STATE OF ALASKA

OIL AND GAS CONSERVATION COMMISSION
3001 Porcupine Drive
Anchorage, Alaska 99501-3192

Re:The Application of ARCO Alaska, Inc.           ) Conservation Order No. 345
   to present testimony for classification of     )
   a new oil pool and to prescribe pool rules     ) Prudhoe Bay Field
   for development of the North Prudhoe Bay       ) North Prudhoe Bay Oil Pool
   accumulation in the Prudhoe Bay Field.         )
                                                    December 16, 1994

IT APPEARING THAT:

1. By letter dated August 18, 1994, ARCO Alaska, Inc. requested a public hearing to present testimony for establishing pool rules for development and operations in the North Prudhoe Bay oil accumulation, located in T12N, R14E, Umiat Meridian.

2. Notice of public hearing to be held on October 5, 1994 was published on August 26, 1994.

3. A hearing concerning the matter of the applicant's request was held in conformance with 20 AAC 25.540 at the Commission offices, 3001 Porcupine Drive, Anchorage, Alaska 99501 at 9:00 a.m. October 5, 1994. The hearing record remained open until the close of business October 19, 1994.

FINDINGS

1. ARCO Alaska, Inc. drilled the North Prudhoe Bay State (NPBS) No. 1 well to a depth of 9610 feet TVD in 1970. The well is located in Sec. 23, T12N, R14E, U.M.

2. The NPBS No. 1 well encountered 42.5 feet of hydrocarbon charged sandstone in the Sag River Formation and 46 net feet in the Ivishak Formation; oil was tested up to 9200 feet subsea and gas down to 9135 feet subsea.

3. The NPBS No. 1 well produced 2,727 barrels of oil per day from the Ivishak Formation and 3.6 million cubic feet of gas and 132 barrels of condensate daily from the Sag River Formation during drillstem testing.

4. The NPBS No. 1 well was plugged and abandoned in 1985.

5. Initial reservoir pressure in the NPBS No. 1 well was 4,600 psi at a datum of 9245 feet subsea in 1970.

6. ARCO Alaska, Inc. drilled the NPBS No. 3 well to a depth of 9447 feet TVD in 1993. The well is located in Sec. 25, T12N, R14E, U.M.

7. The NPBS No. 3 well encountered hydrocarbons within intervals stratigraphically equivalent to the hydrocarbon bearing intervals in the NPBS No. 1 well.

8. ARCO began a long-term production test of the NPBS No. 3 well on October 13, 1993. As of September 30, 1994, the well had produced 948,000 barrels of oil; 258,000 barrels of water and 2.9 billion cubic feet of gas.

9. Reservoir pressure in the NPBS No. 3 well, at a datum of 9,245 feet subsea, has declined from an initial 3,922 psi to 3803 psi in June, 1994.

10. Oil from the NPBS No. 3 well has an API gravity of 35 degrees, a bubble point of 3,870 psi, a solution gas-oil ratio of 923 standard cubic feet per stock tank barrel, a sulfur content of 0.4% and a formation volume factor of 1.48 reservoir barrels per stock tank barrel.

11. ARCO estimates the oil-water contact in NPBS No. 3 at 9280 feet subsea.

12. The North Prudhoe Bay oil accumulation is located north of the Prudhoe Oil Pool and south of the Point McIntyre Field. The North Prudhoe Bay accumulation is bounded on the north and south by two regional faults, the Prudhoe Bay fault and the Pt. McIntyre Fault.

13. Oil within the Prudhoe Oil Pool has an API gravity of about 29 degrees and a sulfur content of 1.0%. The oil-water contact in the Prudhoe Oil Pool is approximately 9000 feet subsea.

14. No gas-oil contact can be identified in either NPBS No. 1 or No. 3.

15. Five conventional cores were taken in the NPBS No. 1 well in the basal Shublik and upper Ivishak intervals. These cores were used to calibrate open hole log responses from both the NPBS No. 1 and No. 3 wells.

16. Reservoir characteristics derived from log analysis of the NPBS No. 3 well are listed below:

 

Ivishak

Shublik

Sag River

Average Porosity

19.6%

14.8%

18.7%

Permeability, md

590

Not Tested

Not Tested

Gross Interval Thickness*

42

77

78

Feet of Net Pay

20

12

50

Net to Gross Ratio

0.48

0.17

0.64

Water Saturation, % Pore Vol.

