Vol. 27, No.41 Week of October 09, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

AOGCC OKs propane sales

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Prudhoe owners want to look at commercial sales, estimate 200 bpd initially

Kristen Nelson

Petroleum News

In 2012, Prudhoe Bay working interest owners opposed a proposal that the unit sell up to 2,500 barrels per day of propane from the field; earlier this year, they said they were interested in selling a smaller quantity, 200 bpd.

The 2012 proposal was from Harold Heinze, who petitioned the Alaska Oil and Gas Conservation Commission to mandate propane sales of 2,500 bpd from Prudhoe Bay, on the basis that not selling propane was causing waste.

On Aug. 17, 2012, AOGCC, in other order 75, “concluded that not conducting commercial propane sales from the PBU was not causing waste.”

Earlier this year, Hilcorp North Slope, the current Prudhoe Bay unit operator, applied for an amendment to other order 75, requesting an update to document the Prudhoe owners’ “current understanding” of impacts on the field “in the event of propane sales.”

In its May 19 application to AOGCC, Hilcorp said that based on its updated analysis of the impact of propane sales, “waste will not occur.”

The company cited changes at the field over the past 10 years and said the current proposed sales volume is some 200 bpd. The Prudhoe owners “are continuing to work with interested wholesale buyers to potentially sell volumes of propane up to the facility maximum capacity limits,” Hilcorp said, citing current facility limits of 600 bpd of propane, with the potential to increase to 1,000 bpd or more “with facility modifications.”

2022 update

In a Sept. 28 decision, amending other order 75, the commission said: “Since the proposed small sales would not cause waste Hilcorp and the other PBU WIOs can continue to explore the possibility of commercial propane sales from the PBU.”

There is a need, the commission said, noting that more propane is consumed in Alaska than is available from in-state sources requiring propane to be imported from Canada and the Lower 48.

And there have been changes at Prudhoe, the commission said, with continuing field development since 2012 and the cessation in 2021 of natural gas liquid sales from Prudhoe to the Kuparuk River unit.

In 2012, the central gas facility handled 170 million cubic feet per day of propane, while Hilcorp now reports an average of 190 million cubic feet per day.

The commission said the CGF is operated to produce as much NGL as possible by operating as close as reasonable to the minus 50 degrees F limit of processing equipment. In 2012 the annual average processing temperature was minus 35 degrees F with a peak of minus 42 degrees, while currently the average is minus 38 F with a peak of minus 44 F.

Recovery issues

In its 2012 order, the commission found that “selling propane would reduce the amount of MI available for EOR purposes and thus would reduce ultimate recovery.”

Currently, the commission said, while Hilcorp believes sales of propane will reduce miscible injectant available for enhanced oil recovery, reducing crude oil recovery, the company “now believes that depending on the timing and size of propane sales, ultimate hydrocarbon recovery, which would include propane sales, would actually increase.”

The commission said in its conclusions that due to the aging of Prudhoe, miscible injectant “is less effective at enhancing oil recovery than it was when Other Order 75 was issued and will continue to become even less effective as time goes by.”

Because the current proposal is for a smaller volume of propane - 200 to 1,000 bpd versus 2,500 bpd in the 2012 proposal - sales would have less impact on ultimate oil recovery than the proposal upon which the 2012 order was based.

“Selling small volumes of propane from PBU, up to the 1,000 bbls per day maximum potential capacity of the existing propane plant, will not harm, and would likely increase, ultimate recovery from the field,” the commission said.

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