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January 2006

Vol. 11, No. 5 Week of January 29, 2006

AOGCC begins Prudhoe reservoir study

Six-month modeling effort under way to study Prudhoe gas off take; negotiations with Exxon for access to Thomson model

Kristen Nelson

Petroleum News

Alaska Oil and Gas Conservation Commission Commissioner Cathy Foerster told the Alaska Natural Gas Development Authority board Jan. 23 that typically you produce all of the oil from a reservoir before you produce the gas and replace the voidage with water. The commission is just beginning a six-month study using the Prudhoe Bay reservoir model developed by the owners, based on an agreement the commission reached with operator BP and the other owners at the field, to determine what the maximum gas production could be from Prudhoe before the end of oil production to maximize total hydrocarbon production.

In the 1970s, before production began, the commission set a maximum daily withdrawal rate of 2.7 billion cubic feet; the current plan the North Slope producers are discussing calls for 4.5 bcf a day of gas offtake.

At Prudhoe, where wells were drilled to produce oil, the field eventually began to also produce gas, so in addition to injecting water into the field, gas is also injected back into the field. This, Foerster said, maintains reservoir pressure, keeping the reservoir energy high enough that there is enough pressure to push oil out of the field.

The oil sits in the reservoir in the spaces between sand grains, she said, and pressure allows it to move to wells and rise to the surface. If the gas were produced now, a lot of pressure in the reservoir would go a way, and eventually there would be no pressure left. Think of an aerosol can, she said: When the pressure in the can goes to zero, you can’t get the remaining contents out.

The second thing that would happen with gas production now is that the oil would move up into the dry rock in the reservoir — the space now occupied by the gas cap. Oil that had been in rock already wet from oil moves to dry rock, and oil will cling to the rock, reducing the amount of oil that can be produced.

A third thing happens with early gas production: As the gas is produced, the pressure drops, and with lower pressure, the oil becomes thicker and harder to produce, Foerster said.

Oil produced first

In an ideal world the oil would be produced first, but on the North Slope there are other considerations, she said. The economic life of the facilities is a factor. You might get all the oil and then there might not be enough economic justification to replace facilities needed for gas, Foerster said.

The rate of throughput on the trans-Alaska oil pipeline is also a factor, and while the commission’s role is to ensure maximum recovery of hydrocarbons, there is a balance that needs to be considered, Foerster said.

The operators are already implementing mitigating measures that will minimize the oil loss once gas production begins. Water is being injected into the gas cap, which will help ensure that the oil does not move up into what is now a dry gas cap, and will keep pressure up, she said.

The six-month reservoir study starts today, Foerster told the board Jan. 23. This process was negotiated with BP, ConocoPhillips and ExxonMobil. The commission got money from the Legislature last year to do its own reservoir modeling, she said, although the commission hoped it wouldn’t have to build its own model, and was able to reach an agreement to use the operator’s model.

Point Thomson negotiations under way

Foerster told the House Special Committee on Oil and Gas Jan. 24 that the commission is in discussions with the Point Thomson owners for a reservoir model study similar to that being done for Prudhoe, although she said the issues with Point Thomson will be different than those at Prudhoe.

She said what the commission wants is the same thing: the ability to lift up the hood and take the engine apart on the reservoir model so it knows what’s in the model assumptions. Commission staff and a reservoir modeling engineer consultant will then be passengers in the car and get to see what the operator is doing to model when you start gas offtake, how much offtake there is and what the mitigation measures are. The Prudhoe agreement gives commission staff and consultant access to computers and allows them six months to get familiar with all details of the Prudhoe reservoir as modeled, and to see how the variables affect each other.

Foerster told the committee the commission is confident it can get what it needs in six months, but if more time is needed, the agreement allows the commission to request a reasonable extension.

The commission is still in the early stages of the process of working out a Point Thomson agreement with ExxonMobil, the operator of that field. She said the commission expects an agreement this summer. While there is no production from Point Thomson, ExxonMobil has been looking at the reservoir for a long time she said, and has updated the model with results from seismic.





Bill would change commissioner qualifications

A bill to change qualifications for the public member of the Alaska Oil and Gas Conservation Commission, introduced last year by Rep. Vic Kohring, R-Wasilla, chair of the House Special Committee on Oil and Gas, has been revised and passed out of Oil and Gas.

The original bill required that the public member should be a licensed, experienced attorney or have a bachelor’s degree in business management and not less than two years of business management experience or not less than six years of experience in business management.

The committee substitute changes the requirement for the public member to “training or experience that gives the person a fundamental understanding of the oil and gas industry in the state.”

AOGCC Commissioner Dan Seamount, who holds the geology seat on the commission, told the committee that the commission supports the bill, but said the commission doesn’t feel there’s been a problem with public members. Since oil and gas operations are becoming much more complex, Seamount said it is good insurance that all members have good knowledge of the industry.

Asked by Rep. Ralph Samuels, R-Anchorage, if “fundamental understanding” has a definition, Seamount said the wording of the committee substitute leaves evaluation of fundamental understanding up to the governor and the Legislature.

Commissioner Cathy Foerster, who holds the petroleum engineer seat on the commission, said the commission didn’t want to see the Legislature limit good applicants by requiring things such as college degrees.

John Norman, an attorney, currently holds the public seat on the commission and is the commission chairman.

Rep. Norm Rokeberg, R-Anchorage, said the seat should not be a political award. A standard of knowledge has been missing in the past, he said.

The bill, House Bill 300, was passed out of Oil and Gas Jan. 24 and goes next to House Resources.

—Kristen Nelson


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