38%

33%

36%

       

*above estimated oil-water contact

17. ARCO's estimate of total original in place hydrocarbons is 12 million stock tank barrels of oil and 31 billion standard cubic feet of gas.

18. Production from the NPBS No. 3 well is commingled at the surface with production from the West Beach Oil Pool in a six-inch diameter multiphase production line running from the West Beach pad to Lisburne Drill Site L1.

19. No facilities for water or gas injection or gas lift currently exist at the West Beach Pad.

20. Production records show that NPBS No. 3 oil production declined from an initial 6000 bbl/day oil in October, 1993 to about 2100 bbl/day in August, 1994. Gas rate decreased from a peak of 15.9 MMSCF/D in December, 1993, to 7.4 MMSCF/D in August, 1994. Water production began immediately following initial production and increased to about 1500 bbl/day in August, 1994

21. Cased hole logs in NPBS No. 3 well indicate gas entering at the top of the perforations from a source above the Ivishak Formation.

22. ARCO perforated a gas bearing interval in the Sag River Formation to help produce liquids from the Ivishak Formation in the NPBS No. 3 well.

23. ARCO has not yet formulated a long term development plan for the North Prudhoe Bay oil accumulation, and stated that additional reservoir data is needed before an appropriate long-term depletion plan can be developed.

24. To continue production from the NPBS No. 3 well, ARCO requested a permanent exemption from the gas-oil ratio limitation set forth in 20 AAC 25.240(c).

25. The primary recovery mechanism anticipated by ARCO is solution gas drive, possibly supplemented by gas cap expansion. Based upon pressure and production information, ARCO believes that water drive may also be a factor in primary recovery.

26. ARCO has equipped the NPBS #3 well with a fail-safe automatic surface and subsurface safety valve (SSV and SSSV). ARCO plans to equip other wells in a similar manner, if drilled and capable of unassisted flow to the surface.

27. ARCO proposes to use well tests as a basis for allocating production.

28. ARCO has upgraded metering equipment and facilities, established equipment maintenance schedules, and provided personnel training at the LPC to enhance allocation.

29. ARCO has developed detailed procedures for allocating production between producing pools. Testing procedures previously approved by the Commission (C.O. 311, 317 & 329) cover test frequency, test separator utilization, test stabilization periods, well and field history record keeping, NGL allocation procedures, records maintenance, reporting requirement and metering installation standards.

30. ARCO proposes to test the NPBS No. 3 well at least two times per month.

31. The pool rules area requested by ARCO includes portions of ADL 28297 and ADL 34624. The mineral interest ownership for each lease is ARCO 50% and Exxon 50%. ARCO states that there is currently a royalty interest that is different between the two leases.

32.ARCO has submitted a participating area application to the Department of Natural Resources for North Prudhoe Bay reservoir. ARCO's participating area application includes only a portion of ADL 28267. ARCO states that this application, once approved, will integrate the interests of the mineral interest owners and the royalty owner for the area contemplated for development in the North Prudhoe Bay area.

33. DNR has not yet approved the participating area agreement for the North Prudhoe Bay reservoir.

34. Permafrost is known to exist to a depth of 1600 feet to 1800 feet in the North Prudhoe Bay area.

35. The North Prudhoe Bay accumulation is included entirely within the affected area of Area Injection Order No. 4A.

36. AIO No. 4A concludes that no underground sources of drinking water exist within its affected area.

CONCLUSIONS

1. Commercially exploitable hydrocarbons exists as one pool within the Ivishak, Sag River and Shublik Formations in the North Prudhoe Bay area.

2. The North Prudhoe Bay oil accumulation is a separate and distinct pool within the Prudhoe Bay Field.

3. The North Prudhoe Bay Oil Pool is capable of regular production.

4. Development plans for the North Prudhoe Bay Oil Pool, including additional drilling and enhanced oil recovery plans, are uncertain at this time because of sparse well control, structural complexity, uncertain volume of original oil in place and reservoir drive mechanisms.

