Vol. 27, No.37 Week of September 25, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

GBP needs lengthy Alkaid 2 flare approval; AOGCC schedules hearing

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Kristen Nelson

The Alaska Oil and Gas Conservation Commission has scheduled a hearing on a request by Great Bear Pantheon for approval for nine months of flaring of gas associated with long-term testing of the Alkaid 2 oil well.

In an Aug. 22 request, Michael Duncan, Great Bear Pantheon’s chief operating officer, said that following completion of the Alkaid 2, “Great Bear intends to conduct a long-term pilot production test to determine if the well, and more specifically the target formation, will be capable of producing at sufficient sustained volumes to support a development program of the target formation.”

During that production test, the company “will need to flare non-utilized natural gas,” he told the commission.

The well

Duncan said Alkaid 2 is a horizontal well with the target formation, the Alkaid production zone, “considered a tight sand.” He said the well will use horizontal multi-stage completion, “similar to those successfully used in the Permian, Anadarko, and Williston basins.”

A long-term pilot production test will “establish the production profile and characteristics of the Alkaid Production Zone,” forming “the basis for understanding formation and field deliverability, processing facility design, takeaway capacity needs, and overall project economics and financial viability,” Duncan said.

The pilot production test will likely last up to nine months, he said and if the initial production rate is low or production decline is significant, “the project may never evolve to regular production.”

Adequate initial production and a modest decline curve are necessary for the project to be considered for regular production, he said.

Use of gas onsite

Duncan said Great Bear Pantheon will deploy a gas-fired turbine during testing, initially fueled by compressed natural gas.

“Once the well begins to flow, Great Bear Pantheon is hopeful that the production stream will include enough natural gas to fully power the turbines,” Duncan said, reducing the amount of natural gas that will need to be flared. The company also plans to use excess natural gas for gas lift.

The company estimates that at production rates of 500 to 1,000 barrels per day, gas production could be 150-500 mcf per day, of which infield uses could consume up to 150 mcf per day, “which could represent the entire gas production stream and eliminate any flaring.”

Duration of test

Duncan said wells using a horizontal multi-stage completion technique, HMSC, such as that at Alkaid 2, “are known for high initial production with rapid decline that eventually transition to steady production at a lower rate.”

Properly understanding the decline curve at the Alkaid 2 will take months, he said, because wells with identical initial production can have very different ultimate rates which won’t be evident for nine months or more.

Determining estimated ultimate recovery, EUR, takes many months with HMSC wells, Duncan said, and uncertainty over EUR in the first few months means uncertainty in the economics which may mean the project won’t be able to attract capital due to “perceived uncertainty in the economics.” Also, facilities designed based on incomplete data may be over-built or under-built for actual production.

“A two million barrel well compared to a well that produces half of that are materially different investments, that require materially different facilities,” Duncan said. Predicted EUR narrows as the pilot production test is carried out. “The confidence in whether the project will prove economic or not significantly increases as the range of potential EUR narrows,” he said, and terminating the pilot production test too early “will result in a very risky prediction of EUR that will be backed by little confidence.”

“Great Bear Petroleum anticipates that the PPT will need to proceed for up to nine months before we reach the level of certain necessary to fund the project and design the facilities,” Duncan said.

Unusual length

In a public notice issued Sept. 14, Jeremy Price, AOGCC chair and commissioner, said typical requests for flaring authorization for testing are for a few weeks and the Great Bear Petroleum request is for longer than any approval the commission has ever granted.

“Due to the unique nature of the request the AOGCC has decided to hold a public hearing on this matter before rendering a decision.”

The hearing will be Oct. 27 at 10 a.m. in the commission’s Anchorage offices. Audio call-in information is 907-202-7104, conference ID no. 673 632 073#.

Written comments may be submitted to the commission at 333 W. 7th Ave., Anchorage, A 99501 or [email protected] and must be received no later than conclusion of the Oct. 27 hearing.


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