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September 2013
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Vol. 18, No. 39 Week of September 29, 2013

Hearing on MI/NGL at Prudhoe Bay rescheduled at BP’s request

The Alaska Oil and Gas Conservation Commission is considering whether revisions are appropriate to Conservation Order 360, issued in 1995, based on changing circumstances.

That order concerns use of natural gas liquids from the Prudhoe Bay oil pool. The decision the commission made in CO 360 directed maximization of production of blendable natural gas liquids. That is, liquids that are sold down the trans-Alaska oil pipeline have had priority over liquids used for MI, miscible injectant.

Prudhoe Bay field operator BP Exploration (Alaska) has been following that direction.

However, based on testimony in a 2012 hearing on potential waste of propane at Prudhoe, the commission is now asking if maximizing NGL production actually promotes maximum ultimate recovery, or if BP should be focused on production of miscible injectant for enhanced oil recovery project.

In scheduling the Sept. 19 hearing the commission said it was “considering whether changes in circumstances” since CO 360 was issued warrant revision of the conservation order, and said it would be considering whether findings and conclusions in CO 360 remain viable and the effect, “if any,” of an annual average MI volume of less than 600 million cubic feet per day “on ultimate recovery from the Prudhoe Oil Pool.”

At the Sept. 19 hearing, commission Chair Cathy Foerster said the hearing had been changed to a prehearing conference, as BP Exploration (Alaska) had requested clarification on what the commission was expecting to learn at a public hearing.

Foerster said she would be attempting to provide the clarity BP had requested so the company could prepare for a hearing and said her goal was to reschedule the hearing 60 days from Sept. 19.

Attorney Jeff Leppo, representing BP, said BP had asked in its correspondence with the commission on the issue to submit prefiled testimony on Dec. 6, citing complications of coordinating testimony among the Prudhoe working interest owners (primarily BP, ConocoPhillips, ExxonMobil and Chevron).

Foerster said she would discuss scheduling with the other commissions, but said her feeling was that the companies had engineers looking at reservoir management daily and it shouldn’t take 120 days to answer the commission’s questions.

When this issue of Petroleum News went to print the commission had yet to post a new hearing date.

Propane issue

Harold Heinze, a former head of ARCO Alaska and the Alaska Natural Gas Development Authority, representing himself, brought the propane issue to the commission’s attention in late 2011. The commission held a 2012 hearing and concluded BP was not wasting propane produced at Prudhoe Bay by using it for field operations.

While the commission rejected the argument that because propane was not being sold today it would be trapped at the end of the field’s life, constituting waste, Foerster told Petroleum News after the 2012 decision (Docket OTH-11-51, Other Order 75) was issued that based on the findings of the propane hearing, the 1995 decision under which the Prudhoe Bay owners sells NGLs into the trans-Alaska oil pipeline should be reevaluated.

That reevaluation was the purpose of the Sept. 19 hearing.

Heinze asked Forester at the Sept. 19 prehearing conference whether, based on testimony the commission receives, it would be willing to revisit some aspects of the propane decision.

Forester said that was correct and also told Heinze that public testimony would be allowed at the CO 360 hearing.

—Kristen Nelson






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Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©1999-2019 All rights reserved. The content of this article and website may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law.