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Kitchen Lights POD provisionally approved
Division wants participating area application, a technical presentation on subsurface unit work, further development activities
Kristen Nelson Petroleum News
The Alaska Department of Natural Resources’ Division of Oil and Gas has issued a conditional approval for the Kitchen Lights unit seventh plan of development.
This is the first POD submitted by HEX Cook Inlet, which acquired the assets and equity interests of Furie Operating Alaska, the Kitchen Lights operator, out of bankruptcy proceedings July 1.
In its Nov. 13 conditional approval the division is requiring the company to complete the existing participating area application or submit a new PA application by the end of the year and provide a technical presentation by July 1 on progress made in subsurface description of the Kitchen Lights unit along with any other activities related to further development of the unit and exploration activities.
The division said the company has until Nov. 23 to accept the proposed POD modifications or the proposed POD will be disapproved.
KLU includes 30 leases, 83,394 acres, with gas production for the 2019 calendar year of 4.35 billion cubic feet, down from 6.21 bcf in 2018.
The division said HEX committed to: continuing development of proven gas reserves in the KLU; continue and increase gas production on Julius R platform; and continue exploration of KLU, including new analysis of seismic data and offset wells to identify specific targets for exploration outside the Corsair block.
Sixth POD In the previous POD, the sixth, Furie committed to the evaluation of a new development well from the Julius R Platform to the stratigraphic equivalent of the Sterling zones in the KLU No. 3 wells; to increase production from the KLU A-2A and KLU 3 wells; develop and present to the division plans for a new development well; and mature and present to the division two prospects for exploration wells outside the Corsair Block and continue exploration drilling throughout the unit.
“In January 2019, however, Furie experienced hydrate plugging that formed in the KLU gas pipeline forcing them to shut-in production,” the division said. While Furie was able to resolve the issue and return the line to gas flow in April 2019, that issue “rendered Furie unable to meet its 6th POD work commitments.”
In March 2019 Furie, at the division’s request, submitted a proposal for establishment of one or more participating areas. The division said that was not part of the POD work commitments, and the application remains pending “after requests for further information.”
The seventh POD was due Oct. 7, 2019, but Furie requested an extension of the sixth POD as the company was engaged in bankruptcy proceedings, and the division established a new due date for the seventh POD no later than 90 days after a bankruptcy reorganization.
As a result of the extension, Furie accomplished a number of operations during the sixth POD extension period: perforating the Beluga formation in the KLU A-1; returning KLU A-2A to production in the Beluga formation; commissioning two replacement gas-fired generators and an ancillary diesel-fired generator; installing a coalescing filter separator for improved dehydration performance; remediating spans under pipeline; and developing a spill, prevent, control and countermeasure plan for the central processing facility and the Julius R platform.
Details from HEX POD In its Sept. 14 POD HEX discussed the January 2019 hydrate plugging issue.
Furie restored gas flow by April 2019, “and since that time has implemented various measures to avoid confronting hydrate plugs in the future such as implementing a periodic pigging program to ensure the pipeline stays clear and unobstructed, providing a prescribed and constant low volume level injection of methanol into the pipeline from the production platform, producing only from the Beluga formation to limit the amount of produced water entering the pipeline, installation of additional heat tract at the Central Process Facility (CPF) and a methanol injection point at the CPF to minimize the potential for freezing.”
HEX said a water remediation plan was developed to handle water produced from the Sterling formation to allow production from those zones in the future, and said Furie had begun working with the Alaska Department of Environmental Conservation on approval for a produced water treatment system to allow overboard discharge of produced Sterling formation water after onsite treatment.
HEX said it was continuing to work on that permit and has engaged DNR’s Office of Project Management and Permitting to help the company “better navigate the approval process.”
It said four wells have been perforated in both the Sterling and Beluga and said obtaining the platform water handling permit would more than double its reserves and revenue.
HEX said its expectation is that the water handling system will be online in 2021, in the second quarter at the earliest.
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