|
Deep Creek exploration approved; includes Happy Valley Middle pad
The state is allowing Hilcorp Alaska LLC to build a new drilling pad to support a two-well natural gas exploration program in the southern reaches of the Deep Creek unit.
The Nov. 5 decision allows the local subsidiary of the Texas-based independent to construct the Happy Valley Middle Pad and an access road in the onshore Cook Inlet unit. Any future development resulting from the work would require separate approval.
The program would begin this December with construction of the 2.29-mile gravel access road and a 300-foot by 400-foot gravel drilling pad and would continue next spring with drilling of the first well, according to a preliminary timetable. The second well would either immediately follow the first or be deferred to subsequent years, as far out as 2019.
The state will accept appeals through Nov. 25.
Two comments The proposal generated two public comments.
A local resident, Tricia Waggoner, cited problems with noise from the Paxton pad at the Hilcorp-operated Ninilchik unit over the past two years and asked whether the state would consider similar impacts from construction noise at Happy Valley Middle Pad.
According to the state, the project would be located three miles from the nearest residence and therefore any operational noise would be unlike to impact Waggoner.
The second commenter, Roberta Highland, president of the Kachemak Bay Conservation Society, highlighted concerns about water use and treatment, gravel sourcing, potential blow out or spills, road maintenance, traffic noise and eventually restoration of the site.
Prospective acreage The state has long desired exploration activity in the region.
The Alaska Department of Natural Resources and Cook Inlet Region Inc. approved the formation of the Deep Creek unit in late 2001 and approved the formation of the Happy Valley participating area in November 2004. The unit covers some 20,000 acres but the first participating area extends over only a small portion at the northern end of the unit.
After acquiring seismic information over the area and drilling exploration wells, Unocal announced a discovery in November 2003, brought the unit online in 2004 at 3 million to 4 million cubic feet per day and drilled some 13 wells by 2009. The discovery justified extending the Kenai Kachemak Pipeline and until the development of the North Fork unit, the Deep Creek unit was the southernmost point of the regional natural gas system.
Additional accumulations suggested Over the following years, studies have suggested additional accumulations in the southern half of the unit. As part of a 2004 ruling pertaining to the Deep Creek unit, the Division of Oil and Gas noted, “Unocal’s interpretation of the data also indicates a potential accumulation south of the Happy Valley reservoir that Unocal refers to as the Middle Happy Valley Prospect.” A 2007 report from Netherland, Sewell & Associates estimated probable reserves of 22 billion cubic feet for the entire unit area, which also suggested the possibility of additional undiscovered reserves in the southern reaches.
By 2009, investment was waning. In its eighth plan of development for the unit, from December 2010, Unocal offered no plans for further exploration activities, but said it was looking to farm out exploration acreage at the southern end of the unit. At the time, then Division of Oil and Gas Director Bill Barron required the ninth plan of development to include an exploration program in the area outside the Happy Valley participating area.
By the time Hilcorp acquired Deep Creek unit, the state was threatening to contract the unit to remove leases in the southern half. Instead, the state gave Hilcorp time to plan exploration activities. While Hilcorp quickly made good on plans to explore outside existing participating areas, its initial wells were just beyond the participating area boundaries, rather than in the far southern reaches of the unit. In a unit plan of development filed in March 2014, the company anticipated drilling a “Middle Happy Valley No. 1 well” in 2015 to target the Sterling, Beluga and Tyonek formations. The company restated that commitment in the plan of development it filed in March 2015 and began permitting the Happy Valley Middle project through the summer and fall.
Following up on earlier studies, Union Oil Company of California commissioned a 2-D seismic survey, a gravity line survey and a geochemistry and soil vapor survey over the region in 2004, and Hilcorp commissioned a 3-D seismic survey over the region in 2012.
- ERIC LIDJI
| 