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AOGCC approves flaring
Three-month increments OK’d for GBP’s 9-month Alkaid 2 well testing request
Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has approved flaring in association with a long-term production test of Great Bear Pantheon’s Alkaid 2 exploration well, but in three-month increments, not for the nine months requested by the company.
In a Nov. 23 order, the commission said the authorization would expire three months after production begins and said it may, at its discretion, extend the flaring authorization in three-month increments, not to exceed nine months total, based on quarterly reports which it is requiring as a condition of the approval.
Great Bear Pantheon drilled the Alkaid 2 from a gravel pad off the Dalton Highway some 20 miles south of Prudhoe in July and August. GBP reported that the well encountered the Alkaid production zone, a tight sand, and was completed horizontally with a multi-stage hydraulically fractured completion similar to completions in tight sand reservoirs in the Permian, Anadarko and Williston basins, the commission said in its order.
The commission concluded that a long-term production test was necessary for GBP to determine if it has an economic discovery and so it can design production facilities for development if the project is viable.
The company plans to use up to 150 thousand cubic feet per day of produced gas for fuel and gas-lift but said that depending on the volume of oil produced, gas production may be between 150 thousand and 500 thousand cubic feet per day, and that any amount over 150 mcf per day would need to be flared.
In addition to approving flaring in three-month increments, the commission is requiring the company to report flaring amounts each month and report quarterly on the general status of the project, any steps to reduce gas flared and progress toward a conclusion on the viability of the project. Since Alkaid 2 is an exploration well, monthly flaring reports will be confidential until the end of the well’s confidentiality period.
An unusual request The commission said its regulations provide that “upon application, the commission will, in its discretion, authorize the flaring or venting of gas for purposes of testing a well before regular production.” Such tests are typically short - a few weeks or less - and handled through sundry permit approval or letter but because Great Bear was proposing long-term testing, the commission determined that a hearing and order were warranted.
The hearing was held Oct. 27.
In its presentation to the commission GBP said Alkaid 2 had a pilot hole whose measured depth was 8,950 feet, with a true vertical depth of 8,584. The well has a 5,000-foot lateral, with a bottomhole at 14,300 feet MD and 8,056 feet TVD.
Oil from the well is trucked for sale on the North Slope; water not injected is taken to a grind and inject facility for disposal; gas is used for power generation, facility heating, gas lift and only then is excess gas flared.
The company said the length of its proposed pilot production test is to enable the company to determine appropriate design specifications and requirements for production facilities and to accurately assess the economics of full-field development.
GBP said it did not know how long a full pilot production test would take but said if the pilot production test was prematurely shortened the estimated production profile would be “highly speculative” and would “lack the certainty to both attract investment and confidently design production facility capacity.”
Long-term tests “Long-term production tests provide more accurate results, especially in poorer quality reservoir rocks, than short-term tests when evaluating the feasibility of a project. Short-term tests may not be able to differentiate between an economically viable development and an uneconomic one,” the commission said in its Nov. 23 order.
Alkaid 2 is in the Alkaid unit which is not, the commission said, “associated with any existing field on the North Slope and therefore does not have access to permanent production facilities in order to conduct a long-term test or a full field development.” The company has acquired temporary production facilities for the pilot production test.
The commission said GBP believes a nine-month production test should be long enough for them to determine if the project is economically viable, although it is possible a decision could be reached sooner.
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