Year-Round Drilling
By Maxwell, Taryn
With innovation and by working with government and environmental groups, Questar Market Resources has won year-round access to its Pinedale Anticline acreage.
When Salt Lake City-based Questar Market Resources, a subsidiary of Questar Corp., drilled its first well in Wyoming’s Pinedale Anticline in 1963, the federal leases had no wildlife stipulations, but they also weren’t producing gas with favorable economics. It wasn’t until the advent of multi-stage hydraulic-fracture stimulation in the 1990s that Pinedale, like many other unconventional plays, finally became economic. With that, Questar was off and running in what has become the nation’s third-largest gas field.
The only problem was the field didn’t actually belong to Questar, despite what its leases suggested. It belonged to the mule deer and the antelope, among other wildlife, which make their way to the Pinedale Anticline each winter to ride out the cold of western Wyoming winters. As far ax the Wyoming Game & Fish Department and the Bureau of Land Management were concerned, Questar had to stay off its magnificent gas field from November to May each year to keep from disturbing the wintering wildlife.
Questar’s Pinedale team-from the left, Diana Hoff, general manager; Dennis Beccue, production and operations manager; and Denis Foley, manager, technical operations-continue to bring proposals before the Bureau of Land Management.
It is a quandary that many operators possessing leases on government land are confronted with every day, and it is a unique problem in an industry that is constantly running from the shadow of “peak oil:” the resource is there, but companies aren’t allowed to access it.
Instead of wringing their hands each November as they were fold to go home. Chuck Stanley, president and chief executive of Questar Market Resources, and Questar’s diverse in-house team charged with managing the Pinedale asset saw an opportunity for innovation. The results of his team’s innovation have made Questar the only operator with multi-year, year-round drilling access in the winter range portion of the Pinedale Anticline, and the winner of Best Corporate Citizen in this year’s Oil and Gas Investor Excellence Awards.
Investor When did Questar first start working in Pinedale?
Stanley We drilled our first well at Pinedale in 1963. We recognized from the very beginning there was a large natural gas accumulation at Pinedale, but it was trapped in very poor-quality rock. With the technology at the time, the play wasn’t commercial, and the nearest gas pipeline was almost 100 miles away. It wasn’t until the 1990s with the advent of modern multi-stage-hydraulic fracture stimulation that Pinedale, along with a lot of other unconventional gas fields, became economic. The drilling took off at Pinedale in the late 1990s.
Chuck Stanley, president and chief executive of Questar Market Resources, says the Pinedale Anticline is a world-class asset that had logistical problems, many of which have now been resolved.
Investor Was this when environmental difficulties started to present themselves in the Pinedale?
Stanley The leases at Pinedale actually date back to the early 1950s. Typical of federal oil and gas leases of the day, there were no stipulations that limited activity to certain times of the year. By the late 1990s, when the first modern wells were drilled on our acreage, the Bureau of Land Management (BLM) began to impose restrictions on seasonal access on every permit they issued to drill a well. Those restrictions precluded us from drilling and completion operations from November 15 through May 1.
Investor Were the species the BLM was concerned about, specifically the mule deer, endangered?
Stanley No, they weren’t endangered. The mule deer are a migratory herd and they spend the summers in the high country north of Pinedale. When it gets cold and the snow starts to fly, usually sometime in December, the deer migrate south and spend the winter on and around the Pinedale Anticline mesa area. They tend to stay there, depending on how severe the winter is, until sometime in the early spring. Because parts of the Pinedale Anticline are winter range for the mule deer, stipulations began to show up on the drilling permits issued by the BLM that prohibited drilling and completion operations during the winter months.
Investor How did the seasonal restrictions affect Questar?
Stanley We found ourselves with a world-class asset and a host of logistical problems. The restrictions created a boom-and-bust cycle every year. We lost all of our drilling rigs in mid-November and each spring we had to mobilize a fleet of rigs to the area and cram as much drilling into the summer as we could. At the peak, we had 16 rigs out there. Just hauling the rigs on and off the anticline was a huge issue.
With the boom-and-bust cycle came poor drilling productivity, huge mobilization and demobilization costs and the collateral impacts on the local community. It was an unsustainable situation. And in the background, there were also a lot of concerns about the impact of development activity on the wildlife. We knew we needed to find a different way to develop this field.
Investor What made you decide to change the way Questar was operating?
Stanley We went to see the governor of Wyoming and told him the current situation was totally unworkable. He told us to come back to him with a solution; the people of Wyoming are reasonable people and they’ll listen to a well-reasoned and logical proposal. We left that meeting and immediately started working with the governor and his staff and all the other stakeholders to see if we could come up with a solution that addressed the concerns about wildlife habitat while smoothing out the boom-and-bust cycle for the mutual benefit of the company, the environment and the folks in the Pinedale area.
We started by having a series of meetings, as part of what we called our “neighbor-to-neignbor program,” to talk to as many people as we could, including folks in the community, environmentalists, ranchers, county commissioners, the mayor of Pinedale, biologists, state and federal officials.
Investor What was the most surprising result of these meetings?
Stanley Some of the really big hot-button issues for people were things we hadn’t thought about. One of the biggest issues for folks in the local community was the traffic associated with trucking the produced condensate and water that comes up with the gas off the anticline and into markets and disposal facilities. Another was the wildlife biologists’ concern about the potential fragmentation of the mule deer and sage grouse habitat by roads and well pads. Those two things became key issues for which we sought solutions.
