STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
3001 Porcupine Drive
Anchorage Alaska 99501-3192
|Re: THE APPLICATION OF ARCO ALASKA
||Conservation Order No.430
|INC. to present testimony for classification
|of a new pool and the establishment of rules
||Kuparuk River Field
|for development of the Tarn oil pool in the
||Tarn Oil Pool
|Kuparuk River Field.
||July 21, 1998
IT APPEARING THAT:
By letter dated March 27, 1998, ARCO Alaska, Inc. ("AAI") requested a public
hearing to present testimony to define the Tarn oil pool and establish
rules for development and production of the reservoir.
Notice of public hearing to be held on April 28, 1998 was published in
the Anchorage Daily News on March 28, 1998.
A hearing concerning the matter of the applicant's request was convened
in conformance with 20 AAC 25.540 at the Commission's offices, 3001 Porcupine
Drive, Anchorage, Alaska 99501 at 9:00 am on April 28, 1998.
The Tarn oil pool is
located immediately adjacent to the southwest corner of the Kuparuk River
Unit ("KRU") on Alaska's North Slope.
AAI is operator of the KRU and operator of state leases overlying
the Tarn oil pool area.
AAI has petitioned the Alaska Department of Natural Resources
to expand the KRU to include the Tarn oil pool.
The Tarn oil pool has not been completely delineated. Large
portions of the Tarn oil pool have yet to be drilled.
The Tarn oil pool correlates with the stratigraphic interval
between 4376 feet to 5990 feet measured depth (MD) in the AAI Bermuda #1
(KRU 36 10-7/1), which appears to contain a typical and representative
stratigraphic section of the pool.
The Tarn oil pool is composed of five late Cretaceous aged
marine sandstone and interbedded mudstone intervals that are stratigraphically
within the Seabee Formation. The name and depth for each productive Tarn
interval in the AAI Bermuda #1 well is as follows:
5990' - 5716' MD
5608' - 5542' MD
5452' - 5316' MD
5316' - 5105' MD
5105' - 4376' MD
The Tarn intervals share a common depositional environment
and have similar lithologic characteristics and fluid compositions. The
five intervals are located closely adjacent,both stratigraphically and
Available well data shows that sand distribution within the
Tarn oil pool is complex, with variable gross sand percentages within each
interval. The current areal delineation of the pool relies on recently
acquired 3-D seismic data calibrated to wellbore data.
Not all of the reservoir intervals in the Tarn oil pool have
been shown to be hydrocarbon bearing in existing wells. The northern and
southern productive limits of the Cairn, Iceberg and Arete intervals have
not yet been determined.
The Tarn oil pool appears to be monoclinal in structure with
easterly dip ranging from three or four degrees to nearly flat. Few faults
have been found.
Hydrocarbon distribution within the Bermuda and Cairn intervals
is controlled by sand distribution, with updip stratigraphic seal along
the western margin of the pool area.
Petrophysical information is derived from conventional cores
collected from the AAI Tarn #1 through Tarn #4 wells and rotary sidewall
cores from the AAI Bermuda #1 (KRU 36 10-7/1) well.
The Tarn oil pool is composed of heterogenious sandstone,
fine to very fine-grained, with shale laminations and interbeds. Sandstone
grains are principally quartz, plagioclase, zeolites, and heterolithic
rock fragments. Clay content is high, ranging between 15 and 25 percent,
and occurs primarily in the heterolithic framework of the sandstone.
Core porosity ranges from 18 to 27 percent and averages 21
percent. Air permeability ranges from 1 to 45 millidarcies and averages
10 millidarcies. Average water saturation based upon core analysis is about
Sandstone porosity is dominantly secondary with common microporosity.
This condition, combined with fine-grain size and high clay content, decreases
permeability and increases susceptibility to fine migration.
AAI requests well spacing of 10 acres to allow flexibility
in locating wells because of rock properties and stratigraphic constraints.
AAI estimates that the likely volume of oil in the Bermuda
and Cairn intervals is about 136 million barrels of original oil in place
("OOIP"). AAI did not provide a volume estimate for other intervals in
the Tarn oil pool.
AAI plans to produce the Bermuda and Cairn interval for a
short period using primary depletion methods, then initiate enhanced oil
recovery ("EOR") operations. Initial EOR plans call for miscible gas injection
using a 20 percent pore volume slug, followed by lean gas sweep to move
miscible products to the wellbore. AAI rejected waterflood operations because
of potential reservoir damage and unfavorable reservoir permeability and
poor water mobility characteristics.
