Hilcorp seeks Falls Creak Area expansion

Oil and gas company Hilcorp Alaska wants to add about 40 acres of land to a gasfield located between Clam Gulch and Ninilchik.

Hilcorp applied to the Alaska Department of Natural Resources’ Division of Oil and Gas on Nov. 2 to expand its Falls Creek Participating Area, located around where Falls Creek crosses the Sterling Highway near Ninilchik.

Participating Areas are those proven to sit above recoverable hydrocarbon reservoirs. The Falls Creek Participating Area is the northernmost of three active areas in the Hilcorp-leased Ninilchik Unit, which straddles the shoreline of Cook Inlet between Ninilchik and Clam Gulch, sitting above an underground geological fold called the Ninilchik anticline that runs parallel to the Cook Inlet coast for about 16 miles. The Ninilchik leasing unit was created in October 2001, according to previous Clarion reporting.

Of the 25,909 acres in the existing Ninilchik Unit — which includes both on-shore and off-shore property — 77.5 percent is state-owned and 13 percent is private, according to Hilcorp’s application. Other royalty owners include the federal Bureau of Land Management, University of Alaska and the Alaska Native corporation Cook Inlet Region, Inc.

The expanded Falls Creek Participating Area would contain 1,502.7 acres, 63 percent of which are state-owned, 33 percent private and 3 percent federal. Hilcorp’s expansion application states that mineral rights for the land to be added have already been leased by Hilcorp.

Standard Oil of California drilled the first gas wells in the present Falls Creek Participating Area in 1961. Until 2003, the Division of Oil and Gas leased Falls Creek as a separate unit, but that year its lessee, Marathon Oil, successfully petitioned the Division of Oil and Gas to include it in the Ninilchik Unit. The Houston, Texas-based Hilcorp bought the Ninilchik Unit’s lease from Marathon in 2013.

Alaska Administrative Code states that expanding a lease area requires geological and engineering data that demonstrates the area is capable of producing economic amounts of gas. Hilcorp Landman David Duffy wrote in the expansion application’s cover letter to Acting DOG director Jim Beckman that “only acreage that has been proven to contribute to the production of natural gas has been included in this application.”

The Division of Oil and Gas will take comments on the proposed area expansion until Jan. 4, 2017 and make a decision within 60 days afterward.

The other active areas in the Ninilchik unit are Grassim Oskolkof Participating area — an offshore field in the middle of the unit — and the southern Susan Dionne Paxton Participating Area. Hilcorp also plans to apply for expansions of these areas in calendar year 2017, Duffy wrote.

 

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.

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