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Hilcorp planning six wells at Milne Point Company is in the early stages of a major revitalization effort at the North Slope field; includes significant maintenance ERIC LIDJI For Petroleum News
With its first year as operator of the Milne Point unit nearing completion, Hilcorp Alaska LLC has been undertaking a major revitalization effort at the North Slope oil field.
Earlier this year, Hilcorp extended a plan of development submitted by previous operator BP Exploration (Alaska) LLC to shift the annual cycle so that it begins in the spring. The current plan of development now runs from January 2015 through the end of July 2016.
With the extension, Hilcorp also proposed some additional activities.
The current plan now calls for drilling as many as six wells across the three main reservoirs and conducting maintenance on as many as 39 existing wells at the unit. While some of those efforts were carried over from BP, Hilcorp also announced plans to build a fairly sizable new facility designed to improve the environmental impact of operations.
In the first three months after formally taking over the unit in December 2014, Hilcorp brought five wells back into operation but nevertheless saw a slight decline in total unit production, which the company blamed on a large backlog of workovers to complete.
As of Jan. 31, the Milne Point unit was producing 19,400 barrels of oil per day from the Kuparuk, Schrader Bluff and Sag River formations. The unit had 327 wells, of which only 187 - 108 producers and 79 injectors - were active, according to Hilcorp.
As part of a larger deal that closed at the end of 2014, BP transferred 50 percent working interest in the Milne Point unit to Hilcorp, and Hilcorp became the new unit operator.
Schrader Bluff So far, Hilcorp appears to be focusing its energies on the Schrader Bluff formation.
Between mid-July and early September, the Alaska Oil and Gas Conservation Commission issued permits for six wells at Milne Point - three development and three service, all targeting the Schrader Bluff formation. The producers would be the Milne Pt Unit SB L-46, Milne Pt Unit SB L-47 and Milne Pt Unit SB J-27. The injectors would be the Milne Pt Unit SB L-48, Milne Pt Unit SB L-49 and Milne Pt Unit SB L-50. The company has contracted the Nordic 3 rig for grassroots wells and rigged workovers.
The proposed drilling campaign would be the first at Milne Point since early 2014, when BP drilled at least 17 wells into the Kuparuk formation, according to AOGCC records.
While BP had previously proposed a four-well program into the Schrader Bluff in 2013, the company postponed those wells until 2016 “to allow additional planning time due to concerns over reservoir pressure in existing injector wells near the planned targets and complications in defining the completion design,” accord to the plan of development.
Kuparuk, Sag River, Ugnu In the Kuparuk formation, Hilcorp is mostly continuing waterflood and enhanced oil recovery techniques over the short run. But the company said it is currently evaluating a 2012 seismic survey conducted over the region to “determine if economic accumulations of oil exist near the margins of the existing development patterns,” which could lead to infill drilling. The company expects to complete some of this evaluation this year.
In the Sag River formation, Hilcorp said it is continuing to study options. The company plugged the K-33 well into the Sag River back to the Kuparuk because of low Sag River production. The current set-up allows the company to switch between the formations.
Sag River is the deepest producing interval at Milne Point, with lighter oil than Schrader Bluff and Ugnu. But high gas-to-oil ratios and poor pump performance have challenged production. Prior to the Hilcorp sale, BP announced plans for a 15-well program at Sag River in 2015 and 2016. If successful, the company saw the potential to drill as many as 200 wells, accessing some 200 million barrels of resources with full development.
The Milne Point unit also contains a heavy oil reservoir in the Ugnu formation. For years before partnering with Hilcorp, BP had been conducting appraisal projects to find a way to develop this technically challenging reservoir. This year, Hilcorp intends to work over the S-39 well. The company said it expects to start an Ugnu drilling campaign in 2016.
While Hilcorp said it is not currently planning any exploration or delineation activities outside the existing participating areas, ongoing interpretation of seismic information from 2011, 2007 and 2012 “may identify accumulations” worth pursuing in those areas.
Earlier this year, the state gave Hilcorp a two-year extension of its tract operations into the Sag River formation from the MPC-23 well. The company planned to request a similar extension of the MPK-33 well and said that other Sag River extensions might be required in the future.
The proposed workover program includes wells at B, C, D, E, F, J, K, L and S pads.
Grind and Inject The amended plan of development also calls for constructing a grind and inject facility at the Milne Point unit to create a waste discharge system with fewer surface impacts.
The project includes a facility at Milne Point unit B Pad, installing surface piping to connect the facility to an injection well and other associated infrastructure requirements.
Hilcorp began permitting the facility this past summer. In filings with the state, the company described a facility capable of processing some 40,000 cubic yards per year.
The company said it was also evaluating a plan to reactive a similar facility at the Northstar unit. Previous operator BP built the facility in 1998 and closed it in 2010.
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