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Precise number required
Division tells Hilcorp to be specific in Cook Inlet PODs on wells it will drill
Kristen Nelson Petroleum News
In two recent plan of development approvals for Cook Inlet units, the Alaska Department of Natural Resources' Division of Oil and Gas told Hilcorp Alaska that it wants a precise number of wells the company plans to drill in a given plan year, with a requirement that the division be made aware of any changes in those drilling plans with amendments to filed PODs.
Both approvals, for the Granite Point and North Cook Inlet units, include the same language in the division's approvals, both signed by Division of Oil and Gas Director Derek Nottingham.
Citing "purposes of accurate oil and gas forecasting," the division said it "requires an accurate estimate of wells that will be or will not be drilled within the Unit. And although the Division comprehends Hilcorp's rationale given the realities extent in the Cook Inlet, an 'up to' number of wells limitations by an Operator in its POD can mean anything from no wells to whatever number it chooses."
The division said it would prefer that Hilcorp just state that it is committing to no wells in the POD period or that it commits to drilling "at least" a certain number of wells.
When deviations occur, the division said, Hilcorp "shall notify" it before the POD period expires "and is welcome to submit a confidential portion of their POD with wells that will not be drilled, or may be drilled pending faster than anticipated drilling activities. Otherwise Hilcorp must submit an amendment to their POD per 11 AAC 83.343(e)."
Rig 151 The issue appears to center on Hilcorp's use of Spartan Rig 151, the only jack-up rig currently in Cook Inlet, to drill both at Granite Point and at North Cook Inlet. In its 2023 North Cook Inlet POD Hilcorp showed anticipated spud dates in early and late July for the first of the three grassroots wells it planned at North Cook Inlet, NCIU A-17 and NCIU A-18. The drilling at Granite Point was scheduled for the fourth quarter of the year.
A bill to support bringing a second jack-up to Cook Inlet failed to advance in the Legislature this year.
PODs for both units cover July 1 through June 30 of the following year.
At issue are results from the 2023 PODs, which run through June 30 of this year.
In its Granite Point 2024 POD approval, the division said that during the 2023 POD, Hilcorp did not drill any grassroots wells at the unit, although there were "up to three" grassroots wells from the Bruce platform at Granite Point targeting the Tyonek formation in the 2023 POD for the fourth quarter of 2023 using Rig 151. The wells Hilcorp committed itself to were exploration wells testing a Tyonek formation gas accumulation, the division said.
"Rather than drill these wells, Hilcorp instead chose to defer its commitment to drill the GPU wells and focused on drilling wells within its North Cook Inlet Unit (NCIU), because Hilcorp had higher confidence in bringing gas located in that unit to market."
But. the division said in its approval of the North Cook Inlet unit 2024 POD, Hilcorp also failed to meet its drilling obligations there, drilling only two of the three grassroots wells in the 2023 plan and only one of two sidetracks in the plan. The grassroots wells the company drilled targeted the Upper and Lower Beluga sands and the sidetracked well targeted the Beluga. The division said Hilcorp also completed plugging and abandoning Cook Inlet State 17589 1A, drilled in 1962.
The division said that in the technical meeting on North Cook Inlet, Hilcorp explained that it states it will drill up to x number of wells because it may not achieve drilling all the wells in the POD, calling the number of wells in the POD a best-case scenario. "When looking at the total well count across the Cook Inlet offshore units, committing to drill numerous offshore platform wells is unlikely achievable by one rig during the drilling season," the division said.
SUBHED: Granite Point The division said Granite Point began producing in 1967, with the South Granite Point unit expanded in early 2015 to include the Granite Point field and renamed the Granite Point unit. During 2023, Hilcorp produced 811,400 barrels of oil and 1.189 billion cubic feet of natural gas at Granite Point, which includes the Hemlock and Granite Point sands participating areas, with exploration and production conducted from the Granite Point, Anna and Bruce platforms.
In the 2024 POD period, Hilcorp's plan includes up to one grassroots well from the Bruce Platform targeting a potential Tyonek formation gas accumulation.
"Due to qualifying language previously addressed in this decision, Hilcorp will need to both notify the Division and potentially submit an amendment to their POD by no later than the end of the third quarter of the POD period if it does, or will not, achieve this drilling commitment during the POD period," the division said.
If commercial quantities of gas are found, the company will evaluate production facility and pipeline capacity constraints.
North Cook Inlet North Cook Inlet has been in production since 1969, the division said, producing from the Tyonek Platform in northern Cook Inlet. Hilcorp acquired the unit from ConocoPhillips in 2016 and holds 100% working interest in all producing intervals.
Alaska Oil and Gas Conservation Commission data show 2023 North Cook Inlet production of 13.61 billion cubic feet of natural gas, up from 12.17 bcf in 2022.
For the 2024 POD, the division said "Hilcorp commits to drilling up to three grassroots wells targeting Beluga sands," and up to two sidetracks. The division said Hilcorp reported in the technical meeting that it was not working on plans for the second sidetrack because of the limited drilling season.
In its 2024 POD plans Hilcorp said the anticipated spud for the first of the three wells, NCIU A-19, was in May, followed by A-20 in June and A-21 in July. No date is given for the sidetrack, NCIU B-01B. Various rig and non-rig well projects are also planned.
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