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CO 100
Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. f~ Conservation Order Category Identifier -/- -- Organizing RESCAN [] Color items: [] Grayscale items: [] Poor Quality Originals: [] Other: NOTES: DIGITAL DATA [] Diskettes, No. [] Other, No/Type OVERSIZED (Scannable with large plotter/scanner) [] Maps: [] Other items OVERSIZED (Not suitable for plotter/scanner, may work with 'log' scanner) [] Logs of various kinds [] Other BY: ~ MARIA Scanning Preparation TOTAL PAGE-~ Production Scanning Stage 1 PAGE COUNT FROM SCANNED DOCUMENT: ¢ ~.~ ? PAGE COUNT MATCHES NUMBER IN SCANNING PREPAR~,TION: .,~ YES ~ NO Stage 2 IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: YES ~ NO 'Lo (SCANNING IS COMPLETE"~I"II~S POINT UNLESS SPECIAL ATTENTION IS REQUIRED ON AN INDIVIDUAL PAGE BASIS DUE TO QUALITY, GRAYSCALE OR COLOR IMAGES) General Notes or Comments about this Document: 5/21/03 ConservOrdCvrPg.wpd 1. January 21, 1971 2. January 22, 1971 3. January 28, 1971 4. February 2, 1971 5. February 16,1971 6. March 3, 1971 7. ---------------- 8. March 4, 1971 9. March 22, 1971 10. March 29,1971 ) ) Conservation Order 100 Commission's Order re: Extension of CO for Additional 120 day period for flaring Inter-office Memo Telegram from Juneau re: scheduling Notice of Hearing and Affidavit of Publication L tr re: hearing Kenai Peninsula Protest wire Excess Gas Utilization Cost Study Transcript Marathon's Itr re: Gas Utilization Hearing of 3/4/71 Amoco's Itr re: Gas Utilization Hearing of 3/4/71 Conservation Order 100 STATE OF ALASKA DEPARTMENT OF NA~TRAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Re: THE MOTION OF THE ALASKA OIL AND ) GAS CONSERVATION COMMITTEE to hold a ) hearing to consider issuance of an ) order affecting the use of gas ) produced as the result of crude oil ) producing operations in certain ) Cook Inlet oil fields ) Conservation Order No. 100 Middle Ground Shoal Field Granite Point Field Trading Bay Field McArthur River Field April 21, 1971 IT APPEAR%NG THAT: 1. The Oil and Gas Conservation Committee published a notice of public hearing in the Anchorage Daily News on February 2, 1971, pursuant to Title 11, Alaska Administrative Code, Section 2009. J 2. A public hearing was held on March 4, 1971 in the Superior Court Room, Alaska State Capitol Building, Juneau, Alaska, at 7:30 P. M., at which time testimony was presented. 3. The hearing record was held open until March 31, 1971 and additional information was received. 4. Conservation Orders 32 and 61 expire April 27, 1971. AND IT FURTHER APPEARING THAT: 1. Essentially all the equipment on the thirteen oil-producing platforms in the Cook Inlet has been converted, to utilize the maximum possible amount of casinghead gas. 2. Significant quantities of casinghead gas are still being flared. NOW, THEREFORE, IT IS ORDERED THAT: Casinghead gas in excess of the maximum amount that can be beneficially utilized may be flared through June 30, 1971. Conservation Order No. 1~0 Page 2 April 21, 1971 DONE at Anchorage, Alaska, and dated April 21, 1971. Thomas R. ~ars~ail, lr , Execut{ve Secretary Alaska Oil and Gas Conservation Committee Concurrence: Homer L. Burrell, Chairman Alaska Oil and Gas Conservation Committee 0 K' Gil5're'~, Ir., ~ember~ Alaska Oil and Gas Conservation Committee AGO 851397 INVENTORY OF RECORD CONSERVATION ORDER I00 GAS FLARING COOK INLET - ALASKA iTEM # I. Copy of C.O. I00. 2. Notice of hearing. 3. Affidavit of publication, 4. Letter - AMOCO to Burrel I dated March 29, 1971. 5. Telegram - W.A. McBean and Assoc to Homer Burrell dated 3/3/71. 6. Telegram - James E. Fisher to A.O.G.C.C. dated 3/3/71. 7. Letter - Marathon Oil Company to Burre li dated 3/22/71. 8. Excess Gas Utilization Study by Shell 0il Company and AMOCO Production Co. 9. Exhibit No. I - Alaska Oil and Gas Conservation Committee. I0. Testimony by Union Oil Company of California on the Trading Bay Field Exhibit Nos. I and 2 attached. Testimony of AMOCO Production Co. Exhibits I-7 attached. 12. The testimony of At~antfc Richfield Company on the Trading Bay Field No~r#l~ east 0~1 Pool. Exhibits I, 2 and 3 attached. 13. Testimony of Texaco, Inc., Exhlbit No. I attached. Testimony of C.J. Diver, Cha'irman, Engineering and Planning Group, Trading Bay Unit. Exhibit ! attached. 15. The testimony of Mobil 0~1 Corporation. Exhibits A and B attached. [6. Testimony of Shell Oil Company by J. T. Logan and A.O.P. Casbarlan. Exhibit Nos. I, 2, 3, 4, 5 and 6 by Shell Oil Company attached. AGO 85Lz~O ]' Amoco Production Company Security Life Building Denver, Colorado 80202 March 29, 1971 Re: Gas Utilization Hearing of March 4, 1971 Mr o Homer L, Burrell Alaska Oil and Gas Conservation Committee Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99504 Dear Mr. Burrell: At the March 4, 1971, hearing, Amoco quoted the following statement from a letter written on February 18, 1969, to a prospective purchaser: 'It appears that two factors will make it unlikely that we can reach an agreement which would be satisfactory to both parties. The first is that, to avoid interference with our oil producing operation, we would have to have a contract which would permit us to interrupt and cease deliveries at unpredict- able intervals, on short notice and for uncertain and perhaps extended period of time. The second is that the amount which you indicate you might purchase would not be all of the gas which would be available when it was possible for us to make deliveries. Entering into a contract for only a portion of the available gas would seriously impair our ability' to find a market for the balance." It may' have been mistakenly construed by some of those in attendance as indicating that if Amoco could not sell all available surplus gas, it would not sell any part of it. This was not our' intent. At the time the letter was written we were negotiating fora market forall~.of the excess gas. We at that time held out some hope that such negotiations would be successful. It would have been grossly' unfair to the prospective purchaser to whom the letter was written to have concealed our efforts along these lines from him. If we had, and our attempt to negotiate a sale for all of the gas had been successful, he might have gone to the time, trouble, and expense necessary to make a firm offer for purchase of part of the gas only to find that the gas was no longer available. We do not think Amoco can be criticized for having made a fair and full disclosure of essential facts to a prospective purchaser. OES:ga Yours very truly, ~, AG 0 85,! ~0 0 Oscar E. Swan . Attorney _2Z~_/~ ~.~ .../ MARATHON OIL COMPANY PRODUCTION-UNITED STATES AND CANADA' Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 March 22, 1971 Attention: Homer Burrell, Chairman Gentlemen: Public Hearing On Extension of Conservation Order Nos. 32 and 61 March 4, 1971-Juneau, Alaska At the hearing on the matter of extension of Conservation Order Nos. 32 and 61 held in Juneau, Alaska on March 4, 1971, a telegram from W. A. McBean and Associates of Calgary, Canada was read into the record. This telegram was a proposal to purchase propane from a West Foreland plant. The only plant at West Forelands is the LEX plant, operated by Marathon Oil Company for itself and others. The telegram recommended that butanes, as well as methane and ethane, be reinjected until markets are available for these products. The record should be made clear regarding this statement. The LEX plant was constructed at West Forelands for the purpose of recover- ing butanes and heavier hydrocarbons and these products are currently being sold along with the crude oil. Therefore, the butanes are not available to any other market and, of course, are not available for injection as suggested in the telegram. At this and previous hearings testimony has been offered as to why this residue gas, essentially methane and ethane, cannot be re- injected into this or other Cook Inlet reservoirs. This testimony included, but was not limited to, the following: l) The interference with pressure maintenance projects currently utilizing water. 2) No depleted reservoirs are available in which to store such gas. 3) The strong likelihood that very little, if any, of this gas could be re- covered. Oil and Gas Conservation Committee -2- March 22, 1971 4) The hazards involved in handling high pressure gas on the offshore platforms. 