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AOGCC continues to gather data on Prudhoe NGLs, MI, propane
The Alaska Oil and Gas Conservation Commission heard from BP Exploration (Alaska) at a Jan. 7 hearing the commission scheduled to gather information “on the disposition of gas liquids in the Prudhoe Bay Oil Field.”
The commission said it wanted evidence on whether it should alter Conservation Order 360 to require use of additional miscible injectant and on whether it had misinterpreted BP’s evidence at a 2012 propane hearing on the quantity of recoverable miscible injectant per barrel.
The commission had asked BP a series of questions following the 2012 propane hearing. That hearing addressed a concern from Harold Heinze that because propane is not being produced for sale from the field, it might be wasted.
The commission determined, following the 2012 hearing, that propane was not being wasted.
Issues of concern But it came away asking whether it should revisit Conservation Order 360, issued in 1995, which addressed a dispute between working interest owners at Prudhoe over whether natural gas liquids, NLGs, should be maximized for shipment down the trans-Alaska oil pipeline or maximized in miscible injectant, MI, to increase enhanced oil recovery. The dispute arose because at the time the owners held different percentages of the oil rim and the gas cap at Prudhoe. Gas cap owners benefitted more when NGLs were sold along with crude oil, while owners with a larger percentage of the oil rim benefitted more when NGLs were used to generate MI, increasing oil production through EOR, enhanced oil recovery.
Ownership at Prudhoe was aligned over the oil rim and gas cap as part of the sale of ARCO’s Alaska assets to Phillips Petroleum, now ConocoPhillips.
In CO 360, the commission found in favor of maximizing sales of NGLs. It also found that expected MI production would be sufficient for identified EOR projects.
Enough MI? In the course of the propane hearings the commission understood BP to say that it didn’t have enough MI, which caused the commission to question whether the sale of NGL down the pipeline should continue to be maximized.
The commission asked BP a number of questions and there was an exchange of correspondence between the two over a period of months.
Finally, the commission called a public hearing to gather information.
BP prefiled its testimony, providing a summary at the Jan. 7 hearing, and that appeared to answer most of the questions the commission had. BP did leave the hearing with a list of questions Commission Chair Cathy Foerster wanted answered, including whether BP had ever provided a follow-up report required by CO 360. The record was left open for that information to be supplied.
BP was represented at the hearing by Bruce Laughlin, BP’s Alaska North Slope reservoir management team leader.
In prefiled testimony signed by Laughlin, BP said the commission should not alter CO 360 to require the Central Gas Facility to be maximized for MI manufacture, instead of being maximized for “the extraction and sale of blendable NGLs.”
“On a strictly volumetric basis, extraction and sale of maximum blendable NGLs results in greater ultimate recovery of oil and gas,” BP said in the prefiled testimony, estimating that maximizing manufacture of MI would result in recovery of an additional 17 million barrels of EOR oil, but would reduce the amount of NGLs sold by 45 million barrels, a reduction of 28 million barrels of hydrocarbon liquids.
“Extraction and sale of maximum blendable NGLs also ensures that NGLs are not stranded without transportation to market,” BP noted.
The company also said expected recovery of EOR oil when CO 360 was issued was 400 million barrels, whereas the current EOR program is expected to recover 470 million barrels, and said it “is meeting the MI needs for current field development,” with substantially more EOR recovery than was projected in 1995.
Response to order 75
BP said that in the commission’s response to the propane hearing, Other Order 075, there are findings and a conclusion “that appear to be premised on a misunderstanding of BPXA’s testimony,” with the commission’s finding that the injection of a barrel of MI for EOR results in the production of 0.7 barrels of EOR oil plus recovery of 85 percent of the MI mistaken.
“The correct information is that injection of a barrel of propane used as MI for EOR today, over multiple cycles of reinjection and recovery, is estimated under certain parameters to result in the production of 0.7 barrels of EOR oil,” while the 85 percent figure refers to the efficiency of the Central Gas Facility, CGF, rather than to the return of MI, which BP said may be retained in the reservoir, produced with crude oil or cycled through the reservoir and returned to the CGF.
BP said that the cost to modify facilities to maximize production of MI for EOR “would be added expense that further degrades the value of increased marginal EOR production resulting from maximizing manufacture and injection of MI.”
The propane issue BP also said that maximizing MI as opposed to maximizing NGLs would primarily affect butane, not propane, “because most of the propane that is captured in the CGF processing is already utilized as MI.”
The company acknowledged the potential interest in purchasing propane for use in energy generation in rural Alaska.
“The primary differences between marketing NGLs via export through TAPS and marketing propane on the North Slope are: (i) the facilities exist to extract and export NGLs, but such facilities do not exist for propane; and (ii) a competitive market exists to secure value for NGLs on a comparable basis to that of oil, including EOR oil, but there is no similar market for propane extracted and sold at the North Slope. As such, the essential missing element in any plan to supply propane for rural energy generation is a competitive market value for propane sales.”
BP said the commission’s order on propane found the use of propane in MI did not constitute waste, but suggested the commission might want to do a technical correction on the issues it identified related to relative volumes of propane, EOR oil and recovered MI.
—Kristen Nelson
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