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Milne Point progresses
Drilling about to start at Moose Pad; polymer flooding proving successful
Alan Bailey Petroleum News
Hilcorp Alaska is moving ahead, upping the oil production from the Milne Point field on the North Slope, David Wilkins, the company’s senior vice president for Alaska, told the Resource Development Council’s annual conference on Nov. 14. The company is about to start drilling on the new Moose Pad at the western edge of the Milne Point unit. The company has also seen success in injecting water and polymer into the field reservoir to boost the production of viscous oil, Wilkins said.
Moose Pad The Moose Pad, the first new well pad at Milne Point since 2002, can accommodate 50 to 70 wells and, unusually for the North Slope, has processing facilities on the same pad as the wells, Wilkins said. Construction of the 14-acre pad began in 2017 and, including the construction of a three-mile access road, cost $120 million. Construction also included the installation of a 15-megawatt turbine generator plant. The processing facility can handle 85,000 barrels of fluid per day. Hilcorp anticipates an eventual price tag of about $400 million for the development, with a potential to recover some 60 million barrels of oil. That represents a development cost of $6 to $7 per barrel, Wilkins said.
“We need more of that and we’ve got more ideas, with our partner BP,” Wilkins said. In 2014 Hilcorp purchased 50 percent of BP’s interests in Milne Point and became field operator.
Gross production from Milne Point is currently flowing at about 23,000 barrels of oil per day. Wilkins said that production could increase to around 24,000 or 26,000 barrels per day by the end of the year, depending on which new wells come on line by then. Hilcorp will have two drilling rigs operating in the field next year and anticipates drilling more than 20 wells, bringing the production up to around 35,000 barrels per day by the end of 2019.
Viscous oil One challenge at Milne Point is the increasing proportion of viscous oil coming from the field reservoir. Currently around 10,500 barrels per day of the field production consists of this type of oil, oil that has a relatively high viscosity and that, therefore, is difficult to flow from the field reservoir rock.
To address the challenge of viscous oil production, Hilcorp has installed a small polymer injection system on J pad at Milne Point, injecting polymer along with water into the reservoir for enhanced oil recovery, Wilkins said. Apparently this technique has a 30-year track record in the oil industry but has not previously been tried at Milne Point. J pad has two horizontal production wells and two horizontal injection wells that are being used for the polymer flooding program.
Without polymer flooding it may only be possible to recover some 10 to 15 percent of the viscous oil that is in the reservoir. The use of polymer flooding should enable the production of an additional 2 million barrels of oil using the four J pad wells, Wilkins said. But, with the current polymer plant being quite small, there is potential to expand the use of this technology.
“I think it’s going to play a big role on the North Slope,” Wilkins said.
In total there are 1.3 billion barrels of relatively heavy oil at Milne Point. If, say 40 percent of that could be recovered, that would represent a major boost to oil production, he said.
In many ways Hilcorp’s efforts at Milne Point reflect the company’s core business, targeted at squeezing as much production as possible from aging oil and gas assets.
“We do something different. We focus our whole company … on the tail end of the asset life,” Wilkins said.
Liberty In Alaska, however, Hilcorp has also been forging ahead with some projects aimed more at the front end of field life. In particular the company is planning to develop the Liberty oil field from a gravel island on the federal outer continental shelf of the Beaufort Sea. Liberty will involve a more than $1 billion investment for Hilcorp, with the potential to produce more than 70,000 barrels per day of oil and a field life of 20 to 30 years. In October the Bureau of Ocean Energy Management issued a record of decision, approving development of the field essentially in the manner that Hilcorp had proposed.
The development plan involves the construction of a 9.3-acre gravel island in 19 feet of water, and the laying of 5.6 miles of a pipe-within-a-pipe pipeline to deliver oil into the onshore Badami pipeline. Hilcorp has commented that the field design reflects the design of other Beaufort Sea offshore fields.
“Keep it simple and work on what’s worked in the past,” Wilkins said.
Wilkins commented that Hilcorp needs to talk to its partners about the approved development plan and to obtain a federal permit for the pipeline design. The company anticipates obtaining a Bureau of Safety and Environmental Enforcement permit for a worst-case discharge contingency planning. This should happen at some time in the first half of next year, following which the project should move ahead.
Cross-inlet pipeline project In the Cook Inlet region, Hilcorp recently completed its cross-inlet pipeline project. This project has connected the oil production infrastructure on the west side of the inlet via a subsea pipeline to the oil refinery at Nikiski on the Kenai Peninsula. The new pipeline arrangements have eliminated the need for the Drift River oil terminal on the west side of the inlet, a terminal beset with safety concerns because of its proximity to the Redoubt Volcano.
At this point the reconfigured pipeline system is delivering 15,000 barrels of oil per day to the Nikiski refinery, Wilkins said. The project also involved laying a new subsea gas pipeline, to maintain the capacity of cross-inlet gas transportation. During the past summer Hilcorp laid 24 miles of pipeline and reconfigured 115 miles of existing pipeline. The project, which cost $90 million, provided 300 construction jobs, involving 500,000 manhours of work and 53 contractors, Wilkins said. Wilkins commented on the successful coordination with government agencies, with 92 permits being issued without delaying the project.
“Everybody wanted to see this project done right and wanted to see it done the right way,” he said.
Wilkins also commented on Hilcorp’s philosophy of pushing responsibility to the lowest possible level in the company’s organization, making work enjoyable and encouraging people to be creative. He particularly commented on Hilcorp Alaska safety record, which has been improving steadily since the company started operating in the state. It seems that 2018 is seeing a particularly low rate of recordable safety incidents.
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