|
BLM may terminate Sterling unit
The federal government is considering whether or not to terminate the Sterling unit.
Given the lack of production at the Cook Inlet unit over the past three years, the U.S. Bureau of Land Management believes it is now time to terminate the legacy gas field.
The federal agency proposed the termination proceedings in a meeting with operator Hilcorp Alaska LLC in mid-December 2016. The process would require the company to properly plug and abandon the remaining but inactive production wells at the unit.
In its annual plan of development, submitted to BLM in early March 2017, Hilcorp instead proposed a sequential approach to plugging and abandoning, starting with the federal wells. The company said it would begin plugging and abandoning the suspended SU 23-15 well and the shut-in SU 41-15RD well starting in the third quarter of this year.
After plugging and abandoning the two wells, Hilcorp said it expected to contract the federal, state and privately held acreage from the unit and to voluntarily relinquish the leases associated with that acreage, leaving only Cook Inlet Region Inc. leases within 1,500 feet of the remaining two wells at the Sterling pad - SU 43-9X and SU 32-09 - for future production. (A fifth well at the unit - SU 43-09 - is an active disposal well.)
Contraction would allow the Sterling unit to continue as an active administrative entity. But given the recent inability of the company to restore production, BLM believes termination is more appropriate, according to a letter BLM sent to state Division of Oil and Gas Director Chantal Walsh on May 18, 2017, seeking her thoughts on the matter. In a June 2, 2017 reply, Walsh said the state would not object to unit termination.
Unsuccessful revival The proposed termination follows years of unsuccessful efforts to revive production.
Hilcorp became the operator of the Sterling unit in 2013, as part of its initial acquisition of properties throughout the Cook Inlet region. The unit was among the oldest in the basin, producing some 14.5 billion cubic feet of natural gas since coming online in 1962.
Hilcorp asked BLM for permission to suspend production in October 2014, and the SU 41-15RD and SU 32-09 wells went offline, bringing unit production to a halt.
In October 2015, the company unsuccessfully used slickline and braided line to retrieve stuck fish - materials in the well bore - from the SU 32-09 well. In September and October 2016, the company perforated two Lower Beluga intervals in the SU 41-15RD well. The gun stuck across another interval slated for perforation and fishing operations were unsuccessful. Another perforated interval in the Lower Beluga only produced water.
During the year, Hilcorp also conducted a field-wide study of the Tyonek, Beluga and Sterling formations at the unit. “Based on technical and other confidential information available to Hilcorp, we have determined that although limited drilling/side track drilling opportunities may exist, such investments are not prudent under current economic conditions, particularly given the limited and seasonal nature of the Cook Inlet gas market,” the company told BLM in its most recent plan of development for the unit.
- ERIC LIDJI
| 