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Home My WebLink About2023 Deep Creek UnitH Hilcorp Alaska, LLC April 5, 2024 Jesse Chmielowski, Commissioner Alaska Oil & Gas Conservation Commission 333 W. 71 Avenue, Suite 100 Anchorage, Alaska 99501-3539 Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone: 907/777-8300 Fax: 907/777-8580 RE: DEEP CREEK UNIT, HAPPY VALLEY FIELD, STATE OF ALASKA, 2023 ANNUAL RESERVOIR REVIEW Dear Commissioner Chmielowski: In accordance with Conservation Order No. 553, Hilcorp Alaska, LLC ("Hilcorp"), as Operator, hereby submits for your review the following Annual Reservoir Review for the Happy Valley Beluga/Tyonek Gas Pool in the Happy Valley Field. This is the 191 Annual Reservoir Review and corresponds to events during the 2023 calendar year. Note that the Happy Valley Fie d has been on production since November 2004 and the cumulative production as of 12/31 /2023 is 43.4 BCF with an average rate of 3,777 MSCFD for the year 2023. Production History and Undate Happy Valley field has been produced from, what has been historically reported, 5 major contributing formations: Sterling, Upper Beluga, Beluga, Upper Tyonek, and Lower Tyonek. All the major formations, except the Sterling A sand, are part of the Happy Valley PA. Although the Sterling A sand is not included as a formation in the Happy Valley PA Pool Rules (CO 553 A), it will be included in this report to help include a more wholistic overview of production from Happy Valley field. Historically the Lower Tyonek, Upper Tyonek, and Beluga major formations have been commingled between 2 or 3 for the formations and therefore production allocations from each major formation have been made. Both the Upper Beluga and Sterling were produced independently with individual wells, HVB- 15 and HVB-14 respectively, and therefore do not require allocations. Below is a plot of historical allocated production of the major formations discussed over time, table including total production and the 2023 volume for each formation, and table of well status and current formation splits per well. Happy Valley (Deep Creek) Cumulative Production by Major Formation 25000 r W IXY 0 15000 6 N W y 10000 3 5000 2003 2005 2007 20D9 2011 2013 2015 2017 2019 2021 2023 Year +HVTrad-Sterling +HV PA -Upper Beluga +HV PA -Beluga —HVPA-Upper Tyonek �HV PA-LowerTyonek Page 2 Major2023 . •n Volume IrwlscF I Cumulative Volume MMSCF HVTract- Sterling 0 1962 HV PA- Upper Beluga 197 5876 HVPA- Beluga 2 828 HVPA-U perTyonek 769 24725 HVPA-LowerTyonek 410 10195 Total 1377 43587 cumlatW MMSCf mtdd , I Stedl U Bald Bel, U rT• k LorrerT HVA-01 51 4863 0 X X X 0 1 HVA-02 Active 1609 20 66 X X X 0 1 HVA-03 51 11 0 X X X 1 0 HVA-04 sl 0 0 NA HVA-06 51 0 0 NA HVA-07 SI 0 0 NA HVA-08 Actlw 3006 85 66 X X 0.25 0.75 X HVA-09 sl 4731 0 X X 0 1 X HVA-10 Active 11440 86 70 X X 0 1 X HVA-11 SI 136 0 X X 0 1 0 HVB-12 Act1w 5045 765 35 X X X 1 0 HVB-13 sl 812 0 X X 0.1 0.9 X HVB-14 sl 1962 0 1 X X 0 0 HVB-15 Actw 5876 5M 32 X 1 X 0 0 HVB-16A Active 537 1000 45 X X X 0.5 0.5 HVB-17 Active 3570 1025 45 X X X 053 0.47 Reservoir Performance Sterling-- As noted above the Sterling A sand currently sits above the existing Happy Valley PA. It was first produced in the HVB-14 well starting in 2012 when that well was drilled to specifically target the Sterling based on gas shows in the HVB-13 well drilled in 2008 and gas indication on logs from the HVB- 15 well drilled earlier that year. Based on logs, the Sterling A sand is a gas on water reservoir. HVB-14 was perforated in upper part of the interval containing gas and produced for —1 year until was making a consistent water cut. The well produced until 2016 when it died making 170 mscfd and 220 bwpd and producing a cumulative 1.96 BCF. It is assumed there is no additional remaining reserves left in the Sterling A sand. There are multiple Sterling sands above and below the Sterling A sand but based on the logs obtained in HVB-17 in 2016 none appear to be prospective. Initial reservoir pressure indicated that the Sterling A sand is an under -pressured reservoir with initial pressure gradient of 0.28 psi/ft (485 psi at 1695' TVD). Current pressure estimate for the Sterling A sand is --250 psi based on RIFT data obtained in 2016 from the HVB-17 well. UpgLr Behiga — The Upper Beluga formation, currently defined as Beluga 1-20 sands, has been produced solely from the HVB-15 which was drilled in 2012 targeting the Upper Beluga accumulation. HVB-15 was completed in the Beluga 1-3,5,8, and 9 intervals. The majority, or potentially all, of production is from the Beluga 1-3 intervals. Intervals 8 and 9 were isolated immediately upon completion in 2012 as indicated unproductive and/or wet and the 5 interval was isolated in 2014 to mitigate apparent issues with sand production (production did not change after it was isolated). HVB-15 had a peak rate of —5500 mscfd in 2013 and is