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Vol. 26, No.48 Week of November 28, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

A successful 10 years

Hilcorp explains how it has improved field performance since coming to Alaska

Alan Bailey

for Petroleum News

During a talk to the Resource Development Council’s annual conference on Nov. 17 Jill Fisk, Hilcorp Alaska senior asset team leader for Prudhoe Bay west, recounted her company’s success in safely re-invigorating oil and gas fields in the Cook Inlet region and on the North Slope since the company arrived in Alaska in 2011.

“Hilcorp is proud of our achievements during our first 10 years in Alaska and looks forward to many more decades to come,” Fisk said. “Future success across all of our operations will be achieved through our Hilcorp culture and values, and our strong relationships with our many partners in the vendor and contractor community in Alaska.”

After initially entering the oil and gas industry in the Cook Inlet, the company acquired interests on the North Slope and now operates several major fields on the Slope, including the huge Prudhoe Bay field. The company is in the process of taking over operatorship from ExxonMobil of the Point Thomson field in the eastern North Slope - the transition in operatorship is scheduled for around Jan. 1.

With about 1,500 employees, 75% of them Alaska residents, Hilcorp is now the largest field operator in Alaska, based on operated oil and gas volumes, Fisk said. The company operates more than 1,700 producing wells in the state, with gross production of about 345,000 barrels of oil per day and about 150 million cubic feet per day of gas, she said.

Hilcorp manages and operates its various Alaska assets using a team structure, with one team dealing with its Southcentral assets while other teams deal with groups of fields on the North Slope.

Core values

Fisk attributed her company’s success to its corporate core values, with its policy of empowering employees while underpinning everything with high levels of safety.

“At the heart of these values is the belief that, by empowering our employees and fostering an entrepreneurial mindset, even the most ambitious goals can be met or exceeded. And we firmly believe that our success with a wide variety of assets in Alaska is living proof of these core values at work,” she said.

Fisk commented that the COVID pandemic has presented a unique safety challenge for the company’s workforce.

“Throughout the pandemic Hilcorp has maintained focus on both delivering our business goals and working with our employees, to adjust to the everchanging COVID situation, doing what was needed to keep our workforce both safe and productive throughout the pandemic,” she said.

Cook Inlet region

Hilcorp’s Southcentral team, while operating some oil fields, is particularly focused on developing and producing Cook Inlet natural gas supplies. This year the company brought its new Seaview gas field in the southern Kenai Peninsula online. And the company plans to drill soon at its nearby Whiskey Gulch gas development.

Much activity in the Cook Inlet region continues to revolve around the repair, recompletion and servicing of wells, both offshore and onshore - Hilcorp operates one rig full time for onshore drilling and one offshore rig, together with multiple workover rigs and a coiled tubing unit, Fisk said.

The company also has to handle the challenge of maintaining the integrity of a very large amount of infrastructure in a difficult operating environment. For example, the Southcentral team is forming a plan for replacing a pipeline for the Middle Ground Shoal field, to return that field to service, Fisk commented.

North Slope

Hilcorp feels particularly proud of its achievements in the Milne Point and Prudhoe Bay fields on the North Slope.

At Milne Point the successful implementation of polymer injection, to improve the production of the relatively viscous oil in the Schrader Bluff formation, has proven to be a particular highlight. While the pilot project for polymer injection was supported by the Department of Energy, success with this project has motivated Hilcorp to extend the use of the technique.

“The Department of Energy polymer trial at Milne Point is now over three years old and delivering world class results,” Fisk said. “Hilcorp has taken these learnings from the pilot and now has three additional polymer projects being implemented at Milne Point. … Hilcorp was the first company to bring this technology to the very challenging operating environment of the North Slope and is on track to deliver one of the best polymer floods in the world, as far as current results go.”

The pilot project economically produced 630,000 barrels of oil more than what normal waterflood would have produced, she said.

In addition to the use of polymer injection, Hilcorp has drilled dozens of horizontal wells with lateral extents of more than 10,000 feet to further develop the Schrader Bluff reservoir at Milne Point, Fisk said. The result has been production rates from the field not seen for decades, she added.

At Milne Point Hilcorp has also been constructing on-pad oil and water separation facilities that can reduce the load on the field’s central processing facility. That, in turn, allows increases in production rates. The company has also seen significant cost savings from the use of jet pumps in wells for artificial lift and plans to expand the use of this technique over the next few years, Fisk said.

Prudhoe Bay

Since taking over as operator of Prudhoe Bay in July 2020, Hilcorp has halted what had been a 4% per year decline in the field’s production capacity, Fisk said, adding that this has been achieved without drilling new wells or executing any major projects.

