On the North Slope, Hilcorp operates four properties, the Milne Point unit, the Endicott field at the Duck Island unit, the Northstar unit and the Liberty project which unlike the other three is not currently in production.
The company initially acquired its positions on the North Slope from BP in 2014, and it has been adding to its positions since.
Going forward, Hilcorp is using the “buy from BP” strategy to substantially increase its North Slope position. BP is withdrawing from the state, having agreed to sell all its assets for $5.6 billion to Hilcorp. The deal includes BP’s 26% interest in the giant Prudhoe Bay oil field, the major and the independent said in separate Aug. 27, 2019 press releases.
Hilcorp is already a strong producer and active developer on the North Slope; it has not been an active explorer as it is in the Cook Inlet basin.
Prior to the closing the acquisition of BP’s assets in 2020, Hilcorp ranks as the third largest oil producer in Alaska in 2018, behind ConocoPhillips and BP.
Milne Point:
In August 2019, Ed King of King Economics Group noted impressive fiscal year 2019 output numbers from Milne Point oil field, based on data from the Alaska Oil and Gas Conservation Commission.
At Milne Point, King said Hilcorp had been doing a “tremendous job squeezing additional life out of this mature asset since purchasing it from BP.”
A total of 8.3 million barrels were produced from Milne in FY19 - a million barrels more than in FY18. (In April, total oil production averaged 25,260 barrels per day, up 17.7% from April 2018.)
The company received authorization to install a third polymer injection facility at Milne Point, a technology Hilcorp first brought to the North Slope.
Injecting polymer and water into the field works better to coax syrupy viscous crude from the reservoir than conventional waterflood, David Wilkins, Hilcorp senior vice president for Alaska, said in November 2018.
Using polymer, Hilcorp expects to increase crude recovery from 10 to 15% of the oil in place at Milne to as much as 50%, per slides Wilkins presented at the Resource Development Council of Alaska’s 2018 annual conference.
The 37th plan of development for Milne Point was approved by the Alaska Dept. of Natural Resources Division of Oil and Gas, effective Jan. 13, 2019, through Jan. 12, 2020.
The unit produces from the Kuparuk reservoir in the Kuparuk participating area, the Schrader Bluff reservoir in the Schrader Bluff PA, the Sag River reservoir in the Sag River PA, and a number of tract operations: C-15A, S-90, C-23, K033; and several Ugnu tract operations, MPS-37, MPS-39, MPS-41 and MPS-43.
Moose Pad - which came online in June 2018 - is the first new Milne pad since 2002, and can accommodate 50 to 70 wells, Wilkins said. Hilcorp is planning to build another new pad in the unit, R-Pad.
Unusually for the North Slope, Moose Pad includes processing facilities on the same pad as the wells, he said.
Pad construction began in 2017 and, with its 3-mile access road and 15-megawatt turbine generator, has cost $120 million. The Moose Pad processing facility can handle 85,000 barrels of fluid per day. Hilcorp anticipates a total price tag of some $400 million for the development, with potential recovery of some 60 million barrels of oil, a development cost of $6 to $7 per barrel, Wilkins said.
37th POD
Hilcorp anticipates drilling as many as 29 new wells during the 37th POD period, it told the division, with potential drilling candidates including 16 Moose Pad Schrader Bluff wells: two water source wells; six producers; seven injectors; and a produced fluids disposal well.
Another Schrader Bluff drilling program would be at E Pad, with as many as eight wells planned, with wells E-35 through E-42 alternating production and injection wells, with four of each planned.
Two Moose Pad Kuparuk producing wells are planned, as well as a Kuparuk producing well at L Pad.
Sag River producing wells are planned for L Pad and F Pad, one well at each pad.
Two S Pad Ugnu producing wells are also included in the 37th POD. Milne Point currently has no Ugnu production, although AOGCC records show there was production from a single well in 2003 and 2004, peaking at 152 bpd; the pool was then shut-in. Regular production resumed for a few months in 2011, peaking at 459 bpd, and was attempted again for a few months in 2012 and again in 2013, when the pool averaged 165 bpd from a single well.
