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Aurora applies to expand Nicolai Creek gas unit Restarted gas production from old field with recompletion; now installing line to sidetrack and second recompletion; also evaluating seismic for deeper oil Kristen Nelson Petroleum News Editor-in-Chief
Aurora Gas is putting in a pipeline to connect the southern area of its onshore Cook Inlet natural gas Nicolai Creek unit. The company has also applied to the Alaska Department of Natural Resources’ Division of Oil and Gas to expand the unit, and one of its participating areas, and will continue to evaluate three-dimensional seismic shot earlier this year for more natural gas development locations, and also to determine what deep oil potential may exist.
Natural gas was discovered at Nicolai Creek in the 1960s during exploratory drilling targeting deeper oil objectives.
The Nicolai Creek unit is on the west side of Cook Inlet, and includes uplands and tide and submerged lands west of Tyonek at the mouth of Nikolai Creek. The unit expansion will add some 94 acres, the state said, a portion of federal lease AA-8426, in sections 29-32 of township 11 north, range 12 west, Seward Meridian.
The Alaska Oil and Gas Conservation Commission told Aurora in September 2002 that it could drill and test wells in the southern portion of the unit, but could not put them into production until it resolved gas ownership issues because the wells are closer than 1,500 feet to a property line, so natural gas could be drained from adjacent acreage, in this case a lease controlled by the U.S. Department of the Interior’s Bureau of Land Management.
Aurora told the Division of Oil and Gas that it has acquired and interpreted a Nicolai Creek 3-D seismic program, and a redefinition of the extent of the unit is necessary to protect correlative rights. The company is proposing to add a portion of that BLM lease to the unit. Two shut-in wells in south participating area The southern portion of the unit, the south participating area, has two wells, both currently shut-in. Aurora said it has successfully worked over those wells, the Nicolai Creek Unit Nos. 1B and 2, and has asked the Department of Natural Resources to advise the Alaska Oil and Gas Conservation Commission to lift its prohibition against production from the two wells while the application for unit expansion is being reviewed. Aurora said it attempted to agree on a revised south participating area with the Bureau of Land Management, but agreement was never achieved.
Aurora is also asking the state and the Bureau of Land Management for instructions on royalty deposits for the two wells, and said is agrees to temporarily “overpaying the royalty amounts attributable to the DNR and BLM by tendering to both parties 10.0 percent each of the gross revenue allocable to the 1B and 2 wells” while the state reviews the unit expansion application, “with an exact re-allocation to occur following DNR determination.”
As an alternative resolution to the royalty issue, Aurora has suggested joint execution of an agreement by the Department of Natural Resources, BLM and the Alaska Mental Health Trust Authority (which is attempting to perfect 100 percent mineral conveyance from BLM for the portion of BLM lease AA-8426 which Aurora wants added to the south participating area). North participating area currently producing In the current plan of development for the unit, Aurora told the state, no new development wells are planned. No remedial work is planned either, but production from the north participating well, the Nicolai Creek Unit No. 3, “needs to become stabilized following remedial work performed” in 2003, and additional well work may be required to close off intervals because of water encroachment.
Aurora began gas production and sales from the No. 3 well in 2001.
Installation of a single facility for the Nos. 1B, 2 and 9 wells — two-phase separation, glycol dehydration, compression and pipeline to the existing field sales meter — were installed this year, and Aurora said no additional major modifications or additions to field operations are planned.
The No. 9 well was drilled to a depth of 2,102 feet, casing run and cemented, and the well perforated and tested in 100 feet of net Beluga sands between 1,320 feet and 1,447 feet. Aurora said that well is expected to produce about 3 million cubic feet of gas per day.
Aurora said the No. 9 is a straight hole, adjacent to the Nos. 1B and 2 directional wells, “to evaluate the previously untested Beluga formation reservoirs.” If the No. 9 well is successful, Aurora said it would propose a further expansion of the unit to include a third participating area, the Beluga PA. Aurora has produced more than 1 bcf from field Aurora said the field produced almost 1 billion cubic feet of gas prior to being shut-in in 1977, and has produced almost 1 bcf from just the Nicolai Creek Unit No. 3 since that well was recompleted and began producing in 2001.
Aurora sidetracked the No. 1 well in the fall of 2002, drilling the 1B sidetrack below 2,200 feet. The No. 1B has been completed in three intervals, the company said, the original two plus a shallower, previously untested sand.
Aurora also recompleted the No. 2 well. Both wells are awaiting pipeline construction to tie production into the nearby pipeline. “Pipeline construction, which involves the drilling of a deviated hole between the top of the bluff next to the Granite Point tank farm and production facility to the beach, began in September,” the company said, with first production from the area expected in late 2003.
Aurora said it will also evaluate additional development locations identified as a result of its 12 square mile three-dimensional seismic survey, shot in early 2003. The company said the 3-D program will also enable it “to further evaluate the deeper oil potential of the Nicolai Creek field.” Texaco and Superior, drilling directionally for deeper oil objectives, found gas at Nicolai Creek and the unit has been in existence for 30 years, with gas used for field operations until the wells were shut-in in the 1970s.
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