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Hilcorp growing Milne
Division approves part of expansion requested; AOGCC OKs new pool definitions
Kristen Nelson Petroleum News
Hilcorp Alaska has been growing production from the Milne Point unit on the North Slope since it acquired a half interest in the unit and took over as operator in 2014, increasing production from just over 7 million barrels of oil in calendar year 2014 to 14.8 million barrels in calendar year 2023, according to Alaska Oil and Gas Conservation Commission data. As part of its acquisition of BP Exploration (Alaska)'s Alaska assets, finalized in mid-2020, Hilcorp acquired the remaining 50% interest in the unit.
Last year the company applied to the Alaska Department of Natural Resources' Division of Oil and Gas to expand the unit to the north and southeast, and to AOGCC to revise oil pool definitions to include the requested expansion areas.
This was the first Hilcorp-requested physical expansion of Milne, which was last expanded in 2003 under BP, which took over Milne Point from Conoco, the original developer, in 1989. Milne production peaked in 1998 at 20.4 million barrels for the calendar year.
AOGCC approved the new pool definitions while the division approved a portion of the requested physical expansion request.
AOGCC also separated the Kuparuk River oil pool rules, which previously had included Kuparuk formation areas in both the Kuparuk River unit and the Milne Point unit -- see item in this issue on the Kuparuk River unit pool rule changes.
Physical expansion The division expansion decision, signed by Director Derek Nottingham and dated May 30, approved an expansion of 5,786 acres, less than half the 13,275 acres proposed by Hilcorp, which included some entire leases, the majority on the northwest of the existing, 50,856-acre unit. The expansion on the southeast was a portion of just a single lease, part of which was already in the unit.
Milne Point produces from four oil pools, the division said, and Hilcorp identified the primary undeveloped resources in the proposed expansion areas as the Kuparuk and Schrader Bluff formations.
The division said in the northern expansion area the primary reservoir target, from F Pad, was the Kuparuk A sand, while in the southeast expansion area the primary reservoir targets, from K Pad, were the Kuparuk C and B-7 sands.
As Hilcorp has continued to drill new wells at Milne, delineating the extent of the Kuparuk and Schrader Bluff oil pools, that drilling "has necessitated the expansion of the MPU unit boundary to follow along mapped fault boundaries," the division said.
Where the division differed with Hilcorp on the expansion area was around oil/water contacts, the division saying Hilcorp did not provide evidence that the Kuparuk formation had hydrocarbon potential beyond known oil/water contacts, leading it to reduce the proposed expansion "to where evidence was provided that a potential Kuparuk hydrocarbon accumulation exists," rather than including some entire leases.
Proposed drilling The division said Hilcorp proposed 10 wells in the expansion area, three Kuparuk reservoir wells, one from K Pad and two from F Pad, and seven Schrader Bluff wells, all from R Pad, with six wells proposed for 2024 and four for 2025.
In its Milne Point plan of development for 2024, submitted in October, the division said the company planned to drill and develop leases outside the existing unit, part of a total of as many as 20 rotary wells with 11 (five producers, six injectors) in the Schrader Bluff formation; seven (three producers and four injectors) in the Kuparuk formation; and two wells (one producer, one injector) in the Ugnu/undefined formation.
Pool rules expansion Hilcorp applied to AOGCC in September for an expansion of the Milne Point unit Kuparuk River oil pool. The pool already extended into leases north of the existing unit, and the company said in its application to the commission that two proposed wells, F-17A and F-34A, would extend into the proposed expansion area in lease ADL 394167, shown on an accompanying map as the southeast corner of that lease, an area not included in the division's unit expansion, which includes a portion of the southwest corner of ADL 394167.
In Conservation Order 816, issued May 19, the commission established separate rules for the MPU Kuparuk River oil pool.
In its findings the commission said Hilcorp's "interpretation of seismic and well data suggests that oil-filled reservoir of the Kuparuk 'A sands' extends beyond the northern boundary of the KROP."
It approved Hilcorp's expansion request.
"Geological and geophysical data support the interpretation that Hilcorp's proposed expansion area is part of the KROP, thus expanding the affected area is appropriate," the commission said in its order.
The commission also, at Hilcorp's request, expanded the area of the MPU Kuparuk River oil pool area injection order. It said Hilcorp's "interpretation of seismic and well data suggest that the strata authorized for injection in AIO 10B extend beyond the northern limit of the defined Affected Area of AIO 10B."
In December Hilcorp applied to the commission to expand the MPU Schrader Bluff oil pool beyond both current pool and unit boundaries to the northwest, the commission said in a May 29 approval order.
In its application Hilcorp said the areas requested for expansion would be targeted in the future and said the northwestern expansion of the Schrader Bluff oil pool would further development of the reservoir from Milne Point R (Raven) and F pads.
The division said the proposed expansion area abuts two other units -- Kuparuk River and Nikaitchuq -- as well as acreage not currently in a unit.
There is scarce well control in the proposed expansion area beyond planned development drilling, the commission said, leading to "some uncertainty" as to how far the Schrader Bluff oil pool actually extends, but it also said that planned drilling would provide more geologic data to better define extent of the oil pool.
But Hilcorp did provide information indicating the Schrader Bluff oil pool extends beyond the existing area, and the commission said it found that expanding the affected area of the pool rules was appropriate.
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