Hilcorp's 2023 Plans for Cook Inlet: Ongoing investment into sourcing natural gas.

• Author: Anderson, Tasha

In mid-2022 Hilcorp Alaska notified local utilities that it did not have enough natural gas reserves to commit to new contracts as current contracts expired. At the time, contracts with the oil and gas producer were up for renewal in periods ranging from two to eleven years. Many utilities are already taking action to reduce their reliance on natural gas or to secure contracts with other providers. The Fairbanks North Star Borough's Interior Gas Utility, for example, has already announced its intent to power the Interior with North Slope natural gas.

Whatever plans Alaska's utilities implement in the coming years to reduce their reliance on Cook Inlet natural gas, a smooth transition depends on ongoing production, which shouldn't be a problem.

According to the "2022 Cook Inlet Gas Forecast" published in January 2023 by the Alaska Department of Natural Resources' (DNR) Division of Oil and Gas, there are "significant gas volumes potentially available through additional investment and development in currently producing fields" in Cook inlet. It estimates 820 billion cubic feet of proved gas reserves in Cook Inlet that is "economic to develop." The report notes there are "key uncertainties" that affect that estimate, such as costs, production rates, and the individual rate of return a company may need to invest.

The report also estimates that those gas volumes can meet the current level of demand for natural gas until approximately 2027, with this caveat: 'This report is not intended to be a prediction of how Cook Inlet gas supply and demand will play out in future years. Rather, it serves as a tool for understanding Cook Inlet's capacity to meet natural gas demand under present conditions and assumptions."

According to Hilcorp spokesperson Luke Miller, the company anticipates spending "hundreds of millions of dollars" in Cook Inlet over the next few years to produce additional gas, but still it urged local utilities to diversify their energy portfolios. Whether or not Hilcorp will be producing the lion's share of Cook Inlet gas far into the future, it is still investing in its operations there and has submitted Plans of Development (POD) to DNR for 2023 laying out what some of that investment entails. /Editor's note: As of press time in early April, the majority of the POD were submitted to, but not yet approved by, DNR.J

North Cook Inlet Unit

In its 2023 POD for the North Cook Inlet Unit (NCIU), Hilcorp indicated it had achieved several...