New Cook Inlet Player To Spend $200 Million in AK
New player in Alaska, Hilcorp Energy, is a little know private company with big plans for Cook Inlet oil and gas production. And it may play a role in giving a boost to Alaska’s slumping oil service industry. Hilcorp president Greg Lalicker outlined some of the company’s goals in Alaska at a talk before the Anchorage Chamber of Commerce on Monday.
Hilcorp Energy is the second largest privately held oil and gas company in the U.S., according to company president Greg Lalicker.
“…but we keep a very low profile, because being private, you just don’t hear about us because we are not out there making announcements and giving investor presentations and in the news all the time. But we are a good sized company, you know we have probably 300 plus million barrels of reserves, we’ve become a mid size independent.”
Lalicker said Hilcorp has built it’s reputation, and its profits, by taking on old, apparantly played out leases and wringing the last of the resources from them.
Hilcorp operates 250 oil fields nationally, with more than 360 wells across those fields. It is the largest oil producer in Louisiana, and now claims Alaska as it’s second largest operation. The company’s reserves are about half oil and half gas, although Hilcorp is eyeing oil projects, due to the declining price of natural gas, Lalicker said.
Hilcorp purchased Chevron’s leases in Cook Inlet last year, in line with the company’s policy of acquiring old oil fields, especially those let go by major producers.
“We buy the fields, and then we exploit the properties. What we are good at is reservoir engineering, it’s geology and geophysics and field operations. We get out there and start chasing those opportunities that the other companies didn’t want to chase for whatever reason, it just wasn’t economical enough, wasn’t big enough, wasn’t attractive enough for the large company.. we start chasing those. And again, over the last five years, we spent about a billion seven (dollars)on exploiting the properties that we own.”
Lalicker said Hilcorp plans to spend 200 million dollars in Alaska this year on it’s efforts to enhance the value of old operations in Cook Inlet. The company has ten platforms in the Inlet.
“Most of those facilities at MacArthur River are of course on platforms out on the water in Cook Inlet, that you’ve all probably seen. Most of them have drilling rigs on them or had drilling rigs on them that were built in the 1960s which were basically junk. So the first thing we’ve been doing, is stripping the old rigs off there and working on getting a platform base rigged where we can move from platform to platform and start working on some of these wells.”
He says lining up people and equipment to fix the broken facilities is the company’s immediate focus. Lalicker says further exploration and drilling will come later. Hilcorp’s biggest obstacle so far in Alaska? Lalicker says the lack of oil field support services. He says in terms of finding equipment, rigs and people, on a par with what is available in the Lower 48, the right people and equipment don’t exist here or if it does, are committed to existing projects.
Hilcorp’s external affairs manager, Lori Nelson, says Hilcorp can help spur Alaska’s oil field service industry
“The folks that had the acquisitions to date have basically been boiling operations down, and now that we’re here to ramp it back up and increase production, those folks that were local to the area, those local providers have taken their operations elsewhere or shut their doors. I’ve run into a number of entities that have moved their equipment to North Dakota. And, that’s the type of thing, the service and support industry, we’re just trying to get the message out that we are here for the long haul and we want to be able to provide them a steady business flow. “
Nelson says most of the company’s 265 employees are local workers.
According to Nelson, Hilcorp’s production focus could be fifty fifty oil and gas in the Inlet
“We’ll take both, especially noting the climate that we are in with Southcentral and being the main energy provider for our utilities. We certainly recognize the importance on gas, and we are focused on it, but as far as new exploration, either one is good for us. “
Lalicker says Alaska’s oil tax regime does not influence Hilcorp’s decision to invest. He says that the company is here to make money producing oil and gas, not to modify the fiscal regime.
The company’s decision to make use of the Drift River tank farm, has been criticized by environmentalists as a bad one.
“Putting oil at the base of an active volcano is playing Russian roulette with Cook Inlet fisheries.”
Lalicker says the tank farm on the West side of Cook Inlet was part of the original Unical, Chevron infrastructure. Drift River was threatened by a volcanic eruption some years ago. Lalicker says it is the logical choice for shipping oil from the West to the East side of Cook Inlet. As far as future operations, Laliker says Hilcorp has no plans to expand to the North Slope in the short term, but is not excluding long term plans. He says right now the company is focused on Cook Inlet. Hilcorp has agreed to purchase Marathon’s assets in Cook Inlet, and that deal is pending regulatory approval.