Re: The application of Stewart Petroleum Company ) Conservation Order No. 332 to present testimony for classifying and ) prescribing pool rules for operation and ) West McArthur River Field development of the West McArthur River Unit. ) West McArthur River Oil Pool April 11, 1994IT APPEARING THAT:
1. By letter dated December 27, 1993, Stewart Petroleum Company (SPC), through its agent Fairweather E & P Services, Inc., requested a public hearing to present testimony for classifying and prescribing pool rules for development and operation of the West McArthur River oil pool in the West McArthur River field.
2. Notice of public hearing to be held on February 4, 1994 was published in the Anchorage Daily News on January 4, 1994.
3. A hearing concerning the matter of the applicant's request was held in conformance with 20 AAC 25.540 at the office of the Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501 at 9:00 am February 4, 1994.
4. The hearing record was held open an additional two weeks to allow the Commission time to review the transcripts and consider additional questions.
1. The area proposed for pool development by SPC includes two State of Alaska oil and gas leases, ADL 359111 and ADL 359112.
2. The West McArthur River Unit (WMRU) No. 1 well, completed in December 1991 encountered commercial hydrocarbons in the Hemlock formation in the SE 1/4, Section 10, Township 8 North, Range 14 West, Seward Meridian.
3. The WMRU No. 2A well, completed in October 1993, encountered commercial hydrocarbons in the Hemlock formation in the SW1/4, Section 10, T8N, R14W, SM.
4. The WMRU No. 2 well, with a proposed bottom hole location in NE1/4, Section 15, T8N, R14W, SM., was plugged and abandoned at a depth of 6429 feet in June 1993.
5. Production testing of the WMRU No. 1 commenced in August 1993 and will continue until September 30, 1994 under Commission authorization granted March 25, 1994.
6. Production testing of the WMRU No. 2A commenced in January 1994 and will continue until September 30, 1994 under Commission authorization granted March 25, 1994.
7. Neither producing well encountered a gas-oil contact.
8. SPC estimates the oil-water contact to be 9600' subsea.
9. The WMRU is classified by the Alaska Department of Natural Resources as an exploratory unit.
10. Currently, produced oil is trucked to Marathon Oil Company's Trading Bay Production Facility for final processing and sale.
11. SPC has interpreted the WMRU accumulation to be an asymmetrical northeasterly trending anticline with steeply dipping flanks, bounded on the north by a fault. SPC suggests a smaller productive structure may exist to the south that is fault separated from the primary structure.
12. Seismic data used by SPC to aide in structural interpretation is 1960s vintage, and has not been migrated.
13. In addition to the above wells, SPC used well information from Pan-American's West Foreland No. 1 and Pan-American's West Forelands Unit No. 1 & 2 wells. West Foreland No. 1 was drilled in 1961, and is currently shut-in as a gas well. The two West Foreland Unit wells were drilled in 1964 and 1966, respectively; both are plugged and abandoned.
14. The WMRU No. 1 development oil well appears to contain a complete and representative section of the Hemlock formation between the measured depths of 13,174 and 13,660 feet.
15. Reservoir porosity calculated by SPC from well logs ranges from 6% to 23% and averages approximately 14%.
16. Permeabilities calculated by SPC from drill stem tests conducted in the WMRU No. 1 and No. 2A wells range from 1 to 183 millidarcies in the Hemlock formation. The average permeability of all test intervals was 99 millidarcies.
17. Based on SPC's analysis of fluid samples from the WMRU No. 1 & No. 2A wells, reservoir oil is 28.8º API gravity, with a gas oil-ratio between 140 and 350 scf/stb and a bubble point of 1048 psig.
18. Average initial reservoir pressure in the WMRU No. 1 well is estimated to be 4295 psig at 9384 feet TVD SS.
19. SPC's development plans for the reservoir are uncertain at this time. SPC plans at least one additional well to the NE1/4, Section 10, T8N, R14W, SM.
