termination of the MGS unit, voluntarily relinquished two leases associated with the Dillon platform, requested a suspension of production for three leases associated with the C, A and Baker platforms, requested a land use permit for the Dillon platform structure and requested modification of existing pipeline easements associated with MGS.

On June 30 the division approved the request.

Hilcorp is evaluating whether there is commercial gas in the area that could be developed from an area north of the Baker platform which could be drilled from that platform, currently lighthoused, or whether a new platform would be required.

The division said it determined a 3-year suspension of operation for the three leases "is an appropriate amount of time to develop exploration prospects, drill, appraise, and ultimately determine whether the leases can be brought back into production."

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