Hilcorp has drilled 192 wells in Cook Inlet since it came to the region in 2011 and plans 27 wells this year -- all gas wells -- the most since it drilled 28 wells in 2014.
This information was part of a briefing Luke Saugier, Hilcorp Alaska senior vice president, gave the Alaska Legislature's House Resources Committee Jan. 28 as part of a group presentation which included ConocoPhillips and Santos. (Hilcorp's comments on its North Slope work were included in a story in the Feb. 8 issue of Petroleum News.)
Cook Inlet was where Hilcorp came to Alaska, acquiring assets from Chevron in 2012, Saugier said, reminding the committee that in 2012 there was concern the area was running out of natural gas.
Hilcorp immediately began to invest in the assets it acquired and has invested more than $1.5 billion in Cook Inlet since 2012, continuing to invest hundreds of million each year.
Hilcorp is "running two rigs full-time all year," Saugier said, something which is quite challenging for the company and the first time Hilcorp has been able to do that.
A graph illustrated Cook Inlet drilling since 2005. Prior to 2012, when Hilcorp began drilling, the peak during that period was 23 wells drilled by all operators in the inlet.
Hilcorp drilled four wells in 2012, 10 in 2013 and peaked at 28 wells in 2014. The company's inlet drilling rate has varied since, ranging from a low of five in 2018 to 22 in 2022. Last year the company drilled 20 Cook Inlet wells -- and as previously noted plans 27 wells this year.
Natural decline
Saugier told the committee that wells naturally decline, with the decline varying depending on location of the well and nature of the reservoir.
"When you drill a well, that first day of production from the well is really the best day that well is ever going to have," he said. After that, the decline rate in Cook Inlet is about 30-40% a year.
Southcentral uses 65 billion to 70 billion cubic feet of natural gas a year -- a little less when it's warm in winter, a little more when it's cold.
Saugier used a slide showing that Hilcorp's gas production has remained steady at around 50 bcf per year since 2016, while production from all other operators combined recently ranged from a high of 31 bcf per year in 2017 to a low of 9 bcf in 2025.
Eleven operators, including the state, drilled wells over the 2005-25 period.
But from 2020 through 2023, Saugier noted, Hilcorp was the only company drilling, something he called a "serious problem."
Furie, under John Hendricks, is now drilling. "That's important for Southcentral Alaska," Saugier told the committee.
There are several reasons for the ability Hilcorp has had to hold at that 50 bcf per year, he said: a very high activity level with a lot of wells drilled; fixing "a lot of broken equipment"; and "re-completing a lot of wells, always looking for gas."
Storage
What has happened as overall Cook Inlet production declined and by 2023 total production was below the 65-70 bcf per year of demand?
Southcentral has been drawing out of storage, and not refilling storage as completely as would be ideal, Saugier said.
Gas storage is drawn down in winter when demand is heavier and gas is injected into storage in the summer.
There are four gas storage facilities around the inlet, he said: Pretty Creek, KGSF, CINGSA and Pool 6, with varying amounts of storage and deliverability. CINGSA is the only storage not operated by Hilcorp and was the only storage facility commercially available.
After some really cold weather in 2024 coinciding with some operating challenges at CINGSA, Saugier said some of Hilcorp's customers expressed an interest in being able to use Hilcorp's storage facilities.
To make that happen, Hilcorp applied to the Regulatory Commission of Alaska to make Pool 6 commercially available, and recently signed storage agreements with a couple of utilities, he said.
Pool 6 could be expanded for storage as it is a large reservoir with only a small portion currently used for storage.
Saugier said that over this year Hilcorp is going to try to provide access to its other storage facilities if utilities are interested. The other facilities are in different parts of the basin with access to different pipelines and can deliver gas at different rates.
But that's emergency backup.
Additional supplies
Things Hilcorp is doing to continue providing gas include developing Pretty Creek on the west side of the inlet and making structural changes to the Tyonek platform to allow more drilling at the North Cook Inlet field.
There is no road access to Pretty Creek, so work there requires barging which limits development in the area to summer when the inlet is ice free.
Hilcorp has built a new pad and drilled new wells at Pretty Creek, work done in one year, he said, to get the gas online.
Also on the west side, Hilcorp operates the Beluga River field which it operates on behalf of itself and two-thirds owner Chugach Electric Association.
Eight wells were drilled on the west side of Cook Inlet in the summer of 2025, a record for Hilcorp, and drilling is expected to continue on the west side.
At the Tyonek platform, Hilcorp's largest gas producing platform, there were no more slots available in the platform legs for drilling, so to add wells Hilcorp began this summer to add huge steel shells, called ice breakers, to the side of the legs, allowing the company to drill more wells. The first of the steel shells, manufactured at Steel Fab in Anchorage and weighing as much as a Boeing 737, was installed in the summer of 2025, requiring two cranes on the platform to lower it over the side. Because the deck of the platform overlaps the legs, the ice breaker then had to be winched into place so it could be welded to the leg.
What about the oil?
Saugier said all the 2026 wells are "100% focused on gas."
He was asked about Cook Inlet oil, since the Kenai refinery depends on that oil.
"There's no nice way to say it," Saugier responded. "The oil producing assets in the Cook Inlet are exceptionally challenged." Cook Inlet oil wells are "very expensive to operate -- particularly offshore."
Fixed costs are very high, oil prices are fairly low and the company's oil wells are "almost subsidized by the gas assets."
But operating those oil wells as long as possible is important, Saugier said, and Hilcorp believes oil prices will recover, making the company's Cook Inlet oil assets competitive again.
