Hilcorp Energy is about to solidify is stake on the North Slope, as operator of the giant Prudhoe Bay field. BP hopes to consummate a sale of its assets to Hilcorp this summer with the turnover of Prudhoe Bay scheduled for June 30, although the state of Alaska must give final approval.
But Hilcorp still has a big stake in Cook Inlet, where it operates oil and gas fields and is the major supplier of natural gas to utilities in Southcentral Alaska.
As Hilcorp expands on the slope, where it operates three smaller fields, it also wants to grow in the Inlet, in fact by exploring an area that was one of Alaska’s earliest oil and gas prospects. This is the Iniskin Peninsula on Cook Inlet’s west side, where explorers drilled as early as 1904..
Hillcorps was the sole bidder in Alaska’s June 17 Cook Inlet lease sale, making three offers for three tracts. The state had solicited bids on 7.9 million acres of unleased acreage in the Cook Inlet Basin in southcentral Alaska and also included the Alaska Peninsula, in southwest Alaska.
“We weren’t surprised at the result ( of few bids) given the state of current oil prices but it was still encouraging to see Hilcorp interested in Cook Inlet. They have a lot on their plate right now with the BP acquisition on the North Slope,” said Tom Stokes, director of Alaska’s Division of Oil and Gas,
Hillcorp acquired state leaseTracts 840 and 841 onshore on the Inlet’s west side. The third lease, Tract 805, is on the east side near Anchor Point north of Homer. It is near Seaview, a new natural gas production pad Hilcorp os developing, and also near Cosmopolitan, an offshore oil field being developed by BlueCrest Energy, an independent company based in Fort Worth, Texas.
Cook Inlet is a mature producing region first developed in the 1960s where Hilcorp is now the major leaseowner and producer of both oil and gas.
The company took over onshore and offshore oil and gas producing fields in 2012 and 2013 from Chevron Corp and Marathon Oil.
Stokes said oil seeps on the Iniskin Peninsula attracted early Alaska explorers with the first well drilled in 1904 and the most recent effort in 1955. No commercial discoveries were made, however.
While Cook Inlet is a mature basin explored for decades geologists say the region still has potential. New discoveries are still being made by companies using new geologic theories and new technology.
While depressed oil prices were a factor in poor June 17 bidding results the regional natural gas prices in Southcentral Alaska, which is an isolated market, are robust compared with the rest of the U.S.
Gas producers, mainly Hilcorp, are selling gas to regional utilities at prices ranging between $6 per mmcf to $8 per mmcf, which compare well against prices in the $2 per thousand cubic feet range in the Lower 48 states.
Southcentral Alaska is an isolated gas market where there is no connection to Lower 48 gas natural gas pipelines or fields, so regional utilities are heavily dependent on natural gas and Hilcorp is the major gas producer.
Hilcorp’s interest in the Iniskin area may have been motivated by natural gas potential. Cook Inlet Region, Inc., or CIRI, a major Alaska Native-owned company, also owns lands in the area.