Hilcorp boost Inlet output; Eni preps long well

  • Hilcorp Alaska Vice President Dave Wilkins told the Resource Development Council of Alaska on Nov. 15 that his company plans to boost Cook Inlet oil production by 3,500 barrels per day by the end of this year. (Photo/Michael Dinneen/For the Journal)

Most state officials are encouraged about the incremental increase in Alaska’s North Slope oil production because of the impact it could have on state finances, but Hilcorp Energy is drilling to produce more from the state’s original oil basin as well.

Hilcorp Alaska Vice President Dave Wilkins said the company drilled nine oil wells into its Cook Inlet fields this year and, as a result, expects to increase its Inlet oil production from about 12,000 barrels per day in January to more than 15,500 barrels per day by year’s end.

“2017 was the year of stepping out and drilling wells mainly on the oil side,” Wilkins said Nov. 15 to attendees of the annual Resource Development Council for Alaska conference. “It was a big, bold move in a downturn.”

Hilcorp, which is the primary operator in Cook Inlet, drilled three horizontal wells into the upper West Foreland field from its King Salmon and Steelhead platforms across the Inlet from Nikiski, according to Wilkins.

Farther to the north along the western shore the company brought another well online in its Granite Point field in early November that has produced 1,100 barrels per day of oil from the Tyonek formation with no residual water.

“We think there’s future development in the Granite Point field in the tighter formations to go horizontal in,” Wilkins said, adding the company believes there are still “tens of millions of barrels” of oil recoverable from both the Granite Point and West Foreland fields.

Hilcorp is also in the midst of spending $75 million to convert a cross-Inlet natural gas pipeline to an oil carrier, a project it plans to finish in about a year, company officials have said. With other requisite work to adjust gas and oil flow on the west side of the Inlet, the project will allow Hilcorp to close the Drift River oil tank farm, which has been a lingering environmental concern to many because of its location at the base of Mt. Redoubt, an active volcano that most recently erupted in 2009 and caused flooding at the facility.

The oil transport line will also reduce oil tanker traffic in the Inlet.

On the gas side of Hilcorp’s business, Wilkins said the company drilled eight wells this year simply to replace burned reserves. Inlet gas storage facilities have ample reserves and are at higher pressures this fall than a year ago, he added.

“We feel we are ready for this winter. Bring it on, turn up your heat, hope it’s cold,” he quipped.

On the Slope, Hilcorp is continuing to build out Milne Point, one of the fields it bought into as part of a $1.25 billion deal with BP in 2014. The company recently drilled 10 wells at Milne Point that are just starting to come online, Wilkins said, and its up to $400 million Moose Pad project at Milne is on schedule.

With $80 million of gravel road and pad work finished the company will start drilling between 50 and 70 wells next fall and peak production from the development is expected to hit 16,000 barrels per day in 2020, according to Wilkins.

Hilcorp believes the Moose Pad project will produce 30 million to 50 million barrels overall.

“Bringing on new oil in Alaska needs to be competitive with other things going on in Hilcorp, so bringing on new oil at $10 or less per barrel cost is very competitive,” Wilkins said.

The company will also be running a pilot polymer flood project at Milne Point to improve heavy oil recovery over water floods that have been inefficient at the field, he said.

Adding polymers to injected water increases the water’s viscosity and helps it “push” oil out of the reservoir more effectively by preventing the heavier oil pool from dispersing and comingling with the water as easily.

Wilkins said the polymer flood should improve heavy oil recover by up to 50 percent over standard water floods.

The company is also in the environmental impact statement process for its Liberty development, a plan for a manmade island in federal Arctic waters that has potential to produce 60,000 to 70,000 barrels per day at peak.

Eni’s long exploration

Italian major Eni, which produces about 20,000 barrels per day from the Nikaitchuq field off of Oliktok Point, will start drilling a diagonal exploration well in the coming weeks that is planned to stretch more than 6.5 miles, Eni Alaska Vice President Whitney Grande told the RDC.

The roughly 35,000-foot well will be drilled from its manmade Spy Island drill site in state waters off of Oliktok Point into formations beneath federal waters further offshore.

“It’ll be the longest extended reach well in the state,” Grande said at the RDC conference.

The company has previously drilled several wells up to 25,000 feet on its state leases, according to Grande.

It’s important for the Eni to start drilling by Dec. 31 because its federal leases are set to expire then, he noted.

“We’re not foreign to the concept of extended reach (drilling); we have some good best practices around ERD and we’re looking to apply those to Nikaitchuq North,” Grande said.

If successful, Eni plans to drill a second, similar exploration well next winter. The company currently believes the offshore reservoir it’s targeting could double the 180 million barrels of reserves the Nikaitchuq field originally held when it started producing in 2011, according to Grande.

Upgrades to Doyon Drilling’s Rig 15 — which has done all the drilling at Nikaitchuq — are being finished now so it can start drilling the first long exploration well next month.

Elwood Brehmer can be reached at [email protected].

09/13/2018 - 1:32pm