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Commissioner denies Unocal’s participating area appeal
Kristen Nelson PNA News Editor
Commissioner of Natural Resources John Shively has denied an appeal by Union Oil Company of California over the size of a proposed shallow Tyonek gas reservoir participating area within the North Middle Ground Shoal unit.
Unocal applied for a two-lease shallow Tyonek gas participating area within the unit in October 1998. The division of oil and gas approved a one-lease participating area in June. In July, Unocal appealed that decision to approve the smaller participating area, requesting instead that the participating area be approved as described in the company’s application.
Unocal presented additional data and information in support of its appeal and also presented an interpretation of three-dimensional seismic data to division staff.
Formation must pass two tests The commissioner noted that formation of the participating area must meet two tests: the acreage must be reasonably known to be underlain by hydrocarbons; and it must be known or reasonably estimated to be capable of producing or contributing to production of hydrocarbons in paying quantities.
The second tract, ADL 369116, is acknowledged by the state to be underlain by gas, Shively said in his decision, noting that a well drilled on the acreage in 1964 flowed gas and that the state certified that well, 1 Pan American MGS 18743, as capable of producing in paying quantities.
But, he noted, the well flowed from 24 feet of Tyonek formation net pay at 8,938 feet subsea, whereas Unocal limited its proposed participating area to the horizon between 1,430 feet MD and 5,302 feet MD in the 4 MGS State 17595 well. No drill stem tests in the Pan American well showed significant gas flow above 8,938 feet, Shively said.
The commissioner concluded that, while gas is present on ADL 369116, “the data submitted by Unocal does not support its interpretation that the Shallow Tyonek Gas Reservoir is present on the northern lease and that it is being produced, or contributing to NMGSU production through pressure support or other means.”
Unocal may request reconsideration or appeal to the Alaska Superior Court.
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