5) The economic waste resulting from expenditures of large sums of money for little or no return. We trust this will serve to clear up any misunderstanding that may have arisen as a result of the above mentioned telegram. It is requested that this letter be included in the record of the subject hearing. Very truly yours, District Operations Manager if" f.o. ~GO 85~404 10 11 12 13 14 15 16 17 19 2O 21 22 23 25 TRANSCRIPT OF PROCEEDINGS STATE OF ALASKA DEPART~iENT OF NATURAL RESOURCES OIL & GAS CONSERVATION COMMITTEE PUBLIC HEARING "TO CONSIDER ISSUANCE OF AN ORDER AFFECTING THE USE OF GAS PRODUCED AS A RESULT OF CRUDE OIL PRODUCING OPERATIONS AT COOK INLET OILFIELD" March 4, 1971 Juneau, Alaska APPEARANCES: HOMER BURRELL TOM MARSHALL O. K. GILBR~TH ~LONNIE SMITH JOHN MILLER HARRY KUGLER BOB HARTIG CHAIRMAN, OIL & GAS CONSERVATION COI$~ITTEE EXECUTIVE SECRETARY, OIL & GAS CONSERVATION COMMITTEE, CHIEF PETROLEUM GEOLOGIST, DIVISION OF OIL & GAS OIL & GAS CONSERVATION COMITTEE, CHIEF PETRO- LEUM ENGINEER, DIVISION OF OIL & GAS PETROLEUM ENGINEER, DIVISION OF OIL & GAS, PETROLEUM ENGINEER, DIVISION OF OIL & GAS PETROLEUM GEOLOGIST, DIVISION OF OIL &'GAS ATTORNEY GENERAL'S oFFICE, & R COURT REPORTERS 277.4713 ANCHORAGE:, At. ASKA 99501 AGO 85L~05 10 11 12 13 14 17 '18 19 2O 21 9.2 Page 2 PROCEEDINGS MR. BURRELL: Good evening, ladies and gentlement. I'm Homer Burrell, Chairman of the Oil & Gas Conservation Committee. To my right is Bob Hartig of the Attorney General's Office, Chief of the Natural Resou ~es Section of the Alaska Department of Law; to his right is Tom Marshall, Executive Secretary of the Alaska Oil & Gas Conservation Commission and Chief Petroleum Geologist for the Division of Oil & .~as; to his right, moving around the table, is Mr. O. K. "Easy" Gilbreth who is a member of the Alaska Oil & Gas Conservation Committee and is Chief Petroleum Engineer for the Division of. Oil & Gas; moving on around to the right we~..:have Mr. Lonnie Smith, Petroleum Engineer, Division of O~1 & Gas, Mr. John Miller, Petroleum Engineer, Division of Oil & Gas, and the man down at the tape recorder there, Mr. Harry Kugler, Petroleum Geologist, Division of Oil & Gas. First I'i1 introduce my boss Chuck Herbert, Commissioner Herbert, over there. And I..'m sure we have many more dignitaries here tonight whom I haven't seen. Chuck, do you think there's anybody else "here I ought to introduce, or should I attempt to run the --- COMMISSIONER HERBERT: Well, the Legislature is represented by Representative Martie Farrell, Chairman of the House Natural Resources Committee' and the well known Red Swanson alongside of him · MR. BURRELL: We are honored to have both ~Ir. Farrell and & R COURT REPORTERS 02~ WEST EIGHTH AVENUE- ~;UITE ~ ANCHORAGE, ALASKA 99501 AGO 851406 10 . 11 12 13 14 15 16 17 18 19 20 21 22 23 25 Page 3 Mr. Swanson here tonight and hope that we can help you, and I want you to feel free to ask questions. Gentlemen, thank you for being here. This is the notice --- I'd like to read the Notice of Public Hearing first here. Notice of Public Hearing, State of Alaska Department of Natural Resources, Conservation File No. 100 Conservation Files No. 32 and 61 permitting flaring of casing head gas not beneficially used from the Granite Point, McArthur River, Trading Bay and Middleground Shoals Fields expire~'~. April 27, 1971. The Oil & Gas Conservation Committee will hold a hearing pursuant to Title Eleven'Alaska Administrative Code Section 2009 to consider issuance of an order affecting the use of gas produced as a result of crude oil producing operations at Cook Inlet oilfield. The hearing will be held in the Superior Court Room, Alaska State Capitol Building, Juneau, Alaska, at 7:30 p.m., March 4, 1971, at which time the operators may present testimony and affected and interested parties will be heard. This was published in the Anchorage Daily News on February'2, .- 1971. We've got a lot of recording equipment here. W~.'=re going to ask the witness toose this chair where they can be picked up. There will be exhibits on the wall. If I may bri~ly touch on the format of this hearing. The plan is that a couple of gentlemen'are going to give a rather introductory --- well, make a few introductory remarks on the general principles of this gas produced with the oil, what's R & R COURT REPORTERS O~.~, WEST EI(~HTH AVENUE ~ BUITE I:l 277-47 ! :3 ANCHORAGE. ALASKA 99B01 AGO 10 11 19. 13 14 15 16 17 18 19 20 21 22 9.5 Page 4 going on, and I think we'll stop at that point and see if any- body has any questions before we get into the --- perhaps the harder testimony on it because we want to make sure that every- body understands who is interested in what.~s going on. Following that, we will move around the Cook Inlet Oil- field in a counterclockwise direction, .starting~with the Middle- ground Shoal field, and we'll have testimony from the operators, I understand. And then we'll stop again after we've ¢overe~ the fields producing on the east side of the Inlet. We'll take~.~ a break and have questions. And then we'll proceed counter- clockwise going down the west side of Cook Inlet and have up testimony from the ~erators again and finish/by taking the west side w~th the liquid extraction plant.at West Forelands; at which time we'll have questions again. I think the procedure will be we'll ask Mr. Marshall, the Executive Secretary, to swear the witnesses who are going to testify on the east side first; and following the testimony on. the east side, the Committee will ask questions, and then we'll ask for questions.from the audience. We have the Honorable Representative Willard Bowman here, and I'd like to recognize him. Who is the first person who wants to testify then? Would they come up then, all the people who want to t'estify on the east side. MR. RUDD: If I may, I'd like to open with a few remarks R & R COURT REPORTERS B2~ WE~T EIGHTH AVENUE ~ BUITE ~ 277-4713 ANCHORAGE. ALASKA 99~0! AGO 2 10 11 12 13 15 17 18 19 20 21 29. 23 25 to the hearing and then introduce the witnesses --- MR. BURRELL: Would you introduce yourself for the record, and I forgot to ask would everybody who testifies please state your name so we'll get it ~n the tape right. MR. RUDD: Joseph Rudd, Attorney for Shell~Oil Company. Gentlemen, this hearing is the outgrowth and in effect the continuation of a series of hearings commenced in October of 1966 in which disposition of gas produced along with oil in Cook Inlet has been considered. For many months Cook Inlet operators have been proceeding under the terms of Conservation Orders No. 3Z and 61, and they've regularly been filing affidavits with the Commission showing utilization of casing head gas for heat and motor'fuel and various other uses in addition to the primary beneficial use of moving the oil from the reservoir to the sur- face. In addition, by filing monthly production reports, each operator has kept the State advised of the amounts of oil and gas being produced so that the basic facts of casing head gas production and utilization are already matters cf public record. We understand that the stated purpose of this hearing is.to consider issuance of an. order affecting the use of gas produced as a result of crude oil productingcperations in the Cook Inlet Oilfield. While the notice of the hearing does not specify the nature of the order to be considered, if one has'been formulated, the operators are .prepared ~to present a brief description of the nature of the operations as they're carried out in Cook Inlet, R & R COURT REPORTERS =?~.4~ AGO 851~0'9 Page 6 10 11 12 13 .14 15 16 17 18 19 20 9,1 25 the beneficial uses to which casing head gas has been put, together witch projections for the future, and the prospects'~,kicL each company may have for marketing of the gas which may be excess to its needs.~ B~cause it appears' ~hat the situation could be presented most logically in this matter we have asked the Committee for permission to divide the testimony into two portions, first relating to platforms producing to the east side ¢ Cook Inlet and the second concerning the west side field. I would now like to present the witnesses who will testify ~mgazxi'in93 the east side to be sworn and present their quali- fications. I call Mr. A. O. P. Casparian, Thomas L. Logan, both of Shell Oil Company, and Mr. Bart Giles of A~GCO. MR. MARSHALL: Will you please raise your right hands? In the matter now appearing, do you swear to tell the tr. uth, the whole truth, and nothing but the truth, so help you God? (Witness answer affirmatively.) .. MR. MARSHALL: · You may be seated, thank you. MR. GILES: I am Bart Giles with AMOCO Production Company in Denver, Colorado. I'm a graduate of Penn State in 1948 with a Bachelor of Science degree in Petroleum and Natural Gas Engineering, and I have worked since that time with the same company. It's changed names twice; it's now AMGCO Production Company. And in the past six years, I have predominantly been in charge of all conservation activities in the fourteen western- most states of our operations. Geographically, this would extend 277-,47 ~ 3 ANCHORAGE, AL.ASKA 90501 AGO 85'].4 LO 10 11 lg 13 15 16 17 18 19 20 21 29. 9.5 Page 7 from the Mexican border to the Russian border. The consarvation activities include forming field wide producing units, the eco- logical and environmental aspects of our producing operations, and hearings involving our.operations in the various states. I am a Registered Professional Engineer in the.states of Colorado and Wyoming, have been Chairman of the Rocky Mountain Oil & Gas AssociationsTe~hnical Committee for six years, am still a member of that committee and a similar committee in North Dakota. MR. BURRELL: Thank you, Mr. Giles. Your qualifications are-accepted for the'z~cord. MR. GILES: To begin, gentlemen, let's reiterate from some of the testimony presented at earlier hearings on the Cook Inlet gas flares the essential facts that all of us should remember so that some:~common misconceptions can be avoided. A common mis- conception about natural gas is the one. that.naturals, gas wherever. and under whatever conditions it may be found, regardless of its chemical composition, regardless of'itS physical properties, is always an inhgrently useful'and valuable substance. This is not so. Gas may be valuable; gas may be worthless; in fact, gas may be a distinct liability. Natural gas often contains water vapor;-and, unless· this w~er"vapor is removed, it can form hydrate which resemble what we have in and around Juneau tonight in appearance and they can restrict or stop the flow of natural gas in a pipeline. And when a natural gas contains .. appreciable quantit~s~of higher hydrocarbons, such as ethane, propane, butane, R & R COURT REPORTERS 1~2~ WEST EIG~-ITN AVENUE ~ ~UITI~ 277-4713 ANC:HORAG E, ALASKA Page 8 10 11 15 17 18' 19 20 9.9. 