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Ninilchik unit POD and delay of unit contraction both approved
Kay Cashman Petroleum News
On May 1, the Alaska Department of Natural Resources' Division of Oil and Gas received the proposed 2024-25 20th Ninilchik unit plan of development, or POD, from Hilcorp Alaska for the period of Aug. 1 through July 31, 2025. The company was notified on June 25 that the POD for the Cook Inlet basin unit had been approved.
Among other things, in its 20th 2024-25 POD period Hilcorp committed to maintaining and enhancing production of the Ninilchik unit through adding perforations to the Blossom No. 1 exploration well and evaluating the potential for drilling one well targeting prospective deep gas in the Paxton structure.
A few days earlier, on June 20, Hilcorp received approval from the division to delay mandatory contraction of the Ninilchik unit until July 31, 2025.
Both approvals were signed by division Director Derek Nottingham.
After its May 1 request for delayed contraction, on June 5 Hilcorp gave a technical presentation to the division concerning both its proposed 20th POD and its request for delayed unit contraction.
Unit history The Ninilchik unit was formed in 2001 and contains three participating areas: Falls Creek, Grassim Oskolkoff, and the Susan Dionne-Paxton.
The unit was acquired by Hilcorp in 2013 from Marathon Oil Co.
In November of 2016 Hilcorp applied to the division to expand the Ninilchik unit and the Falls Creek participating area, which were approved March 2, 2017, and May 16, 2017, respectively.
Remand of the appeal of the Falls Creek PA expansion is currently pending appeal before the commissioner of the Department of Natural Resources.
Mandatory contraction of the Ninilchik under (under 11 AAC 83.356(b)) has been delayed from Dec. 12, 2013, to May 31, 2017, 2018, 2020, 2023, and, most recently until July 31, 2025.
Production During the calendar year 2023, the Ninilchik unit produced a cumulative total of 15.8 billion standard cubic feet of natural gas. The average daily gas production rate for calendar year 2023 was 43.2 million standard cubic feet per day. As of April 30, 2024, the Ninilchik unit had cumulatively produced 281.6 bcf of gas.
Ninilchik averaged 34,451 thousand cubic feet, mcf, per day in April 2024, 17% of Cook Inlet basin production, down 1,756 mcf per day, 4.9%, from a March average of 36,207 mcf per day and down 20.3% from an April 2023 average of 43,214 mcf per day.
2023-24 19th POD Although Hilcorp did not drill or complete any development wells during the 19th POD period, it completed, or will complete, the following projects during this POD period:
* Added additional perforations to the Grassim Oskolkoff No. 8 (completed on 07/13/2023 as part of 2022-2023 18th POD work commitment);
* Installed capillary string on Pearl 2A;
* Patched wet sand and added perforations to Paxton 12;
* Added perforations to Kalotsa 4, Paxton 12, Kalotsa 8, Paxton 3, Susan Dionne 6;
* Returned Paxton 7 to production with tubing swap and new perforations and installed capillary string; and
* Returned Paxton 6 to production.
Hilcorp completed installation of a compressor at the Pearl Pad during the 2023-2024 19th POD period and will be adding perforations to the Paxton 2 and Pearl 11 during the same period.
Although Hilcorp did not add perforations to the Blossom 1 well, it committed to doing so in the proposed 20th 2024-25 POD period.
Finally, activities to convert the Susan Dionne 8 well to a Class II disposal well remain in progress and although not complete, this work commitment is slated for completion during the 20th POD period.
20th 2024-25 POD For the 20th 2024-25 POD period in the Ninilchik unit, Hilcorp has committed to the following operations:
* Add perforations and flow test the Blossom 1 exploration well, which was drilled in 2015 but is not in production;
* Evaluate potential for drilling one well targeting prospective deep gas in the Paxton structure;
* Perform various rig and non-rig well projects, that may include completion of all required regulatory work to convert well to Class II disposal well (if the UIC Class II Application to AOGCC is approved, and if approved, disposal operations will be completed during this POD period).
The rig and non-rig well projects may also include perforations to the Pearl 10, pull patch, fill clean out, and add perforations to Kalotsa 1, evaluate utility of adding velocity strings or other artificial lift options in various well bores to enhance production, and evaluate further rig workovers, perforation adds, water shutoffs, or fill cleanouts as necessary to maintain and enhance unit production.
The company is also considering evaluating installing additional compression at the Paxton Pad (pending decision to execute a drill well from Paxton Pad along with continued performance trends at Paxton 6 and 12).
Hilcorp may also begin installation of necessary surface equipment to facilitate conversion of Susan Dionne 8 to Class II waste disposal well (pending AOGCC approval as previously mentioned).
Various appeals, legal actions The Ninilchik unit is involved in several appeals and legal actions.
The Susan Dionne/Paxton Participating Area-Tract Consolidation (i.e., Thurman White, Gavora, Burgess, James White Appeal), Appeal No. 08-001 currently remains pending with the Department of Natural Resources Appeal Section.
Several overriding royalty interest owners appealed the expansion of the Falls Creek PA to the Kenai Superior Court (3KN-17-00650CI), which upheld the Department of Natural Resources commissioner's decision that ORRI owners do not have standing to appeal expansions of a PA. The ORRI owners appealed the Kenai Superior Court's decisions to the Alaska Supreme Court, which reversed the lower court's decision, and remanded the matter to the department's commissioner for proceedings consistent with the Court's decision. See PLC, LLC v. State, Dep't of Nat. Res., 484 P.3d 572 (Alaska 2021) (holding that because agency decision to exclude from expansion a company's acreage from participating area adversely affected, company had standing under AS 44.37.011(b) to appeal decision to commissioner).
--KAY CASHMAN
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