Hilcorp Energy's Innovation drill rig

Hilcorp Energy's Innovation drill rig will be at work in Prudhoe Bay this fall.

Hilcorp Energy has told state officials it will resume drilling of new wells in the large Prudhoe Bay field on the North Slope, where it is the field operator. Drilling was suspended in Prudhoe, as with most other fields on the slope, when oil prices crashed in 2020.

The move won’t increase the number of rigs working overall on the slope because Hilcorp is moving one of two rigs that were at work in the Milne Point field to Prudhoe Bay to restart the drilling there. The move will leave one rig still drilling in Milne, which Hilcorp also operates but is also 100 percent owner.

Still, the decision is important because it was made by the majority of the several Prudhoe Bay owners, reflecting a general consensus that conditions are improving for the industry. Decisions on spending money in Prudhoe Bay, the largest field on the slope, require consensus among its owners on specific drilling or development programs, and this is sometimes difficult to achieve because companies typically have different view on the profitability of a specific project.

“We are pleased to have support from our working interest partners to drill several Prudhoe Bay wells in the coming months, said Luke Saugier, Hilcorps’ Senior Vice President, Alaska.

“The last year has been challenging but I’m proud of what our team accomplished, including increasing production at Prudhoe Bay. We look forward to working with our Prudhoe Bay partners, ConocoPhillips, ExxonMobil and Chevron, to continue to safely and responsibly develop Alaska’s natural resources,” Saugier said in a statement.

Hilcorp is now one of the major Prudhoe owners after purchasing BP’s holdings in the field last June, and Hilcorp is known to be aggressive development activity. Other Prudhoe owners, however, are typically more conservative.

Overall, the number of drill rigs at work on the slope remain the same at six. ConocoPhillips has one rig working in the National Petroleum Reserve-Alaska at the company’s new GMT-2 project; one rig in the Alpine field drilling wells for Fiord West, a new project in that field, and one smaller “workover” rig in the Kuparuk River field working on rehabilitation of older wells.

Eni Oil and Gas also has one rig working in the Nikaitchuq field northeast of the Kuparuk River field, and plan to restart a second rig, now “stacked,” or stored in the field, later this year.

In contrast to Prudhoe, ConocoPhillips is sole owner in its NPR-A project as well as the Alpine and Kuparuk River fields, as is Eni at Nikaitchuq. Having a single owner usually results in faster decisions on projects.

Despite the improving conditions for the industry, Alaska Oil and gas jobs continue in the doldrums. They totaled 6,200 in June, down 900 from June 2020 and 3,800 from prepandemic June 2019, according to state Department of Labor and Workforce Development estimates for June released last Friday.

The difference from prepandmic 2019 reflects the producing companies’ decisions in 2020 to slash drilling, which is a high-employment activity. That happened when oil markets and prices collapsed in early 2020 due to the pandemic. However, while oil market demand and prices have shown strong recent recovery the industry had not yet resumed North Slope drilling significantly, which likely indicates continued caution by the companies.

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