Providing coverage of Alaska and northern Canada's oil and gas industry
January 2018

Vol. 23, No. 4 Week of January 28, 2018

AOGCC OKs deeper Ninilchik definition

Hilcorp had been testing deeper Beluga/Tyonek gas targets; new pool definition adds some 250 feet of depth to natural gas pool

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has approved a request by Hilcorp Alaska to redefine the vertical boundaries of the Ninilchik Beluga/Tyonek gas pool, deepening the lower gas pool boundary by some 250 vertical feet. In an August application Hilcorp said it had been testing deeper intervals in the Ninilchik Beluga/Tyonek gas pool, which was then defined as the gas-bearing intervals between measured depths of 1,480 feet in the Paxton No. 5 well and 9,600 feet in the Paxton No. 1 well. Hilcorp requested a change to gas-bearing intervals between measured depths of 1,555 and 9,035 feet in the Kalotsa No. 3 well.

In its findings the commission said recent test results from the Kalotsa No. 4 development well confirm potentially commercial quantities of natural gas in Tyonek formation sands underlying the Ninilchik Beluga/Tyonek gas pool as it had been defined. The commission said Hilcorp’s requested expansion of the pool’s vertical boundaries and use of a different reference well log would not significantly change the upper boundary of the pool, but would “deepen the lower pool boundary by approximately 250 vertical feet.”

In early October Hilcorp amended the application to include an expansion of the Beluga/Tyonek pool to include a small area which had previously been added to the unit but not to the AOGCC defined gas pool. That was also approved in the commission’s Jan. 22 order.

The commission said that expansion would “conform the pool boundary to the current exterior boundary of the Ninilchik Unit.”

Correlative rights issue

A spacing exception request in the application required notification of all affected parties within 3,000 feet of the boundaries of the area, the commission said, requiring Hilcorp to notify all those parties and provide proof of that notification. A November hearing was continued for 30 days with the commission requiring Hilcorp to provide proof that all affected parties had been notified.

Don Shaw, a private citizen owning land near the Ninilchik unit, submitted written comments at the November hearing and testified at the Dec. 14 hearing, claiming infringement of his correlative rights, the commission said, “based upon his belief Hilcorp’s Frances 1 well is draining gas reserves beneath his property.” Shaw told the commission that his property is “... within a 3,000-foot spacing exception radius of the Francis 1.”

“This is incorrect,” the commission said in its January order. “Frances 1 is an unsuccessful exploratory oil well that encountered gas in the Tyonek sands not found in other, nearby Falls Creek wells. To test, complete and produce these gas reserves, a spacing exception was required because Frances 1 is located within 1,500 feet of a property line where the owner and landowner are not the same on both sides of the line and because the well is located within the same governmental section as, and within 3,000 feet of, another well that is open to the same pool.”

A spacing exception was granted, the commission said, noting that the Shaw property is not within the 1,500 feet required for a spacing exception, and said Shaw was notified because a small portion of his property lies within the 3,000-foot radius for required landowner notification.

“Notification is just that,” the commission said, “and nothing more. It does not imply, or establish, a 3,000-foot drainage radius for the Frances 1 well.”

Perforations within the Frances 1 well are some 2,750 feet from the nearest portion of Shaw’s property, the commission said.

Shaw told the commission his land is being drained by the Frances 1 well, and compared his property to a marsh surrounding a bond, with the marsh and pond interconnected.

“This is an inaccurate characterization,” the commission said. “The structure of the Beluga and Tyonek Formation is not analogous to a pond. The Beluga and Tyonek are comprised of discontinuous sandstone lenses deposited in braided to meandering rivers and streams. Well-to-well correlations using logs recorded in the Falls Creek wells and Frances 1 demonstrate that there is little lateral continuity between individual sand layers in this area. As a result, absent high-quality seismic data, whether stratigraphic traps exist beneath the Shaw Property cannot be demonstrated without drilling.”

“Testimony and evidence presented by Mr. Shaw does not demonstrate that gas exists beneath his property or that Hilcorp’s Frances 1 well, located more than one-half mile to the north-northwest, is draining gas from his property,” the commission said in its conclusions.

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