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Plenty of gas DNR assessment points to more than a decade of Cook Inlet gas reserves Alan Bailey Petroleum News
In the light of widespread concern about the capacity of Alaska’s Cook Inlet gas fields to continue to supply sufficient natural gas to meet the needs of local gas and power utilities, the Alaska Department of Natural Resources has tried to replace gas supply conjecture with objective facts, using available data about the Cook Inlet gas fields to estimate how much gas remains to be produced and how long that production might last.
Scientists from Alaska’s Division of Oil and Gas and from the Division of Geological and Geophysical Surveys determined the estimates and have now reported results showing that there may be significantly more gas in the existing Cook Inlet fields than people had feared.
“People here have been almost in a panic mode,” Kevin Banks, director of DOG, told Petroleum News Dec. 22. “People have been rushing to try to solve a problem that most people felt like was very imminent. In fact, I don’t think it is.”
The new estimates indicate that there is sufficient Cook Inlet gas still available to give people the breathing space needed to assess and develop future energy supply sources, such as building a major hydropower system or bringing natural gas from the North Slope, Banks said.
The gas cliff Some of the heightened concern about Cook Inlet supplies has originated from a DNR plot of projected Cook Inlet gas production that has been around for several years and is variously referred to as the gas cliff or gas waterfall. But this plot, which shows Cook Inlet gas production declining precipitously after the mid-2000s, has been based on projected production from existing Cook Inlet wells: people have speculated about what additional gas reserves might come on line as new drilling taps into gas not already accessed.
And the new report sheds much light on this question of establishing more reserves from more drilling.
Simply projecting forward the current, declining well production rates for the 28 existing Cook Inlet gas fields results in an estimate of 863 billion cubic feet of remaining Cook Inlet natural gas reserves, with annual gas production sinking below projected annual gas demand somewhere around 2011, the report says. But the scientists conducting the study found that a more comprehensive projection technique that takes into account reservoir pressures, temperatures and the engineering characteristics of the gas fields results in a reserves estimate of 1,142 billion cubic feet, a reserves figure that would meet supply needs until around 2015.
Then, to look at the increase in potential reserves from the drilling of new wells, the scientists homed in on the four largest Cook Inlet gas fields — the Kenai field, the Beluga River field, the North Cook Inlet field and the Grayling gas sands — to use geologic techniques to assess likely gas volumes in sands fairly certain to contain untapped gas in and around the fields.
There is the possibility of drilling in less prolific field areas that have not yet been accessed, and the possibility of perforating existing wells, to access sands known to contain gas but so far unused, perhaps with gas at somewhat lower pressure than the sands that have been targets for gas production to date, Banks said. And many of the gas reservoir horizons in Cook Inlet gas fields are known to consist of multiple, small sand bodies, deposited from ancient, meandering river systems and often containing isolated gas pools.
“Some of these wells in those four fields, they penetrate 60 different lenses of gas,” Banks said.
The geologic analysis of reasonably probable gas that could be drilled added another 353 billion cubic feet to the potential gas reserves estimate and moved the date for possible gas supply shortages out to nearly 2020. Then, doing a similar geologic analysis for more questionable gas sand possibilities around the four large fields, and factoring in a reduction of 50 percent in the resource estimates to allow for the significant discovery risk associated with these sands, the scientists were able to add another 643 billion cubic feet to the possible reserves, thus moving the gas supply shortfall projection to somewhere between 2025 and 2030.
Finally, the geologists assessed the possible gas resources in some known Cook Inlet gas prospects, both onshore and offshore, to estimate the gas volumes that might be added to Cook Inlet gas reserves from some future exploration in the region. That analysis added another 300 billion cubic feet to the resource estimates, a volume that could extend the viability of gas supplies out beyond 2030.
No LNG The dates at which gas supplies are predicted to drop below gas demand all assume that the LNG export facility on the Kenai Peninsula, a major current consumer of Cook Inlet gas, goes out of operation after the facility’s federal LNG export license expires in 2011. At that point gas demand, consisting essentially of utility gas, would stabilize at a level somewhat below 100 billion cubic feet per year, the projections assume.
And the DNR report points out that the estimates of increases in gas reserves do not take any account of the economic viability of the required drilling and field development to access the reserves: the report simply assesses future reserves that technically could be found and developed. But, while the economics of drilling new development wells by Cook Inlet gas producers are something of an unknown factor, the future pricing of utility gas in the Cook Inlet region has become uncertain amid consumer concerns about possible price hikes.
And if the gas producers move from drilling into known gas sands to drilling in less reliable field areas, and perhaps embark on new exploration, the costs and risks of drilling and development will rise. For example, exploration in the offshore prospects that the DNR geologists investigated would require the use of a jack-up rig, an item of kit that is very expensive to hire and operate.
It is also worth realizing that the exploration analysis presented in the DNR report relates only to certain specific, known prospects and is not a complete assessment of undiscovered natural gas resources in the Cook Inlet basin. The U.S. Geological Survey is currently doing a complete assessment of the basin, presumably considering a more complete range of gas prospects and perhaps coming up with yet higher undiscovered resource figures.
And geologists tend to view the Cook Inlet basin, with its relatively sparse scattering of exploration wells, as significantly underexplored, thus leaving the future possibility of more new gas discoveries.
Deliverability Apart from the question of ensuring that there is enough utility gas to supply Southcentral Alaska over the course of a complete year, the region faces the more immediate issue of ensuring that gas deliverability — the rate at which gas can be delivered from gas wells in the Cook Inlet basin to gas consumers — is adequate to meet peak demand for heating and lighting during the colder days of the Alaska winter. Deliverability has been declining steadily in recent years and almost ran short during a severe cold snap in January 2009.
Scientists involved in the DNR study investigated gas deliverability from gas wells and fields by estimating daily production rates on a well-by-well basis using publicly available monthly production data. In the absence of available daily well data, this estimation method tended to smooth out the extremes of actual daily production peaks, but gave at least some insights into well performance during the huge swings in utility gas demand between summer and winter in Southcentral Alaska.
And an analysis of daily production in recent years confirmed that the storage of summer-produced gas in gas storage facilities for use in the winter is becoming an increasingly important factor in meeting deliverability needs.
“The ability to meet peak demand with real-time production has significantly diminished in the last decade because reservoir pressure has declined, water influx has increased and not enough wells were drilled to replace reserves and maintain redundancy for peak rate capacity,” the DNR report says. Although the gas producers have drilled some new wells and installed some new gas compression to maintain winter deliverability, the economic challenges of taking these actions to serve relatively brief demand spikes will drive an increasing use of gas storage, the report says.
But complications such as the way in which the amount of gas stored in a gas storage facility impacts the rate at which the facility can deliver gas make the prediction of excess capacity in the gas delivery system rather difficult when gas storage comes into play.
However, the DNR scientists took their estimated daily well production data and extrapolated into the future daily production data from individual gas pools, to assess how gas deliverability may evolve. And a subsequent plot of estimated future daily production for the Cook Inlet basin as a whole indicates that gas storage will become increasingly vital, as peak deliverability from the gas field wells declines progressively further below peak winter demand.
On the other hand, new wells in the Cook Inlet’s often highly discontinuous gas reservoirs will also be needed to maintain adequate winter deliverability, while more detailed and up-to-date gas production data are needed to reduce some major uncertainties in deliverability forecasting, the report says.
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