The Cook Inlet basin is the cradle of the modern oil and gas industry in Alaska. In 1957, Richfield Oil Corp. discovered oil when it tapped the Hemlock formation with the Swanson River No. 1 well.
The Swanson River oil field convinced a divided Congress that the oil industry could provide the economic basis for statehood and Alaska became the 49th state in 1959.
Today, the federally administered Swanson River unit is still producing oil. In fact, production is rising due to the return of shut-in wells to production, optimization of artificial lift, and other efforts by operator Hilcorp Alaska LLC, which acquired the unit in 2012.
The U.S Department of the Interior’s Bureau of Land Management currently administers five oil and gas units in the Cook Inlet basin, and Hilcorp operates them all.
Hilcorp’s “efforts to increase the oil and gas production from these mature fields have proven successful,” BLM said.
The units - Beluga River unit, Birch Hill unit, Beaver Creek unit, Kenai unit and Swanson River unit - include federal, state, Cook Inlet Region Inc., and fee leases, according to BLM.
Cook Inlet revitalization
Aside from its five federally administered units, Hilcorp is active - and is increasing production - far and wide in the Cook Inlet basin.
Hilcorp Alaska, owned by privately owned Texas-based independent Hilcorp Energy Co., has a track record of entering mature hydrocarbon basins and making necessary investments to produce more oil and gas.
The company has stimulated overall Cook Inlet oil production.
Prior to the 2011 entry of Hilcorp into Alaska, the Cook Inlet basin’s onshore and offshore oil production had declined to 8,900 barrels per day. At the same time, natural gas reserves were projected to soon be insufficient to meet continued local utility demand and aging platform infrastructure was considered to be nearing its functional end of life. Cook Inlet was considered a mature oil and gas province that had reached peak oil production of more than 227,000 bpd in 1970 and peak natural gas production in 1994.
Hilcorp’s recent efforts have turned the tide, and production levels have begun to recover. In July of 2019, Cook Inlet production averaged 14,336 bpd. A natural gas shortage no longer looms for natural gas consumers in the region.
Hilcorp is now the dominant on and offshore oil and gas producer in the Cook Inlet basin, as of January 2019 operating about 19 fields and units - a number that fluctuates due to acquisitions, consolidations and terminations.
On the west side of Cook Inlet, Hilcorp operates the Ivan River, Lewis River, Pretty Creek and Beluga River units.
Offshore, the company operates the North Cook Inlet unit (actually in middle Cook Inlet), the Granite Point unit, the Middle Ground Shoal unit, the Trading Bay unit, and the North Trading Bay unit (middle Cook Inlet) and associated McArthur River field.
On the southern Kenai Peninsula, Hilcorp operates the Ninilchik, Deep Creek and Nikolaevsk units.
In the northern Kenai Peninsula, the company operates the Birch Hill unit, the Swanson River unit, the Beaver Creek unit, the Sterling unit, the Kenai unit and the Cannery Loop unit.
In Lower Cook Inlet, Hilcorp is moving forward to explore relatively unexplored territory.
In April through October 2020, Hilcorp Alaska hopes to drill two to four exploratory wells in the untapped federal waters of lower Cook Inlet, pending the results of a 3D seismic survey 20 miles due west of Homer halfway between Kachemak Bay in the lower Kenai Peninsula.
Granite Point unit
The Granite Point field averaged 2,541 bpd in July 2019, down 10.7% from a July 2018 average of 2,846 bpd.
In 2018, the Granite Point unit produced a total of about 1 million barrels of oil and about 1 billion cubic feet of gas, a significant uptick from the production of 879,000 barrels of oil and 752 million cubic feet of gas in 2017.
The Alaska Oil and Gas Conservation Commission in a May 20 order approved Hilcorp’s request to commingle production, revised pool definitions for the Granite Point Middle Kenai Oil Pool and defined a new Granite Point Hemlock Oil Pool at the Granite Point unit.
