Hilcorp Energy has laid out its plans for Cook Inlet oil field redevelopment. In a presentation to the Anchorage Chamber of Commerce June 18, company president Greg Lalicker said Hillcorp has set a goal to increase production from the Inlet’s aged fields to 25,000 barrels per day by 2014.
That’s up from 14,000 b/d in 2011, Chevron Corp.’s final year of owning the fields and producing platforms. Hilcorp acquired the properties from Chevron in January,
To accomplish this Hilcorp, which is privately held, plans to invest $206 million this year and $155 million in both 2013 and 2014, Lalicker said.
Chevron had been spending about $40 million per year in capital investments in the fields, which include 10 offshore platforms, Lalicker said.
Chevron acquired the properties in 2005 when it took over Unocal Corp., which had operated the Cook Inlet fields for decades. Most of the platforms were installed in the 1960s and 1970s.
Hilcorp announced earlier this year that it would also acquire Marathon Oil’s Cook Inlet production assets, which are mainly producing natural gas for local utilities.
Hilcorp’s first actions are to rehabilitate the platforms and at the Swanson River field on the Kenai Peninsula, the one onshore oil field acquired from Chevron, Lalicker said.
“There are a lot of old, shut-in wells and our first goal is to fix all the broken stuff, take the drill rigs, which are mostly junk, off the platforms, and then prepare them for new drilling using a modern rig,” Lalicker said. That work is under way already, he said.
Hilcorp has also put a workover rig into the Swanson River field to rehabilitate old wells. Swanson River was discovered in 1957 and was Alaska’s first commercial oil discovery.
Hilcorp specializes in purchasing mature producing properties from major companies, investing in redevelopment and increasing production. That strategy has been successful in mature fields the company has acquired in Louisiana, Texas and the shallow water Gulf of Mexico, and has allowed the company to grow at about 15 percent per year, Lalicker said.
The biggest immediate challenge in Cook Inlet is the scarcity of rigs, contractors and suppliers, he said. A once-vibrant oil and gas support industry has atrophied over the years with the decline in activity in the Inlet. Even those suppliers still based on the Kenai Peninsula are focused on supporting North Slope customers, Lalicker said.
Cook Inlet has seen a renaissance of exploration and other activity in recent years as independents like Hilcorp have replaced larger companies as owners and operators. Apache Corp. is another new entry, purchasing extensive leases in Cook Inlet over the last two years. Apache plans its first exploration well this year.
Small independents are also exploring in Cook Inlet, including Buccaneer Alaska and Furie Alaska Operating, both based in Houston, Cook Inlet Energy, a subsidiary of Tennessee-based Miller Energy Resources, and locally-owned independent NorDaq Energy.
Activity by the smaller companies has been boosted by a set of state exploration incentives that include tax credits that can pay 60 percent or more of the costs of an exploration well.
Tim Bradner can be reached at firstname.lastname@example.org.