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Providing coverage of Alaska and northern Canada's oil and gas industry
November 2019

Vol. 24, No.45 Week of November 10, 2019

Commission hears pool rules presentation

BlueCrest proposes Hansen pool rules, triggered by multiple spacing exceptions required for fishbone lateral well design at field

Kristen Nelson

Petroleum News

In early June the Alaska Oil and Gas Conservation Commission said that in response to requests from BlueCrest Alaska Operating LLC for spacing exceptions at the Hansen H10 well and its fishbone lateral branches, a request which would result in 63 spacing exceptions, the commission was scheduling a public hearing to establish pool rules for development and operation of the Hansen oil pool at the Cosmopolitan unit.

BlueCrest, which has been producing from the Hansen oil pool since 2017, had not sought pool rules but had been operating under statewide AOGCC rules. The commission said it received 25 spacing exception requests from BlueCrest for the Hansen H10 well and its fishbone lateral branches June 7, and if the current request was granted, it would result in 63 spacing exceptions having been issued for the Hansen wells.

Oct. 10 hearing

A full hearing was not held until Oct. 10 - this summary of the hearing is from a transcript of the proceedings.

Commissioner Dan Seamount chaired the hearing, and as he explained in an overview of the proceedings, a hearing was scheduled for Aug. 13 and BlueCrest submitted an initial field and pool rules application Aug. 2. A hearing was begun on Aug. 13 but was continued because BlueCrest had not served notice to the Bureau of Ocean Energy Management. (There are federal tracts on the seaward side of the Cosmopolitan unit.)

The commission requested that BlueCrest refile its application and provide notice of service to BOEM, as well as providing answers to questions from the commissioners. BlueCrest refiled its application Aug. 30; on Oct. 2, BOEM notified the commission by letter that it had no objection to the proposed rules.

Andrew Buchanan for BlueCrest

Geologist Andrew Buchanan, vice president of BlueCrest Alaska, presented testimony for the company. The Cosmopolitan unit is 100% owned and operated by BlueCrest, he said, and consists of four state leases, 13,314 acres offshore, with 11 wells drilled and 20 sidetracks. (BlueCrest acquired Cosmopolitan from Buccaneer Energy in 2014 and began crude oil production in 2016, trucking the crude to the refinery in Nikiski.)

Buchanan said that since BlueCrest took over as operator it has drilled four wells and redrilled one well.

In describing the field’s geology, he said one thing BlueCrest has noticed in its drilling is compartmentalization within the reservoir.

In response to a question from Seamount, Buchanan confirmed that the oil pool goes from the top of the Starichkof to the base of the Hemlock.

Development drilling is based on multilateral wells in what the company has described as a fishbone pattern - hence the need for the multiple spacing exceptions.

Buchanan said the company plans to do more appraisal in 2020, development reservoir management strategy and refine costs in 2021-22 and execute its development strategy in 2023-25.

The current development is by primary depletion using fishbone and extended reach drilling wells, and Buchanan said BlueCrest is looking at options for secondary recovery, probably gas injection for pressure maintenance. He said the facility would require upgrading to inject gas as the company doesn’t currently have the compression needed - and, he said, BlueCrest would also have to find additional sources of natural gas.

Next well

Buchanan said the next producing well the company plans would require the 25 spacing exceptions - it would be three trident laterals off a single wellbore. That would about triple the reservoir penetrations, making well spacing one of the key rules the company is requesting, to waive well to well spacing restrictions within the field. BlueCrest does not plan, he said, to drill within 500 feet of a lease line so that is not an exception it is requesting.

In its pool rules application, submitted July 31, the company said: “By eliminating intra-pool spacing rules, BlueCrest will be able to target smaller, undrained portions of the pool that cannot be reached/contacted by wells conforming to current statewide spacing restrictions. … (helping) to maximize recovery from otherwise bypassed pay, while allowing for continued production from established development wells.”

Another crucial request for the company is a three-week test duration for the blow out preventer test while the production section of a well is being drilled. The problem, Buchanan said, is that it takes a long time to get in and out of the hole - two days to get in and two to three days to back out.

He said BlueCrest has had instances where it had to come out of the hole prematurely to meet BOP operations when functional bits and tools were still in the hole.

There were two times when the company had to start coming out of the hole for BOP tests before the last lateral was drilled and it then was not economic to return to drill that last lateral, so the production from the last lateral was lost because the company won’t be able to tap into that oil, Buchanan said.

Commissioner Jessie Chmielowski asked if that request related to the fishbone laterals only, not the parent well. Buchanan said, yes, the BOP exception would apply just to the production section, not to the surface or intermediate sections of the well.

In slides prepared for the presentation BlueCrest noted that its request for blowout preventer tests every 21 days, rather than every 14, is in line with what is required by the United Kingdom, the Netherlands, Denmark and Brazil, as well as by the rewrite of the U.S. Bureau of Safety and Environmental Enforcement well control rule for the outer continental shelf.






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