Hilcorp outlook for maintenance, some drilling on peninsula in 2020
The big news from Hilcorp these days is its $5.6 billion bid to buy BP out of Alaska, but not all its focus is on the North Slope. Cook Inlet still plays a role in Hilcorp’s footprint in Alaska.
“We have 537 fulltime Hilcorp employees. Ninety percent of them live here in Alaska and over half of them live on the Kenai Peninsula. We have found the Kenai Peninsula workforce to be a wonderfully experienced, creative, energetic workforce to do what we do every day and we will in the future continue to tap into the Kenai Peninsula workforce,” said Dave Wilkins, senior vice president of Hilcorp Alaska, speaking at the 2020 Economic Outlook Forum in Seward earlier this month.
Hilcorp got its foothold in Alaska in Cook Inlet in 2012, buying up oil and gas assets from companies looking to get out of the aging region.
When Hilcorp got to Cook Inlet, much of its activity was drilling natural gas wells.
“Early when we got here it was a lot of drilling on the Kenai Peninsula, mainly gas wells because we needed to prop up the gas market that feeds the utilities and the home heating. And we did that and then we didn’t have to do it. We just do it as needed. And then we shift our drilling to the North Slope, which is, right now, where most of our activity is,” Wilkins said.
Hilcorp’s focus on new production has switched elsewhere — the North Slope and, currently, an exploration project on the Yukon Flats in the Interior. But Wilkins says they’re still generating 32,000 barrels of oil equivalent a day in Cook Inlet — meaning volume of oil and gas.
Wilkins says Hilcorp plans to drill five to seven new gas wells on the peninsula in 2020. There’s a project near Beaver Creek in Kenai and expansion of the Seaview development near Anchor Point.
“We will continue adding perforations and working on existing wells, fixing wells, keeping the facilities up adding new compression so that everybody can keep their home heat and lights on in the wintertime and during the year,” Wilkins said.
Wilkins says Hilcorp is continuing to plug and abandon old wells no longer in production in Cook Inlet. One of their largest shutdowns was closing the Drift River Terminal at the base of Mount Redoubt across Cook Inlet after installing a pipeline that takes oil directly to Marathon.
“We did the right thing and said, ‘We want out of it. Let’s permanently abandon it.’ And we did so. We cleaned the tanks, cleaned the pipeline and now the lights are out at Drift River at the base of the volcano,” Wilkins said.
In 2019, Hicorp plugged 10 wells onshore and a couple offshore, Wilkins said. This year, they plan to plug 10 more on the peninsula and one offshore, by the Tyonek Platform in the northernmost Cook Inlet field.
Hilcorp had a failure in its Middle Ground Shoal pipeline in December 2016 that leaked 210,000 to 310,000 cubic feet of methane per day into Cook Inlet for nearly four months. The pipeline had a suffered a previous leak in 2014, when it was owned by Exxon Mobil subsidiary XTO in 2015, according to the Alaska Department of Environmental Conservation.
At the time, Hilcorp said it couldn’t fix the leak immediately due to ice conditions in the inlet and couldn’t shut down the gas line because it was needed to provide power to offshore platforms. Divers repaired the line in May 2017. Hilcorp was not fined for the leak but signed a consent order with the Pipeline and Hazardous Materials Safety Administration that required further inspections and repairs on the Middle Ground Shoal oil and gas field.
Hilcorp doesn’t plan any drilling offshore in Cook Inlet in 2020. The agenda is workovers and repairs at their 12 platforms and associated infrastructure.
“We will continue with our integrity and inspection program to make sure that the pipelines and the platforms and the facilities are in good shape. And we have an ongoing inspection to make sure we understand the condition of those. We take out of service the stuff that is in bad condition, replace it, repair it,” he said.
If Hilcorp’s BP purchase goes through, it expects to double its workforce in Alaska.