AAI estimate oil recovery in the Bermuda and Cairn intervals
at 10 percent of OOIP using primary methods. With miscible and lean gas
injection, AAI estimates an additional recovery of 21 percent OOIP. Total
recovery from the two intervals is expected to be about 43 million barrels.
Solution gas-oil ratio was estimated at 710 scf/stb from
a recombined separator sample.
The gas-oil ratio is expected to increase significantly during
production life because of pressure drawdown and miscible gas or lean gas
breakthrough during reservoir depletion.
AAI calculated original reservoir pressure of 2350 psig in
Tarn #2 on the basis of a pressure build up test immediately following
a 10-day flow test. The well flowed an average 1900 BOPD of 37 API gravity
crude oil with a gas-oil ratio of 1200 scf/stb at a flowing tubing pressure
of 550 psig. Gas-oil ratio was elevated because of reservoir pressure drawdown
during the test.
AAI will measure reservoir pressure in producing wells and
injection wells initially and within portions of the reservoir on a periodic
basis to monitor reservoir performance. Other surveillance such as profile
logs may be applied to wells where multiple intervals are open for production
Casing and cement plans will adhere to 20 AAC 25.030 with
designs based on performance factors to withstand permafrost and downhole
AAI proposes to use well annuli in accordance with 20 AAC
25.080 to dispose of drilling wastes as part of the development operations
and is also requesting authorization for an area injection order for waste
disposal and EOR operations.
AAI proposes to commingle Tarn oil with hydrocarbons from
the Kuparuk oil pool for processing in KRU production facilities. Production
will be allocated back to Tarn oil pool on the basis of monthly well tests.
NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter
set forth, in addition to statewide requirements under 20 AAC 25, apply
to the following affected area referred to in this order.
Pool rules for the initial development and delineation of
the Tarn oil pool are appropriate at this time.
Initial pool development will be conducted on leases that
are not participating in the KRU.
AAI, the operator of the KRU and the leased portion of the
Tarn oil pool area, can properly undertake concurrent operations in both
the Kuparuk and Tarn oil pools.
Minimum well spacing of 10 acres will allow the operator
to deal effectively with difficult rock properties and stratigraphic constraints
in locating wells, and should not cause waste, compromise ultimate recovery
or jeopardize correlative rights.
Early implementation of miscible gas injection to mobilize
oil followed by lean gas injection to sweep the reservoir and support pressure
will preserve reservoir energy and enhance ultimate recovery from the pool.
Remedial measures may be required in some areas of the reservoir
to control placement of injectant, and improve the ability of the injectant
to sweep the rock and maintain reservoir pressure.
Annular disposal of drilling wastes can occur in an environmental
safe manner if conducted in accordance with 20 AAC 25.080, but will require
subsequent Commission review on a well-by-well basis to ensure that the
provisions of 20 AAC 25.080(c) are met. The area injection order for the
Tarn oil pool can provide a partial basis for any subsequent Commission
determinations concerning annular disposal.
Reservoir pressure will be measured in wells using standard
industry practices on a regular basis to manage production and monitor
Exception from the gas-oil-ratio limitations of 20 AAC 25.240
is appropriate provided a pressure maintenance project starts within six
months of the start of regular production.
Commingling Tarn and Kuparuk production streams on the surface
is appropriate provided that there is adequate individual well testing
to assure production allocation quality.
Two well tests per month has been a minimum standard for
commingled pools with the advent of commingling pools in surface facilities
prior to custody transfer and severance from leases.
An allocation factor of 1.0 for the Tarn Pool is acceptable
during the first year of production to evaluate multiphase well test equipment
and allocation quality.
Rule 1 Field and Pool Name
||25, 26, 34, 35
||1, 2, 3, 4, 9, 10, 11, 12, 13,
14, 15, 16, 17, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33,
34, 35, 36
||6, 7, 18, 19, 30, 31
||1, 2, 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14, 15, 16, 17, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 32,
33, 34, 35, 36
||1, 2, 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14, 15, 16, 17, 18
The pool is in a geographic area known as the Kuparuk River Field and
will be contained within the Kuparuk River Unit. Hydrocarbons underlying
the affected area and within the referenced intervals of the Seabee Formation
constitute a single oil and gas reservoir called the Tarn oil pool.
