ilcorp gave notice to several Southcentral Alaska utilities in 2022 that it would be unable to renew all of its then-current contracts to supply natural gas—the region’s primary source of energy—alarming residents and businesses alike. At the time of the announcement, Hilcorp stated that an ongoing drilling program could resolve the shortage, since additional natural gas exists in Cook Inlet but is not being produced.

While local utilities are considering options to secure an adequate supply of natural gas—including transporting it from the North Slope or importing it from other countries—to meet their obligations to their customers and members, ongoing exploration activity in Cook Inlet may help ensure Alaskans have the heat and power they need.

In April, Furie Operating Alaska, the state’s only Alaskan-owned natural gas producer, announced it is drilling new wells in Cook Inlet as part of a $40 million in-field gas development program “that will demonstrate that Alaskans can drill and produce more gas out of Cook Inlet,” said John Hendrix, president and CEO of HEX, Furie’s parent company. Furie had already moved the Spartan 151 jack-up rig to the Julius R platform in the Kitchen Lights Unit and had identified twenty-seven targets within a 3-mile radius of the Julius R platform. The Alaska Industrial Development and Export Authority is supporting Furie on the project in the form of a $50 million multi-year revolving line of credit to “help accelerate drilling operations to increase Cook Inlet gas production and ensure a more secure and stable energy future for Alaskans,” the organization stated in May. The state-backed investment authority stated that the drilling program is expected to create up to 100 jobs during development and add 5 new permanent positions.

In Furie’s 2025 Plan of Development (POD) for the Kitchen Lights Unit submitted to the Alaska Department of Natural Resources (DNR) Division of Oil & Gas in late 2024, Phase I of the full field development plan will extend into 2026 and includes drilling up to two new penetrations (“contingent upon various factors”); obtaining approval from the Alaska Department of Environmental Conservation for increased produced water discharge; installing three 30-inch and two 20-inch conductors; increasing the total number of surface slots on the Julius R platform from six to eight; modifying the existing manifold or installing a new manifold to accommodate more wells than Julius R was originally designed to operate; and continuing to maximize recovery and optimize production in the existing Kitchen Lights Unit wells.

According to Hendrix, the two new penetrations are grassroots wells, which means the wells are not exiting from an existing well-base but are being drilled “from scratch.” The hope, he said, is to “bring us [HEX/Furie] up over 10 percent of Alaska’s gas supply.”

In addition to new drilling, Furie is also looking to extend the life of its currently producing Kitchen Lights Unit wells by improving the economics of operating them. As part of that effort, the company successfully petitioned the state to modify the royalty applied to seven leases in the Kitchen Lights Unit. According to DNR, Furie asserted that “royalty modification was warranted to prolong the economic life of a gas field or pool as per-barrel equivalent costs were projected to increase sufficiently due to declining production to make future production no longer economically feasible,” and the company provided technical and financial documentation to that effect.

The state was persuaded, in part. While Furie sought the modification for all thirty leases in the unit, DNR’s final findings and determination report found that granting royalty modification—reducing state royalties to 3 percent until the unit’s gross revenues total $712 million (with a start date of September 2024)—for “select” Kitchen Lights Unit leases was in the best interest of the state for two reasons: reducing the royalty would extend the life of the unit, resulting in the state gaining approximately $36.4 million in direct revenues over time, and there would be a “significant indirect benefit” of continued Cook Inlet gas production for Southcentral utilities and their customers.

As the dominant natural gas producer in the region, Hilcorp is also pursuing several opportunities to boost production and storage in Cook Inlet. In February it acquired 100 percent working interest of the North Fork Unit from Vision Resources, a subsidiary of Gardes Holdings; Hilcorp took over operations in May.

Gardes Holdings stated that it was struggling to raise money to drill new wells. In 2024, this came to a head when DNR approved the North Fork Unit POD for 2024 with modifications, the most significant of which was that Vision Resources needed to drill a new well by the end of 2025 and maintain operations to bring that well into production. Hilcorp Corporate Manager of Alaska Government and Public Affairs Matthew Shuckerow told the Northern Journal in May that Hilcorp plans to drill new wells as soon as this winter and that the company is “excited about the opportunity to further develop the North Fork Unit—a field that is largely undeveloped but shows potential for new production.”

In Cook Inlet, Hilcorp also operates the Lewis River, Ivan River, Pretty Creek, Beluga River, North Cook Inlet, North Trading Bay, Trading Bay, Granite Point, Kenai/Cannery Loop, Ninilchik, Deep Creek, and Seaview units.

It has filed PODs for several of its units that include drilling in the 2025 POD time period, which runs from approximately mid-2025 to mid-2026, though there is some variation from unit to unit.

For the Pretty Creek Unit, Hilcorp is planning to drill two exploration/delineation wells from its new Diamond Pad, testing for sand presence and hydrocarbon charge, and one development well targeting Sterling and Beluga sands from the Pretty Creek Pad.

In its North Cook Inlet Unit, Hilcorp plans to drill three sidetrack wells and to perform a slot expansion to allow for four additional grassroots wells.

At the Granite Point Unit, Hilcorp is planning to drill one grassroots well targeting a potential gas accumulation within the Tyonek Formation from the Bruce platform.

At its Ninilchik Unit, it is planning to drill two wells, and possibly up to four, targeting the Tyonek and Beluga gas formations.

Other significant planned Cook Inlet activities for Hilcorp include the Steelhead platform oil simplification project in the Trading Bay Unit and evaluating production facility and pipeline capacity restraints to optimize the deliverability of gas between existing platforms and the Granite Point Tank Farm. Also, in January, Hilcorp subsidiary Hilcorp Alaska Gas Storage applied for a certificate of public convenience and necessity from the Regulatory Commission of Alaska to own and operate a natural gas storage facility at the Kenai Gas Field.

In its application, Hilcorp Alaska Gas Storage says the facility would help “meet current and future needs of Alaska natural gas customers and enhance the deliverability and geographic diversity of natural gas storage during cold winter weather and other times when natural gas demand in Southcentral Alaska is especially high.” The facility would operate similarly to Cook Inlet Natural Gas Storage Alaska, which stores natural gas in a depleted gas field. The Kenai Gas Field facility began operations in 1961 producing natural gas, and it transitioned into producing and storing gas in 2006; Hilcorp acquired the facilities from Marathon in 2012. No additional infrastructure is necessary for Hilcorp to operate the facility to accommodate storing gas from third parties, and the company believes it can increase the facility’s storage capacity from 38 billion cubic feet to 70 billion cubic feet and its deliverability from 130 million cubic feet per day to 225 million cubic feet per day.