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Providing coverage of Alaska and northern Canada's oil and gas industry
September 2006

Vol. 11, No. 36 Week of September 03, 2006

AOGCC finalizes Kustatan gas ruling

Commission issues pool rules, spacing and drilling unit exemptions for Forest Oil’s west side single-well natural gas pool

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has issued pool rules for the Kustatan gas field on the west side of Cook Inlet, wrapping up a process that began in February when the commission found that Forest Oil Corp. was operating the Kustatan Field No. 1 gas well in violation of well spacing requirements and drilling unit requirements.

The well, drilled for oil by Forest predecessor Forcenergy Inc. in 2000, did not encounter commercial quantities of oil and was completed as a Class II waste disposal well in 2003, and used for injection from April 2003 through November 2004.

The well was subsequently re-completed as a gas well and began regular production on Nov. 14, 2005.

The well, however, lies within 1,500 feet of a property line where ownership changes; re-completion of the well as a gas well without a spacing exception violated the commission’s regulations, as did regular production from the well without a pooling agreement in place.

The commission provided a notice of violation of well spacing and pooling requirements to Forest on Feb. 24, 2006, and the company shut the well in that same day. In March the commission issued an interim order allowing Forest to resume production to avoid potential damage to the reservoir and loss of reserves (see story in April 9 issue of Petroleum News).

Exemptions are to spacing, drilling unit requirements

Forest applied for an exemption from well spacing requirements and drilling unit requirements. The commission said it received letters from all potentially affected landowners stating that they did not object to Forest’s application; it granted a temporary spacing exception March 17 to allow Forest to return the well to production.

In its Aug. 24 findings the commission said the proposed Kustatan field #1 gas pool is an area of approximately 210 acres within State of Alaska lease ADL 390368; the existing well, Kustatan Field No. 1, is the only well drilled in the pool. The commission said not more than one well may be completed in the pool.

The gas pool lies between 5,352 feet and 5,385 feet measured depth in the Kustatan Field 1 well, with best quality reservoir rock in the lower, primary reservoir interval, which is 18 inches thick. Production is from the Tyonek formation.

Original gas in place 0.55-0.56 billion cubic feet

Original gas in place is estimated at 0.55 billion to 0.56 billion standard cubic feet and Forest estimates a recovery factor of 80 percent. Based on seismic, well log and production data Forest believes the entire gas accumulation to lie within the boundary of ADL 390368.

Peak production from the pool was approximately 1.85 million cubic feet of gas per day, with cumulative production through June 12 of 183.3 million cubic feet. The commission said the existing well is the only development well planned for the pool. Forest is developing the gas pool through blowdown and no pressure maintenance or enhanced recovery operations are planned.

The commission granted a waiver for well spacing, allowing regular production of a gas well within 1,500 feet of a property line, and a waiver for a drilling unit, allowing regular production from a gas well from a property that is smaller than the governmental section upon which the well is located. It said that because the pool is small establishing a drilling unit smaller than one governmental section “will not promote waste nor jeopardize correlative rights”; it also said waiver of the property line set-back requirements “will not promote waste nor jeopardize correlative rights.”






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