9.3 and pentane, these components too must be removed from the gas before it can be transported any appreciable distance, beyond a mile as a rule; and when ~he'quantities of such'gas are sufficient and a market for the product is ~adily available, ~ extraction process to take the liquids out o~ this gas may be profitable, but this is not always so. Even when a natural gas is essentially pure methane, containing no appreciable inert gases, no poisonous hydrogen sulfide gas or components which must be removed before the gas can be transported, use of the.g~, s cannot be achieved by simply connecting the well by pipeline to the ultimate consumer. The pressure, of the gas must be carefully regulated. Sometimes the natural pressure has to be supplemented. Limited reserves of natural gas, regardless of the p~ysical prope ~ies or the chemical composition, if remote from markets, may be without value. Gas of a chemical composition which seemingly would r~nder it valuable as a fuel also occurs naturally under conditions where no use can. be made of it. Natural gas.occurs.~ in coal mines, occasionally in quantities sufficient to constitut( a definite safety hazard; it has to .be removed'from the mine as ~apidly as possible. Now, another mistaken belief is the one.that the value of natural gas li%s entirely in its chemical composition. The value of the physical energy may be much greater than the value of the chemical energy whichtis produced when the gas is.burned. Pressu::e energy is essential if the gas is to be put to any use. This R & R COURT REPORTERS B2B WEST EigHTH AVENUE- BUITE ~'~'~ AGO ANCHORAGe. A~$KA 10 11 12 14 15 17 18 19 2O 21 22 23 24 25 Page pressure energy moves the gas through the pipeline to the ultimate the ' consumer. If the gas as produced at~ellhead does not have enoug of this pressure energy stored up in it, the pressure must be boosted with expensive compressioneq'.'.~pment in order to transport the gas to market. This ability of a gas to store up energy in the form of pressure which can later be used to perform useful work makes it possible to use the same gas several times over for ~uny purposes other than as fuel. When gas is found in nature in solution in.an oil reservoir, the pressure energy in that,.gas is used very effectively to produce the oil. Gas may also be injected into the well'bore to supplement the energy of the gas that is in solution and toassist in lifting the oil to the surface. To further assist in the production of oil, gas may be injected back into the reservoir itself to promote better move- ment of the oil out of the tighter, denser reservoir rocks, thereby allowing it to be produced more efficiently. Perhaps the most damaging misconception of all is'the one that the way to secure greater use of natural gas reserves is through production restrictions or punitive regulations. · This misconception is often expressed is questions such as Texas has put out the flare; why can't Alaska. Its proponents seem Unaware that Texas has not put out the fl&re. A-lot of gas unavoidably used to produce oil and which cannot be economically put to further use is still being flared. The very substantial !...~ reduction in flares in these states has.been made possible by ., R & R COURT REPORTERS 8;~ WEST EIGHTH AVENUE -- EUITE I~ 277-4713 ANCHORAGE. A~ASKA 99501 AG~ 8514,l.] 10 11 12 13 14 15 16 17 18 19 20 21 23 25 greatly expanded markets. The greatly expanded markets have not been created, they~have not been made possible by the severe restrictions on gas use which are sometimes cited as examples of what Alaska shoul~ do. The reverse is true: it's the almost unlimited market now~d~ve!oped in these states which has.made the restrictions~on flaring of gas used to produce oil profitable and workable. To me it's simply the interacting forces'of supply and demand coming into play and being allowed to work uninhibited towards a proper match-up. The present level.of gas usage achieved in other states is the end result of years of struggling with the ~roblem. The laws and regulations which Alaska now has are patterned after those which' have Worked most successfully in Other stat~s. We feel, gentlemen, that Alaska. has secured and will continue to secure a level of use of its gas reserves equal to or better than that of Texas or any other state in.a comparable stage of development. The!important thing to remember is that development of adequate markets takes time and it takes effort. Fortunately, the natural gas reserves found thus far in Alaska do not have some of the handicaps Which natural gas reserves in other parts of the world have. ' Let,s talk first about gas well gas. Gas that's produced ._ from a gas~r~$ervoir is Usually dry. It's a merchantible product under several hundred --- several thousands pound pressure when · it arrives at the wellhead. The only problem to be solved in & R COURT REPORTERS 82~ WEST EIGHTH AVENUE- ~UITE ~ 277.,4713 ANCHORAGE. ALASKA 991~01 AGO 85141,%. 10 11 12 13 14 15 16 17 18 19 20 21 22 24 25 Page utilization of gas well gas in Alaska is that of finding a market for the gas and then transporting th~gas to that market. It's easy to pinpoint the problem, but it may not be co easy to solve it. At least, however, gas well gas can be ~ft down there in the g~ound un%il the problem of a market is solved. The Situation' involving casing head gas is different. If we are to produce the oil, then we have to produce the ~sing head gas associated with i~. The same market problem we have with gas well gas must be solved. Some additional problems are presented, however, each being quite costly to solve. Water and higher hydrocarbons must be removed from this gas before it can either be transported or used for any purpose. The energy in the form of pressure which was stored in this gas in the oil reservoir and beneficially used to produce the oil must be restored. Then thei.~gas must compete with gas well gas for the limited market. And~whether casing head gas can.be further used economically depends upon whether the return which can be realized from its sale is greater than- the cost of dehydrating it, repressuring it, and processing it. Testimony presented to you gentlement three yeazs ago at gas disposition hearings .put the casing head gas in true perspective. The work energy of this gas that's in solution with the oil down in the reservoir performs:.:~two~very beneficial uses before one ever sees this gas when produced at the surface. First, in the work energy that forces the oil.from~the reservoir rocks towards and/ the ~el!..bore, a point of lower pressure;/next, in the work & R COURT REPORTERS 8~'B WEST EIGHTH, AVENUE -- ~UITE 0 277-4713 ANCHORAGE, ALASKA 1)9501 ' r 10 11 12 13 15 16 17 18 19 20 22 23 25 Page 12 energy that helps to lift by natural gas lift the oil up the well to the surface. To realize just how beneficial this gas energy is in producing the oil in our Cook Inlet Oilfiel'd,we could no ~more produce the oil and keep the associated gas do%.~n.in the reservoir than a bartender could draw a beer and keep all the .: bubbles in the keg. Shell?' HR. RUDD: Hr. Chairman,if I may ask the two Shell .w_itnesses to present their qualifications. MR. BURRELL: Just --- may I ask you to wait just a minute, ~.~r. Rudd, here. MR. RUDD: Sure. M~. BURRELL: I think we've got a bunch in the back I'd like to' recognize, the group that Mr. and ~,~rs. Bruce Kendall brought in, the high school students from the Anchorage area, and see if they can't all, including Mrs. Kendall, come up front and find a seat. I think there are some seats if we give you a ch to look for them. If you can't find a seat, come up here and be~.th judge. Welcome back from Seattle. (Pause) ~.4r. Giles, will you be available for questioning later? ~R. GILES: You bet. MR. BURP~ELL: Are there any members of the Legislature who would like to ask any· questions of Mr. Giles at this time? He wi be available 'later. We'd rather go through all the questions fir and then get to him, feel free if you'd like to. ~.~'. RUDD: Interrupt at any time. Is that what you're sayi MR. BURRELL: That's not what i said, Joe, F~r. Rudd, if you'd like to bring your next witness up and have him give his R & R COURT REPORTERS ~ WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANCHO~AGw, ALASKA ~950' ~I~GO 851416 · . [nc( 11 st Page 13 10 11 12 15 16 17 18 19¸ 20 21 24 25 qualifications MR. RUDD: .The next witness will be Mr. A. O. P. Casparian, ! WhO will present his qualifications. MR. BUR~RELL: Could we get him to spell his name?