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AOGCC considers shale oil development Foerster says commission anticipates new regulations for disclosure of hydraulic fluids; extended gas flaring will not be allowed Alan Bailey Petroleum News
The Alaska Oil and Gas Conservation Commission, or AOGCC, is viewing with interest Great Bear Petroleum’s efforts to develop oil direct from source rocks on the North Slope, AOGCC Commissioner and Chair Cathy Foerster told Law Seminars International’s Energy in Alaska conference on Dec. 4.
Given the size of North Slope oil fields such as Prudhoe Bay, the prospects for shale oil development in Alaska should be good, Foerster said. “If there is any correlation between how good the conventional reservoir is and how good its source is, we’re sitting on a gold mine,” she said. “We’re really optimistic that Great Bear will do great things.”
Foerster said that the exploration phase of Great Bear’s program raises few issues for the commission, but that the commission is considering what actions it needs to take as the shale oil program moves through production testing and development.
Shale oil is a commonly used term referring to oil produced from source rocks, although those source rocks are not necessarily shale.
Hydraulic fracturing Great Bear will likely have to apply hydraulic fracturing techniques in all of its wells. But this technique is by no means new to Alaska, Foerster said.
“One out of every four wells in the State of Alaska has been hydraulically fractured, and we’ve been fracturing wells for 40 years here,” she said.
The commission already has adequate regulations in place to ensure that hydraulic fracturing is performed safely, Foerster said. However, in recognition of recent technical advances, and recognizing public concerns, the commission will update its regulations in 2013. New regulations will require disclosure of what fluids are being used and will require freshwater monitoring, Foerster said.
As more people become aware that fracturing is happening in Alaska, more people will want to know what is going on, she said.
Gas flaring The most difficult issue for shale oil regulation will likely, however, relate to the flaring of gas that is produced along with the oil. With the impracticality of transporting gas from shale oil well sites during production testing, companies will want to flare gas during that phase of the development cycle, Foerster said. But AOGCC will insist on the construction of gas handling facilities before wells go into full production. The commission will not allow extended flaring, Foerster said.
“We’re not going to be North Dakota, which flares 34 percent of the gas it produces. We currently flare less than 0.5 percent of the gas that we produce and we’d like to keep it that way,” Foerster said. “We’ll have some fights about that, I suspect. I’m ready.”
Ideally, the gas would be shipped to Prudhoe Bay for oil-field reservoir pressure maintenance and improved oil recovery, she said.
The other issue for shale oil production — the metering of the production, to ensure that the state receives its royalty share of the oil — should prove relatively simple to deal with, Foerster said.
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