Investor Once you knew the key issues, how did you approach them?
Stanley I challenged our asset team responsible for developing the Pinedale Anticline to come up with solutions. Then I got out of the way and let them do their thing. They came up with some great innovation using off-the-shelf technology. For example, directional drilling has been around for years in the Gulf of Mexico. We applied the technology to land drilling by creating concentrated surface pads and drilling multiple wells, in some instances 30 or more, from single pads. The wellheads are 16 feet apart on the surface and the wells reach out several thousand feet from the pad to develop reservoirs on even spacing in the subsurface. That drastically reduced initial surface disturbance to a third of the area allowed in the BLM’s 2000 Record of Decision for the Pinedale Environmental Impact Study.
As we addressed the truck-traffic issue, we realized we were talking about 20,000 to 30,000 tanker-truck visits per year just in the Questar-operated area during the years of peak production from this field. To eliminate these truck visits, we designed and built a liquids-gathering system to transport by pipe all of the associated condensate and water. The water is now transported to a disposal facility and the condensate goes down a series of pipelines all the way to refineries. We completely eliminated all that truck traffic and the tanks from the locations. In retrospect, that was probably the most important innovation.
Another innovation our team came up with was flareless, or green, completions. Our original practice was to flare gas from each well as we drilled out the frac plugs. If you’re close to the well at this time, it sounds like a 747 taking off, and it also puts up a big plume of steam, which many people from afar misinterpret as smoke. That was a big concern for folks in the community, so we developed a technique that allows us to drill out the frac plugs while simultaneously selling gas during the clean-out operation. The result was no more flaring. The equipment to implement the technology was already available, but it wasn’t in use in the area; we had to bring it in from South Texas.
Investor So most of this innovation wasn’t being practiced in the Pinedale?
Stanley Yes. Each element had to be adapted to the unique circumstances at Pinedale, but the technology already existed.
Investor What inspired Questar to become more environmentally friendly\?
Stanley When I joined the company in 2002, the lightbulb was already coming on in our shop that Pinedale was going to be significant. I asked our team members if they thought we could develop the field the way we were doing it at the time and the answer was “no.”
There was no way we could develop our acreage on 10-acre, or possibly five-acre spacing with vertical wells, each from an individual three-to-five-acre surface pad. The surface disturbance would have covered the whole anticline, and the seasonal restrictions meant it would have taken decades to develop the field. We knew there had to be a better way. We needed a solution that allowed us to better protect the environment and wildlife while eliminating the whipsaw of starting and stopping our activity every six months.
I am proud of our Pinedale team’s accomplishments. We implemented a project that employed directional drilling to reduce habitat disturbances, a liquids gathering system that substantially reduced air emissions and eliminated tanker-truck traffic and liquids tanks at the well-sites, and a completion technology that eliminated flaring.
In exchange, we have been given limited year-round drilling access. We still can’t complete wells during the winter, but the economics of year-round drilling have allowed us to implement these innovative solutions. Along the way, we learned how to better communicate with stakeholders. We put a human face on the company. Folks in the community saw that our employees were real people. As a result, we had broad community support for our project before we even started the formal BLM public consultation process.
Investor How have Questar’s strides in the Pinedale affected its operations elsewhere?
Stanley We certainly have raised the consciousness across our entire organization to look for ways to do things better from both an environmental and operational standpoint. But it’s important to understand the things we did at Pinedale are not a one-size-fits- all solution you can just universally transfer across an entire operation or industry. Pinedale is unique. It is a world-class concentration of gas in a very small area. That concentration allows us to do things we can’t do elsewhere. Each area presents different challenges and different opportunities. Pinedale has taught us if you give bright people the opportunity to think outside the box, amazing things happen.
SMALLER FOOTPRINT
Questar Market Resources’ winter drilling in the Pinedale Anticline currently involves three pads and six rigs, as allowed by the Bureau of Land Management (BLM).
“Now the BLM is analyzing u proposal that u number of operators, including Questar, take year-round drilling to another level,” says Diana Hoff, Questar general manager, Pinedale division.
Regulatory agencies and biologists have indicated thai development would be best done by running a greater number of rigs in a smaller area. “This would result in finishing drilling activities much earlier, while accelerating the start of pad reclamation and minimizing habitat fragmentation,” Hoff says.
Year-round drilling would also allow Questar to upgrade more of the rigs it has under contract. “It lets us have predictability: you know you can contract a rig and you can make capital expenditures on these rigs toward lower emissions and noise. Before, if you didn’t know if you were going to be able to have access every winter, you didn’t want to put new equipment on a rig, and then watch it move off to North Dakota or Oklahoma when our winter drilling limitations started.
“It allows us to efficiently develop the resource and, at the same time, leaves large blocks of unfragmented habitat, large areas with minimal human activity on a year-round basis. We feel it’s a better way to operate in a critical environmental area such as Pinedale.”
The company is expecting a decision on its proposal by the end of the second quarter.
“…The things we did at Pinedale are not a one-size-fits-all solution you can just universally transfer across an entire operation or industry.” Chuck Stanley, Questar Market Resources
Copyright Hart Energy Publishing, LP Mar 2007
(c) 2007 Oil & Gas Investor. Provided by ProQuest Information and Learning. All rights Reserved.