AOGCC approves Hilcorp Alaska's applications for Sterling wells

Kristen Nelson

Petroleum News

Hilcorp Alaska is planning to bring the nonproducing Kenai Peninsula Sterling gas field back into production, acquired two leases in the area at the state's 2024 Cook Inlet areawide lease sale and is permitting wells.

The Alaska Oil and Gas Conservation Commission has approved two applications from Hilcorp Alaska for spacing exceptions for Sterling wells. The company filed three requests Feb. 3 for spacing exceptions for the proposed Sterling Unit 32-16 gas well in the Sterling and Beluga undefined gas pools and the Sterling Unit 43-10 and 43-10RD in the Tyonek undefined gas pool -- all within 1,500 feet of property lines where ownership or landownership change, triggering the spacing exception requests.

Decisions on two of the wells were issued July 14.

The commission said in its decision that Sterling Unit 43-10RD "will be drilled to a backup location if Hilcorp's proposed SU 43-10 gas development well is unsuccessful." The decision for SU 43-10 had not yet been issued when this edition of Petroleum News went to press.

Spacing exceptions

"Well spacing regulations protect the oil and gas rights of adjacent landowners and maximize resource recovery by establishing default limits on how close, under the land's surface, oil and gas wells can be to property lines where ownership changes," the commission said in its July 14 decisions.

In Conservation Order 824, the decision on SU 32-16, the commission said the well "targets unproven reserves in the Sterling and Beluga Undefined Gas Pools. These reserves cannot be reached and efficiently developed by conforming to applicable statewide spacing regulations because of the narrow, discontinuous, and lenticular nature of the Sterling and Beluga reservoir sands and their most prospective locations on the subsurface structure."

In Conservation Order 825, on SU 43-10RD, the backup well to SU 43-10, the commission said both wells "target unproven reserves in the Tyonek Undefined Gas Pool. SU 43-10RD targets potential reserves that cannot be reached by conforming to applicable statewide spacing regulations because of the narrow, discontinuous, and lenticular nature of the Tyonek reservoir sands and their most prospective locations on the subsurface structure."

Sterling unit

Hilcorp Alaska was designed operator of the unit in 2013.

Sterling unit wells have not produced in paying quantities since May 2015 and in December 2017 the U.S. Bureau of Land Management terminated the federal Sterling unit agreement.

For the proposed SU 32-16, affected landowners are Cook Inlet Region Inc. and the state for properties within 1,500 feet of the proposed well, with CIRI the landowner for lease C-061723 containing proposed surface, target and bottomhole locations. The state is the landowner for ADL 394294, traversed by part of the well. Hilcorp is 100% working interest owner of all properties within 1,500 feet of SU 32-16; CIRI, the state and the MHTA are landowners of all properties within 3,000 feet of the well.

ADL 394294 is one of two leases in the former Sterling unit acquired by Hilcorp Alska in the state's 2024 lease sale.

In the second decision the commission said affected landowners are CIRI and the Alaska Mental Health Trust Authority for the properties "traversed by, or within 1,500 feet of, the proposed SU 43-10RD well," with CIRI the landowner for C-061723 which contains the proposed surface, target and bottomhole locations and MHTA the landowner for MHT 9300101, portions of which are within 1,500 feet of SU 43-10RD. Within 3,000 feet of the well landowners are CIRI, MHTA and the state of Alaska.

--KRISTEN NELSON