n mid-2022 Hilcorp Alaska notified local utilities that it did not have enough natural gas reserves to commit to new contracts as current contracts expired. At the time, contracts with the oil and gas producer were up for renewal in periods ranging from two to eleven years. Many utilities are already taking action to reduce their reliance on natural gas or to secure contracts with other providers. The Fairbanks North Star Borough’s Interior Gas Utility, for example, has already announced its intent to power the Interior with North Slope natural gas.

Whatever plans Alaska’s utilities implement in the coming years to reduce their reliance on Cook Inlet natural gas, a smooth transition depends on ongoing production, which shouldn’t be a problem.

According to the “2022 Cook Inlet Gas Forecast” published in January 2023 by the Alaska Department of Natural Resources’ (DNR) Division of Oil and Gas, there are “significant gas volumes potentially available through additional investment and development in currently producing fields” in Cook Inlet. It estimates 820 billion cubic feet of proved gas reserves in Cook Inlet that is “economic to develop.” The report notes there are “key uncertainties” that affect that estimate, such as costs, production rates, and the individual rate of return a company may need to invest.

The report also estimates that those gas volumes can meet the current level of demand for natural gas until approximately 2027, with this caveat: “This report is not intended to be a prediction of how Cook Inlet gas supply and demand will play out in future years. Rather, it serves as a tool for understanding Cook Inlet’s capacity to meet natural gas demand under present conditions and assumptions.”

According to Hilcorp spokesperson Luke Miller, the company anticipates spending “hundreds of millions of dollars” in Cook Inlet over the next few years to produce additional gas, but still it urged local utilities to diversify their energy portfolios. Whether or not Hilcorp will be producing the lion’s share of Cook Inlet gas far into the future, it is still investing in its operations there and has submitted Plans of Development (POD) to DNR for 2023 laying out what some of that investment entails. [Editor’s note: As of press time in early April, the majority of the POD were submitted to, but not yet approved by, DNR.]

In its 2023 POD for the North Cook Inlet Unit (NCIU), Hilcorp indicated it had achieved several requirements of its 2022 POD, including mobilizing Rig 151 to the Tyonek Platform in May 2022 to drill several sidetrack wells, five of which were successful. The sixth was an unsuccessful sidetrack attempt of NCIU A-12, and as a result Hilcorp is planning the complete abandonment of the wellbore by the end of June, which is when the 2022 POD period ends. According to the POD, “The plugged back well will be utilized for a future sidetrack opportunity.”

Hilcorp also completed a wellwork and workover program and surface facility operations at the Tyonek Platform.

The 2023 POD, which covers July 2023 through June 2024, states, “In 2023, Hilcorp will continue to build an inventory of future development projects, including grassroots wells, sidetracks, and workovers to increase rate and reserves, specifically to focus on exploitation of potential gas resources within the Beluga and Sterling formations.”

In July it anticipates drilling up to three grassroots wells from the Tyonek Platform, potentially including NCIU A-17 and NCIU A-18, both targeting Beluga sands. It’s also planning up to two sidetrack wells, one at NCIU B-01A and the other unspecified.

Hilcorp’s attempts to bring the North Trading Bay Unit (NTBU) back into production were frustrated by mechanical issues in 2022. Hilcorp made two attempts to drill NTBU A-10RD2 before notifying DNR in July 2022 that alternative drilling plans were underway to redesign the sidetrack for another attempt. Hilcorp spudded A-10RD3 in mid-March, drilling operations were underway as of April, and the company anticipated drilling would be complete early this month. Hilcorp believes that NTBU production will be restored in Q3 2023. According to the POD, Hilcorp estimates A-10RD3 will cost more than $8 million. It continues, “At this time, Hilcorp anticipates that the A-10RD3 is sufficiently designed and located to efficiently drain remaining gas reserves associated with the NTBU’s Tyonek formation for the remainder of field life,” and “Hilcorp currently has no plans for further exploration or delineation in the NTBU.”

That said, work will continue in NTBU as Hilcorp executes a plugging and abandonment (P&A) program at the Spark and Spurr platforms in 2024, as they are “no longer suitable for drilling or production operations.”

Hilcorp’s Trading Bay Unit includes the McArthur River Field and the Trading Bay Field. In calendar year 2022, Hilcorp produced 1,049 thousand barrels of oil and 6,593 million standard cubic feet of gas at the McArthur River Field and 311 million barrels of oil and 431 million standard cubic feet of gas from the Monopod Platform that taps the Trading Bay Field.

The 2023 POD for the Trading Bay Unit anticipates that current oil and gas production will be maintained and/or enhanced, “particularly through the drilling of the A-10RD2 from the Monopod.”

