Two more aged Cook Inlet oil platforms may be headed for permanent shut-down

More aging Cook Inlet, Alaska oil platforms are being shut down, possibly for good. It could also be the end for one of the first offshore oil fields developed in Cook Inlet, Middle Ground Shoal.

Hilcorp Energy, the major operator in the Inlet, told state officials in a filing that repair of a damaged fuel gas line serving two platforms in the Middle Ground Shoal field cannot be repaired.

The fuel gas pipeline along with Platforms A and C in the Middle Ground Shoal field that it served have been shut down since a gas leak was discovered in 2021.

Hilcorp has been evaluating repair options but has now told the state Division of Oil and Gas that it can’t be done economically.

Platform C, one of two production platforms served by the gas line, will be shut down permanently but the company is still looking at possibilities of restarting Platform A with fuel supplied from an undeveloped nearby gas deposit.

There are three million barrels of recoverable oil left in the Platform A area but fuel gas is needed to operate the platform.

Hilcorp is studying whether this can be done by drilling from the existing platform or whether a small, separate gas production platform will be needed, which could make the venture uneconomic. Two other Middle Ground Shoal platforms, Baker and Dillon, were shut down in 2003 and 2012.

Middle Ground Shoal is the first of Cook Inlet’s offshore oil field brought into development. All four of its platforms were installed between 1964 and 1967.

Permanently closing Alaska offshore platforms raises issues for both the owner companies and the state. Under terms of the state oil and gas leases companies are obligated to remove platforms when production operations cease. This will be expensive, and it is a cost that Hilcorp would prefer to stave off as long as possible.

The state has a concern in that removing the platform could be more damaging to the environment than just letting it sit. Some Inlet platforms no longer producing have been sitting for years, such as the Dillon platform in Middle Ground Shoal that last saw production in 2003.

Companies have argued that as long as there is some chance that the platforms can be used the state shouldn’t impose the removal obligation and so far state agencies have gone along with this.

Hilcorp wants to preserve options for someday tapping nearby small pockets of undeveloped oil and is also considering using the platforms to site tidal power generation facilities.

Cook Inlet has the second-highest tides in North America and companies working on renewable energy are working on tidal-generation from locations near shore, taking advantage of the Inlet’s strong twice-daily tidal currents.

Seventeen platforms for both oil and natural gas have been installed in Cook Inlet since the 1960s. Seven are now shut in as no longer economic, but 11 are still operating including one oil platform, the Osprey, operated by Glacier Oil and Gas, a small independent, and the Julius R platform, for gas production, operated by Furie Operating Alaska, another small independent.

Over the years the state has worked to help the Inlet producers keep the oil platforms limping along, with reductions of the one-eighth state royalty and special tax terms.

Production at most of the shut-in platforms is also just suspended, meaning in theory the wells can be restarted, but Hilcorp has also told the state that it will begin Plugging and Abandoning operations this year on platform wells with suspended operations.

Plugging and Abandoning means that wells will be permanently closed off with cement snd eith surface casing removed.

While Cook Inlet is a historic Alaska producing province many believe the basin still has potential for new oil discoveries. However, more attention is now focused on finding new natural gas to replace declining gas production in the region.

Alaska’s largest communities are in Southcentral Alaska and they mostly depend on gas for residential and building heating. Most power generation is also fueled by gas.