Rule 2 Pool Definition
The Tarn oil pool is defined as the accumulation of hydrocarbons common
to and correlating with the intervals between the measured depths of 4376
feet and 5990 feet (MD) interval in the Bermuda #1 well (KRU 36 10-7/1).
Rule 3 Spacing Units
Nominal spacing units within the pool will be 10 acres. The pool shall
not be opened in any well closer than 300 feet to an external boundary
where ownership changes.
Rule 4 Casing and Cementing Practices
Rule 5 Injection Well Completion
Conductor casing must be set at least 75 feet below ground level and cemented
Where required for annular disposal, surface casing must be set at least
500 feet below the permafrost and be cemented to surface.
Rule 6 Automatic Shut-in Equipment
Injection wells may be completed with tapered casing provided a sealbore
assembly, packer, or other isolation device is positioned not over 200
feet above the top of the injection or perforated interval.
A sealbore assembly, packer, or other isolation device may be positioned
within 200 feet of a secondary target interval within the defined pool
where potential reserves are reasonably expected and will be evaluated
Rule 7 Common Production Facilities and Surface Commingling
All wells capable of unassisted flow of hydrocarbons will be equipped with
a fail-safe automatic surface safety valve.
Injection wells will be equipped with a double check valve arrangement.
Surface safety valves will be tested at six-month intervals.
Rule 8 Reservoir Pressure Monitoring
Production from the Tarn oil pool may be commingled with production from
the Kuparuk oil pool in surface facilities prior to custody transfer.
The allocation factor for the Tarn oil pool will be 1.00 for the first
year of production to evaluate the allocation method, testing frequency
Each producing well will be tested a minimum of two times per month during
the first year of regular production.
The Commission may require more frequent or longer tests if the allocation
The operator shall submit a monthly file(s) containing daily allocation
data and daily test data for agency surveillance and evaluation.
The operator shall provide the Commission with a well test and allocation
review report after six months and after one year of commingled production.
Subsequent report frequency and necessity will be determined after the
first year of regular production.
After one year of regular production, an evaluation of test frequency and
allocation quality must be done to support extension of the 1.00 allocation
factor or consideration of alternatives.
Rule 9 Gas-Oil Ratio Exemption
Prior to regular production or injection an initial pressure survey shall
be taken in each well.
A minimum of one bottom-hole pressure survey per producing or injecting
governmental section shall be measured annually. Bottom-hole surveys in
paragraph (a) may fulfill the minimum requirement.
The reservoir pressure datum will be 5200 feet subsea.
Pressure surveys may consist of stabilized static pressure measurements
at bottom-hole or extrapolated from surface, pressure fall-off, pressure
buildup, multi-rate tests, drill stem tests, and open-hole formation tests.
Data and results from pressure surveys shall be reported quarterly on Form
10-412, Reservoir Pressure Report. All data necessary for analysis of each
survey need not be submitted with the Form 10-412 but must be available
to the Commission upon request.
Results and data from special reservoir pressure monitoring tests or surveys
shall also be submitted in accordance with part (e) of this rule.
Wells producing from the Tarn oil pool are exempt from the gas-oil-ratio
limits of 20 AAC 25.240(b) so long as the provisions of 20 AAC 25.240(c)
Rule 10 Pressure Maintenance Project
A pressure maintenance miscible gas injection project must be initiated
within six months after the start of regular production from the Tarn oil
Rule 11 Reservoir Surveillance 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
Rule 12 Production Anomalies
Progress of enhanced recovery project(s) implementation and reservoir management
summary including engineering and geotechnical parameters.
Voidage balance, by month, of produced fluids and injected fluids.
Analysis of reservoir pressure surveys within the pool.
Results and where appropriate, analysis of production logs, tracer surveys
and observation well surveys.
Results of well allocation and test evaluation for Rule 7(f) and any other
Future development plans.
In the event of oil production capacity restrictions at or from
the Kuparuk facilities, all commingled reservoirs produced through the
Kuparuk facilities will be prorated by an equivalent percentage of oil
production, unless this will result in surface or subsurface equipment
Rule 13 Administrative Action
Upon proper application, 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,
and is based on sound engineering principles.
DONE at Anchorage, Alaska and dated July 21, 1998.
David W. Johnston,
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