For over a decade, Hilcorp Alaska has been proud to be the driving force in the Cook Inlet basin, investing significantly in Southcentral Alaska. When we entered the Alaska market, the basin was in rapid decline, and few investors were willing or able to put up the capital required to produce more oil and gas from the aging fields. Since then, we’ve invested more than a billion dollars in the Cook Inlet basin, generating well over 700 billion cubic feet of natural gas to power and heat Alaskan homes and businesses.
Our team of more than 1,500 Alaska employees has worked to stabilize the natural gas supply for the Railbelt. Our efforts have included drilling more than 155 new wells, implementing new technologies, and repairing aging infrastructure. And recently, Hilcorp made a long-term commitment to ensure the only jack-up drilling rig in Alaska doesn’t leave the state at this critical time.
Unfortunately, aside from Hilcorp Alaska, industry investment in the Cook Inlet basin has continued to decline, making our operations increasingly difficult. The necessary equipment is hard to source, especially on short notice, and contractor services are hard to find. In addition, the federal permitting processes are more tedious than ever. These challenges all layer on top of what is already only a six-month offshore drilling season.
Even with these headwinds making operations difficult, Hilcorp Alaska is deepening its commitment to the Cook Inlet, planning to deploy up to four drilling rigs to add 15 to 20 new wells annually over the next five years. This near-billion-dollar investment is crucial not only to sustain our current operations, but also to meet future needs, despite the 30% year-over-year production decline that’s common in Cook Inlet wells.
We are doing what we can, where we can. During the recent cold spell in February, when the utility-owned gas storage facility faced operational issues, Hilcorp Alaska did not just meet, but exceeded its contractual obligations by releasing additional gas reserves to ensure uninterrupted energy supply without increasing prices. Similarly, even as our contract with Homer Electric Association concluded in March 2024, we provided an extra year of gas supply at stable prices, smoothing their transition to other energy sources. And we are collaborating with the utilities and regulatory agencies to make our gas storage assets available for commercial use.
Hilcorp Alaska has and will continue to fully develop our Cook Inlet basin leasehold with a specific focus on delivering a reliable and affordable supply of natural gas.
As Hilcorp Alaska continues to invest in and expand our natural gas production in the Cook Inlet basin, we remain in constant contact with utilities, state and local governments, and the community. With so many Alaskans living and working for Hilcorp Alaska, our employees are personally committed to delivering lasting energy solutions for Alaska.
Luke Saugier is senior vice president, Hilcorp Alaska.