5. Continued production from the NPBS No. 3 well, reservoir pressure measurements and reservoir modeling may provide additional information useful for resolving uncertainties related to original oil in place and reservoir drive mechanisms in the North Prudhoe Bay oil accumulation.

6. Periodic review of the operator's development plans is appropriate to ensure that operations are being conducted to optimize recovery and prevent waste.

7. The North Prudhoe Bay Oil Pool includes a gas cap of indeterminate size.

8. The solution gas-oil ratio within the NPBS No. 3 well is being masked by production of gas from the gas cap.

9. An exemption from the gas-oil ratio limitation set forth in 20AAC 25.240(c) is required before regular production of the NPBS No. 3 can commence.

10. Long-term exception to gas-oil-ratio limit in 20AAC 25.240(c) is not appropriate at this time because produced gas is not being returned to the reservoir and no additional recovery project is currently planned.

11. Pool rules are appropriate to define the conditions for gathering additional production and reservoir data necessary to support a long-term depletion plan for the North Prudhoe Bay Oil Pool.

12. The North Prudhoe Bay Oil Pool cannot support stand alone facilities, and surface commingling of production for processing in the LPC is necessary to maximize recovery.

13. Production allocation procedures developed for other pools that are commingled and processed at the LPC are suitable for allocating North Prudhoe Bay production. Periodic reviews are appropriate to evaluate allocation methodology and revise procedures if warranted.

14. Surface commingling of North Prudhoe Bay production with Lisburne, Niakuk, Pt. McIntyre, Stump Island and West Beach production will not cause waste nor jeopardize correlative rights.

15. The installation of surface or subsurface safety valves on wells could prevent an uncontrolled release of hydrocarbons.

16. Precautions regarding sulfide corrosion and stress cracking are warranted.

17. The mineral interest owners and the state royalty owner have not yet integrated their interests in the portion of the North Prudhoe Bay Oil Pool contemplated for development.

18. No underground sources of drinking water are known to exist in the North Prudhoe Bay area.

19. Subject to the rules below and statewide requirements, production from the North Prudhoe Bay reservoir may occur in a manner that will protect freshwater, prevent waste, protect correlative rights, and provide for the maximum ultimate recovery of oil and gas that is prudent.

NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth, in addition to state-wide requirements under 20 AAC 25, apply to the following affected area referred to in this order:

Umiat Meridian

 

T12N, R14E

Section 22

All

     
 

Section 23

SW 1/4

Rule 1 Field and Pool Name

The field is the Prudhoe Bay Field. Hydrocarbons underlying the affected area and contained within the Sag River, Shublik and Ivishak Formations constitute a single associated gas and oil reservoir called the North Prudhoe Bay Oil Pool.

Rule 2 Pool Definition

The North Prudhoe Bay Oil Pool is defined as the accumulation of oil and gas that correlates with the interval between 9105 feet and 9568 feet measured depth in the North Prudhoe Bay State #1 well.

Rule 3 Drilling and Production Equipment

Drilling and production equipment must meet the requirements of API RP 7G, Section 8, "Drillstem Corrosion and Sulfide Stress Cracking," current edition.

Rule 4 Automatic Shut-In Equipment

a. Each well shall be equipped with a Commission approved fail-safe automatic surface safety valve system (SVS) capable of preventing uncontrolled flow by shutting off flow at the wellhead and shutting down any artificial lift system where an over pressure of equipment may occur.

b. The safety valve system (SVS) shall not be deactivated except during repairs, while engaged in active well work, or if the pad is manned. If the SVS cannot be returned to service within 24 hours, the well must be shut in at the well head and at the manifold building.

1. Wells with a deactivated SVS shall be identified by a sign on the wellhead stating that the SVS has been deactivated and the date it was deactivated.

2. A list of wells with the SVS deactivated, the dates and reasons for deactivating, and the estimated re-activation dates must be maintained current and available for Commission inspection on request.

c. A representative of the Commission will witness operation and performance tests at intervals and times as prescribed by the Commission to confirm that the SVS is in proper working condition.

Rule 5 Surface Commingling and Common Facilities

a. Production from the North Prudhoe Bay Oil Pool may be commingled on the surface with production from other pools for processing at the LPC prior to custody transfer.

b.Production from each well will be determined by the following well test allocation methodology. Allocation data and well test data will be supplied to the Commission monthly in both computer file and report formats.

