|
Contraction delays: Redoubt gets partial OK; Ninilchik request in
Kristen Nelson Petroleum News
A request from Cook Inlet Energy to delay contraction of its Cook Inlet Redoubt unit was partially approved April 30 by the Alaska Department of Natural Resources' Division of Oil and Gas. On May 1 the division received a contraction delay request from Hilcorp Alaska for its Ninilchik unit.
In the April 30 Redoubt decision, division Director Derek Nottingham said the division did not find CIE's request for a 10-year contraction delay to be in the state's best interest, but said the division recognizes changes in corporate ownership at CIE in recent years, and the fact that CIE's parent company, Glacier Oil and Gas, is actively developing on the North Slope and said that "warrants strong consideration for a delay in contraction," and allowed CIE an additional 3 years.
The Redoubt unit was formed in 1997 and currently has 9,668.5 acres and one participating area, the division said. Sustained production began in late 2002.
CIE acquired the RU effective Dec. 1, 2009.
Mandatory contraction of a unit to participating area boundaries -- the portions of a unit that are in production -- and lands facilitating production is required 10 years after the beginning of sustained production.
The division said it granted 1-year delays in 2012, 2013 and 2014.
In 2021, CIE voluntarily relinquished 13,846 acres of the 22,370 acres which regulations require to be contracted, with a decision on further contraction delayed to Dec. 1, 2022.
The division said CIE requested a 10-year delay based on untapped resource potential; preservation of production; corporate change and expansion; and proprietary knowledge and infrastructure.
CIE told the division the acreage it holds contains an estimated 20 million barrels of original oil in place in the unexplored northern fault block and 47 million barrels of OOIP in the southern fault block, said its Osprey platform can access all 67 million barrels and that further unit contraction would hinder development of those resources.
The company said contraction would also adversely impact its West McArthur River unit as both units use the Kustatan Production Facility.
CIE also said corporate changes impacted expansion plans as did pandemic-related challenges and low oil prices. In late 2022 new corporate ownership began a new growth phase, but time is required to develop strategies and secure capital. The company also cited its proprietary 3D seismic, subsurface models and historical data.
The division said CIE has had 3 years since the 2021 contraction delay and voluntary relinquishment, and while a 10-year delay was not in the state's best interest it would allow a 3-year delay, with provision that CIE could discuss further delay with the division as it nears the end of the 3-year extension.
The division is requiring a 3-year plan for development of the North and South Fault Blocks by Dec. 1, 2024, along with well plans and maps depicting plans for acreage CIE plans to continue leasing and developing.
Ninilchik request Hilcorp Alaska acquired the Ninilchik unit in 2013, it said in its May 1 request for a contraction delay.
The company said its current exploration and development will extend into 2025.
The unit's 10-year contraction date was Dec. 12, 2013, Hilcorp said, and it has requested delays, the most recent a 1-year delay ending July 31, 2024. The company is now requesting a delay to July 31, 2025, to support continued Ninilchik exploration efforts and allow for resolution of appeals of the Falls Creek and Susan Dionne-Paxton participating areas.
Hilcorp said that upon completion of its exploration drilling program it will adjust the Ninilchik participating areas to include existing and historical production within the unit.
During 2024-25, Hilcorp said it plans additional well work on the Blossom 1 exploratory well, work which was delayed following the Pearl gas discovery.
"Following completion of the planned projects and the settlement of the NINU appeals, Hilcorp can then evaluate potential adjustments to the NINU boundary and the existing PA boundaries, as needed," the company said.
--KRISTEN NELSON
| 