THE LINK: JULY 2023 35 light crude oil from the slope. Producing the viscous oil is done through horizontal production wells and requires specialized processing, Saugier said. “A big part of our investment will be in the new processing facilities,” he told legislators. The technologies developed for Milne Point will also be used in expanding viscous oil production at the nearby Prudhoe Bay field, where the Schrader Bluff formation is also found. Hilcorp is also experimenting with production from the Ugnu, a large deposit of heavy oil found at Milne Point and Prudhoe Bay. The company now has one well producing from the Ugnu and is working with scientists at the University of Alaska Fairbanks on the use of solvent to loosen the oil and expand production. In Cook Inlet Hilcorp is focused on expansion of natural gas production and plans $1 billion over the next five years in new exploration and development. This will require the addition of new drilling rigs and a new offshore gas production platform, Saugier said. A new gas pool has been identified near the Granite Point field, a historic 1960s-era oil field that has been producing since the 1960s, and additional new drilling is planned at Ninilchik, an onshore gas field on the Kenai Peninsula. Hilcorp entered Cook Inlet in 2012 when it purchased mature, declining assets from Chevron, Marathon Oil and Exxon Mobil and invested in repairs and drilling 90 new wells, the same strategy followed later in North Slope fields. The company was able to stabilize both oil and gas production, but the decline in gas supply is now expected to resume in 2027, according to state of Alaska geologists. Natural gas and electric utilities in Southcentral Alaska are now developing plans to deal with the gas shortage for power generation with expansion of renewable energy. Hilcorp will meanwhile continue developing additional gas but is also studying the use of mothballed offshore platforms for renewable energy, including tidal power. — Tim Bradner They call it the Hilcorp Wedge. Thanks to “substantial investment” and technological advances, Hilcorp has not only stemmed the North Slope production decline but has added 730 million barrels to the pipeline since it entered the Slope in 2014. Luke Saugier, senior vice president for Hilcorp Alaska, said the company has invested over $1 billion and drilled more than 100 new wells, with another 20 wells planned for this year. It’s grown production at Milne Point from 18,400 barrels per day in 2014 to over 41,000 barrels per day today, and he expects it to grow to 60,000 barrels per day in the next four or five years. If the state enacts one of two tax bills, SB 114 and SB 122, or the individual pieces of those bills, “Hilcorp would be forced to scale back in Alaska, especially in the Cook Inlet where the investment and operating environment is most challenged,” Saugier told the Senate Finance Committee last week. SB 114 reduces the per-barrel production tax credit for North Slope producers while SB 122 is a corporate income tax that primarily impacts Hilcorp. “And because Hilcorp is the operator at Prudhoe Bay, even a narrowly targeted tax on Hilcorp would impact overall investment in Alaska’s largest oil field,” he said. “There has been discussion about how Senate Bill 114 and Senate Bill 122 would level the playing field. This bill would not level the playing field. In fact, it would tilt the field against the small independent companies that the state has been trying for decades to incentivize to come to Alaska. “The state of Alaska, under three different governors, was fully aware of our structure when it approved each one of our transactions. However, now, after Hilcorp has invested billions of dollars and dramatically increased production on the Slope and in the Cook Inlet, we’re being unfairly targeted.” You can watch the entire presentation at www.akleg.gov/basis/ Meeting/Detail?Meeting=SFIN%20 2023-05-05%2009:00:00 Hilcorp focuses on the future
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