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Commission Weighs Oil Loss With Slope Gas Production

Posted on: Monday, 27 February 2006, 03:02 CST

By Bradner, Tim

The Alaska Oil and Gas Conservation Commission has kicked off a major study of possible Prudhoe Bay field gal production rates for a proposed natural gas pipeline that would minimize the loss of oil recovery once a pipeline is in operation.

The study is being done in cooperation with Prudhoe Bay leaseowners and is expected to be completed in about six months, AOGCC Commissioner Kathy Foerster told a state legislative committee in Juneau Jan. 24.

The state's major oil and gas producers' assumption that 4.5 billion cubic feet of gas per day will be available for the pipeline is based on preliminary information, Foerster said. The figure is being used as a basis for pipeline planning, but a more definitive figure of what can be produced from the Prudhoe Bay and Point Thomson fields without an unacceptable loss of oil will be determined after the detailed study, she said.

Alaska law requires the state conservation commission to approve field production plans that affect oil and gas recovery. The commission is charged with prevention of physical waste of oil and gas, which in this case involves the inability to produce oil because gas is being taken.

It is expected that production of gas from Prudhoe, which has a large gas cap and an estimated 26 trillion cubic feet of gas reserves, would result in some loss of oil because of reduced reservoir pressure. Foerster said the AOGCC must ensure that the oil loss is minimized. The commission will set an allowable offtake rate that will accomplish that.

Loss of oil recovery in Prudhoe has been estimated at several hundred millions of barrels once gas production begins, but the operators could take steps to mitigate that loss, Foerster said.

The commission reached agreement with producers in 2005 to review a unified Prudhoe reservoir model maintained by BP Exploration (Alaska) Inc. under a confidentiality agreement. The commission will have access to data from the model and will be able to run its own simulations under the agreement, Foerster said.

Last year the state Legislature appropriated funds to the commission to allow it to develop its own Prudhoe field reservoir model, but Foerster said the agreement with the producers will lead to a decision basedl on better data than would have been possible if the AOGCC had developed a separate model. The decision will also be made faster, in about six months compared to the three years estimated if the producers had not agreed to cooperate in sharing their information, Foerster said.

Gas from the undeveloped Point Thomson field 60 miles east of Prudhoe Bay will also be needed for the gas pipeline, and the commission will have to approve a gas offtake agreement for that field, Foerster said. The AOGCC is in early stages of negotiating a separate reservoir information-access agreement with Point Thomson leaseowners, she told the legislative committee. That agreement could be in place by summer, Foerster said, and it would lead to a similar decision on allowable production rates at Point Thomson.

Potential resource losses at Point Thomson could be an even bigger issue for the AOGCC, because unlike Prudhoe, the Point Thomson field is not in production. Gas production there could result in substantial losses of recovery of liquid condensates in the reservoir, according to Dudley Platt, a petroleum engineer working on contract with the state Department of Revenue.

An alternate plan to produce the gas condensates first, before a gas pipeline is built, and recycle gas that would be produced was explored by the Point Thomson operator, Exxon Mobil Corp. That was ultimately rejected because of reservoir problems. The state Division of Oil and Gas, under former director Mark Myers, felt the gas condensate production plan might have been economic if Exxon Mobil and the other leaseowners, which include BP Exploration and ConocoPhillips Alaska Inc., had been willing to pursue it more aggressively.

Copyright Morris Communications Feb 05, 2006

Source: Alaska Journal of Commerce

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