AOGCC hears CIE on North Fork pool rules

Field operator Cook Inlet Energy describes work at field, plans for wells, potential of additional pad in northern part of unit

KRISTEN NELSON

Petroleum News

Cook Inlet Energy applied to the Alaska Oil and Gas Conservation Commission in November for pool rules for the Tyonek gas pool in the North Fork unit. The commission held a hearing on the application Jan. 5.

North Fork is on the southern Kenai Peninsula some 10 miles north-northwest of Homer.

Cook Inlet Energy senior landman Timothy Jones told the commission there are five leases at the North Fork unit, all held 100 percent by Cook Inlet Energy, and all state leases issued by the Alaska Department of Natural Resources. The company’s acreage is bordered by some leased state acreage, Jones said, as well as by Cook Inlet Region Inc. acreage held by Hilcorp Alaska.

The first leases were established at the field in 1954, Jones said. Cook Inlet Energy acquired North Fork from Armstrong in a sale which closed in early 2014.

In its application Cook Inlet Energy told the commission the discovery well was drilled in 1965. Although the field had several changes of ownership there was no further exploration or any development until the North Fork leases were acquired by Denver-based independent Armstrong Oil and Gas, which brought in four partners. That joint venture reentered the original well, drilled new wells and brought the unit on production in 2011. Cook Inlet Energy said Armstrong work at North Fork included acquisition of 3-D seismic over the area, drilling additional wells and installation of production facilities.

Cook Inlet Energy petroleum geologist Greg Kirkland told the commission eight wells have been drilled in the unit, seven of which are producing natural gas. The southwest quadrant of the field has seen the majority of production to date, he said, with a largely unexplored fault block to the north where the company plans to develop a pad and drill.

With the exception of the exploration well, all wells in the field have been drilled from a single pad, Kirkland said.

Since acquiring the field Cook Inlet Energy has drilled two wells; he said the company also did a workover on the discovery well.

Commissioner Dan Seamount noted at the hearing that he had wanted to see Unocal look at developing the field when that company held the leases and he worked for them, but Unocal believed the gas potential from the field was only a half a billion cubic feet. At that time, only the discovery well had been drilled.

In addition to production facilities and drilling, bringing the field online also required a pipeline and a supply contract with Enstar Natural Gas Co., both of which were part of what Cook Inlet Energy acquired from Armstrong.

Cook Inlet Energy said in its application that the field had produced some 11.9 bcf through September and that a recent volumetric study showed there may be as much as 70-80 bcf of original gas in place, but that recovery from the area would likely be less than 30 bcf.

Seamount said the recovery estimate of 30 bcf from natural gas in place of 70-80 bcf seemed small for a gas field and asked how the company came to that conclusion.

Kirkland said there was considerable variation in the quality of the reservoirs penetrated, with some wells producing at very good rates with probable recoveries of 70-80 percent, while some of the thinner sands might have recoveries at much lower rates. In a summary statement he said recovery would vary from 80 percent to 10-15 percent.

Commission Chair Cathy Foerster asked if Cook Inlet energy had considered hydraulic fracturing at the field.

Kirkland said they have looked at it and continue to look at various types of fracks, but said no fracturing had been attempted to date at North Fork.

Foerster also asked if sands correlate across the field. Kirkland said they do correlate across the field; he said coals in particular correlate. But, he said, while intervals correlate, the sands may be separate reservoirs.

Kirkland said in summary that the filing for pool rules is from the base of the Beluga to the Hemlock. He said that without pool rules, the company has to file for exceptions to spacing rules for most of the wells drilled. He said the proposed pool rules would protect correlative rights and provides for a 1,500-foot buffer.