currently producing at a rate of —500 mscfd on a —8%/yr decline rate. A total of 5.9 BCF have been produced from the Beluga 1-3 zones. Initial reservoir pressure determined during initial production Page 3 of the Beluga 3 interval indicated a sub -normal pressure at a gradient of 0.31 psi/ft (655 psi at 2110' TVD). RIFT data gathered in 2016 from the HVB-17 well indicated pressure in the Beluga 3 at that time to be 448 psi (0.2 psi/ft). Other RIFT points were taken throughout the Beluga 1-7 sands during that time showing a range of pressure gradients from (0.2 — 0.34 psi/ft). There remain multiple prospective Beluga zones (10- 20) indicated by logs from wells HVB-17 and HVB-13. There is currently ongoing work to begin producing these zones via well HVB-13. Beluga — The Beluga formation, currently defined as Beluga 21-135 sands, has been historically produced in the HVA-08 and HVB-13 wells. Wells HVA-09, HVA-10, and HVA-I I have been completed in multiple Beluga formation sands but were proven unproductive. A total of 0.83 BCF has been estimated to have been produced from the Beluga formation sands with the HVA-08 being the only active producer. Reservoir pressure gradients throughout the Beluga sands range from 0.36 psi/ft in the Beluga 23 up to normally pressured 0.44 psi/ft in the Beluga 44 using RIFT data gathered in HVB-17 in 2016. Due to the minimal production from the Beluga sands it is expected that most of the reservoirs are at or close to reservoir pressure. The current interpretation, based on logs and testing over time is that the majority of the Beluga sands do not contain flowable gas. Additional testing in more Beluga sands need to be done to confirm that statement. Upper Tyonek — The Upper Tyonek formation sands, currently defined as sands Tl- T52, has produced approximately 50% of the production from the Happy Valley field at 24.7 BCF. The major contributing sands are the T-6, T7, T-10, and T-17 and were historical produced mainly from wells HVA-08, HVA-09, HVA-10, and HVA-12. Initial RIFT data gathered in the HVA-03 and 14VA-04 wells indicated these zones were initially normally pressured (0.42-0.45 psi/ft). RIFT data gathered in 2016 in the HVB-17 well showed gradients ranging from 0.1 to 0.41 psi/ft. This formation is currently being produced from the two most recent drill wells HVB-17 (2015) and the HVB-16A (2022) at a combined current production rate of -- 1 mmscfd, using current allocations. PLT's are planned in 2024 to confirm current allocations splits and gain better understanding of which sands are currently contributing. Lower Tyonek — The Lower Tyonek formation, currently defined as sands T-68-155, has produced approximately 25% of the production from the Happy Valley field at 10.2 BCF. This formation has been produced from wells HVA-01, HVA-02, HVA-12, HVB-16A, and HVB-17 with the majority of production coming from wells HVA-01, HVA-02, and HVB-17. Historically the major contributing sands have been the T-91, T-105, T-120, T-125, and the T-140. Currently there is no pressure data available to indicate individual sand pressures throughout the lower Tyonek section. Initial RIFT data gathered in the HVA-03 and HVA-04 wells indicated these zones were initially normally pressured (0.42-0.45 psi/ft). The Lower Tyonek formation is currently being produced from the HVB-16A and the HVB-17. PLT's are planned in 2024 to confirm current allocations splits and gain better understanding of which sands are currently contributing. 2023 Activity a) Rate Adding Wellwork HVB-13 — work began in Novebmer of 2023 to recomplete the well to test the undeveloped Beluga 13 and 10 sands. The existing Beluga sands were isolated and a new tubing string was run and cemented in place. The well was attempted to be swabbed down but the swabbing tools were lost due to potential cmt on the tubing walls. In January 2024 they were successfully fished out and diagnostic work continues to confirm pressure isolation in the tubing and IA. It is planned to perforate these zones in April 2024 and test. Page 4 HVB-12 (Jan 2024) — perforations were added in the Upper Tyonek T-1, T-2, and T-6 intervals resulting in --100 mscfd rate gain HVB-16A (Jan 2024) — perforations were added in the Upper Tyonek T-1, T-2, and T-6 intervals resulting in —200 mscfd rate gain HVB-17 (Jan 2024) — perforations were added in the Upper Tyonek T-2, T-6, and T-7 intervals resulting in no additional rate b) Surveys - There were no surveys completed in 2023. As noted above there are plans to complete PLT suveys on the wells producing from the Upper and Lower Tyonek zones to gain better understanding of contributing zones c) Drilling - There was no drilling activity in 2023 Future Plans There is currently a field study planned to be completed in the spring/summer of 2024 to continue to identify any additional development potential and rate adding wellwork in the Happy Valley field. Page 5