AOGCC plans to revisit Prudhoe gas off-take rate

Commission to use field owners’ reservoir studies; will take comment on proposed rules governing its access to those studies

Kristen Nelson

Petroleum News Editor-in-Chief

The Alaska Oil and Gas Conservation Commission will revisit the natural gas off-take limit for Prudhoe Bay and it will begin by using reservoir studies done by the field owners and operator.

The commission said Oct. 28 in a draft report that because of volumes being discussed for a proposed North Slope gas sales project, the reservoir development that has occurred and current understanding of reservoir management and reservoir simulation, it believes there is a need to revisit the appropriate off-take limit.

A maximum off-take rate of 2.7 billion cubic feet per day was established in 1977 when the commission first adopted pool rules for the field, but current proposals discussed for gas sales projects range from 4.5 bcf to 6 bcf a day from Prudhoe Bay and Point Thomson combined. At 4.5 bcf a day, approximately 2.9 bcf a day would come from Prudhoe Bay. Of the current 2.7 bcf a day limit, some 700 million cubic feet are used for fuel, field operations, production of saleable natural gas liquids, enhanced oil recovery and minor local sales, leaving approximately 2 bcf for sales gas, the commission said in its draft report.

The majority of natural gas produced from Prudhoe, some 8 bcf a day, is reinjected to maintain reservoir pressure, assisting in oil recovery.

The commission held public hearings in March and May to determine if it should revisit gas off-take, and reviewed the original decision as well as reservoir simulations the owners ran in 2002 (see stories in the March 13, March 20 and May 29 issues of Petroleum News).

The commission said Oct. 28 it will reconvene the hearing Dec. 1 to take comments on its proposed report, concluding the current inquiry.

The draft report “incorporates principles that would govern monitoring” by commission staff and consultants of reservoir studies which the Prudhoe Bay unit working interest owners and operator will conduct. Those reservoir studies, the commission said, will be done in advance of later formal hearings on an allowable off-take rate for Prudhoe.

At issue: how much data public

In its May 19 hearing the commission addressed the issue of whether it could get enough information on gas off-take rates working cooperatively with industry, or whether it would have to do its own studies, an alternative which commission Chairman John Norman said would be more costly.

In its draft report the commission said the Prudhoe owners and BP Exploration (Alaska), the field operator, have indicated a willingness to cooperate with the commission “regarding review of their reservoir studies, including simulation studies.” They have agreed, the commission said, to cooperation principles set out in an attachment to the draft report. The commission said that based on agreement of the owners and operator to the principles, it “will forego pursuing independently full field reservoir simulation studies, although it reserves the right to initiate such studies at any time.”

The field owners and operator have agreed to provide commission staff and consultants access during working hours to a data room with computers and software giving them access to Prudhoe Bay oil pool reservoir simulations and related studies. They will be required to sign a confidentiality agreement, but “may take and retain notes” in the data room. Specified materials may be copied and removed in electronic form. Information not on an approved list for copying may be requested and BP and the owners will respond within 10 working days of receiving such requests.

The commission agreed to hold data room information confidential, but said confidentiality provisions do not apply if information in the data room is the same as that supplied to the commission without a claim of confidentiality or obtained independently by the commission without a confidentiality obligation.

Data room operation will begin within 30 days of the commission issuing its report and the study will continue for six months.

When the commission holds Prudhoe Bay gas off-take rate hearings, BP and the owners will introduce as evidence in those proceedings Prudhoe Bay oil pool “reservoir studies that best reflect a reasonable range of offtake options and their effects.”

The commission said it will determine the confidentiality of data room information introduced in proceedings at that time.