Cook Inlet and the Interior Basin have been the major areas of focus for Hilcorp, Cook Inlet Energy and Doyon Ltd. Hilcorp has only been in Alaska for a few years, but is already making a large impact on production. They purchased assets from Chevron in 2012 and from Marathon in 2013. Production in their major oilfields has doubled from January 2012 through September 2014. Hilcorp President Greg Lalicker noted that he was confident that Hilcorp could meet the needs of Alaska for years to come. An example of this is the Trading Bay Field. There was a steady decline of the field and Hilcorp was able to turn this around and increase production in the field. Hilcorp has invested a total of $73 million in the Trading Bay Field.
Hilcorp will also increase their investment in Alaska with the asset transfer from BP that closed last week. This transfer included 100 percent of BP’s interest in Endicott and Northstar and 50 percent of Milne Point on the North Slope. There is also an option to purchase 50 percent of BP’s interest in the Liberty Development.
David Hall, President of Cook Inlet Energy, continued the discussion by outlining the growth within Cook Inlet. Hall shared the significant investment of Cook Inlet Energy from $34 million in 2012 to almost $140 million in 2014. Cook Inlet Energy works in four distinct fields, Redoubt, West McArthur River, North Fork and Badami. He concluded that the company’s capital expenditures have led to a 436 percent increase in BOE/D from 2012 to 2014. They are continuing to grow and are working hard to offset the production decline.
Jim Mery, Vice President at Doyon Ltd. rounded out the presentation with his company’s work in the Yukon Flats Basin and Nenana/Minto. He said that increased oil activity around the state has revved up Doyon’s business and they are seeing the benefits. Mery outlined Doyon’s objectives of oil and gas discoveries in both basins; new markets for Doyon oilfield service companies; business opportunities for nearby village corporations; job training for shareholders; and to secure new partners for State of Alaska leases.
A focus on the Arctic rounded out day 1 of the RDC Conference. Drue Pearce, Senior Policy Advisor with Crowell & Moring gave a detailed description of the Arctic Council and Alaska’s place in Arctic policy issues. She stressed the shift of the council from promoting economic and energy issues to protecting the environment and conserving its resources. There are many people and organizations that covet the Arctic; and often their agendas do not mesh with Alaska and the Native Alaskan lifestyle. There is currently no discussion of economy or smart development when discussing Arctic policy.
The United States is poised to take over the Chairmanship of the Arctic Council in 2015. Secretary of State, John Kerry, will be the chair of the council for the 2 year US term. Alaska will be well represented with Fran Ulmer as the Special Advisor on Arctic Science and Policy. The theme for the US Chairmanship will be “One Arctic: Shared Opportunities, Challenges and Responsibilities.” The thematic areas include addressing the impacts of climate change in the arctic, stewardship of the Arctic Ocean, and improving economic and living conditions in the region. This will be the first time that US policy is addressing economic issues in the arctic in the current administration. Alaskans should continue to watch the work of the Arctic Council because it directly affects the living and working conditions for many Alaskans. Policy-makers should have input from people who live and work in the Arctic when making decisions regarding our coastlines. Some want to shut off the entire Arctic and if they are not able to do that, they will section it off into pieces that do not allow Alaskans to live the lives they have lived for hundreds of years. It is important that Alaskans have a seat at the table when discussing Arctic policy.
The North Slope is primed for new development and Repsol and Caelus Energy Alaska shared their successes from the past year. Bill Hardham, Alaska Operations Manager for Repsol, reported that they were looking forward to their fourth drilling campaign on the North Slope and have made good progress from the first three winter campaigns. Repsol is the second largest North Slope leaseholder with more than 650,000 acres. They intend to be very busy in 2015 with a 500+ workforce and a budget of $240 million. Repsol is currently waiting for permits to be approved and to have the proper weather to start ice road construction. In the past three seasons, Repsol has drilled nine wells and invested $650 million in the North Slope. They first entered the Alaska market because legislators were willing to work on the tax structure and make Alaska more competitive in the national and global market.
Pat Foley introduced Caelus Energy Alaska to the conference to finish the day’s presentations. Caelus is a privately held Exploration and Production company founded in 2011. It acquired Pioneer Natural Resources Alaska assets in April 2014. Caelus is currently working to develop Oooguruk, where they are 70 percent operators. Oooguruk should have 13,000 BOPD gross production, 80+ Alaska employees, and 150-300 Alaska contract workers. Caelus has a $500 million capital budget for 2015. They see Oooguruk as their platform to grow the business, increase production, and further explore the North Slope. In the next year, there will be many new projects with a lot of diversity for Caelus Energy Alaska.