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AOGCC hearing looks at Oooguruk water injection issues Concerned about less-than-expected rates of water injection, impart on field’s production, mentioned by Pioneer in earnings call Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission is concerned about the impact on Oooguruk development of differences between planned and actual water injection rates by Pioneer Natural Resources. It held a hearing Oct. 25 and had asked both Pioneer and ConocoPhillips Alaska, which as operator of the Kuparuk River field is the third-party water supplier, to present testimony.
Pioneer raised the issue in an Aug. 4 second-quarter earnings conference call when it noted that various issues at Lower 48 fields and at Oooguruk had caused an annual production loss estimated at 2,500 to 3,000 barrels of oil equivalent a day.
A story in Petroleum News reported the water injection supply shortage, but mistakenly attributed the overall volume of 2,500 to 3,000 boed to Oooguruk alone.
Asked about the situation in Alaska in the question and answer session of the August earnings call, Pioneer President and COO Timothy Dove said the figure for Alaska for the first half of the year was about 1,000 barrels per day.
Dove said Pioneer needed 15,700 bpd of water for injection and said, as reported in a transcript of the earnings call, “we’re significantly short of that in terms of what we’re being supplied, something like 6,000 barrels a day.”
He went on to say that Pioneer hadn’t thought water, used for sweeping oil from the reservoir, would be a problem and said the company is working on internal fixes.
“So, our production would be higher in this year, other than for the fact that we’re losing production related to this lack of water, probably 1,000 barrels a day at least in the first half of the year.”
No blame to ConocoPhillips Pat Foley, Pioneer Natural Resources Alaska manager of land and external affairs, told the commission the Kuparuk River unit seawater supply for Oooguruk has been less than estimated by Pioneer.
But, he said, Pioneer contracted for water and ConocoPhillips has met all its obligations to deliver water on an “as available” basis. He said Pioneer places no blame on ConocoPhillips.
Foley said while water injection has been less than planned, Pioneer does not believe waste has occurred; deferred production is not lost production; and Pioneer believes ultimate recovery has not been impacted.
He disputed the numbers cited by Petroleum News — as well as who spoke to water supply issues at the Aug. 4 earnings call, incorrectly reported by Petroleum News as CEO Scott Sheffield — and said that according to a transcript of the Q&A, Dove had said production was down by roughly 1,000 bpd at Oooguruk in the first half of 2011 due to the water shortage.
Foley said Pioneer believes that ultimate recovery from the field will not be impacted and that no waste has occurred. Whether adequacy of water supply for enhanced oil recovery injection may lead to waste was an issue in the commission’s public hearing notice.
Water from Kuparuk Greg McDuffie, commercial activities supervisor for ConocoPhillips Alaska, told the commission at the Oct. 25 hearing that as Kuparuk River unit operator, ConocoPhillips Alaska’s first goal with seawater is to maximize oil recovery from the Kuparuk River field. He said when KRU seawater deliverability exceeds KRU demand, seawater is available to third parties.
McDuffie said the seawater delivery rate is variable, and any weak link in the chain, such as maintenance or weather, will impact the water delivery rate to Oooguruk.
More than 8 million cumulative barrels have been delivered to Oooguruk since injection started in April 2009, he said, and more than 1 million barrels of water has been produced at Oooguruk since startup.
Commissioner John Norman asked if any other third parties received seawater from Kuparuk. McDuffie said the Colville River unit has been a third-party user of KRU seawater since 2000.
Norman asked how water was apportioned and McDuffie said it was not straightforward because there could be shortages in different parts of the system.
Asked by Commissioner Cathy Foerster about priorities in water delivery, McDuffie said that the first priority is the Kuparuk River unit, followed by the Colville River unit which has had an agreement for seawater delivery since 1998. CRU is the first third-party seawater user and has priority over any subsequent third party, McDuffie said.
Follow-up requested Asked about any plans to increase water supply, Foley said Pioneer has had conversations with ConocoPhillips about increasing capacity. He said Pioneer has considered other ways to get water supply but hasn’t found an alternative more cost effective than bringing in seawater from the Kuparuk River unit.
Forester said the hearing was not an attempt to find fault with Pioneer’s development work at Oooguruk, but to see if there were issues the commission needed to understand better.
Norman said he echoed those remarks, but also said the question of water supply for injection has been raised and the commission will be keeping an eye on what is done on voidage replacement at Oooguruk.
Norman invited Pioneer to communicate with the commission’s engineers on the company’s plans for dealing with the water injection issue, or, he said, the commission could hold another hearing in six months.
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