Hilcorp also anticipates as many as 16 well workovers during the 37th plan.
Duck Island
At the Duck Island unit, which holds the Endicott field and went online in 1987, Hilcorp was able to “maintain a fairly flat production rate over the last two years,” King said. (Previously Hilcorp had boosted output.)
“At only 7,000 barrels per day, it’s unclear how long this field will continue to produce. …. Holding it flat is about as good as we can hope for,” King said.
Duck Island unit’s latest approved POD is the unit’s 37th. Hilcorp said production from Duck Island comes from three participating areas and one tract operation: the Endicott PA produces from the Kekiktuk reservoir; the Sag Delta North PA and the Sag River Reservoir Eider PA both produce from the Ivishak reservoir; the Minke tract operation produces from the Sag River reservoir.
Duck Island produced an average of 7,242 barrels of liquid hydrocarbons (oil plus natural gas liquids) per day from Jan. 1, 2018, through Sept. 30, the division said, and some 334.5 million cubic feet of natural gas per day.
Hilcorp drilled the SDI3-23A sidetrack during the 36th POD, the division said, but because that drilling project absorbed the majority of drilling time during the 36th POD, the company was only about to drill two additional sidetracks. Hilcorp had committed to evaluate shut-in wells and drill as many as six additional sidetracks in addition to SDI3-23A. (Alaska Oil and Gas Conservation Commission data show 14 wells at the field shut-in as of December.)
For the 37th POD, Hilcorp said it plans no new wells, but “will continue to pursue efficiencies through various well optimizations, including the evaluation of shut-in wells utility and their potential return to service.” The company said it plans up to five well workover projects which “may include return to production, producer to water injection conversions, or water/gas shutoffs.”
Northstar
After starting regular production in 2001, the Northstar field is already nearing the end of its economic life, currently producing about 10,000 bpd for Hilcorp, Economist Ed King said.
“However, Hilcorp has a talent for getting oil out of fields that others are ready to give up on,” King noted. “In fact, the Northstar unit (in FY 19) saw an increase of 317,587 barrels of oil (a 9% increase) over FY18.”
In its 15th POD for Northstar Hilcorp said the unit is jointly managed by the division and the Bureau of Safety and Environmental Enforcement of the U.S. Department of the Interior.
There are three sand accumulations at Northstar, the company said: the Ivishak sands in the Northstar PA and the Fido PA; and the Kuparuk sands in the Hooligan PA.
In its POD approval the division said Northstar produced an average of 10,361 bpd of liquid hydrocarbons (oil and NGLs) between January and the end of November 2018, and a daily average of 516.2 million cubic feet per day of natural gas.
In the just completed POD, the 14th, Hilcorp said it drilled no new grassroots wells or sidetracks, but completed various well work jobs, including two rig workovers recompleting wells from the Ivishak reservoir to the Kuparuk, and conversion of an Ivishak gas injection well to production.
In the 15th POD, which will run from February 2019 to February 2020, the company said it does not anticipate drilling any new wells, but does anticipate completing two rig well workover projects, one to recomplete an Ivishak reservoir producer to a Kuparuk C producer and one to recomplete an Ivishak reservoir gas injector to a lean gas injection well in the Kuparuk A and C reservoir.
The company said it would continue to evaluate well work opportunities as they arise and “pursue efficiencies through various well optimizations, including the evaluation of shut-in wells utility and their potential return to service.” (AOGCC’s December 2018 data shows four shut-in wells at Northstar.)
Facility projects that the company may undertake during the 15th Northstar POD include a feasibility study and economic analysis of the potential of a project to improve NGL recovery during warmer ambient temperatures. (Northstar, Endicott and Prudhoe Bay produce NGLs in addition to crude oil.)
Hilcorp said that if such a project were sanctioned, “the necessary infrastructure, facility modifications and tie-ins and potential module delivery could occur during the 15th POD period.”
Liberty
Hilcorp expects Liberty to come online between 10,000 and 15,000 barrels per day, peaking at 60,000 to 70,000 bpd within two years. The company also expects the field to produce as much as 120 million cubic feet of natural gas per day.
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 exceed a $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 2018 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.
