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AOGCC looks at Milne Pt changes
The Alaska Oil and Gas Conservation Commission is considering requiring changes in how wells are constructed at the Milne Point field. Conservation Order 390, issued in 1997 at the request of BP Exploration (Alaska) Inc., exempted Milne Point wells - BP was then the Milne Point operation - from a requirement in the commission’s regulations that “producing wells capable of unassisted flow must be completed with downhole production equipment consisting of suitable tubing and a packer that effectively isolate the tubing-casing annulus from fluids being produced, unless the commission specifically approve production through the annulus to increase flow rate without jeopardizing ultimate recovery from the well.”
The issue the commission is considering is whether a packer should be required in wells with electric submersible pumps.
CO 390 found that Milne Point wells producing from the Kuparuk, Schrader Bluff and Sag River through Milne Point production facilities were on artificial lift, 13 on gas lift and 79 on ESPs.
The commission concluded, in the 1997 order, that since packers installed in conjunction with ESPs “may cause premature failures, increase operational risk, reduce production efficiency and potentially reduce ultimate recovery,” that completing ESP wells at the field without packers was appropriate.
In May of this year, however, the commission proposed cancelling CO 390.
In response Hilcorp Alaska, the current Milne Point field operator, requested a hearing on the matter.
Revisions, not cancellation On July 27 Hilcorp requested that rather than cancelling CO 390, the commission revise it, providing that Milne Point wells with ESPs and which were constructed with both production casing and surface casing, could be completed without an ESP packer assembly.
Hilcorp told the commission there were 119 ESP wells at Milne Point, 84 active producers and seven active water source wells. Of the 119, 116 ESP wells, 97.5 percent, were completed without packers under the waiver granted by CO 390.
Guy Schwartz, commission senior staff engineer, said at the Sept. 10 hearing that Milne Point is the only field with a packer exemption. With some 119 wells with ESP, the 60 percent of those wells in the Kuparuk formation and monobore wells were the biggest concern. Schrader Bluff, he said, has relatively low pressure.
He also said CO 390 seems outdated and makes some assumptions that may not be true today. In addition, Schwartz said, there is a need to be consistent across the state.
Reduction of ultimate recovery Hilcorp attorney Marc Bond, introducing Hilcorp’s presentation, said ESPs at Milne Point have an average life of 2.7 years. Use of a packer increases well complexity and will shorten ESP life, he said, while well work with packers increases risk and reduces ultimate recovery.
Keith Elliott, Hilcorp senior reservoir engineer, showed the commission an economic analysis plotting economic limit vs. ESP life. He said Hilcorp works hard to increase ESP life because it is expensive to replace ESPs. Based on an average run life of 2.7 years, the economic limit - the point at which if a well breaks Hilcorp won’t fix it - is 95 barrels per day.
Asked by AOGCC Chair Cathy Foerster what oil price was used in the model, Elliott said $50 per barrel.
He said the concern with packers is that they may degrade the run life of ESPs, increasing cost and decreasing economic life. If ESP life degrades to 1.7 years and workover costs increase 33 percent that would drop the economic limit to 145 bpd, which could drop field recovery efficiency by 1 percent.
Elliott said if the economic limit increases to 145 bpd, then 43 wells may not be repaired when they break and the production rate at the field would drop by 3,537 bpd. The graphic Elliott used said 30 of the 43 wells that produce less than 145 bpd use ESPs; their total production rate is 2,701 bpd.
Current production is 19,500 bpd from all wells, Hilcorp said, and the Kuparuk formation at Milne Point has produced less than 25 percent of reserves of 900 million barrels.
The flowing issue The commission’s regulation targets “producing wells capable of unassisted flow” and both Foerster and Commissioner Dan Seamount asked if wells could flow on their own.
Mark O’Malley, Hilcorp’s Milne Point field superintend, said wells wouldn’t flow into a flowline on their own. He said if lines were opened to tanks he suspected there might be a short residual flow.
O’Malley reviewed the need of annular operations to keep wells flowing, maximize ESP run life and ultimate recovery.
Paul Chan, Hilcorp’s Milne Point operations manager, said Conoco, the field’s first operator, had extensive problems with ESPs in wells, and said packers impact ability to do well work safely and efficiently.
Seamount asked if other fields had the same problem and Chan said typically not.
Foerster said other North Slope operators - she cited Eni, Caelus and ConocoPhillips - have similar operations but do not have the exemption from packers provided to Milne Point in CO 390. They all use packers, she said, and told Hilcorp that it was important for the commission to understand what makes Hilcorp operations different. Foerster said the hearing record would be left open for an answer from Hilcorp on why its wells need to be operated differently.
- KRISTEN NELSON
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