Skip to main Content
Energy

Hilcorp, Cook Inlet Energy boost their grip on Southcentral oil, gas

Two budding Cook Inlet energy producers came out swinging Wednesday, picking up thousands of acres of oil and gas leases in the region during Alaska's annual sale.

A total of 28 Cook Inlet tracts totaling 145,739 acres were acquired by six bidding groups. By acreage, that's the sixth-largest ever for Cook Inlet, according to Bill Barron, director of Alaska's Division of Oil and Gas.

Barron said the sale, which brought in nearly $4.5 million, is the third largest in terms of money received by the state for Cook Inlet leases -- but it's down from the record years in 2011 and 2012, when the state received $11 million and $6.9 million, respectively.

Hilcorp and Cook Inlet Energy LLC picked up most of this year's leases, asserting a growing dominance Cook Inlet. Hilcorp has steadily boosted its Cook Inlet presence since purchasing Chevron's Kenai area wells in 2011 and Marathon's leases last year. With those assets alone, Hilcorp controls roughly 60 percent of the region's natural gas production.

Hilcorp in particular dominated at the sale, picking up a majority of the leases -- 19 all together, totaling 101,600 acres at a cost of $2.7 million, according to the division of oil and gas.

Hilcorp Spokeswoman Lori Nelson said the company was pleased with the sale. Known for its success in taking over and renovating legacy wells, Nelson said the company is now moving toward more exploration based on its Cook Inlet successes.

"(The lease sale acquisition) is part and parcel to our success as a company overall," Nelson said. "We've had success in taking over legacy assets. (Cook Inlet) is a world class basin and we think there's great production potential."

Barron, too, was pleased to see Hilcorp's expanded presence.

"Typically they aren't too involved in exploration," he said. "So for them to be picking up new acreage is a really good sign."

While Cook Inlet is estimated to have more than 19 trillion cubic feet of natural gas, local utilities have warned of shortages in the near-future if production doesn't increase.

Nelson noted that Hilcorp recently completed a 3D seismic survey near Deep Creek and has plans to drill in the Ninilchik unit on the east side of Cook Inlet this summer. That well will be the first drilled in the unit in three decades.

"We're actively working to our grow our presence in the region," Nelson said.

Cook Inlet Energy LLC picked up far less acreage -- about 29,000 acres costing $870,000. But that was still an impressive showing for the up-and-coming energy company, which picked up five of the six leases on which it submitted bids.

Chief Executive Officer David Hall said the company, despite only a three-year presence in Cook Inlet, has acquired more 700,000 acres in Cook Inlet. That makes it the second largest lease-holder in the region.

"We will continue to be aggressive," Hall said. "We've been aggressive to date in terms of acquiring acreage and drilling. We're one of the companies to keep an eye on."

Other lease sales conducted Wednesday were met with far less interest. No bids were received for leases on the Alaska Peninsula and only one bid was submitted in the Augustine Island geothermal lease sale.

Barron said given the state's history with geothermal leases -- this was the third, with a previous sale for Mount Spurr in 2008 and another in the 1980s -- he wasn't sure what to expect.

"Even by having one bid, I'm kind of pleased," he said.

Despite increasing interest in renewable energy, geothermal has struggled to find a footing in Alaska. There are only a handful of geothermal projects in the state, according to the Alaska Energy Authority. According to the AEA, despite "significant geothermal potential, the attributes of Alaska's geothermal resources remain poorly defined."

Contact Suzanna Caldwell at suzanna(at)alaskadispatch.com

For more newsletters click here

Local news matters.

Support independent, local journalism in Alaska.

Comments