ConocoPhillips: Taking aim at Beluga River unit

Company might install compressors to boost key Cook Inlet gas field; ownership trio with ML&P, Chevron yet to make investment call

Wesley Loy

For Petroleum News

ConocoPhillips Alaska Inc. has submitted a plan to federal land managers to improve the performance of the Beluga River unit, for decades a vital source of natural gas for powering the state’s main population center.

The plan involves installing compressors to boost capacity at several of the well pads in the Beluga field, which is located on the west side of Cook Inlet.

“The addition of compression will increase the delivery volumes to sales as the formation pressure and production volumes continue to decrease,” says a ConocoPhillips project description.

The company has submitted details about the compression project to the Bureau of Land Management. The paperwork includes permit applications, the project description and drawings.

ConocoPhillips said in a June 10 cover letter to the BLM that the project would begin in July and finish by Dec. 31, 2011.

But a company spokeswoman, Natalie Lowman, told Petroleum News on July 21 that the project isn’t locked in.

“This project is still under evaluation by the owners, and no firm decision has been made yet on going forward,” Lowman said in an e-mail.

“The project design and cost estimation is still in progress,” she wrote. “We do not anticipate that a final investment decision will be made until late 2010 or first quarter 2011.”

Project details

“The project also includes addition of sand and water handling equipment at most of the compression locations,” the description says. “With the addition of compressors, new pipelines and jumper lines will be installed. Most lines will be installed on pad with a few instances where they go off pad.”

The compressor modules would come new from an unnamed factory.

A map shows the pads where the compressors would be added. As an example, at the Central Processing Pad at the heart of the Beluga unit, the plan calls for the addition of two compressor skids; new buried flow lines from the well to compressors and back to the existing on-pad dehydration building; one new six-inch well line to bring production from a neighboring well site to the compressors; new water and fuel gas lines to support the compression; a surplus 131-barrel tank; and new meters and chokes.

A compressor, according to Schlumberger’s handy online oilfield glossary, is “a device that raises the pressure of air or natural gas. A compressor normally uses positive displacement to compress the gas to higher pressures so that the gas can flow into pipelines and other facilities.”

Petroleum News asked ConocoPhillips about the goals of the Beluga compression project — whether it would increase gas recovery from the field over the remainder of its lifetime, or merely boost gas production during times of high demand.

The company, through Lowman, replied: “The purpose of the project would be to lower the surface pressure that the wells deliver into. This lowering of pressure would likely increase gas recovery from the field and there would likely be some improvement in the near term to the overall field deliverability.”

ConocoPhillips also has submitted a request to the U.S. Army Corps of Engineers to expand a gravel drill site known as Helipad. The expansion, covering about a tenth of an acre, would involve a potential wetland.

Legacy gas field

Cook Inlet Region Inc., an Anchorage-based Alaska Native corporation, and the Kenai Peninsula Borough are the two primary owners of surface lands within the Beluga unit.

Located in the middle of the field is Chugach Electric Association’s Beluga power plant, the largest in Alaska. Situated about 40 miles west of Anchorage, the plant opened in 1968 and uses gas turbines to generate electricity. Transmission lines carry the power from the plant to the city.

The power plant used to burn Beluga gas exclusively. Today, it also takes other Cook Inlet gas delivered via a Marathon pipeline from Granite Point, said Phil Steyer, a Chugach spokesman.

Not all of Beluga’s gas production goes to the Chugach plant. Some goes into the Enstar pipeline system. Enstar is the main gas utility for Southcentral Alaska.

Three companies each own a third of the Beluga River unit: the operator ConocoPhillips, Anchorage Municipal Light & Power and Chevron.

Beluga has been one of Cook Inlet’s most prolific gas fields, producing nearly 1.15 trillion cubic feet over its lifetime through 2009, state Division of Oil and Gas figures show. Production peaked at 57.6 billion cubic feet of gas in 2004, declining to 40.9 billion cubic feet in 2009.

Cook Inlet gas production has become a hot topic in recent years as the basin’s known reserves play out, putting stress on the system to deliver adequate gas on cold winter days when demand is highest.

State legislators have passed a number of incentives to encourage exploration and gas storage.

‘Mature asset’

Beluga is a “mature asset,” says the POD submitted by Dan Clark, Cook Inlet asset manager for ConocoPhillips.

“The Sterling reservoir pressure has declined to approximately 41% of original pressure,” the POD says. “Reservoir deliverability has declined with pressure depletion. Aquifer encroachment has also been observed in isolated sands in some wells. The Beluga River field will continue to decline with further production.”

Proposed operations during the plan period include completing one new well, plus four drill site turnarounds, the POD says.

The POD also talks of spudding and completing a “grass roots twin” for a Beluga well that was shut-in in 2005 after it “began to produce increasing amounts of water and finally loaded up and died.”

A new well also was drilled and completed during the 47th plan period, the POD says.

The POD lists a total of 24 wells in the Beluga River unit, including producer and disposal wells.