State lets Pioneer go with the flow

AOGCC allows Pioneer to use multiphase flow meters at Oooguruk, first application between two units with different operators

Eric Lidji

Petroleum News

State regulators are allowing Pioneer Natural Resources to use a complex and powerful tool to measure oil production at the Oooguruk unit in the waters off the North Slope.

Through the end of October, the Dallas-based independent will be allowed to use multiphase flow meters to measure production of oil, gas and water from the offshore unit, which recently came into production. (See related story on page 12 of this issue.)

The temporary ruling from the Alaska Oil and Gas Conservation Commission allows Pioneer to begin production at Oooguruk while the commission tries to figure out the best way to monitor the complex program.

Flow meters are responsible for arguably the two most important parts of developing an oil field: testing the wells to keep the underground reservoir healthy, and divvying up the production among the various owners. In Alaska, that includes the state.

Traditionally, this process has been unwieldy, because wells produce gas, water and sediment along with oil. Reservoir engineers around the world measure production using large “gravity” separators, which spin this “multiphase” stream into its various components and measures each individually.

But for the past five years or so, improved technology has allowed companies to measure the entire messy stream at once using nuclear detectors. These “multiphase flow meters” are expensive, but pay off over the long haul because they require less space and maintenance that gravity separators.

Multiphase flow meters are becoming widespread across the industry, including Alaska, but some uncertainty exists about the accuracy of the machine under certain conditions, particularly heavier oil deposits and reservoirs with a high percentage of water.

A study commissioned by the companies and analyzed by the state suggested that viscous oil like that expected from Oooguruk, if not properly accounted for, could make the flow meter less accurate.

Oooguruk involves complex interests

As the first independent operator on the North Slope, and the first besides BP or ConocoPhillips to produce oil in northern Alaska, Pioneer has been looking for new ways to produce a small field large by North Slope standards.

One solution was to share facilities with the neighboring Kuparuk River unit, operated by ConocoPhillips. As a result, this will be the first time two North Slope operators use a multiphase flow meter to measure combined production.

An inaccurate reading could hurt either or both of the two companies, or the state, depending on whether the flow meter counts too much or too few barrels.

Pioneer Natural Resources will use the multiphase flow meters to determine the production rates at Oooguruk. That production will mix with the larger pool at the Kuparuk processing facilities. ConocoPhillips will measure that pool using more traditional techniques. By subtracting the Oooguruk production figures from the total measurements, ConocoPhillips will determine the production of Kuparuk.

As a result, the accuracy of the multiphase flow meters impacts production values from both Kuparuk, the second largest oil field in North America, and Oooguruk, the first new production in northern Alaska in years.

If it’s wrong, either the companies pay too much or the state gets too little, and the engineers tasked with monitoring wells to keep them online for as long as possible don’t have accurate information to make judgment calls.

AOGCC still trying to decide how to test meters

The companies question whether it is even possible to field test the multiphase flow meter without also installing a gravity separator for comparison, which would defeat the point of buying the smaller system.

A popular test, one completed by the two companies, involves attaching a multiphase flow meter to a loop of pipeline, which allows a small amount of fluid to test the accuracy of the machinery over a long period of time.

The state held a workshop in 2002 to discuss the practical application of multiphase flow meters and published a set of guidelines two years later.

BP and ConocoPhillips have since performed pilot tests on Prudhoe Bay and Kuparuk respectively. The AOGCC recently allowed BP to use multiphase flow meters at Milne Point, Endicott and Northstar, all single-unit applications.

But even a using the meters on two units operated by the same company can cause complications.

For instance, if BP decides to use multiphase flow meters at the offshore Liberty project and process the oil at the existing facilities at Endicott, the company would be mixing oil from state and federal lands, causing similar concerns to the ones currently being worked on at Oooguruk.

Both the state Department of Revenue and Division of Oil and Gas backed the AOGCC decision to allow the meters to be used at Oooguruk, but both governmental agencies also said Pioneer and ConocoPhillips should have to get a waiver to the state codes outlining where a company must measure its production.

In a letter from the Department of Revenue, Deputy Commissioner Marcia Davis wrote that having two companies with a “competing commercial interest” helped protect the state in this case.

The AOGCC is keeping the record open on the matter until July 7 to allow for additional technical reports and public comments to be included.

—Contact Eric Lidji at 907-770-3505