According to the POD, “The anticipated sidetrack drilling of the A-10RD3 from the Monopod into the [NTBU], if successful, will restore production to the NTBU. Going forward, Hilcorp anticipates that gas volumes produced from NTBU via the A-10RD3 will satisfy the Monopod Platform’s operational fuel demand and will thus eliminate the need to transport gas to the Monopod from the Steelhead platform. This, in turn, will result in a net increase of gas sales from the Trading Bay Unit and extend the operational life of the unit. After sustained production from the A-10RD3 is confirmed, Hilcorp anticipates submitting a formal proposal to DNR to merge the North Trading Bay Unit into the Trading Bay Unit.”

In calendar year 2022, Hilcorp produced 875,600 barrels of oil and 1.3 billion cubic feet of gas at the Granite Point Unit (GPU). In April 2022, Hilcorp added perforation in GP 24-13RD2 in the C6 sands, attempting to return the well to production. Other work conducted, according to the 2022 POD, included identifying rotary development wells targeting gas in the Tyonek formation from the Bruce platform and annual regulatory inspections on current GPU facilities.

For 2023, Hilcorp anticipates that current oil and gas production will be maintained and enhanced. Using Rig 151, it plans to drill up to three grassroots wells from the Bruce platform in Q4 2023 targeting the Tyonek formation. It will also continue to evaluate current GPU well stock for “various rig and non-rig well projects during the 2023 POD period,” which for GPU runs through June 2024.

In June of 2021, the Middle Ground Shoal Fuel Gas System, the subsea pipeline system that provides fuel gas from shore to Platforms A and C in the Middle Ground Shoal (MGS) Unit, developed a leak. DNR approved a suspension of production at platforms A and C as Hilcorp looked into options to repair or replace the system. In March 2022, at Hilcorp’s request, DNR conditionally approved an extension of the suspension of production through December 2022. In November 2022, Hilcorp provided a technical briefing to DNR on options for repair or replacement of the fuel gas pipelines. Hilcorp also introduced concepts related to repurposing idle platforms, and DNR approved an additional suspension of production through June.

As of the 2023 POD, Hilcorp’s evaluation of the Middle Ground Shoal Fuel Gas System determined that the cost associated with its repair or replacement is not economic as a stand-alone project. In addition, the company found that Platform C has reached its economic limit and won’t be returned to production. Platform A does have potential for reactivation, but not as a stand-alone project. Hilcorp estimates that recoverable reserves associated with Platform A exceed 3 million barrels of oil equivalent, but that does not justify the cost of repairing the subsea system.

Instead, Hilcorp’s 2023 POD proposes a field study on a known gas structure north of the Baker platform, which is located within the current MGS Unit area but may potentially extend farther north to currently non-utilized state leases. The study will identify potential drilling targets and evaluate whether the Baker Platform is suitable for drilling the area or if a new platform would be required. If a new offshore platform is constructed, it would require installation of a new pipeline to shore, which may create a contingency to potentially reactivate Platform A.

Other 2023 POD work includes P&A on wells at the Dillon Platform. Once wells on the platform have been plugged and abandoned, Hilcorp plans to contract the MSG Unit boundary to exclude the leases associated with the platform.

As Platform A awaits the results of the field study, Hilcorp plans to utilize it as an unmanned lighthouse facility, maintaining current wells and production facilities in case the platform may be reactivated in the future. Platform C will also be managed as an unmanned lighthouse facility, and P&A work for wells there will be integrated into Hilcorp’s multi-year P&A program.

In 2022 Hilcorp maintained production from the Lewis River Gas Pool #2 as planned in its 2022 POD, producing 259 million standard cubic feet. Hilcorp’s 2023 POD does not include any exploration or delineation activities, but it does include drilling one well, LRU C-01, spudding in June and targeting Sterling, Beluga, and/or Tyonek Sands.

At its Beluga River Unit, in accordance with its 2022 POD, last year Hilcorp drilled three grassroots wells and one sidetrack, using Rig 147 to target Sterling and Beluga gas sands. In its 2023 POD, with the same goal, Hilcorp anticipates drilling up to five wells: BRU 223-34, BRU 241-23, BRU 213-26, BRU 214-27, and BRU 211-35.

In an amendment to its 2023 POD for Beluga River Unit, Hilcorp requested authorization to drill two grass roots units on K Pad. That project would include the installation of associated tie-in infrastructure including gas flowing, electrical instrumentation, well cellars, and conductors. DNR approved the amendment, with the condition that a certified as-built survey of the project be provided to DNR within one year of placement.

In February, Hilcorp submitted an amendment to its eighteenth POD for the Ninilchik Unit, which is effective through July 31. In the amendment, Hilcorp explains that a recent gas discovery in the Pearl Structure within the unit supports three additional wells to be completed in Q2 2023. The Paxton 12, Pearl 10, and Pearl 11 grassroots wells are being drilled from the Paxton and Pearl Pads, respectively, and will target the Beluga and Tyonek Gas sands located within the Ninilchik Unit.

The drilling requires expansion of the Pearl Pad, located 4 miles northwest of Ninilchik on privately-owned surface lands; the pad expansion will have a footprint of 1.62 acres.

DNR approved the amendment in March.