2020s Prudhoe gas sales could be well timed

As North Slope field ages, gas reinjection will be losing part of oomph some 50 years after Prudhoe oil production began in 1977

Bill White

Researcher/writer for the Office of the Federal Coordinator

Sometime in the mid-2020s, the grand strategy for how to produce Alaska’s great Prudhoe Bay oil and gas field - send the crude oil and other liquids to market; reinject the natural gas - will be primed to pivot.

That’s because gas reinjection, which has proved spectacularly successful in pushing more oil from Prudhoe, will be losing part of its oomph roughly 50 years after that June 1977 day when the first barrel of crude left the field en route to a West Coast refinery.

Gas reinjection applies pressure on the underground oil, moving it toward wells, in much the same way that pumping air into a keg helps the beer flow.

But gas reinjection - called “gas cycling” in the industry - also has been central to a variety of other techniques the Prudhoe Bay operators have deployed to flush more oil from the field. And some of these techniques will be about played out by the mid-2020s. Gas cycling just won’t be helping them as much anymore.

The mid-2020s timing dovetails with plans of the Alaska LNG project to start sending maybe a third of Prudhoe’s gas production to market around that same period. Those plans are still in the early, formative stage, called pre-front-end engineering and design, with a final investment decision whether to construct the estimated $45 billion to $65 billion project unlikely before 2019.

Prudhoe would be the anchor gas reservoir for Alaska LNG. Other gas would be piped from the Point Thomson field to the east, the North Slope’s second largest gas reservoir after Prudhoe.

The start of “major gas sales,” as the industry calls them, would mean that Prudhoe, while entering spring as a gas field, officially would be in deep autumn as an oil field.

Prudhoe’s oil production would continue for many years, still declining. And natural gas still would be reinjected, just in reduced volumes.

Oil production would slacken somewhat as the reservoir pressure drops with both oil and gas going to market. Some fraction of Prudhoe’s remaining oil that could have been produced without gas sales would stay locked underground. But selling that gas would produce tens of billions of dollars in revenue for the producers and the state treasury.

It’s hard to overstate how special Prudhoe has been as an oil play. Oil companies have produced more than 12 billion barrels from Prudhoe since its 1977 start-up. It has been the nation’s top conventional oil field in daily production since day one. A 37-year run so far. (A few unconventional shale regions produce more oil these days.)

Prudhoe remains No. 1 despite daily production that has plunged from its 1.6 million-barrels-a-day peak in 1987 to today’s output of about 250,000 barrels a day, not counting oil from its satellite fields. Prudhoe accounts for about half the total production from all Alaska North Slope oil fields.

By the mid-2020s, Prudhoe will have yielded almost 13 billion barrels of oil and other hydrocarbon liquids, with perhaps another billion to go, especially if decades of gas sales prolong oil production.

Prudhoe’s storehouse of natural gas to be sold is colossal in itself. More than 20 trillion cubic feet of gas is available. That’s the energy equivalent of roughly 3.5 billion barrels of oil.

By the mid-2020s, with some of the advantages of gas cycling gone, the timing will look better than it has at any time since 1977 to start cashing out Prudhoe’s natural gas.

A tactical study

Because gas cycling shores up the reservoir pressure, the oil is lighter and more capable of flowing. This means that:

*Extra oil flows as the producers inject water along the edges of Prudhoe to flush oil to wells.

*More production occurs as the producers alternate those waterfloods with injection of a cocktail of gases - called “miscible injectant” - that cause hard-to-flow oil to break its grip on the sandstone holding the riches in place.

*More oil and other hydrocarbon liquids that had been left behind now get picked up - or vaporized - when the injected gas flows over them during cycling. These vaporized liquids then can be produced and sent to market, or made into more miscible injectant.

Gas cycling has been a key tool used to help pressurize Prudhoe, but it isn’t the only one. The waterflooding along the oil rim, the miscible injectant and separate water injection above the oil also add pressure. All of these production methods are interlocked.

“Prudhoe Bay has evolved through time to an extensive facility infrastructure fully integrated with the reservoir processes to optimize recovery,” two Prudhoe engineers wrote in a 1993 paper, “Prudhoe Bay: Development History and Future Potential,” presented at a Society of Petroleum Engineers conference. “Many of the projects implemented in Prudhoe Bay represent the largest of their kind in the world. Integration between projects ... adds another dimension to the complexity of developing incremental opportunities.”

The interaction of these strategies, with aggressive well workovers and ongoing field development, has turned Prudhoe into an overachiever.

Surprise discovery

From the first, a dark day-after-Christmas 1967, when natural gas blew from a wildcat well at a lonesome drill site near a frozen Arctic inlet called Prudhoe Bay, the industry knew it found something special.

When the crew ignited it, the gas jet flared 50 feet despite a 30-mile-an-hour wind, according to one account.

The well had punctured Prudhoe’s gas cap. This was a surprise. The well was targeting the Lisburne formation roughly 1,000 feet deeper than Prudhoe, though a secondary target was Prudhoe’s Ivishak sandstone. (The Lisburne field officially was discovered in 1969 and started production in 1982.)

A confirmation well prompted the Prudhoe discovery announcement in March 1968, and soon came an estimate of what that reservoir a mile-and-a-half underground could yield: a phenomenal 9.6 billion barrels of oil and 26 trillion cubic feet of gas.

