Hilcorp Alaska, LLC recently jump started investment in Alaska’s oldest oil and gas region with a $3.9 million federal bidding round. The company bought the exploration rights to 14 offshore blocks covering 76,615 acres in Southcentral Alaska’s Cook Inlet.
This area was the site of some of the earliest drilling in Alaska in the 50s and 60s, but its pace has shrunk in recent decades due to booms in production and exploration above the Arctic Circle on the North Slope and offshore.
Much of that previous Cook Inlet production was in the more northern state-controlled waters. Houston-based Hilcorp however, is betting big that the little-explored southern waters owned by the federal government will pay off.
The latest round of buying in the southern region is the newest sign that outlooks are positive for the oil and gas industry across the state. In the past 8 months alone, Caelus Energy made an astonishing discovery in Smith Bay, the State of Alaska had an “outstanding” leasing round, the Arctic Slope Regional Corporation acquired 21 leases in the Beaufort, and Italy’s Eni submitted a development plan to the Bureau of Ocean Energy Management.
This recent surge of developments comes despite environmentalists’ claims that companies are uninterested in further exploring Alaska’s vast energy potential in the Arctic and elsewhere.
In addition to their impressive Cook Inlet holdings, Hilcorp also has an extensive presence in the Arctic, with a $3 billion ongoing project in the Beaufort in partnership with BP. Hilcorp has had a strong history of increasing production at existing fields since its entrance into the Alaskan market in 2011.
The company is also conducting a $75 million infrastructure upgrade on its existing pipeline and storage facilities in the Cook Inlet, which will include improvements to some of the oldest oil and gas terminals in the state.
Hilcorp’s purchase of BP’s interest in the Northstar and Endicott sites and its50 percent acquisition in the offshore Liberty field demonstrates that Arctic expansion is a major priority,. The Liberty field, currently in the permitting process, could be the biggest play on the North Slope in years with an estimated 80-130 million barrels of recoverable oil in the shallow waters of the Beaufort.