~ MR. RUDD: C-a-s'p-a-r-i-a-n. MR. BURRELL: Thank you. MR. CASPARIAN:. My?name is PeterCasparian,. Division Mechanical Engineer .with shell Oil Company and a graduate of the Royal College' ;f Science and Technolog~ in Glasgow with a Bachelo~ of ScienCe ~in ivil Engineering,_ . 6f'>Harvard University with a Master of Science and of Cornell University with a Doctor of Philosophy also in Civil Engineering. I have been with Shell Oil Company some seven yearsf --- UNIDENTIFIED VOICE: Mr. Chairman? MR. BURRELL: Yes. UNIDENTIFIED VOICE: Could he speak up just~ a little bit? MR.. BURRELL: Yes, could you speak up a little bit,--- MR. CASPARIAN: Yeah. MR. BURRELL: --- Mr. Casparian; we can't quite all l~ear you. MR. CASPARIAN: Okay. I've been with Shell Oil Company - some seven years, and during that time I've worked initially in research, and for the past five years in operations, principally been in facilities handling oil and gas. ~ time has/spent in the ~ulf Coast and California, and for the last seven months my R & R COURT REPORTERS B20 WEBT EIGHTH AVENUE- BUITE I~ 277-47]3 ANCHORAGE, A~ASKA 99501 AGO 85 t~.].7 .4 10 11 12 13 14 15 16 17 I8 19 20 21 22 23 25 Page 14 responsibilities have included the MGS field which we are~dis- cussing tonight. I'm a Registered Professional Engineer in'the state of Louisiana. MR. BURRELL: And your qualifications are accepted, Mr. Casparia~. MR. CASPARIAN: Thank you. MR. LOGAN: My name is Thomas Logan~ I'm a graduate of the University of Houston with Bachelor of Science degrees'in Petroleum Engineering and Mathematics. I've been an employee of Shell 0il C6mpany for the last ten and a half' years. My petro- leum ~ngineering experience consists of development, production, and reservoir engineering assignments in Oklahoma, Texas, offshore Louisiana, California, and now Alaska. I also have spent two years at Shell's research center in Houston where I was briefly involved in the early reservoir simulator studies to determine the feasibility of water flooding in the Middleground Shoal Field; however, most of my work at the research center involved developing, computer programs for aiding in.optimizing gas field development and producing operations, i am currently the Division Petroleum Engineer for Shell's West Coast Division-North which covers all' of Shell's operations, producing operations, from the'San. Joaquin basin of California northward to Alaska. 'As I Understand' it, the purpose of this hearing is to . determine if there is a potential market for the casing head gas produced fzx~mthe Cook Inlet Field which would allow us to .utilize · 'R & R COURT REPORTERS ~2~ WEsTrEIOHTH AVENU~- SUITE ~ ~?'~?'~ AGO 85L~! 8 ANCHORAGE. A~S~ 99501 Page 15 '.4 10 11 15 19 20 21 1 the produced gas even mora completely than it is now being utilized. As one-of the operators in the Middle.~ound Shoal Field, we at Shell feel that everything economically feasible has been done to Utilize and to minimize, the flaring of casing head gas being produced in .this oilfield. To give you all a feeling for our operations, I believe it would be beneficial for me to discuss the'following items: Number one, I'll b~iefly describe the type of oil reservoir we are dealing with at Middle- .~'round Shoal, that is what are the main producing characteristics what kind of performance, both of oil and casing head gas, might we expect under normal primarily producing operations. I would then like to describe the early performance ~of the Middleground Shoal Field both as to production characteristics and reservoir pressure !~c~'.~n~. You will see what could have occurred had not an aggressive program to maintain the reservoir pressure, by' water flooding been followed. The early performance under water flood conditions~ will be .illustrated and the effect,~.~On, the~ultimate recovery of oil and gas will be discussed. We will show you our ! current predicted production performance, and this will illustrat~ the anticipated oil and gas recoveri~sversus time. A gas usage history and forecast will also be shown to further illustrate how we minimize flaring. From these performance predictions, you will be able to see w~at r~latively small volumes of gas we are talking about flaring, at Middte,.i~ound Shoal. This small volume of course is one of the key restrictions we run into when R & R COURT REPORTERS 82~ WE~T EJ(~HTH AVENUE- ~UITE ~ 277-47;3 ANC:HORAGE, ALASKA 9950~ AGO 851~j. 9 .6 10 11' 12 13 14 15 16 17 ,18 19 20 21 22 23 24 25 Page 16 attempting to find a market for this gas. Following my description of the reservoir and producing process, Mr. Casparian will discuss the handling and movement of oil and gas both offshore and ~.to..~:~ the onshore facilities. He will show you Hhe numerous ways inwhich we are utilizing a large portion of the gas on the platforms and our plans to increase its usage. He will tell you how we have maximized liquid recovez~es and finally discuss some of the problems associated ~with casing head vas at Middle~round Shoal which preclude the obtaining of a market for this product. In its original state, Middle,round Shoal can be classified as a dissolved gas drive reservoir. The name is not taken from . the shape or the condition of the reservoir but from the source of energy which produces the oil. The enez~y is derived from the light hydrocarbons, that is gas, which occur in solution in the hydrocarbon' liquid mixture in the ~serv~ir. These light hydro- carbons are liberated from solution as the oil is produced, forming a gas phase in the produced stream as contr&stedl~.to[:.tke liquid phase in which the rest of the reservoir hydrocarbons -.remain. This gas, being highly expansible, furnishes the energy to push the oil into the well bore and up thrOugh:....,the production string. Dissolved.gas drive reservoirs behave characteristically. during their producing li~'e. These ~eha~iOr%i3pa~terns~.~pertain to the oil production performance~ reservoir pressure, changes with time, and the ra~io of gas.and oil produced during the life of & R COURT REPORTERS 02.5 WEST EIQHTH AVh~NUE- SUITE ~ 277-47 i 3 ANCHORAGE. ALASKA gg~o1 AGO 851.42 0 Page 17 10 11 12 '14 15 17 18 19 20 21 the reservoir. My first exhibit will illustrate these~characteristic trends. The rates and pressure levels shown here are of a , schematic nature, but they're similar t° those of the Middle- \ Ground Shoal Field. As you can see, the oil production rates increase early in the life as the wells are drilled, climbing to some peak rate during the first year or two depending on the rate of development and the size of the reservoir. During'this time, we see a steady gas/oil ratio.,.,although we already note rapid decline in' the reservoir pressure. When this pressure drop to the reservoir bubble point, the gas in solution begins evolvin~ in the reservoir. At this point, the pressure conditions existin, in the reservoir are no longer sufficient to keep all of the gas in solution; although both the remaining solution gas and the evolved gas continue to supply the energy to prodUce the oil, the process becomes less efficient. Gas flows more easily in the · reservoir because it is lighter, less viscous, and does.not tend to cling to the surfaces of the pore space inthe rock as dOes the oil. Once free gas commences to flow, a Sort of chain reaction · takes place. 'The removal of gas causes the pressure to drop faster and allows' greater amounts of gas to be released from solution. We thus experience a rapid increase in the producing the gas/oil ratio:~.as."~6he gas flow channels increase in size and/~il channels correspondingly decrease. During this time, gas flows the much more easily,, while/oil flows with increasing difficulty. & R COURT REPORTERS 82~ WEBT EIGHTH AVENUE ~ ~UI~E ~ 277-4713 ANCHORAGE, A~S~ 99~01 AG~ 851421 10 11 12 14' 15 16 17 18 19 20 21 23 25 Page 18 Because of the rapid depletion of pressure or natural energy, some form of artificial3~tift must eventually be employed to lift the oil to the surface. The recovery of oil from a dissolved- gas drive reservoir by its own energy and artifical lift ~ech- niques is nearly al~ays low, say in the range of fifteen to twenty per cent of the original oil in place .for a Middl~.'