New oil project in Cook Inlet
Hilcorp Energy is planning to develop an oil deposit below the gas reservoir in its North Cook Inlet field, where the company now operates the Tyonek platform. The first development well is planned for 2020. Hilcorp has also built a new oil pipeline to connect with Cook Inlet’s west side. Presence of the oil has long been known. ARCO Alaska made the original discovery in the early 1990s. Although test wells were drilled the deposit was not developed. Hilcorp has now decided to move ahead with it.

Slope deposit reaches to ANWR
Independent Jade Energy is planning a test well in 2020 in the Sourdough prospect area a few miles southeast of the Point Thomson gas and condensate field operated by ExxonMobil. BP drilled two wells at Sourdough in the mid-1990s that discovered oil. Reserves have been estimated at between 50 million barrels and 100 million barrels but the find was never developed. Jade’s leases border the Arctic National Wildlife Refuge, and we’re told the oil formation extends across the border into ANWR. This could force the federal govenment into offering that acreage for lease so that drainage of oil doesn’t occur from wells drilled on nearby state leases

ConocoPhillips bullish on slope
ConocoPhillips finished up its busy winter exploration season on the North Slope and is still bullish about future development. The company had 700 employed on its GMT-2 project in the National Petroleum Reserve-Alaska along with about 400 on the exploration program, state legislators in Juneau were told in a briefing by ConocoPhillips. A gravel pad, vertical support members and some pipeline has been installed. Another 700 will be employed next winter. GMT-2 will cost about $1 billion and is expected to begin producing in 2021, with peak output of 35,000 barrels per day to 40,000 barrels per day, Scott Jepsen, the company’s vice president for Alaska external affairs and transportation, told the House Resources Committee.

On Willow, a larger project further west in NPR-A, a Final Environmental Impact Statement from the U.S. Bureau of Land Management is expected later this year with a Record of Decision, which also approves federal permits, coming in the first half of 2020. The ROD and issuance of permits will clear the way for ConocoPhillips to approve construction. Willow is expected to begin production in 2024 or 2025 with a current expectation of producing 100,000 barrels per day at peak. That could change if more oil is found in the area. ConocoPhillips is already assessing another discovery nearby, “Willow West.”

The company also expects the new Doyon Drill- ing “extended-reach” drill rig to be on the slope a year from now to begin drilling wells to Fiord West, an identified oil deposit in the northwest part of
the Alpine field. Production is to begin in August, 2020 with an expected peak of 20,000 barrels per day. One secret to the company’s success is new efficiency in development and drilling, which has lowered costs. ConocoPhillips can now profitably develop North Slope oil at crude prices down to $40 per barrel, Jepsen said.

One concern oil producers have is that the state will look once again to the industry to help balance a fiscal deficit. There is really no revenue gap for the state unless a large Permanent Fund dividend is paid. A $3,000 PFD is now proposed.