|
Deep Creek contraction delay approved
Division agrees to defer contraction by a year, given Hilcorp’s continuing exploration drilling program in Kenai Peninsula unit Alan Bailey Petroleum News
Alaska’s Division of Oil and Gas has agreed to delay by a further year the contraction of Hilcorp Alaska’s Deep Creek unit on the Kenai Peninsula. In a June 28 letter to Hilcorp, division Director Chantal Walsh commented that Hilcorp’s plans to continue a program of stratigraphic test well drilling and to conduct some exploration drilling in the unit provide justification for delaying the contraction until May 31, 2019. The unit had been scheduled for contraction on May 31, 2018.
Hilcorp’s most recent plan of development for Deep Creek, approved on May 17, says that the company wants to drill four to six stratigraphic test wells in the unit and that the company had drilled two of these wells in October 2017. The company said that it plans to drill the remaining two to four wells by July 30, 2019. The wells would target the Sterling and Beluga formations.
The idea is to use the results of this test well drilling to inform the drilling of exploration wells, also targeting the Beluga and Sterling, in 2019.
“Because these exploration and development plans are contingent on the completion of the remaining stratigraphic test wells planned for the DCU, extension and delay of the mandatory unit contraction for an additional one year is warranted,” Walsh wrote in her June 28 letter.
Formed in 2001 Unocal formed the Deep Creek unit in 2001 from a combination of state leases and leases owned by Cook Inlet Region Inc. Sustained gas production began from the Happy Valley participating area in November 2004. Hilcorp acquired the unit on Jan. 1, 2012, when the company purchased all of Unocal’s assets in the Cook Inlet basin. Production, which comes from a gas pool in the Tyonek and Beluga formations, and from the Sterling, has been declining. However, Hilcorp has its drilling plans, with the objective of bringing more gas on line.
Under state regulations, 10 years after production starts in a unit the area of the unit must be contracted to include just those lands that include an approved participating area, or that facilitate production in some manner. On that basis, the Deep Creek unit should have contracted on Nov. 14, 2014. However, since then Hilcorp has requested and been granted a series of contraction delays, given the company’s plans for further exploration and development in the unit.
|