“This achievement is due to hundreds of projects executed all across the field by hundreds of people all working towards the same goal,” Fisk said.

Hilcorp has three focus areas at Prudhoe: increasing well rates; improving the efficiency and reliability of the facilities; and reducing costs through improved efficiency.

Improving well rates has involved bringing more of the existing wells online, through well repairs and other actions. Major facility repairs have returned a Lisburne well pad to production, while the debottlenecking of a pad brought multiple wells drilled from that pad back online. There is now a record number of operational wells in the western Prudhoe satellites, Fisk said.

Oil production at Prudhoe is also constrained by the ability of the field facilities to handle the water and gas that is cycled around from production to injection wells. By increasing daily average water rates by 200,000 barrels per day, Hilcorp has been able to add 10,000 barrels of oil to daily production, Fisk said. Similarly, an increase in gas rates of 500 million cubic feet per day has added another 5,000 barrels per day of oil production, she said.

Reservoir pressure is also critical to production rates. Fisk said that, to push up the reservoir pressure at Prudhoe, Hilcorp has increased the gas cap water injection, so that sustained reservoir pressure has added 1,000 barrels of oil to daily production, with the possibility of further pressure and production increases in the future.

Returning equipment into service

In terms of facility efficiency and reliability, Hilcorp has improved the facility up-time rate from 85% to 94%, a performance improvement that equates to additional oil production of about 6 million barrels for this year, Fisk said. Much of the improvements have resulted from returning to service out-of-service equipment, some of which has not seen use for a decade or more, she said. In particular, bringing more equipment into use adds redundancy to a plant, preventing interruptions when equipment has to go down while also adding to the capacity of the plant to handle more gas and water. For example, bringing all of the cooling fans into operation in several plants has improved gas handling capacity, Fisk commented.

In addition to maintenance and repair activities, Hilcorp’s integrity program has been focusing on the effective monitoring of equipment and pipelines. For example, the company is implementing external and internal crawler equipment that can inspect every inch of a pipeline, rather than doing spot checks, Fisk said. Another major focus is the upgrade of the high voltage power distribution system, to prevent power outages and the resulting equipment down time, she said.

Reducing costs through improved efficiency involves seeking efficiency opportunities, while also introducing new vendors, with competition for vendor services.

“However, we do recognize that reducing costs alone is not a path to success,” Fisk said. “The purpose of diligent cost control is to generate free cash flow at Prudhoe Bay that can then be reinvested back into the field for the types of maintenance, repairs and growth projects that I’ve been highlighting. … We’re here to grow for decades to come, investing in safe and reliable operations at Prudhoe Bay.”

Schrader Bluff

Fisk also commented that in September Hilcorp began a new drilling program in the Schrader Bluff formation in the western satellites of the Prudhoe Bay unit. The company had already increased Schrader Bluff production as a result of the increased injection of water and miscible injectant, in conjunction with well workovers, recompletions and repairs. However, this first new well into the Schrader Bluff has also resulted in a production increase.

“We expect to hit a record Schrader Bluff oil rate and well count by year end, with much growth to come in the coming years,” Fisk said.

Fisk also commented that, having previous conducted a polymer injection test in the Schrader Bluff at Prudhoe, Hilcorp is planning a pilot project to evaluate the use of polymer flooding, following success with the technique at Milne Point. The Schrader Bluff reservoir at Prudhoe is the same as the reservoir where polymer flood is being used at Milne Point, she said.

Hilcorp’s Prudhoe Bay drilling plan for 2022 involves the use of a rotary rig, initially focused on Schrader Bluff development before moving to other opportunities in the unit. Hilcorp also plans to run a coiled tubing unit through most of 2022, to execute sidetrack drilling opportunities, Fisk said.

Hilcorp has also seen success from the use of well work and facility optimization projects to reduce production decline rates in the Northstar and Endicott fields.

“Hilcorp’s safe, economic and environmentally responsible operation of Northstar and Endicott have added millions of barrels of reserves, and added decades of life to these fields,” Fisk said.

Commitment to communities

Fisk also commented on Hilcorp’s commitment to Alaska communities through its charitable giving program. In line with its philosophy of empowering its employees, the company administers the program and donates matching funds while having employees make individual decisions over which charities to donate to through the program.

“Our belief is that nobody knows better how those dollars can best be put to work than the employees themselves that live and work in those communities,” Fisk said.

And Fisk expressed Hilcorp’s pride in its track record in Alaska.

“Alaska has clearly been a big win for Hilcorp, but we also believe our success in Alaska is a big win for Alaska and the people that live here,” she said.

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