Aurora gets AOGCC approval for storage

With permission from Division of O&G, Aurora can begin third-party gas storage at a depleted reservoir in the Nicolai Creek unit

Eric Lidji

For Petroleum News

A reservoir in the Nicolai Creek unit meets the standards for natural gas storage, according to an April ruling from the Alaska Oil and Gas Conservation Commission.

The ruling allows operator Aurora Gas to inject gas from 2,426 feet to 2,916 feet into the South Undefined Gas Pool at the unit using the existing Nicolai Creek Unit No. 2 production well. That corresponds to a true vertical depth of about 2,141 feet.

The NCU 2 well, drilled by Texaco in 1966, must undergo mechanical integrity testing before injections begin. Those tests must be repeated at least once every four years.

Aurora must also provide the AOGCC will an annual report showing that the injected natural gas volumes are remaining in the reservoir and not migrating underground.

In an accompanying order, the AOGCC determined that portions of freshwater aquifers deeper than 2,000 feet in the NCU 2 wellbore aren’t currently sources of drinking water because they contain hydrocarbons, have high salinity or are otherwise impractical.

The Nicolai Creek unit is located on the west side of the Cook Inlet basin.

The unit consists of two participating areas, North and South, separated by the Nicolai Cross Fault. NCU 2 is in the South participating area, where Aurora plans to store up to 1 billion cubic feet of natural gas in three upper Carya sands of the Tyonek formation.

According to the AOGCC, the NCU 2 well had produced 806 million cubic feet of gas by December 2009 and should produce around 947 mmcf total before being converted to an injection well. Working storage is expected to be between 600 mmcf and 700 mmcf.

Aurora does not yet have a source of gas for storage, but will either store excess gas from its own production base or buy volumes from another producer or a utility in the region.

Storage big during session

Additional storage in Cook Inlet could smooth seasonal demand somewhat in the Southcentral region. Extreme temperature swings in the sub-Arctic mean far more natural gas is needed in winter than in summer, but declining deliverability and slim storage capacity make it harder to call up additional resources without damaging reservoirs.

The Cook Inlet Recovery Act passed this year adds clarity to the regulatory process for storage facilities and creates a tax credit for gas storage opened between 2011 and 2015.

Aurora still needs a storage lease from the Alaska Division of Oil and Gas before it begins injections. As of press time, the division was still reviewing the application.