~'Ground Shoal'type field. Low recovery from this type drive mechanism emphasizes that large quantities of oil, the more valuable'of the two hydrocarbon phases produced, can be left remaining the reservoir rocks. Under these conditions energy must be supplied from some exteriOr source, to prevent the waste of thi~ highly valuable product. To prevent waste in the dissolved gas drive reservoir, we must therefore maintain a reservoir pressure at a level in excess of the bubble point. That 'is, the pressure level-at which gas is evolved from solution in the reservoir, thus st&rtin~ ;he change reaction that results in the poor production performance I"ve shown on this exhibit,, This is a case in the Middle Shoal ~ield. The original reservoir, pressure was approximatelyl 4200 psi. The bubble point pressure is jus~ under 1500 psi. Between these two pressure levels.'the gas in solution is slightly in excess of 400 s~andard c~bic feet per barrel of oil. This , oil is rather unique' in that there exists such a low solution gas content and a relatively low bubble point pressure. These characteristics are found in s~veral of the Cook Inlet oil R & R COURT REPORTERS 82~ WE~T EIOHTH AVENUE---~ ~UITE ~ 277-4713 ANCHORAGE, ALASKA 99501 A GO ,8 5.! ~,22 1 10 11 12 -14 15 16 17 18 19 20 9.1 9.5 reservoirs. In contrast in other areas, many reservoirs at equivalent depths, pressures, and temperatures, with similar gravity oi1%, contain about 1200 standard.cubic feet per barrel and the bubble point is often quite, close to the original reservoir pressure. By virtue of having only about a third of the normal amountsof solution gas, we also have less available energy to help produce the.oil. However, the large spread between the original reservoir pressure and the h~bble point did allow sufficient time to plan and implement a secondary recovery process.for this field before the bubble point was reached. My second ~hibit illustrates the effect of injecting.water .in a dissolved gas drive reservoir to keep the pressure, the reservoir pressure, at a level above the bubble point. The ma~r things to look for are the maintaining of a relatively low and stable gas/oil ratio and much improved oil production rate'. Implementing this process early in the life of a reservoir of this type prevents .~he:.,waste~'of~.~reservoir energy in ~he form of excess gas production. The pressure is maintained by replacing hyrdrocarbon withdrawals with water. The gas in solution is also used more efficiently'to provide the much needed energy to move oil to the surface. The recovery of oil under these conditions can be improved significantly. Typical improve- , ments can result in recoveries in the range of.forty to fifty per cent of the original oil in place. This.~then is the main concern in the operations of a field such as Middle.~round Shoal; & R: COURT REPORTERS WEST EIGHTH AVENUE- SUITE S 277-471:3 ANGHORAGE. ALASKA 1~9~O1 Page 20 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 that is we strive to maximize the recovery of oil which is so · valuable to the wellbeing of our people. My next exhibit shows the actual production performance of t/~e Shell operated portion of the MiddleGround Shoal ~ield. You can see that th~ early performance follows that of our earlier model of a dissolved gas drive reservoir. The oil production rate increased rapidly at first as the field was developed. The producing gas/oil ratio~..is relatively constant as the reservoir pressure remains'above the bubble point. Secondary recovery operations were initiated with water injectivity tests in early, · 1968, and full scale water floodoperations were in ~rogress by mid-1969. We are currently' injecting up to 30,000 barrels per day of Cook Inlet water into the SAS portion.of the field. Similar operations are being ~onducted in'the AM~CO operated portions of the field. As you can see,. the injection progra~ has been effective in maintaining a stable producing gas/oil · ratio. In fact, based on the early oil production performance, our earlier predictions of oil and gas re¢ou~ .r~shave been revisea upward. It appears that the water injection program will prove to be quite successful. Shell's operations in the MiddleGround Shoal ~ield have been in line with the best known techniques to maximize oil recovery and minimize the loss or ineffi¢ie'~t-use of our natural resources. Our concern here today is over the flaring.of gas' in Cook Inlet. At Middleground Shoal we have'been successful in & R COURT 277.4713 ANCHORAGE, AI..ASKA 99501 Page 21 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 minimizing c~sing head gas production. The gas produced is that minimum amount necessary for the efficient production of our wells. In fact, it is less than that, and we are required to reuse much of this produced gas for artifica! gas lifting to maintain our production rates. My final exhibit shows the actual gas production history' of the Shell operated portion of the Middl¢~'~ound Shoal Field and our current prediction of future production. Also shown is a plot of gas usage during this same time period~ The area between these two curves is the total volume of gas that has been flared and will be flared in the -- future. We estimate some nine million ~C~' of surplus gas will be produced from now until the crossover point of the two curves. This represents a relatively small volume when compared-to the gas fields in the CoOk..Inlet area'. Mr..Casparian will elaborate further;~on~,i.~this~,~exhibit~following my discussion. I would, howeve~ like to say thatbased on my experience in the five major producin¢ --- major oil producing states, I feel that'the Middle Ground -~ ,. Shoal ~ield is'a"model of good' engineering techniques and .. '- operational methods to maximize the recovery and use of our natural resources, in this case oil and gas.. We.all. realize that the'total and complete use of all hydrocarbons produced from a"' reser~ii~ is desirable. Because of the physical location of' the Middle.~round Shoal and other Cook Inle~ fields and/la~k of'a market for these relatively small volumes of gas, some/gas is necessarily flared; however, this gas is not considered to be & R COUI~T REPORTERS i32~ WEST EIGHTH AVENUE ~ 13UITE 27,7-47 i 3 ANCHORAGE, ALASKA AGO 8514,25 10 11 12 13 14 15 16 17 18 19 20 21 22 25 Page 22 wasted as it has been efficiently utilized in the oil producing process and subsequent operations to the maximum benefi~ we can economically attain. Mr. Casparian, who will follow me in testimony, will further discuss the hardware of our operations. My discussion has been primarily concerned with what has happened f~om a reservoir viewpoint. I would therefore like to turn the dis- lc~ssion over to Mr. Casparian who will apprise you of our capability to produce and handle gas, the many beneficial uses we put the gas to, and some pertinent facts on the marketability of this gas. UNIDENTIFIED VOICE: Homer? MR. BURRELL: Yes. UNIDENTIFIED VOICE: .Could you explain to us, sir, why this is a model operation? You say. based on your experience~ ~'in.~-. past fields this is a model operation, one of the best that you've found. Why? "MR. LOGA/~: Because in t'he past most reservoirs are not water flooded this early.in their-life. You usually have a difficultY'time.getting the necessary data:~:~d production performan¢~e together to enable'you to justify water flooding. In many cases you cannot justify water flooding in a dissolved gas drive · , reservoir for economical purposes. UNIDENTIFIED VOICE: Then it's a model as far as.secondary · recovery, not necessarily ~kegas utilization; is that what you're. R & R COURT REPORTERS ' ~. ~T ~,~.~. ^~u~-- ~u~. AGO 85L ~26 277-4713 ANCHORAGE· A~S~ B~501 Page 10 11 13 14 15 17 19 saying? ~. LOGAN: NO, it's a model for both, and Mr. Casparian will tell you some of the reasons why.' MR. BURRELL: Thank you, Mr. Logan. I think I forgot to state for the record that you're accepted as an expert witness. MR. CASPARIAN: I'd like first to outline what to present to you tonight as part of my testimony. First, I shall briefly review ~urfiela pipeline gathering system to demonstrate that our casing head gas could, ~ .necessary, be transported to shore and continue with a review of our efforts in maximizing the beneficial.use of this casing head gas in our operations, and finally to briefly comment on the problems associated with developing a market for~.~is casing head gas. During the initial life of th~i~ MGS Field, the SAS A Platform and the Chakachatna B Platform were connected by a series of two flow lines as shown in this plat.. I'd like to submit this as SAS Exhibit $5. The combined production was A's transfered~to shore thr0ugb/two eight inch lines for processing in our onshore dehydration facility. As discussed in previous gas hearings, these lines unfortunately are not capable of handling gas production; however, in the summer of '67, Platforms Platfor~ C and D were &nstalled-and'pipe~ines'were laid connecting/A to C, C to D, and D to shore. These pipelines were designed and are capable of handling natural gas. As you can see from Exhibit #5, installation of these lines provides a r~loop for all the R & R COURT REPORTERS 821~ WE~T EIGHTH AVENUE- t~,UITE ~ 277-4713 AN(IHORAGE, A~S~ Bg~01 AGO 851~27 10 11 lg 13 - 14 15 16 17 18 19 20 gl 9.5 Page 24 platforms, provides a route to shore, and provides an alternate fuel source or gas lift source for each of the platforms. This loop provides a backbone of a system that can be utilized for gathering all gas in the MGS ~ield at a point onshore as'a possible sale outlet. In addition, it~allOwed...~he conversion'.~ of most of our engines on each platform to natural gas as it provided for a continuous source of fuel. As was pointed out by Mr. Logan, the primary beneficial use of gas is a function of moving the oil to the well bore and lifting it to the surface and making it possible to deliver.. that oil to market. I would like now to' discuss a secondary beneficial usage of this casing head gas in our operations. I have here a chart showing in chronological order for each one of the'platforms and the onshore facilities where and how this gas' is being utilized. I'd like to introduce .this as Exhibit %6. On Platform A we have approximately 2600 horsepower of compression being used.in our.