The commission said retaining the vertical extent of the Granite Point Middle Kenai Oil Pool, GPMKOP, and defining the new Granite Point Hemlock Oil Pool, GPHOP, “is appropriate and will lead to better development of the field and maximization of the ultimate recovery.”
In the order the commission revised the pool definition so there is no vertical gap between the oil pools, with the GPMKOP the accumulation that correlates to Mobil’s Granite Point No. 1 well between 7,725 feet and 10,885 feet measured depth, and the GPHOP defined as the accumulation between 10,885 feet and 11,280 feet MD in Mobil’s Granite Point No. 1 well.
Hilcorp requested elimination of inter-well spacing requirements for wells in the affected area and authorization of downhole commingling of production in wells open to both the GPMKOP and the GPHOP.
The commission’s approval of commingling was subject to a production log or geochemical analysis being obtained within 30 days of beginning of commingled production. It also required periodic production logging or geochemical analysis of wells with downhole commingled production (at least every 24 months), with copies of logs and analyses used to determine allocation of production submitted to the commission within 30 days. The order eliminates well spacing restrictions for the GPMKOP and GPHOP, “except that no oil well shall be completed within 500 feet of an exterior property line where ownership or landownership is not the same on both sides of the line.”
Granite Point plans
Hilcorp a indicated it would use the Spartan 151, or a similar jack-up rig, to drill as many as four sidetrack wells from existing wellbores at the Granite Point Platform. The Alaska Department of Natural Resources’ Division of Oil and Gas said in an approval of the unit plan of operations dated May 16, 2019, that the proposed wells will be drilled to bottom-hole depths between 7,000 and 16,000 feet.
Rig mobilization was slated to begin by June 1, 2019, with an estimated 30 to 60 days per each well completion. Drilling activities and rig demobilization was planned to conclude by Nov. 15.
Hilcorp’s most recent plan for the Granite Point unit, filed April 1, 2019, and approved May 10, 2019, said the company planned to maintain production for the period of the 2019 POD, which is effective July 1 through June 30, 2020.
Long-range Granite Point development activities included plans to delineate all underlying oil or gas reservoirs, further evaluate additional rotary development wells, and evaluate drilling of multilateral sidetracks out of existing parent bores using coiled tubing drilling technology.
Hilcorp said in the plan that it anticipates drilling two rotary sidetrack wells, GP-53 and GP-55, and said it was possible that operation on the first of the wells could begin in late May.
“If timing of the ice arrival in the Cook Inlet permits, a third rotary sidetrack well, GP-52, will be drilled,” the company said.
There are three platforms at the Granite Point unit: Granite Point, Anna and Bruce.
North Cook Inlet oil
Hilcorp has prepared an initial plan of development, or POD, for a known oil pool below the North Cook Inlet gas field. Drilling of the first development well from the offshore Tyonek platform should happen in 2020, the company told the division in its 2019 POD for the North Cook Inlet unit.
The Tyonek platform currently supports production from the gas field. Because the oil development well will penetrate the top of the structure of the Sterling and Beluga gas sands, the well will also enable an evaluation of remaining dry gas development in the unit, the company told the division.
In the early 1990s ARCO Alaska discovered oil in a major geologic anticline under the gas field.
In 1998 Phillips Petroleum conducted some appraisal drilling in the oil accumulation, termed Tyonek Deep. In 1999 the company put the project on hold due to low oil prices, saying that it had tested two wells in the oil pool and run completion tubing in a third well, with the wells being ready for production. The development never proceeded.
In preparation for reviving oil field development Hilcorp laid a new subsea oil pipeline from the Tyonek platform to the Inlet’s west side. The line is in conjunction with a major Cook Inlet pipeline reconfiguration, conducted in 2018. The reconfiguration converted one of the twin subsea Cook Inlet Gas Gathering System pipelines from the carriage of gas to the carriage of oil.
To maintain adequate gas transportation capacity across the inlet, Hilcorp laid a new subsea gas pipeline from the Tyonek platform to the west side of the inlet, which ties up with the existing gas pipeline from the platform to the inlet’s east side.
The company is replacing crew quarters on the Tyonek platform, plans to upgrade the cranes and the helideck, and to remove drilling and mud pits.
