Hilcorp has big plans for renewal of aged Inlet fields

Hilcorp Energy Co. plans an aggressive program of well workovers and remediation in aging Cook Inlet oil fields and platforms acquired from Chevron Corp. earlier this year, Hilcorp’s Alaska manager said May 24.

“We see shut-in wells as an opportunity, not a liability,” John Barnes, Hillcorp Alaska’s manager, said. “This company has a long history of purchasing and rejuvenating mature, old producing assets,” he said.

Barnes is an Alaska industry veteran and former Alaska manager for Marathon Oil.

In the Chevron acquisition, Houston-based Hilcorp purchased eight producing oil platforms in several Cook Inlet fields along with two platforms that are in a suspended status.

Hilcorp employs about 260 in Alaska, mostly former Chevron employees, Barnes said. Cook Inlet now produces about 10,000 barrels per day. The bulk of that is from Hilcorp-operated fields.

The company is also purchasing Cook Inlet gas-producing assets owned by Marathon Oil Co. and that acquisition is expected to close later this year, Barnes said.

Marathon’s production is mainly from onshore gas fields on the Kenai Peninsula, on the east side of Cook Inlet.

Barnes said Hilcorp’s near-term plan is to pull and replace old tubing on about 20 aged oil production wells on the platforms and replace older gas-lift equipment on the wells with more efficient electric submersible pumps, or ESPs.

The company will also be removing old drill rigs from the platforms this year and in 2013 will bring in a new, mobile rig that can move from platform to platform to rework old wells, Barnes said.

Most of the platforms have two rigs and none have been used in recent years.

“Many of these are more than 50 years old. They were old when they were installed on the platforms in the 1960s an 1970s,” he said.

There is now a small workover rig working on wells at the Swanson River oil field on the Kenai Peninsula, and that work will continue, Barnes said.

Swanson River, discovered in 1957, was a Chevron-owned field included in the purchase of the offshore field.

The company is also drilling at the Steelhead platform, an offshore platform that mainly produces gas. The oil reservoir tapped by Steelhead was Chevron-owned and the gas reservoir is owned by Marathon, but all of that will be consolidated when the Marathon purchase is closed, Barnes said.

Other Marathon fields being acquired include the large onshore Kenai gas field and the Ninilchik field, both on the Kenai Peninsula. Chevron owned a minority interest in Ninilchik now owned by Hilcorp, along with a nearby smaller gas field, Happy Valley.

Barnes said Hilcorp is optimistic that it can boost production on the aged Inlet platforms. Most of the platforms have production in the hundreds of barrels a day and some wells produce about 100 barrels per day, but this can be boosted with a strategy of well workovers and some new equipment like ESPs, Barnes said.

On Cook Inlet’s west side the company is working on reopening the closed Drift River oil terminal, which was closed in 2009 when it was damaged by floods related to a nearby volcanic eruption.

When the terminal closed, west Cook Inlet producers — which include Hilcorp and Cook Inlet Energy, a small independent — developed an interim plan to store crude oil in smaller tanks at the Trading Bay and Granite Point fields, shipping oil through the 42-mile pipeline and loading it from the pipeline directly on tankers.

This has resulted in more frequent tanker shipments and higher costs. The cost of west Inlet production could be lowered substantially if the large tanks at Drift River are brought back into service and a more efficient tanker schedule can be instituted, Barnes said.

Hilcorp is working to have two tanks at the terminal operational by October, he said.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.