|
Spacing exception needed at Cannery Loop
Hilcorp and Cook Inlet Natural Gas Storage Alaska present agreement to AOGCC on use of vertical reservoirs at Cannery Loop unit Kristen Nelson Petroleum News
Cook Inlet Natural Gas Storage Alaska’s Sterling C gas storage pool sits atop Beluga and Tyonek formation producing gas pools owned and operated by Hilcorp Alaska at the Cannery Loop field on the Kenai Peninsula.
CINGSA owns leases covering the Sterling C storage pool; Hilcorp owns the leases below the storage pool.
Both production and drilling are ongoing at Cannery Loop, which produced an average of 5,328 thousand cubic feet of natural gas from the Beluga and Tyonek formations in July, the most recent month for which data are available from the Alaska Oil and Gas Conservation Commission.
Hilcorp applied to AOGCC for a spacing exception to allow it to perforate two Cannery Loop Unit wells, CLU 13 and CLU 15, within 1,500 feet of the vertical property line of the gas storage pool.
While applications to produce from closer than 1,500 feet from a boundary are common, this is a case of stacked ownership - and leases used for different purposes.
AOGCC, on its own motion, held a hearing in August.
“Specifically, AOGCC is reviewing whether a 1500-foot offset requirement is appropriate for a vertical property line,” the commission said in a public notice for the hearing.
Companies reach agreement In early August CINGSA and Hilcorp requested that the commission cancel the hearing and amend the conservation order for Cannery Loop to reflect terms agreed to by the parties.
AOGCC held the hearing Aug. 27. It had not yet issued a decision when this issue of Petroleum News went to press.
In their joint request the companies said they believe amending the conservation order for Cannery Loop in accordance with terms reached by the parties “is consistent with sound engineering and geoscience principles and will not jeopardize either party’s correlative rights. This proposed amendment will also allow for maximum use of the vertical reservoirs in the Cannery Loop Unit for both production and storage purposes, thereby avoiding waste.”
Included in materials the companies presented for the hearing was a diagram showing that 1,500 feet true vertical depth below the Sterling C, the gas storage pool, would encompass all of the Upper Beluga and most of the Middle Beluga, estimated to represent “a P10 to P90 range of remaining reserves of 20 to 80 BCF.” A 1,500-foot vertical offset would eliminate production of that resource.
Data exchange The agreement reached by the parties includes extensive data exchange for new and existing wells which penetrate the gas storage pool or are perforated within 1,500 feet of the gas storage pool.
CINGSA is requiring that for all future wells, intermediate casing be set and cemented a minimum of 50 feet below the base of the Sterling C gas storage pool, and for existing wells, if intermediate casing has not been set at least 50 feet below the gas storage pool, the requirement is for a minimum of 100 feet of good pipe to formation bond of the primary casing string below the base of the gas storage pool.
CINGA is also requiring a 50-foot minimum buffer below the base of the gas storage pool “within which no new perforations may be made.”
“Both parties require notification for any perforation activity less than 1,500 feet (vertically) from the base of the Sterling C Pool.”
A 100-foot buffer is required for completion and re-completion plans including hydraulic fracturing.
The companies also agree to share with each other information on any condition that may indicate a loss of integrity within an hour, even if based on a preliminary evaluation.
| 