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Marathon to expand Susan Dionne pad Space needed for gas compressor, eight additional development wells at Ninilchik unit participating area on Kenai Peninsula Kristen Nelson Petroleum News
Marathon Oil Co. has applied to expand the Susan Dionne pad at the Ninilchik unit on the Kenai Peninsula north of Ninilchik. In filings with state and federal agencies the company said the pad would be expanded for production equipment and eight development gas wells. The total expansion is some 150,000 square feet, some 30,000 square feet of which would be for a gas compressor.
This is the second Kenai Peninsula gas-related pad expansion Marathon has applied for recently. The company earlier applied to expand a pad in the Kenai gas field and has also told regulators it plans to expand the Ninilchik unit Paxton pad.
Production came online from the Susan Dionne producing area in 2004 and compression is going to be necessary to maintain gas flow to the Kenai Kachemak Pipeline. The new compressor will allow lower pressure gas to be commingled with gas from higher pressure wells “at a rate greater than the line pressure of KKPL.” Marathon said the compressor installation will be similar to those already in operation at two other pads in the Ninilchik unit, Falls Creek and Grassim Oskolkoff.
Space for eight new wells The larger portion of the proposed expansion, some 120,000 square feet, will allow space for some eight new well locations. The company said its initial development plan was based on information that an average of six to eight wells would be required for each production location. Susan Dionne, however, “has sufficient reservoir extent that additional wells are necessary to fully develop and recover gas reserves,” with the pad expansion allowing space for some eight new wells. “Future development may require additional wells, but this total need cannot be determined at this time.”
Marathon said the Susan Dionne No. 6 well is planned for August.
The pad expansion work would begin in June and is expected to be completed by early July with the drilling pad expansion completed first, followed by the production pad expansion. The compressor module will be fabricated offsite, Marathon said, and brought to the pad for installation in September. Construction and fabrication will begin shortly after pad expansion; the work is expected to be complete in January 2009, with startup in that month.
The compressor is expected to be in full operation by early February.
Regulatory issues Marathon cited two areas where there are issues with regulatory agencies over the expansion.
The first is the amount of wetlands which the project will fill. The original estimate was that some 0.19 acres of wetlands would be filled by the 3.45-acre expansion. The U.S. Army Corps of Engineers believes the wetlands area to be filled is larger, although still less than an acre.
Marathon said that to expedite permitting it “has agreed to accept that the total expansion of 3.45 acres is wetland.” The company said the Corps of Engineers is willing to reconsider the wetland acreage and amend the application when sufficient information can be obtained.
Marathon said it “acknowledges the obligation for compensatory mitigation for this project and would like to include the final wetland acreage from this project with that from the Kenai Gas Field, Pad 41-7 and the Paxton Pad construction as a single action.” Paxton, formerly a tract operation within the Ninilchik unit, was merged into the Susan Dionne participating area at the end of last year. Paxton is south of Susan Dionne.
Marathon is proposing that mitigation be by in-lieu fee mitigation, and has suggested the Kenai Peninsula Borough’s Crooked Creek Restoration project as the project the company would like to support.
State concerned about noise Another issue Marathon cited is noise. It said the Kenai Peninsula Borough has no established noise standards and that it intends to develop “site specific attainment goals for compressor operation at the Susan Dionne Pad,” based on the 2008 noise survey currently in progress.
Marathon said there are no applicable noise standards for compressor operation, but said the Alaska Department of Natural Resources has referred to “Enforceable Standards for Development of State Owned Coalbed Methane Resources in the Matanuska-Susitna Borough” issued in 2004. “Those regulations identified noise mitigation standards which have been referenced as guidelines for operators of new equipment, such as compressor units.”
Marathon said “any inferences to the regulations governing shallow gas noise standards are in error and not applicable.” It referred to the Alaska Oil and Gas Conservation Commission’s definition of shallow gas, which along with coalbed methane references natural gas at true vertical depths of less than 4,000 feet.
The Susan Dionne pad involves drilling for natural gas at true vertical depths of 5,000 feet, “which eliminates the applicability of shallow gas noise standards for oil and gas development,” Marathon said.
The company also said it “will seek to utilize construction materials and seek to mitigate sound so that the noise levels at the nearest residence do not exceed the identified maximum level for the quietest time period (night).”
“Noise monitoring will be conducted after the compressor unit is deemed operational to assess conditions and help determine whether additional modifications are required.”
Unit gas discovered in 1960s Natural gas was discovered in what is now the Ninilchik unit in the 1960s but pipeline infrastructure was only completed in 2003.
Marathon drilled in the area beginning with the Grassim Oskolkoff wells in 2000 and 2001 and filed to drill at what is now the Susan Dionne pad, at the southern end of the Ninilchik unit, in 2001.
Natural gas from the unit began flowing in 2003.
The Ninilchik unit is composed primarily of offshore oil and gas leases on the Ninilchik anticline, which approximately parallels the Kenai Peninsula shoreline for more than 16 miles from near Clam Gulch to just north of Ninilchik.
The existing Susan Dionne pad is at the original Union Ninilchik No. 1 pad, constructed in 1962 to drill an exploration well. In 2001 Marathon acquired the lease and entered the existing well, renamed the Susan Dionne No. 1; a second well, Susan Dionne No. 2, confirmed commercial quantities of natural gas.
The existing Susan Dionne pad is roughly horizontal with the long axis from east to west. The expansion would be off the eastern end of the pad, with the new production area continuing the existing pad to the east and the new drilling area extending north-northeast. Marathon owns the surface acreage at the Susan Dionne pad.
PA most productive at Ninilchik AOGCC production records show that through March Susan Dionne has been the most productive of the Ninilchik participating areas, producing 29 billion cubic feet of gas, compared to 21 bcf for Falls Creek and 20 bcf for Grassim Oskolkoff. All produce from the Tyonek formation.
The most recent Division of Oil and Gas report, prepared in 2007 for data through the end of 2006, shows gas reserves at Ninilchik at 61.7 bcf, an increase from the 2006 report, which showed 50.8 bcf. The previous, 2004 report, when the unit had just gone into production, showed gas reserves of 100 bcf and production to date — beginning in 2003 — at 3 bcf.
At gas reserves of 61.7 bcf, Ninilchik ranks fifth among Cook Inlet gas fields, behind Beluga River (530.4 bcf in remaining reserves); North Cook Inlet (245.9 bcf remaining); Kenai (143.7 bcf remaining); and McArthur River (136.1 bcf remaining).
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