20. SPC plans to construct permanent processing facilities and a pipeline to the Marathon Oil Company's Trading Bay Production Facility to facilitate long term sales of hydrocarbons from the WMRU.
1. An Order classifying and prescribing rules for development of the oil and gas accumulation shown to underlie the WMRU within the Hemlock formation is appropriate at this time.
2. Only a portion of the WMRU has been shown by SPC to be productive. Evidence from WMRU No. 1 and No. 2A wells conclusively show the Hemlock formation to be oil-bearing under portions of SPC's northern lease, ADL 359111. Evidence from Pan American's West Forelands Unit No. 2 well suggests that oil-bearing Hemlock formation does not extend into ADL 359112.
3. Additional drilling will be required to fully delineate the accumulation and to support a claim that oil-bearing Hemlock formation extends into ADL 399112.
4. Evaluation of potential reservoir management issues cannot be undertaken until the accumulation is further delineated.
5. Future development plans, including enhanced oil recovery efforts, are uncertain at this time. Near-term development is contingent upon the results of a well to be drilled in the northern portion of Section 10, T8N, R14W, SM. Regardless of the outcome of this well, long-term sales of hydrocarbons from the WMRU may occur if conservation principles are applied and followed while producing the field.
6. Imposing statewide conservation regulations, 20 AAC 25, without modification is appropriate at this time to prevent waste, protect correlative rights and enhance ultimate recovery.
7. Statewide conservation regulations will allow SPC sufficient latitude to conduct development activities currently ongoing in the WMRU.
8. The order may require modification as additional data becomes available from ongoing and future development activities planned by SPC.
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 described area:
Township 8 North Range 14 West Section 10
Rule 1. Field and Pool Name
The field is the West McArthur River field. Hydrocarbons contained within the Hemlock formation constitute a single oil and associated gas reservoir called the West McArthur River oil pool.
Rule 2. Pool Definition
The West McArthur River oil pool is defined as the accumulation of oil and gas that is common to and correlates with the accumulation found in the WMRU No. 1 well between the measured depths of 13174 feet and 13660 feet.
Rule 3. Regular Production
Regular production will be deemed commenced following completion of testing operations in WMRU No. 1 and No. 2A or on September 30, 1994, whichever is sooner.
Rule 4. Reservoir Management Plan
The operator shall submit to the Commission an annual reservoir management plan by June 1 of each year. The plan must describe all development activities currently ongoing and anticipated to be undertaken during the coming year. Modifications to the annual reservoir management plan must be submitted to the Commission. Information derived from testing and producing of existing wells and information from future drilling will be presented to the Commission as part of the annual reservoir plan. The plan must include:
a. Voidage balances by month of produced fluids (i.e., oil, water, gas) and injected fluids (i.e., gas, water, low molecular weight hydrocarbons).
b. Progress of any enhanced recovery project(s) approved by the Commission.
c. Analysis of reservoir pressure surveys within the field.
d. Results and analysis of production logging surveys, tracer surveys and observation well surveys.
Rule 4. Reservoir Pressure Monitoring
a. Prior to regular production, a pressure survey shall be take on each well to determine reservoir pressure
b. A minimum of one bottom-hole pressure survey per producing governmental section shall be run annually. The survey in part 'a' of this section may be used to satisfy the minimum requirements.
c. The datum for all surveys is 9400 feet TVD SS.
d. Pressure surveys will be either a pressure build up, pressure fall off, RFT, static bottom-hole after the well has been shut-in for an extended period, or other Commission approved survey.
Rule 5. Enhanced Oil Recovery Plan
An enhanced oil recovery plan must be submitted to the Commission within one year after commencement of regular production from the field.
Rule 6. Administrative Action
Upon request by the operator or upon its own motion, the Commission may administratively amend this order if the revision does not promote waste, jeopardize correlative rights, and is based on sound engineering principles.
DONE at Anchorage, Alaska and dated September 12, 2000.
David W. Johnston, Chairman
Russell A. Douglass, Commissioner
Tuckerman Babcock, Commissioner