1. Conduct well tests to determine production rates for each well.

2. Calculate each well's theoretical monthly production (TMP) based on well test rate(s) and actual time on production.

3.Sum the TMP volume for all wells in all pools.

4. Determine an allocation factor as the ratio of the metered volume to the TMP for all wells in all pools (i.e., metered/TMP)

5. Calculate each well's actual monthly production (AMP) volume as:

AMP = TMP x Allocation Factor

c. NGLs will be allocated to each pool based on actual gas production volumes and NGL process simulations. Process simulations will be updated at least once per year based on NGL samples and results reported to the Commission.

d. At a minimum, each producing well will be tested at least twice each month. Wells that have been shut in and cannot meet the twice monthly test frequency must be tested within five days of startup.

e. Optimum test duration and stabilization time will be determined on a well-by-well basis by the operator or, in its discretion, by the Commission.

f. Water volumes will be determined by API/MPMS approved methods, or the use of industry proven, on-line water cut measurement devices approved by the Commission.

g. API gravity will be determined for each producing well annually by an API/MPMS approved method.

h. Gas samples will be taken and analyzed for composition from each non-gas lifted producing well yearly.

i. The allocation process for the North Prudhoe Bay Oil Pool will be reviewed with the Commission in conjunction with scheduled LPC allocation review.

Rule 6 Production Anomalies

In the event of oil production capacity proration at or from the LPC, all commingled pools produced at the LPC will be prorated by an equivalent percentage of oil production recognizing mechanical limitations and operational constraints.

Rule 7 Reservoir Pressure Monitoring

a. Prior to regular production, a pressure survey shall be taken on each well to determine the reservoir pressure.

b. Until a secondary recovery project is approved and implemented, a minimum of one bottom-hole pressure survey per producing governmental section shall be obtained annually.

c. The datum for all surveys is 9245' TVDss.

d. Pressure surveys will be either a pressure buildup, pressure falloff, RFT, or static bottom-hole pressure after the well has been shut in for an extended period.

e. The pressure surveys will be reported to the Commission on form 10-412, Reservoir Pressure Report. All data necessary for complete analysis of each survey need not be submitted with the form 10-412, but must be submitted upon request.

f. Results and data from any additional reservoir pressure tests, surveys or special monitoring techniques shall be submitted in accordance with part 'e' of this rule.

Rule 8 North Prudhoe Bay Oil Pool Annual Reservoir Report.

A surveillance report will be required after one year of regular production and annually thereafter. The report shall include but is not limited to the following:

a.Progress of enhanced recovery project(s) implementation and reservoir management summary, including engineering and geotechnical parameters.

b.Voidage balance by month of produced fluids and injected fluids.

c.Analysis of reservoir pressure surveys within the pool.

d.Results and, where appropriate, analysis of production logging surveys, tracer surveys and observation well surveys.

e.Results of any special monitoring.

f.Future development plans.

Rule 9 Gas-Oil Ratio Exemption

Wells producing from the North Prudhoe Bay Oil Pool are exempt from the gas-oil ratio limit set forth in 20 AAC 25.240 (c) for a period of one year from the date of these pool rules. The operator must show cause and justify a continuance of the exemption before the end of one year of regular production.

Rule 10 Integration of Interests

Within 30 days of the date of this order, the operator will submit to the Commission a copy of an agreement validly integrating the interests of all persons owning interests in the affected property in the pool or portion of the pool for which development is contemplated. In the absence of an agreement, the Commission will hold a public hearing in accordance with 20 AAC 25.540 and issue an order creating a participating area which integrates the interests of all persons owning an interest in the pool or portion of the pool.

Rule 11 Administrative Action

Upon proper application or its own motion, the Commission may administratively waive the requirements of any rule stated above or administratively amend this order as long as the change does not promote waste, jeopardize correlative rights or compromise ultimate recovery, and is based on sound engineering principles.

DONE at Anchorage, Alaska and dated December 16, 1994

David W. Johnston, Chairman
Alaska Oil and Gas Conservation Commission

Russell A. Douglass, Commissioner
Alaska Oil and Gas Conservation Commission

Tuckerman Babcock, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index