- gas lift operations. This compresses approximately nine million cubic feet psrday or Nine thousand ~E~ ~r gas from':.'~O~>psi~to]. 1000 psi for injection into the casing tubing annulus where it is metered into the tubing.string by gas lift valves-in order to lighten the p~oducing~if~id column and increase our production , rates. This gas is merely a producing aid and does the same as the original gab in solution in the reservoir.. TwO steam generat~ tO provide heat on the platform were 'converted from diesel to COURT I~EPORTERS EIGHTH AVENUE- ~UITE I~ 277-47~3 AGO 8,51428 )rs 10 11 15 17 · . 18 19 2O 29. 9,3 Page 25 as casing head gas/fuel in late 1967. In addition to three AC enginators in. early 1968. Our water flood pro~ect~required~"~the addition of two 1100 horsepower turbines to drive our pumps for water injection. These were installed in late '68. And a , deaeration tower to remove oxygen from the Cook Inlet water used in the water flood' was also installed at that time. In late '69 we installed a syst~m:~toirecover liquids from our compressed· gas which w,ere re-injected into the crude-production, stream for shipment to shore. I've included this in this chart to show that we're stripping some of the heavier ends of our gas lift · . gas and injecting these into our crude production. This amounts per day to approximately 100 ~C~/of equivalent gas. Platform C's history is somewhat the s,ame. Since May 1968 we have converted two ~.S enginators and installed two 1100 horsepower compressors and two 1100 horsepower turbines, inclmding a deaeration tower. In addition, we plan to s?f~r~.: up a new 660 horsepower comp zessor during the first quarter of this year for additional compression. Our. onshore facilities required to dehydrate or remove most of the.produced water in the .crude consumes at present approximately 500 ~ per ~ay. We are presently 'investigating the feasibility of installing a vapor, recovery ,s~stem on'our onshore stock tanks to recover additional gas-liquids .that would otherwise 'be lost which would of course be reinjected back into the· total production stre~am. We estimate that this would amount to app~oxi mateiy 150 ~ .~2~~ per day of equivalent gas.' Thus our total gas R & R COURT REPORTERS ~i~ WEt:iT EIGHTH AVENUE ~ ~UITE I~1 277-4713 ANC:HORA~E, A~S~ 99501 10 11 12 13 14 15 16' 17 19 2O 21 9.2 23 Page 26 usage at present amounts to some 4000 ~-C~ per day. Let's now look at the next chart which-shows total gas production versus our estimates of fuel gas requirements. This was introduced as Exhibit ~#4. At this point in time we're using approximately forty per cent of the total produced gas at Middle- ground Shoal field. Within the next two years we will be using approximately fifty per cent of the produced gas, and by 1981 we will'be utilizing approximately one. hundred per cent of the gas produced in our operations. I'd like to point out some other factors on this chart. Integration of the upper curve would give you of course the total e~imated gas production. The. area.under the lower curve gives the total, estimated fuel~'~usag~,'. With the difference of course being the surplus gas available from our operations. This surplus gas amounts to some 9,000 --- or.nine billion cubic feet. From the present t~ime'on, the total amount of ~,_~.~..i.~e_d,~in. our operation will amount to approximat~ sixty-four per cent of the total remaining casing head gas. As. we pointed out in previous testimony, this excess gas is approxi- mately less than three Der cent of what we anticipate our Beluga River ,Gas ~ield to be, less than two per cent of what we think the North Cook Inlet ~as ~ield to-be,' and'less than' one per cent , -of what we think the Kenai ~as ~ield to. be. Each of these, source has attracted a market. I believe you can see by the small size ./ of this accumulation why no market,has yet become available. In addition, I'd like to mention several other factors that .. R & R COURT REPORTERS 277-47~3 AN(~HORAGE, ALASKA AGO 851430 Page 27 10 11 12 13 14 16 17 .18 21 22 23 25 may hinder the development of a future market. The availability of.excess gas is short, less than ten y~ars, which is a short life duration for a gas contract sale co~pared to the usual fifteen to thirty years; that the rate of excess gas available declines with time; that the cost to dehydrate, compress, trans- port, and process the gas is high; and that this~ source~:of gas is~:interruptible unlike-;?gas well gas. Despite these shortcomings, we remain continuously alert in our marketing endeavors for any profitable means of disposing of this gas. This latter aspect will be covered, I believe, in more detail by AMOCO's representat; In conclusion, I have reviewed with you our efforts to gather our gas p~oduction to a point onshore, our present and future forecasts for the utilization of the casing' head gas available from our operations, and some of ,the shortcomings associated with locating a market for our excess casing head gas. In my opinion, the maximum secondary beneficial use of the gas which can be made at the present time is being made,, and we have provided for future uses~?0f this excess gas if and when they become available. Thank you. - Mr. I'd like to turn it over to/Bart GileD. MR. CASPARIAN: Hr. Chairman? MR. BURRELL: Mr. Casparian. (OFF THEI RECORD FOR CHANGE OF TAPE.) MR. CASPARIAN: I wanted to move the admission of Exhibits ~1 been introduced by through #6,~,.~hich haVe/? the prior two witnesses. MR. BURRELL: I was going, to do that. We'll,identify them for the r~cord as Shell's Exhibits 91 through 96., (Pause) .1 & R COURT REPORTERS ~i~.~ WE~T EI~,HTH AVENUE- SUITE ~ 277-47~3 ANCHORAGE. ALASKA 99501 AGO 8514~1 ve Page 28 10 11 12 13 14 15 16 17 18' 19 20 23 9.5 MR. GILES: Gentlmen, before we go too much further, let me orient everyone as to the platforms that we're talking about.. Shell their just covered /~ A and C platform's forecasted gas production and gas usage. I'm next going to talk about our Baker Platform then Middle~.Ground Shoal and/our Dillg_n.~_?.~a.g~Qr.~, and then I'll move to the northernmost two of the three platforms at Granite Point, which are our Anna and Br~ce as you go in a northerly direction, and that will complete.the dissertation'tonight for the east side, and then others will come along and talk. about --- starting on the south end of Granite Point by Mobil and on back down the left'side or the west side of the Inlet to complete the story. Our Exhibit %1 --- UNIDENTIFIED VOICE: Pardon me, Mr. Giles. Could you stand near the microphone, please, as you talk? MR. GILES: Our Exhibi.t %1. shows by two.color, contrasts the new forecast of produced gas in solid red as opposed to the · old forecast in solid green of produced gas, and likewise, in dotted red the present forecast of fuel gas consumption on the platforms Baker and Dillon and the'old forecast, in dotted-green. Now, the new forecast in solid red curve includes produced gas on both the Dillon and the.Baker platform, but the usage curve,. the dotted red, shows only the Baker platform gas usage because we will 'show on a later exhibit for Granite Point-that we are using Granite point gas to fuel our Dillon platform. But had we not included Dillon produced gas along wi~h Bak&r, we see that & R COURT rEPORTERS 82~ WEBT EI~HTH AVENUE- BUITE ~ 277-4713 ANCHORAGE. ALASKA ~O1 AGO 851432 5 10 11 12 13 14 15 16 17 18 19 . ,20 21 22 23 ~24, 25 Page 29 in the end of 1978 we expect that. the Dillon' platform will no longer be economical to operate for .our oil productionoperations, and with the naked eye you can see that if you extrapolated back from that point, the convergence point when we will be fuel deficient from that point on in time would~.'