Hilcorp’s POD said that in 2018 the field produced 6.2 billion cubic feet of gas, versus 7.1 billion cubic feet in 2017.
Middle Ground Shoal unit
In 2018 Hilcorp produced 520,000 barrels of oil and 111 million cubic feet of gas from the Middle Ground shoal unit. That compares with 308,649 barrels of oil and 83 million cubic feet of gas in 2017. Production in 2017 was impacted by a field shutdown due to a leak in the subsea pipeline that delivers fuel gas to the offshore platforms.
Since July 2018 Hilcorp has conducted well workover operations in the field, converting an injection well to a producer; perforating five wells; and performing coiled tubing cleanouts on two wells. The company also inspected some locations on a gas pipeline, conducted sonar surveys on all subsea pipelines and reconfigured the subsea gas pipeline manifold on one platform.
The field currently has two active platforms, Platform A and Platform C, while the Baker and Dillon platforms are dormant.
In anticipation of the potential future reactivation of the Baker and Dillon platforms, and to address issues relating to the inspection of the field’s subsea gas pipeline, Hilcorp plans to install two subsea power cables to the platforms from platforms A and C, possibly during the summer of 2020. Reactivation of the dormant platforms would entail major upgrades to platform facilities, Hilcorp told the division.
Hilcorp continues to evaluate the economics of reactivating drilling rigs on the A and C platforms. Potential drilling operations would include updating the well completions, adding perforations, cleaning out wells and repairing damaged wells. There are also some potential new drilling prospects - the company is in the process of interpreting new and reprocessed seismic data, to better delineate the structure of the field and identify possible drilling targets. Drilling possibilities include infill drilling and step-out exploration tests, the company told the division.
In terms of continuing maintenance, Hilcorp plans to complete diver inspections of some subsea components of Platform A, and of the subsea gas pipeline.
Trading Bay unit
In the Trading Bay unit the McArthur River field produced 1.7 million barrels of oil and 9.7 million cubic of gas in 2018. Oil production was virtually the same as production in 2017, while gas production increased.
Since July 2018, Hilcorp had completed two new wells in the field and had started but not completed a third well as of the date of the plan of development. The company conducted workovers on four wells on the Grayling and Steelhead platforms. It also converted one well to gas lift and reperforated another well.
Hilcorp plans to continue to evaluate new rig workover opportunities in the field while also identifying new subsurface possibilities.
The Trading Bay field, the other field in the unit, produced 595,000 barrels of oil and 1.3 billion cubic feet of natural gas in 2018. That compares with 675,000 barrels of oil and 1.1 billion cubic feet of gas in 2017.
Since July 1, 2018, Hilcorp has been conducting workover operations on two wells and anticipated workover of a third well.
The company is doing a study of the field to identify rig workovers, sidetrack drilling, waterflood optimization and other activities to bolster field production.
North Trading Bay unit
Hilcorp envisions restarting production from the North Trading Bay unit, using a sidetrack well drilled from the Monopod platform that supports the adjacent Trading Bay unit.
North Trading Bay used to produce from the Spark and Spurr platforms, but oil production ceased in 1991 and gas production in 2005. The two platforms have been maintained in lighthouse mode since then - Hilcorp has in the past indicated that restarting these platforms would not be viable.
The company told the division that, following some additional seismic evaluation, it anticipates starting a sidetrack from the A-10RD well in 2019. If the sidetrack is successful, Hilcorp anticipates applying for a unit expansion to include newly producing acreage.
West Side status quo
Hilcorp filed PODs with the division for its three small onshore west side Cook Inlet gas fields, covering June 1, 2019, through May 31, 2020.
The POD for Ivan River is the 49th for that unit; the Lewis River is the 44th for that unit; and that for Pretty Creek is its 41st.
Hilcorp said Ivan River produced 184.9 million standard cubic feet of gas in 2018, while Lewis River produced 145 million cubic feet and Pretty Creek produced 54.5 million cubic feet.
