|
Producers 2013: XTO steady at MGS field The Exxon subsidiary has managed to keep the aging Middle Ground Shoal field alive and kicking for 15 years, but investment lags Eric Lidji For Petroleum News
The name XTO Energy Inc. rarely comes up when policymakers discuss Cook Inlet, but for 15 years the small company has been a consistent oil producer in the basin.
The Fort Worth, Texas-based company operates the Middle Ground Shoal field and its two platforms, A and C. Hilcorp Alaska owns a 22.92 percent working interest in the field.
Middle Ground Shoal produced an average of 2,610 barrels of oil per day in July 2013, making it the second most productive oil field in the Cook Inlet basin. Cumulatively, the Middle Ground Shoal field had produced more than 200 million barrels of oil through July 2013, according to figures from the Alaska Oil and Gas Conservation Commission.
While the Middle Ground Shoal field has always been a small part of the XTO portfolio, the role became much smaller when ExxonMobil acquired the company in late 2009.
Rejuvenation The Middle Ground Shoal field came online in 1967, but by the time XTO-predecessor Cross Timbers Oil Co. purchased the offshore field from Shell Oil in 1998, it was producing only 3,600 bpd and with production falling needed work to remain relevant.
The Middle Ground Shoal field fit into the larger XTO strategy of seeking out aging North American oil and gas fields operated by large companies with high overhead and using the flexibility of an independent to increase reserves and ultimately production.
By 2006, XTO had drilled 12 penetrations at Middle Ground Shoal, doubled the oil reserves to 24 million barrels and brought production in the range of 3,000 to 4,500 bpd.
XTO also became an important player in the local economy. As of 2012, the company was the sixth largest taxpayer in the Kenai Peninsula Borough, although since Hilcorp has acquired the assets of Marathon and Unocal, XTO is now probably the fifth largest.
Focus on west flank While Shell had focused on the shallow east flank of the crested Tertiary Tyonek formation at Middle Ground Shoal, XTO focused on the steeper (and trickier) west flank by drilling directionally through the formation and subsequently penetrating the formation again on the bottom side of the well. In 2002, an XTO executive called the west flank “the big opportunity we’ve been working on for the last three or four years.”
Increasingly, though, Middle Ground Shoal took a back seat to other projects in the XTO portfolio. In 2006, XTO deferral several sidetracks while it invested in other regions.
While the company initially thought it might drill the sidetracks in 2007, AOGCC records show the company hasn’t drilled since 2005.
Instead, XTO focused on maintenance. “Our focus over the past few years has been maintaining production through coil tubing work on producers, injection well workovers, and artificial lift optimization,” XTO executive Kyle Hammond said in October 2007.
Also in 2007, XTO replaced its pipeline surveillance system at the field. “This is a system designed to provide immediate notice of any problem with the pipeline 24 hours per day,” Hammond said. “We are constantly doing maintenance on our facilities to identify, repair or replace worn or aging vessels, equipment, pipes, and/or valves.”
As far as drilling, though, XTO spent money in other areas in its portfolio.
Exxon arrives Those other areas were what attracted ExxonMobil to XTO.
The global oil giant acquired XTO in late 2009, in an all-stock deal worth $31 billion, in a bid to increase its North American natural gas holdings at the start of the shale boom.
The acquisition gave Middle Ground Shoal much more competition for capital funding and production has declined well below the level it was at when XTO acquired it.
In 2012, XTO faced two small setbacks at the field.
In January, a faulty gasket on a tank at its onshore facility in Nikiski caused a 6,300-gallon crude oil and processed water spill into a secondary containment area, which the company was able to clean up within two weeks. In November, XTO was forced to temporarily suspend production from its two platforms because of a shortage of fuel gas.
However, July 2013 production was up some 12.5 percent from July 2012 rates.
| 