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Commission OK’s metering plan for GMT2
Approval allows use of measured volumes for GMT2, as with GMT1, with final lease automatic custody transfer metering at Alpine Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has approved a waiver request from ConocoPhillips Alaska for final custody transfer metering of oil production from Greater Mooses Tooth 2 to occur after that production has been severed from the unit and commingled with production from GMT1 and the Colville River unit.
Because there are no production facilities at Greater Mooses Tooth, the commission has approved measurement of GMT2 oil production with Coriolis meters and water cut analyzer, with the gas leg metered by orifice meters.
After metering the oil and gas flow streams will be recombined, the commission said in a Dec. 19 order, and then shipped to GMT1, where they will be combined with GMT1 production before being shipped to Colville Delta Pad 5 and commingled with the CRU production gathering system.
Final metering for sale will be at the CRU lease automatic custody transfer meter.
ConocoPhillips requested the waiver in July; the commission previously approved a waiver to allow use of a coriolis-based metering system at GMT1.
The metering exemption is needed because the GMT pads have been built without standalone processing facilities, which, ConocoPhillips has argued in both instances, would have made the accumulations uneconomic to develop, thus stranding the resources.
Supporting comments The commission said it received written comments supporting ConocoPhillips’ GMT2 request from the Alaska Department of Natural Resources Division of Oil and Gas, the Alaska Department of Revenue Tax Division, the Arctic Slope Regional Corp. and the U.S. Bureau of Land Management.
ConocoPhillips is the operator and sole working interest owner at Greater Mooses Tooth and the operator of the Colville River unit. The working interest owners at the Colville River unit are ConocoPhillips and Petro-Hunt LLC.
Greater Mooses Tooth landowners are BLM and ASRC; the Colville River unit landowners are DNR, BLM and ASRC.
“All potentially affected landowners provided letters of support/nonobjection to CPAI’s proposed methodology for allocating production” at GMT2, the commission said.
Three-phase separator The commission said ConocoPhillips “proposes to install a single stage three-phase separator to support measurement of production leaving the GMT2 development.” Coriolis meters and a water cut analyzer will be used to meter the oil leg while the gas leg will be metered by orifice meters.
After metering the streams will be recombined before being shipped to GMT1 and combined with production from that pad, and then on to Colville Delta Pad 5 for commingling with Colville River production.
ConocoPhillips has proposed a production allocation factor for GMT2 of 1.0, the same as GMT1, so oil production allocated to the Colville River unit would be the volume measured by the CRU lease automatic custody transfer meter, minus the volume measured through the Coriolis meters at GMT1 and GMT2.
The orifice meters at GMT2 will serve as the gas sales meter for gas shipped from GMT2 to the Colville River unit.
Costs prohibitive ConocoPhillips testified, the commission said, that standalone processing at GMT1 would cost in the neighborhood of $700 million to $900 million, making the project economically prohibitive.
The company told the commission at an Oct. 23 hearing that if standalone processing facilities were required at GMT2 there would be a four-year delay for reengineering, an increase of some $800 million in production facility costs and $40 million per year in annual operating costs and said the project wouldn’t make the cut for corporate approval under those conditions.
“CPAI provided the AOGCC access to a data room to review confidential project specific economics,” including a cost estimate prepared for ConocoPhillips by Turner & Townsend Larkspur, “a company with extensive experience preparing conceptual project cost estimates for CPAI and other operators on the North Slope. TTL bases its estimates on other costs estimates it prepared and recently completed projects as bench marks when they prepare new cost estimates,” the commission said.
An allocation factor of 1.0 assumes that the Greater Mooses Tooth metering systems are 100 percent accurate, with an error applied to Colville River production, resulting in one unit over reporting production while the other unit under reports.
The commission said it approves the allocation factor based on the fact that all potentially affected landowners have submitted letters of support/nonobjection, specifically approving the meter factor of 1.0 for GMT2.
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