At Ivan River, Hilcorp said there was no production from the Sterling-Beluga gas participating area during 2018; production from the Tyonek PA averaged 0.507 million standard cubic feet per day.
For 2019, Hilcorp said it did not have any development plans at Ivan River, but would continue production and use of the disposal wells.
There was no production from the Lewis River gas pool No. 1 participating area during 2018, and production was maintained from the Lewis River gas pool No. 2 PA.
For 2019, Hilcorp said it does not have long-range development plans, or any planned exploration or delineation plans.
The company said it will continue to produce from the No. 2 participating area during 2019.
At Pretty Creek, for 2019, Hilcorp said it plans to evaluate shut-in wells for potential return to service or utility but does not have any exploration or delineation activities planned. Production will continue from the Beluga participating area and gas storage will continue.
Kenai Peninsula gas fields
Hilcorp PODs for four Kenai Peninsula natural gas fields focus primarily on maintaining production. The gas fields - Cannery Loop, Deep Creek, Nikolaevsk and Ninilchik - account for 22% of Hilcorp’s Cook Inlet gas production, some 193 million cubic feet per day in 2018.
One new well is planned at Cannery Loop. At Ninilchik, the company indicated that new drilling would probably be put off at least a year.
The PODs are for Aug. 1, 2019, through July 31, 2020.
The POD for Cannery Loop is the 40th for that field.
Hilcorp said it maintained steady production at an average of 8 million cubic feet per day at the field during the 2018 calendar year.
For the 2019 plan, Hilcorp is evaluating drilling the CLU No. 14 in August, a well which would primarily target the Middle Beluga with secondary targets in the Sterling sands. Hilcorp said the well would “explore farther east in the Lower Beluga and Tyonek sands than any previously drilled well at CLU,” providing “more insight of the eastern flank of the Cannery Look structure,” information which might “lead to additional prospects to the north of the field.”
Deep Creek produced an average of 5.1 million cubic feet per day in 2018.
Hilcorp said it has completed evaluation on drilling a new HVB No. 18 well primarily targeting the Middle/Deep Tyonek sands with secondary targets in the Middle to Upper Beluga sands. The well was originally planned to be drilled in December, but is likely to be delayed, “due to bottlenecks in the KBPL gas pipeline.”
A new exploratory drilling program is still planned for 2020, based on results of stratigraphic test wells, and likely targeting the Sterling and Beluga formations.
Current production at Deep Creek will be “maintained and improved throughout the 2019 POD period, primarily through implementation of efficiencies and optimization projects,” the company said.
Nikolaevsk is the smallest of the fields in this group, with production from a single well averaging 500,000 cubic feet per day in 2018. This is the 12th POD for the field.
Hilcorp said in its 2019 POD that it did not have any planned exploration or delineation project at the field and plans to continue production from the Red Well No. 1
Ninilchik is the largest field in this group, averaging 27.9 million cubic feet per day in calendar year 2018. This is the 15th POD for the field.
In its 2019 POD Hilcorp said that the six identified prospects in the Grassim Oskolkoff PA will not likely be drilled in the 2019 POD period unless market conditions change but will most likely be drilled in the 2020 or 2021 POD periods.
Hilcorp said the Pearl No. 2A may be drilled in the late 2019 POD period, “contingent on market conditions, but will most likely extend beyond the 2019 POD period.”
The Blossom No. 1 may be sidetracked, based on market demand and economic conditions, but will most likely be drilled in the 2020 or 2021 POD periods.
March data from the Alaska Oil and Gas Conservation Commission show 26 producing wells at Ninilchik. Hilcorp said that during 2019 it would evaluate adding “velocity strings and/or other artificial lift options in various wellbores to enhance production.”
The company has a workover program planned during the 2019 POD for several wells and plans to install an additional high-pressure heater-separator unit at the Paxton pad to allow for additional throughput from the Paxton No. 8 wells. It may install additional dehydration facilities on the Susan Dionne pad to allow for additional throughput from Kalotsa pad. It plans to add a water injection module at Susan Dionne pad for produced water disposal.