.o¢cur along about ~the it 0fi'1978 whether we showed/the way we have or whether we just made' it a Baker produced gas and Baker fuel consumption curve. Now, the new forecast of produced gas differs from the old forecast; it!s quite obvious; because we're seeing, quite gas frankly, a lot less/production by virtue of our water flood operations. Also, back' in 1969 we saw quite a drop in gas production when we shut in well #10 which had been producing quite a bit of gas from the MGS A,pool. Now, by virtue of the flood around the Baker platform, the pressure.decline.has been arrested ~i~h pressures in the EFG pool holding well above the · bubble point; pressures in. the BCD pool have continued to decline slightly'below the bubble point, but we have plans to add ano'ther injection pump in the'next few~months soas to realize a positive Withd~awal'balance'in that pool. Now, the area around the Dillon , platform never did get'below .the bubble point. Now, as has been'mentioned earlier, the specific pieces of equipment, that we reuse produced gas for fuel on.th8 platform are detailed to this'Conservation Committee every 120 days in our affidavits filed with them; but-I'might'add-that-we-are planning this year tO replace the reciprocating internal combustion engine~ · · R & ~ COURT REPORTERS 8~ WEST £1OHTH AVENUE ~ ~UITE ~77.47,~ ~ AGO 8'5.1433 ANCHORAG~.A~ASKA nd ~o 10 11 17 18 19 2O 21 .9.2 9.5 Page 30 on the platforms, with gas turbines to run the AC generators because the maintenance and repair costs with the turbines are quite a bit less. .Turbines generally use about twice as much gas as gas --- as the reciprocating engines do., but in effect we are rePlacing two Waukeshas with one gas turbine, so our fuel gas usage should not appreciably change. Now, we are at this time reusing beneficially for fuel on Baker about 1.1 million cubic foot per day, and this represents about nineteen per cent of the present produced gas from Baker and Dillon, that is. But I think the important message from this Exhibit 91 is this, that from here .one, out we will be reusing for fuel sixty-two per cent of our remaining produced gas. Now, even if we could find a market tomorrow for the thirty-eight per cent excess gas that would be available, it's only going to be available for three to four years in any real significant quantity, and then beyond 1974\there may not be enough gas for a~marketer to continue to take it .... I might turn to a map that's really not suited for this; it's too long; we'll try her. Our Exhibit.#2 is simply a Chakac~atna group structural interpretation of the Midd!e~;~ound Shoal ~ield, and the color code is simply that AMOCO has the · northern e~d of-the'field around the Baker platform; Shell has the central part of' the field-with their"A and-~ platforms; and · ~then-at %~e south end-of-the· field~'we have~our~platform Dillon; so the yellow represents AF~CO and 'the ~ed-the Shell group, ~he R & R COURT REPORTERS B2~ WE~T EI(~HTH AVENUE- ~IJITE ~' 277-4713 AGO 85L43.4. · 9 11 12 18 I4 I5 17 15 19 20 Page 31 SAS group, and the blue arrow on this map indicates ~the well that we plan to use for injection, well #9, in the BC to improve the pressure restoration in that reservoir through water in- jection. The gold dots represent the producing wells; the blue dots represent the injection wells; and you can see that there --- this is an every other row injection pattern throughout the narrow structure. I would say that with the cooperative lease line injectors betwee~ both borders~.~ our border to the~ north,.our border to the south', each-group has its'water flood working quite well. Shell mentioned earlier that.they, ar~ ' injecting up to a maximum of thirty thousand barrels of water per day on their properS;AMOCO is injecting twelve thousand barrels per day around its Baker platfonnand injecting ten thousand barrels of water a day through the wells on ~ Dillon , plat'form. ~ The curve on the left.is our Exhibit #3 and it shows the , p~oduction performance around the Baker platform, at Middle,~C~ound Shoal, and the curve on the right shows the same thing .for the production Dillon platform/,and as you can see, we're'seeing some pretty · nice responses already from the water floods around these two platforms. .The response a.~ the Baker platform is mostly · the EFG pool; some of'the response is from the MGS A.pool. The big increase in early 1970 resulted from two things: opening the · A'po°l in well #7, plus..a workover.'to restore production from the ,EFG pool"in that same well. Now, ~he subsgquent drop resulted R & R COURT REPORTERS 02~ WE~T EIGHTH AVENUE- BUITI~ ~ 277-47 i 3 _ ^~cHo~^~. ^~^s~^ ~o, AG(] 85t435 6 10 11 12 13 14 15 '16 .. 17 19 20 21 22 23 24 25 Page 32 when our gas lift compressor on Baker went down for two-thirds of a month, but the rest of the green shaded area is actual water flood response, and again I would like to emphasize for the Committee's benefit that we plan to add another injection pump in the next few months to :boos.~a the BCD performance. Dillon's response is of course just from one p0ol, the · . Hemlock Conglomerate which we call the G pool, because that's very all that's productive at the/south end of Middle~Dund Shoal. YOU will also notice that since the water flood has been started in Baker the gas/oil ratios have tended to be depressed as we've put more water in the ground; it stabilizes the gas/oil ratios; in some instances reduces them. Again, I show in the GOR curve around Dillon that we never did get below the bubble point,~and that-is essentially the solution gas/oil ratio~.~yoU?re seeing. I'd like now to turn to Granite Point-and talk about our Anna and Bruce platforms in that field. Exhibit %5 is a pre- diction of the produced gas that we will produce from the Anna- , . and Bruce platforms in GraniteFPoint as opposed to the amount 'of gas that we expect to beneficially reuse on these platforms. You'll noticewith, the solid stippled area that is the gas that's taken from Grahite Point and used to.fuel the Dillon platform. Now, while the new forecast of Produced gas ~hich' is the solid red curve indicates we'll be producing more gas' to the time when we-become fuel~defi¢ient,~tha,n we had forecasted tO Fou°a year and a'half ago at a hearing on this field, the volume of R & R COURT REPORTERS 1~21~ WE~T EIOHTH AVENU~- ~UITE 277-4713 ANCMORAGE, A~SKA AGO 8514,]6 6 10' 11 13 ' 15 17 18 19 20 21 25 surplus gas over and above fuel needs will not be much different . to the time.that we become fuel deficient. We estimate twenty BCF surplus from now to conversion. A year a~d a half. ago, we had forecast twenty-two BCP surplus. The difference involves tkree adjustments: as you can see, somewhat more produced g~s until we become fuel deficient, offseti~by the fact that we are now a year and a half later in time beyond the time of our earlier forecast, and then adjusted downwards because of the fact that we're using more gas, more Granite Point gas, for fueling needs tha~ we had forecast. But basically the difference between the red and the shape of the green curve, the new versus the old forecast, differs because of an unanticipated, unavoidable delay in our water flood star~ up. You can see how these pumps have been displaced. This,delay in our water flood start has been occasioned by a vibrations problem in the injection pump which had been specifically designed, specially designed., because the injection pressures at Granite Point will be the highest ever tried by the oil industry~ Now, through a redesign of the pump we and the pump vendor feel confident that we've got this matter solved now, and we~expect.the first pump to be delivered and operational 'in-May of .'71. We'll put that first pump on the ! Anna platform. ~, we expect a full scale flood of Ours with . a bore Pump ~o .be operational in August of '71,~and this flood will be~designed f6rtwenty thOusand barrels of water ~e~ay at seventy-five hundred pounds pressure, but the equipment will R & R COURT REPORTERS ' ,,~. w~,,',' ~,~,-,?. ^v~.u-- ,u,~ ~ AGO 851 z~37 277-4713 ANCHORAGE, A~SKA 99501 6 7 10 12 13 14 15 16 19 2O 21 22 23 24 25 Page 34 be able to go up to ten thousand pounds if necessary at decreased rates. Now, once again we have detailed every one hundred and twenty days to you the specific items of equipment that are reusing produced gas on these two platforms, and as I explained to you for the Midd~e<~ound Shoal' Baker and Dillon platforms, we also on these platforms plan to replace the reciprocating internal . combus~on .engines with gas.turbines to run the AC generators. · NOW, right now we are beneficially reusing 3.6 million cubic feet a day, and this represents about twenty-three per cent of current Granite Point produced gas. Here again I must emphasize that the important message this cha ~ shows is that from here on out.we will be reusing for fuel sixty-three .per cent of the remaining p~duced gas, and again even if we could find a market tomorrow for the thirty-seven per cent excess gas that would be available, it's only going to be four or five' years that we're going to have any excess gasinrathersignificant ~uantity, and it's doubtful beyond 1975, if the marketers, if we had one, could continue to tak( the ~as because you're not taiking much area down to the point of conve~e~u.~. I have an exhibit --- (pause) --- Our last exhibit is a · jointly drawn Mobil-AMOCO structure map of Granite Point. The ~llow coloration shows the AM~CO acreage .to the~north; the red acreage shows the Mobil-Union acreage to the sou=h.. ',when I say AMDCO', I really mean Chakachatna group;, we have t-hree partners, Skelly, ARCQ, and Phillips, equal partners. The solid red lines ':~ ~.>. · . ~ & R COURT REPORTERS ~ WEST EIGHTH AVENUE -- ~UITE · 77.~?,~ AGO 85.1438 ANCHORAGE. A~S~ .7 10 15 18 19 20 21 9.5 Page 35 show the gas twin eight inch lines of Mobil-Union to the shore side on ~e west side, and the solid twin yellow lines are twin ~en ~. inch lines to' the East Forelands facility. The blue arrows show the wells that are proposed by the Chakachatna group for injection when we get in gear in a few months. The solid blue dots, including two lease line injectors.jointly drilled by the Mobil-Union-Chakachatna group on the border, and the other Mobil- Union wells that are injectors are shown in solid blue, and the .orange dots are the producing wells throughout the field. And again while Mobil has their water flood in operatiQn, we expect to be in the same position very soon, by summer, and we will' put ou~ first injection~pump on the Anna platform. I think that's i'it on the exhibits. ~I should'like at this time to wrap up'the story for the eas sid~ of the~Inlet by first elaborating on the Short life during which the excess produced gas will be available. In trying to maximize oil recovery, we operators actually contribute to the- short life of.the produced gas. 