n the past much of Alaska’s oil and gas industry was dominated by large, international corporations. While their presence has been vital in developing oil and gas operations and infrastructure around the state, over the decades smaller and often privately-owned companies have found opportunities throughout the state to pursue oil and gas industry exploration, production, and even refining. It’s privately-owned Hilcorp that has agreed to acquire BP’s Alaska assets for $5.6 billion, and hopes are high that the company that specializes in revitalizing fields in decline will have a bright, long future in Prudhoe Bay. But Hilcorp is far from the only privately-owned oil facility operator in the state.
Prudhoe Bay oilfiled..
alamy.com
n the past much of Alaska’s oil and gas industry was dominated by large, international corporations. While their presence has been vital in developing oil and gas operations and infrastructure around the state, over the decades smaller and often privately-owned companies have found opportunities throughout the state to pursue oil and gas industry exploration, production, and even refining. It’s privately-owned Hilcorp that has agreed to acquire BP’s Alaska assets for $5.6 billion, and hopes are high that the company that specializes in revitalizing fields in decline will have a bright, long future in Prudhoe Bay. But Hilcorp is far from the only privately-owned oil facility operator in the state.
alamy.com
For the last few years, BlueCrest’s development activities have been building toward implementing a highly efficient trident well design.
In the fourth quarter of 2018 at its Cosmopolitan Unit, BlueCrest drilled and completed the H16a fishbone well, which was the second well in its 2018 drilling program. H16a contained eight individually permitted wells, which yield the equivalent of an 800-foot spacing well program and are effective in maximizing production from a given area. H16a was brought into production in December 2018 and the company reports that to-date it provides approximately 29 percent of oil production and approximately 10 percent of the gas production at Cosmopolitan.
Using data from its H12 and H16a fishbone wells, BlueCrest drilled a step-out well in 2019 “to prove up the reserves on the southside of the structure,” a part of the reservoir that has not previously been tested, according to the company. BlueCrest also successfully drilled the H4 fishbone well, which contains seven individually permitted wells. H4 was brought into production in March and provides approximately 26 percent of oil production and approximately 7 percent of gas production at the BlueCrest facility.
For 2020, BlueCrest has been enthusiastic about sharing information on its innovative trident well design, which is one main wellbore drilled from the surface to the reservoir edge, where it splits into three fishbone wells, each of which contains eight individually permitted wells. Using drilling results data from the H16a and H4 fishbone wells, BlueCrest is now prepared to move forward with a trident well and has identified a location that will allow the company to drill and evaluate the trident well design. BlueCrest states in its 2020 Cosmopolitan Unit Plan of Development that a trident well “will provide a significant savings in the cost and time of drilling three fishbone wells from the surface to total depth.” BlueCrest plans to drill at least one, and possibly two, trident wells in 2020.
On the infrastructure side, BlueCrest received approval in May from the Alaska Department of Natural Resources, Division of Oil and Gas to install and operate a gas processing unit at the Cosmopolitan production facility on Hansen Pad.
Covering a period of May 2019 through April 2020, the Redoubt Unit’s Plan of Development proposed a scope of work that includes sidetracking well RU-6 and using it as a water injection well for the Redoubt waterflood; plans to replace the ESP in well RU-2 in conjunction with the RU-6 sidetrack; and ongoing examination of current and planned enhanced recovery waterflood efforts, including, if necessary, converting additional wells. Currently Redoubt has four production wells, which in 2018 produced 471,398 barrels of oil and 93,352 million cubic feet of gas. Also at Redoubt, the company is planning minor modifications to the Osprey platform and to add additional space for ESP support equipment.
The company’s West McArthur River Unit produced 326,260 barrels of oil and 59,122 million cubic feet of gas in 2018. Plans for the current season include permitting to convert currently shut-in wells to produced water disposal wells and injecting produced water into the Hemlock formation and ongoing work to permit drilling plans at the Sabre prospect, which would comprise an offshore exploratory well drilled from a jack-up drilling rig.
Glacier Oil and Gas committed to ongoing activities to enhance production at the North Fork River Unit, which has produced 18.9 billion cubic feet of gas since it came online in 2011. The company is enhancing production through infrastructure improvements such as additional compression and separation facilities and “small ball” projects, including perforating additional zones and setting plugs as necessary to control water intrusion.
While Hilcorp’s plans for its new Alaska assets have yet to be announced, work is ongoing on its existing Alaska interests. In June the company was granted an easement to drill wellbores through State of Alaska subsurface lands at the Moose Pad development project at the Milne Point Unit. While the wellbores originate from Moose Pad in the unit, they cross the unit boundary into the Kuparuk River Unit, of which Hilcorp is not the lessee. The scope of work includes up to fifteen wellbores through Kuparuk leases on state land to be used as development and water injection wells, not to produce hydrocarbons.
Also in June Hilcorp was authorized to place a portable modular polymer injection facility on its F Pad at Milne, which includes gravel expansion to the existing pad. The facility will include an injection building, a high pressure letdown building, a motor control center/utility building, and a polymer storage silo. According to Hilcorp, the injection of polymer is necessary to increase production from wells MPF-106, MPF-108, and MPF-110. The full scope of work includes excavating gravel and then placing and spreading it on the tundra to be level with the current pad; placing rig mats on the pad; securing portable modular units; installing self-standing exterior landings; tying the new facility into existing utilities; installing new piping on new pipe supports; connecting and installing electrical instrumentation; and additional infrastructure and tie-ins as required.
And in August the company was approved to construct an equipment turnaround on Milne Point Road to allow safe and more efficient equipment transportation.
According to the most recent Plan of Development for Milne Point, Hilcorp plans for 2019 included drilling up to twenty-nine new wells (including the above-mentioned wells into Kuparuk), completing sixteen well workovers; commissioning and starting-up Moose Pad; pursuing permitting of an additional pad; and “a variety of other facility maintenance, upgrades, and infrastructure projects.”
At Hilcorp’s Northstar Unit, for 2019 the company anticipated completing two well workover projects: for well NS-07, a RWO recompletion from the Ivishak reservoir producer to a Kuparuk C producer, and on well NS-17 a RWO recompletion from the Ivishak reservoir gas injector to a lean gas injection well in the Kuparuk A and C reservoir. Hilcorp also planned to continue work on the Northstar Propane Chiller project.
At the Duck Island unit, the developer has been working on completing up to five well workover projects, continued separation train water removal improvements, and overhaul of the main gas compressor A-train turbine.
In 2017, Senate Bill 30 was signed into law, approving a four-year contract from the state to sell royalty oil to Petro Star. The contract runs until December 2021; for 2020 the state will sell 10,800 to 13,500 barrels of oil per day to the company and in 2021 will sell 8,400 to 10,500 barrels per day. Over the life of the contract, it is anticipated the state will generate between $22 million and $27 million.
This year in August Petro Star was awarded a maximum $53 million fixed-price with economic-price-adjustment, IDIQ contract for JA1 jet fuel from the Department of Defense. The one year-contract with a 30-day carryover has an October 2020 completion date.
Through contracts such as these, Petro Star is a vital link in providing Alaskans access to Alaska-sourced oil products. Jobs, funds, and facilities all remain in the state, where Alaskans have the best opportunity to benefit directly and indirectly from the economic benefits. It was the finding of the Department of Natural Resources that “the negotiated RIK [royalty in-kind] contracts for the sale of the state’s royalty oil to Petro Star are in the State’s best interest” for a variety of reasons, among them Petro Star’s role in the Alaska economy.