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AOGCC reevaluating Prudhoe gas off-take rate Proposed North Slope gas line sales range from 4.5 bcf to 6 bcf per day; according to 1977 rule only 2 bcf can be sold Kristen Nelson Petroleum News Editor-in-Chief
The Alaska Oil and Gas Conservation Commission has held the first in a series of hearings on the gas off-take rule for the Prudhoe Bay field. The commission regulates oil and gas off-take rates as part of its mandate to ensure hydrocarbon resources are not wasted. The current Prudhoe Bay gas off-take rate, 2.7 billion cubic feet per day, was set in 1977 when pool rules were established prior to the beginning of oil production from Prudhoe Bay.
Proposed North Slope gas sales are described as being in the range of 4.5 bcf to 6 bcf per day.
Frank Blaskovich, a consulting reservoir engineer who reviewed the off-take rate for the commission, concluded that neither studies done prior to the establishment of the rule nor a 2002 study by the Prudhoe Bay field owners justify the rate, and it should be re-examined.
At the March 3 hearing, commission Chairman John Norman said the existing 2.7 bcf a day rule was the entire off-take, with 2 bcf a day designated for pipeline sales. After 28 years, he said, it is appropriate to revisit the rule. Issues include the impact of a major gas sale on total hydrocarbon production from Prudhoe; the impact of timing; and depletion plans and mitigation measures. Does rule still make sense? Blaskovich reviewed the bases for the 1977 off-take rate, which is based on the commission’s mandate to prevent physical waste of oil and gas and to ensure that developed reservoirs achieve maximum recovery of hydrocarbon reserves. All oil and gas producing state have the equivalent of Alaska’s conservation commission, bodies which ensure that oil and gas reservoirs are effectively produced.
In 1977, when the commission set off-take rates for both oil and gas, both the Prudhoe owners and a state of Alaska consultant did simulation studies presented at a hearing.
Reservoir simulation, Blaskovich said, consists of mathematical models applied to petroleum reservoirs with results dependent on available data and calibration. Not much data was available 28 years ago, he said, because production hadn’t yet begun. To calibrate a model you compare the predictions you get out of the model with what has happened in the reservoir.
“It’s a history match,” Blaskovich said, and in 1977 there was no history.
The studies done in the 1970s were standard for the time, he said, but could give only very coarse approximations by today’s standards. There were four different 1977 model studies, three by the Prudhoe Bay owners (in 1977 the major owners were ARCO, BP and Exxon) and one by H.K. Van Poollen for the state, and all the studies appear to have shared the same basics, he said.
Van Poollen ran cases with and without gas sales, Blaskovich said, and even in the early days you could see that a gas sale would add to hydrocarbon recovery. There is little documentation available for the cases run by the working interest owners, and no real base case to determine major gas sale impacts on oil recovery, so it is difficult to make an apples-to-apples comparison between the studies, he said. A moving target Both the commission and the owners recognized that further evaluation would be needed.
At the 1977 hearing Commissioner Hoyle Hamilton said “… the Conservation Commission doesn’t want to get itself in a position that we’re certifying any gas sales, any pipeline gas sales rate. We’ll be approving of a reservoir off-take rate in view of the conservation purposes,” Hamilton said.
In the 1977 Prudhoe Bay operating plan the field owners said: “Over the life of the field, these plans will undergo continual evaluation and will be modified as necessary, based on observed reservoir performance, to achieve the maximum economic recovery of oil and gas from the Prudhoe Bay field.”
The early models fell far short of predicting field performance. In 1977, the estimate was that 8 billion to 9 billion barrels of oil would be recovered; today, Blaskovich noted, more than 10 billion barrels have already been produced and the estimate is that total recovery will be some 13 billion barrels, 50 percent more than the 1977 estimate.
The 1977 estimate was based on gravity drainage and waterflood; since then recovery methods have changed, Blaskovich said: Prudhoe Bay is not the same field it was in 1977, “Prudhoe Bay has moved on,” he said.
Conclusions that can be drawn from the 1977 work are that while a major gas sale increases total energy recovery, it can put some liquid recovery at risk. But, he said, the work done in the 1970s does not provide a defensible basis for any specific major gas sale off-take rate “from a conservation standpoint.”
The models done for the commission “gave qualified support” for 2 bcf a day for a gas sales pipeline, but the working interest owner models have an “incomplete picture.’
“Reservoir performance predictions on a field without production history are approximate at best,” Van Poollen said at the 1977 hearing.
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