State approves Nicolai Creek expansion

Adds around 60 acres and forms two participating areas at unit on the west side of Cook Inlet; storage request still pending

Eric Lidji

For Petroleum News

The state has approved an expansion of the Nicolai Creek unit in the Cook Inlet basin.

The expansion, requested by unit operator Aurora Gas, adds around 60 acres to the onshore unit on the west side of the Cook Inlet and creates two new participating areas.

Aurora originally asked the state Division of Oil and Gas to create one participating area, but the state decided to form two areas to separate gas production coming from the Beluga and Tyonek formations, which both underlie the unit.

The Nicolai Creek 11 well penetrates both formations. The Alaska Oil and Gas Conservation Commission previously allowed Aurora to comingle production from the two formations, allocating 70 percent of the production to the Beluga Undefined Gas Pool and 30 percent to the South Undefined Gas Pool in the deeper Tyonek formation.

The NC 11 well produces around 3.3 million cubic feet per day from three Beluga completions and 403,000 cubic feet per day from a Tyonek completion, according to flow test information Aurora gave the AOGCC to support its comingling request.

“Because it is likely that the Tyonek will quickly deplete to its economic limit, administration of the participating areas will be simplified by establishing separate participating areas,” Kevin Banks, director of the DOG, wrote in his May 5 ruling.

The ruling created the West Beluga PA and the West Tyonek PA.

The West Beluga PA overlies the Beluga Undefined Pool, with Beluga sands present in the NC 11 well from 920 to 2,099 feet measured depth. The West Tyonek PA overlies the South Undefined Pool, with Tyonek sands present from 2,260 to 2,362 feet in the same well.

The West Beluga PA is limited to Tsuga 2 sands in the Lower Beluga formation, while the West Tyonek PA covers only Carya 2 sands in the Upper Tyonek Formation. These sands are discontinuous, allowing Aurora to use the Carya for production and storage and to develop the Tsuga from two wells — NC 9 and NC 11 — that don’t communicate.

To create the boundaries of the two participating areas, Aurora proposed using net pay maps based on seismic data. The state, though, said seismic data didn’t give a “definitive picture of fault locations and other reservoir characteristics due to the presence of gas throughout the area,” and instead based the boundaries on “the drainage radius of the well” using factors like permeability, porosity, pressure and well production data.

Aurora began producing from NC 11 in December 2009, while the land was under lease but not included in the unit boundary. Bringing the well online, along with upgrading facilities and installing a gathering line, helped the company meet its obligations under the Nicolai Creek 36th plan of development. The 37th POD is due on Oct. 1, 2010.

Following recent approval from the AOGCC, the DOG is considering a request by Aurora to store natural gas in depleted sands in a different part of the Nicolai Creek unit.