ConocoPhillips is the only company to operate production in both major basins in Alaska.
While the bulk of ConocoPhillips’ production comes from the North Slope, the company maintains three major operations in Cook Inlet: the onshore Beluga River unit, the offshore North Cook Inlet unit and the liquefied natural gas export terminal in Nikiski.
The Beluga River unit
Standard Oil Co. of California — working with Shell and Richfield Oil Corp. — discovered the Beluga River gas pool in December 1962 with the Beluga River Unit No. 1 while looking for oil in deeper formations on the west side of the Cook Inlet basin.
The company brought the field online in 1968, after Chugach Electric Association built the Beluga River Power Plant nearby. With a major pipeline in 1984, Enstar Natural Gas Co. connected the field to residential and commercial heating markets in Anchorage.
Today, ConocoPhillips, Hilcorp and Municipal Light & Power each own a one-third interest in the field, which produces some 80 million to 90 million cubic feet per day.
Cumulatively, the Beluga River unit had produced some 1.3 trillion cubic feet of gas through July 2013, according to the Alaska Oil and Gas Conservation Commission.
As of early 2013, the Beluga River unit hosted 27 wells — 15 in production, two operating disposal wells, one plugged and abandoned, and nine shut-in.
With 45 years of hard work under its belt, the Beluga River unit remains a mainstay for the Southcentral region, but its performance is in decline. The Sterling formation is at 30 percent of its original pressure, according to ConocoPhillips, leading to a decrease in deliverability. Water production from the field has risen rapidly over the past decade. Those two facts are driving much of the current development activities.
ConocoPhillips spent more than $80 million drilling four wells at the Beluga River unit between 2008 and 2010 and spent another $60 million in 2011 dispersing compressor stations to improve the pressure and increase the quality of the machines at the field.
Between mid-2012 and mid-2013, ConocoPhillips drilled the BRU 244-23, recompleted the 212-24T to stimulate shallower Beluga sands, planned six well turnarounds and began evaluating several projects to improve well performance.
The current plan of development runs through June 17, 2014, and calls for no new drilling, but ConocoPhillips is proposing to install velocity strings and artificial lift to improve the production from existing wells, as well as to upgrade the cylinders on several wellhead compressors, among numerous other projects aimed at similar outcomes. The company also continues to analyze ways to bring shut-in wells back into production.
The North Cook Inlet unit
Pan American Petroleum Corp. discovered the North Cook Inlet Tertiary System Gas Pool in 1962 in the waters off Tyonek with the Cook Inlet St 17589 No. 1.
ConocoPhillips developed the field using the Tyonek platform, which ties back to the east side of Cook Inlet and eventually feeds into the Kenai LNG facility. North Cook Inlet came online in 1969, the same year the pioneering facility exported its first shipment.
In late 2012 and 2013, ConocoPhillips conducted a limited program at the unit. The biggest item was installing gas lift at four wells, three of which were shut-in and one of which has since been brought back into production. The two wells that remain shut-in both produced water after the gas lift and ConocoPhillips is considering alternatives.
ConocoPhillips also replaced both cranes at the platform.
In 2008 and 2009, ConocoPhillips spent $75 million drilling three wells at the unit, but later called those wells disappointing. ConocoPhillips did not drill this year, but told regulators it “plans to perform a rig work-over program that may or may not include drilling in 2014 or 2015” and “plans to evaluate future drilling opportunities after 2015.”
Other work being considered for the next two years includes upgrading compressors, performing concentric coiled tubing well work delayed by the crane replacement, installing or improving artificial lift at four more wells and potentially conducting two rig workovers and sidetracking a well, in addition to ongoing maintenance and repairs.
Cumulatively, North Cook Inlet had produced some 1.8 tcf through July 2013.
The Kenai LNG facility
While North Cook Inlet has spent much of its life feeding the Kenai LNG plant, the relationship the between field and facility has been strained in recent years. ConocoPhillips and partner Marathon Oil announced plans in early 2011 to mothball the facility because they could not secure contracts in the Asian markets, but subsequently kept the facility operational through 2012 to accommodate unexpected increases in Asian demand.
Those shipments came to an end when the most recent export license expired in March 2013. With tightening supplies in the Cook Inlet basin, ConocoPhillips — now the lone operator — saw no need to apply for another extension.
In September 2013, though, the Alaska Department of Natural Resources asked ConocoPhillips to apply for a three-year extension. With local demand met through 2018, the state believes the facility is a needed market for Cook Inlet producers.
ConocoPhillips is currently considering the request, the company said. The North Cook Inlet unit also includes a Tyonek Deep oil prospect, which ConocoPhillips considers “uneconomic as a standalone development at this time,” but recently farmed out to Buccaneer Energy Ltd.
