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Prices ding Hilcorp’s offshore assets Efforts to revive legacy platforms are slowed by low oil prices; company expects to merge Middle Ground Shoal fields ERIC LIDJI For Petroleum News
Hilcorp Alaska LLC is proposing a restrained offshore development program at its Cook Inlet properties for the coming year in response to the current economic climate.
The local subsidiary of the Houston independent operates four offshore units - Granite Point, Trading Bay, North Trading Bay and South Middle Ground Shoal - and three fields - North Middle Ground Shoal, Middle Ground Shoal and McArthur River.
While those units and fields have been an important part of Hilcorp’s ongoing effort to revive and increase production from aging facilities in recent years, the company expects activity to be limited this year, at least compared with the pace of work in recent years.
Even with those reductions, Hilcorp is continuing its ongoing effort to consolidate operations by merging small neighboring fields into jointly managed units.
Granite Point Mobil Oil Corp. discovered the offshore Granite Point oil field in 1965 and the following year installed (from south to north) the Granite Point, Anna and Bruce platforms.
Hilcorp has been working over wells at the platforms for several years and recently merged the Granite Point field into the nearby South Granite Point unit to create the Granite Point unit with two participating areas: Hemlock and Granite Point Sands.
Hilcorp conducted a workover campaign to repair or improve one Granite Point well, three Anna wells and two Bruce wells. Cumulatively, the platforms produced 968,100 barrels of oil and 825.7 million cubic feet of natural gas in 2015, according to Hilcorp.
This year, the company expects to maintain existing production rates at the unit but has only scheduled one workover to address complications from a workover project at the Anna platform last year. “Under the present economic climate and limited gas market, Hilcorp does not anticipate any new grassroots or sidetrack drilling projects,” the company told state officials in a proposed plan of development submitted in March 2016.
Trading Bay At the southern end of the west side of Cook Inlet, Hilcorp operates the Trading Bay unit, the McArthur River field to the south and the North Trading Bay unit to the north.
Union Oil Company of California discovered the Trading Bay oil field in 1965 and later discovered the associated Grayling gas sands. The Trading Bay unit and McArthur River field are home to the Grayling, Dolly Varden, Steelhead, King Salmon and Monopod platforms.
The McArthur River field produced 2.055 million barrels of oil and nearly 1.05 billion cubic feet of natural gas in 2015, according to Hilcorp. The company conducted a major workover campaign at the field last year, with projects at six Dolly Varden wells, eight Grayling wells, two Steelhead wells and three King Salmon wells. The Trading Bay field produced 1.3 million barrels of oil and more than 2.08 billion cubic feet of natural gas in 2015 and the company performed workover activities at eight Monopod wells.
Hilcorp expects an “overall decrease” in development this year, citing “the current economic climate and limited market for gas.” The company is planning four sidetracks at McArthur River, and three drilling projects and four workovers at Trading Bay.
Chevron discovered the North Trading Bay field in 1965 and brought the unit online in 1968 from the Spark and Spurr platforms. The two platforms have been lighthoused since in 1992, aside from a brief attempt at reviving gas production from Spark in 2007.
While previous operator Marathon Oil Corp. had been talking about decommissioning and removing the platforms as early as 2009, Hilcorp has generally been more hopeful.
Hilcorp performed some “routine” maintenance at the platforms last year and recently completed a 3-D seismic survey over the unit and is currently processing the results.
According to the company, “It is not economically viable or technically feasible to return either platform to production” this year. But Hilcorp still sees possibilities for the platforms. “This alternative remains preferable to abandonment,” the company said.
A range of engineering studies planned for this year and next year should provide some guidance on how best to preserve the platforms. An alternative proposal would “return the North Trading Bay Unit to production via directional wells drilled from the Monopod Platform and drilling/sidetracks from existing platforms,” according to the company. In either case, Hilcorp would seek to combine North Trading Bay into the Trading Bay unit.
Middle Ground Shoal In the center of Cook Inlet, Hilcorp operates the North Middle Ground Shoal field and its shut-in Baker platform, the Middle Ground Shoal field and its active “A” and “C” platforms, and the South Middle Ground Shoal unit and its lighthoused Dillon platform.
This year, Hilcorp plans to propose a unit to combine all three fields into a single entity.
With “a rebounding economic climate and available gas supply market,” Hilcorp plans to reactive the Baker platform in 2017 and might revive the Dillon platform in 2018. The company is evaluating “intermediate opportunities” to use directional wells A and C “to target oil prospects otherwise accessible only from the Baker and Dillon platforms.”
Cumulatively, those two platforms at the Middle Ground Shoal field produced 219,700 barrels of oil 47 million cubic feet of natural gas in 2015. While the company expects production rates to remain steady this year with several maintenance projects, a larger investment program at Platform C is “not feasible under current economic conditions” and might force the company to temporary suspend production sometime this year.
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