Even before production began in June 1977, teams of oil company engineers, geologists, geophysicists and others were analyzing the reservoir with the focus of a grandmaster studying a chessboard. The reservoir held 25 billion barrels, but no oil field surrenders every drop. The 1977 estimate of 9.6 billion barrels produced would be an outstanding result. Coaxing any extra beyond that total would be a sweet bonus.

Today, the Prudhoe Bay producers - mainly ConocoPhillips, ExxonMobil and BP - think they’ll ultimately get around 14 billion barrels of oil and other hydrocarbon liquids from the field. They’ve produced more than 12 billion barrels so far.

Besides gas cycling, pumping water into the field and using miscible injectant, they credit the extra oil to more wells spaced closer together, horizontal drilling and other drilling advances, among other factors. Gas cycling makes them all more robust.

The path has involved a series of pivots in how the companies manage Prudhoe. Circumstances changed, so plans changed, too.

In particular, after a few years of oil production, the plan for what to do with Prudhoe’s natural gas took a radical turn. And the companies holding oil and gas leases did a radical rethinking of how best to manage Prudhoe.

Too much gas

Over time, everyone knew, this would change because more gas would come up the wells. Find a new use for the gas or a way to handle it, or oil production would hit a limit.

The first formal plan for the excess gas emerged during Prudhoe’s development as an oil field, as crews drilled the initial wells, laid the 800-mile trans-Alaska oil pipeline and built an oil-tanker port in Valdez during the mid-1970s.

The plan was almost as grandiose as the oil development then underway. A multibillion-dollar project to build a separate gas pipeline system to the Lower 48 states. About 2 billion cubic feet a day of Prudhoe’s gas would be sold, starting in the early 1980s, about five years after oil production began.

The timing would solve the problem of more gas coming up with the oil. Gas not piped south or used to run Prudhoe would be reinjected.

To offset the pressure loss from oil and gas both going to market, the companies running Prudhoe would inject water.

In fact, water injection - in massive amounts - began in 1984 after several years of building the plant, pipes, wells and other injection machinery. Injections didn’t stop the loss of underground pressure the Prudhoe reservoir was experiencing every year. But water injection slowed it.

Meanwhile, the gas pipeline project died. The market would not support its multibillion-dollar cost.

Something had to be done with Prudhoe’s growing gas production. Soon Prudhoe’s gas-handling equipment would be overwhelmed.

In addition to the gas pipeline idea, the North Slope companies explored many other concepts for turning Prudhoe’s gas into money.

These included gas liquefaction at Prudhoe and LNG shipments on ice-breaking tankers, submarines or airplanes, or turning the gas into electricity transmitted to the Lower 48 states, a senior executive with Sohio (now BP) told a U.S. Senate committee in 1983.

More ideas included chemical conversion of the gas to methanol, building petrochemical facilities at a southern Alaska coastal site or liquefaction in southern Alaska for LNG shipments to U.S. or foreign markets, an Exxon executive told a state legislative committee in 1989.

But in the 1970s the gas pipeline to the Lower 48 looked best. In fact it looked so promising that, to raise cash to develop the oil field, Sohio even pre-sold its gas production to a pipeline company that would be on the receiving end of the long Alaska gas pipeline.

By the early 1980s, with no Alaska gas pipeline, the other commercialization ideas still looked unattractive and Prudhoe operators still faced the question: What are we going to do with natural gas getting produced every day if we have no way to send it to market?

They could handle a little over 2 bcf a day with Prudhoe’s original machinery. But the volume would be 3 bcf by the mid-1980s, and 6 bcf to 7 bcf by the mid-1990s as more gas and less oil came up the wells. That quantity of gas is massive. It’s about half the volume burned in U.S. homes on an average day.

The new plan they devised involved executing some strategies right out of the oil-field management playbook, but deploying them on an enormous scale.

They would muscle up the gas-cycling program, injecting most of the produced gas back into the reservoir. This would give the producers a two-fer: Not only would it pressure more oil to wells as expected, but it would vaporize oil that otherwise wouldn’t flow and bring that oil to the surface, too.

In addition, the giant facilities they would build would strip out natural gas liquids from the methane stream. Back then almost 14 percent of the gas was NGLs, such as ethane, propane, butane and pentane.

Once extracted from the stream, these liquids could be put to two purposes.

Some - tens of thousands of barrels a day of butane, pentane, hexane, etc. - could be routed to the oil pipeline and sent to market (they can be used to make gasoline, for example); this would be like producing a whole new oil field.

Some - tens of thousands of barrels a day of propane and ethane - could get brewed with other ingredients into a chemical cocktail called miscible injectant that would help produce more oil; this cocktail would be formulated to loosen the grip of passed-over oil in the reservoir that is stuck stubbornly to rock surfaces.

These plants would be the largest of their kind in the world. They would cost billions of dollars.

The companies executed this plan. As a result, natural gas did, in fact, become a powerful money-maker ... by proxy. It helped Prudhoe cough up billions of additional barrels of oil and other hydrocarbon liquids.

Editor’s note: Part 2 of this story will appear in the Feb. 22 issue of Petroleum News. This is a reprint from the Office of the Federal Coordinator, Alaska Natural Gas Transportation Projects, online at www.arcticgas.gov/prudhoe-gas-sales-2020s-could-be-timed-well-aging-oil-field.