GUEST COMMENTARY: Hilcorp’s proven ability to increase production is just what Alaska needs
In 2009, elected officials and leaders across Southcentral Alaska were sounding the alarm about the risk of losing natural gas deliverability due to inadequate gas supply. The possibility of rolling blackouts had citizens on edge and demanding solutions.
Once an active, thriving oil and gas basin, Cook Inlet oil production peaked in 1970, and had since declined to the point where the big Cook Inlet players were no longer investing in new projects.
Plenty of hydrocarbons remained in Cook Inlet, but not in quantities sufficient to hold the interest of larger, multi-national companies who typically prefer large-scale projects.
The Alaska Legislature moved quickly, changing Cook Inlet’s tax structure to attract more investment. Soon thereafter, smaller players swarmed into the Inlet and began looking for new oil and natural gas.
The most notable was Hilcorp, which began buying assets from Marathon, XTO, and others. Before long, Hilcorp was the dominant player in Cook Inlet, and began injecting hundreds of millions in new investment into finding oil and gas.
Fast forward a few years, and Southcentral Alaska’s utilities had all the gas they needed under contract, as well as a new storage facility that allowed excess gas pumped during the summer to be saved for wintertime demand spikes.
The Cook Inlet Recovery Act was essentially repealed a few years later, but Hilcorp was now well established in the area with plans for more investment.
More recently, Hilcorp reconstructed the Cook Inlet subsea pipeline that stretches along the west side of the Inlet, a $90 million project.
After years of successfully applying its unique business model in Cook Inlet, Hilcorp realized it could do the same on Alaska’s North Slope, another basin with significant potential. In 2014, Hilcorp purchased a portion of BP’s assets: Northstar, Milne Point, Endicott, and Liberty.
Since then, Hilcorp has operated the fields, increasing investment, activity, and production from the producing fields. Hilcorp has made significant investments, increased daily production by thousands of barrels a day, and most importantly has extended field life.
The Prudhoe Bay announcement represents the next opportunity in Alaska’s oil and gas story, and is a natural outgrowth of oil field economics. Hilcorp has a proven track record of taking over older, more established oil and gas fields and breathing new life into them.
The positive impact they have had on the economy of the Cook Inlet basin has been significant and continues.
Their can-do attitude is a positive sign that Alaska’s largest and most iconic oil field will continue to support thousands of Alaskan jobs and produce oil and generate state revenue for years to come.
Tim Dillon is the Executive Director of the Kenai Peninsula Economic Development District. KPEDD is a non-government organization that aids and promotes responsible and sustainable regional economic growth.