'We do it in this way: once the field limits have Been reasonably well defined by development drilling, we. immediately take steps to conduct a secondary recovez program to optimize oil recovery. Mr. Logan previously pointed · out how quickly this was done at MiddleGr0und Shoal. And water flooding is the best secondary recovery, method in out, Cook Inlet oilfield by far; there's no question about i%. And when we start ~injectin~ water, we ~egin repressuring the reservoir which will 82~ WEST EIGHTH AVENUE- 277-47~3 ANCHORAGE, A~SKA 6 10 11 12 15' 17 20 21 Page 36 reduce the amount of gas that is produced with the oil at the wellhead. Living proof of this was shown on 'the Exhibit ~,'~'~ of AM.CCO's in the gas/oil ratio, history and how it declined after the water flood got underway.on the Baker platform. Now, a further benefit occurs when water injection starts. We beneficially; reuse more produced gas in fueling the turbine driven injection pumps, and also on the platforms and at the onshore drilling facilities --- I should say just the onshore facilities, we and Shell, and Shell showed you with their charts, reuse the casinghe~ gas beneficially once again in th~se ways: first, to operate . the AC generators furnishing electric power, to operate the.steam generators that furnish the heat, and the DC generators that power drilling equipment on .~he platforms; secondly, for the gas lift compressor and to gas lift the oil wel~, to run the hydraulic lift pump for oil wells that are not gas lifted, and to operate the turbine compressors to ship the hydrocarbons to the shore facili~es. Now, once again I have to emphasize that these uses will eat up sixty-two per cent to sixty-three per cent of the remaining produced.gas. These were the figures respective2 for .us'.at the Middle.~.~round Shoal platforms and Granite Point, and if I recall 'Shell's testimony, theirs was sixty-four per cent of the remaining ~roduced gas. ' , Well, what can we do with the remaining thirty-six, thirty-/ se.ven, thirty-eight.per cent o'f the produced gas that's still available? We should look at the various alternatives which we R & R COURT REPORTERS B~.B WE~T EIGHTH AVENUE ~ BUITE ~ 277-47 ! ~ ANCHORAGE, ALASKA ~9~01 Y ,6 10 11 12 13 · 14 15 17 18 19 gl Page 37 did look at several years ago; we investigated it very carefully; and each of these alternatives were rejected then for the reasons I'll give, but I think it's important in commenting on these that having been rejected then when there was a lot more gas then available, none of these alternatives warrant reinvestigation now when there is far less excess ~gas available now. We investigated extracting the liquids from this'wet produced gas, and Our investigatign showed that unlike the extraction plant for'produced wet gas that is now:.-operative on the west side of the Inlet, we one, the east side lacked,i~the' volumes to make an extraction plant economical. Even if it had been economical, we would have had to have a contract to avoid interference with our oil producing operations which would permit us to interrupt and stop deliveries at unpredictable intervals, on short notice, and for perhaps extended periods of time-. I think we all recognize that a liquid extraction plant would not of course put out the gas flare. Another alternative,'we considered reinjec.ting the gas into the reservoir from'which it Originally came. This was rejected · because it just wouldn't do nearly the good that water inOection can do. Besides, there wasn't enough casinghead gas available after reusing some of it for fuel to maintain reservoir ~ressure, ha~ we elected to inject it. Now, water injection with equipment costing only half as much as the compression equipment needed for gas injection will accomplish much more than gas in contacting R,& R COURT REPORTERS WEST EIOHTH AVENUE ~ 277-4713 ANCHORAGE. AhASKA · 10 11 13 14 15 16 17 18 19 20 21 Page 38 far more reservoir rock, and~in doing that, that means more ultimate oil recovery. It accomplishes more than gas by main- the raining/reservoir pressure which in turn'stabilizes the pro- duced gas volume.. And finally, water does much more than gas by making the very best and most efficient use of~ the remaining gas in the reservoir as reservoir energy. Another alternative, .we considered storing the excess gas in a shallowrr~servoir for use later when our platforms become fuel deficient. ~n Middle~ound Shoal there are some shallow gas sandS; there are not any shallow.gas sands at Granite Point, but there are some relatively shallow water sands above the oil producing horizons at Granite Point. But whether we're talking about,~iligas sands or water sands, either way these sands which are not competent, well cemented rocks are already loaded with fluid~.. Now, if we tried to store gas. in any of these weak, lenticular, fluid filled sands, we might rupture mother nature~.~s storage container, and if this happened, we'd have more of a problem than the problem we se~ out to solve in the first place. Well, that ~oils down'to one last alternative, try and secure a ~arket for this excess gas. The problems for a potential buyer.are several fold: first, the very short period of time when this excess~gas would be available; second, the low pressure of. this produced gas which wiI1 require costly compression; third, the wetness of this produced gas which will require some treating first to dry it out; fourth, the ~xp~ctancy that this COURT REPORTERS 277-4713 AN=HORAGE. A~KA 99~01 AGO 8.5Lz~.2 10 11 13 14 15 16 17 18 lg 21 Page 39 gas suppty would be interrupted at odd times, never predictablY;: and finally,~here's a fifth problem; our attorneys advise us --- (pause) --- MR. BURRELL. We're changing the tape;~:it.)ll just be a minute here. We'll stop the testimony and take a break, the testimony of the' east side. (Pause) Okay, back on the record. MR. GILES: I had mentioned the fourth reason,' the expectancy that this gas supply would be interrupted'at odd times and never predictably. And finally our attorneys advise us there will be legal problems involved too, but not insurmountable ones, but I'll let my attorney comment on these problems after I'm.. finished. But despite these five shortcomings with the excess 'produced gas, we in AM~CO remain alert in our market search for any profitable means of disposing of this gas, and this brings us to the real purpose of this hearing as we see it and as called by the Conservation Committee: is there now a potential market for the casinghead gas produced in these Cook Inlet fields, %~hich would allow the reuse of the produced gas even more completely than it's now b~ing used, and the answer is no. Our gas people's \ latest ¢onta¢~'relative to a possible sale of the excess gas that -is available at the Chakachatna onshoreTtreating facility have been with Ph~llip ~ Petroleum Company and the Anchorage Natural Gas Company. The current thought being investigated is Anchorage Natural's proposal, and.. I emphasize this is just a proposal, to exchango our excess gas. on the beach with PhillipS,-for some of ~ & ~ COURT REPORTERS ANCHORAGe, A~SKA 99501 10 13 14 15 ~ 16 17 I8 19 2O 21 22 23 25 Page 40 their LNG. Now, Anchorage Natural has not yet answered our iates~ inquiry on this possibility {hat. was dated February 17 of this year, but Phillip's:.: has responded to our letter inquiry of February 18 of this year by saying in their answer, five days later, the 23rd of February, that they a~e still no~ in a positio~ to' decide on this available gas yet; Practically all of Shell's excess gas is flared at their platforms in Middle.~£ound Shoal, and ab~t fifty-five per cent of our excess gas likewise is flared at our four platforms, in the two fields. About forty-fi~e per cent of our presently available excess gas is flared at our East Forelands onshore facilities. It's that portion of the Granite Point gas that~routed by way of · million' 'the beach, some seven and a half/cubic feet a day., that is not needed out at platform-Dillon for fuel. This gas arriving at the beach at a handred and seventy-five pounds should be. a lot more attractive to a potential buyer than the low pressure casinghead gas flared out at the platformswhich would require .. additional costly compression equipment to get it to shore~ But despite the seemingly attractive pressure at which this excess Granite Point gas arrives on the beach, we do not have a con- tractual arrangement. Now, AMOCO stands ready and willing to , entertain any offer, marginal as it may be, that the. State. of Alaska would be willing to accept for its royalty portion, of. this gas now on the beach, provided no additional-.cos~ need. b~ incurre, and willing I say AM.'0CO 'stands ready/to do this; we do have'three partners 82~ W~'ST EIGHTH AVENU~' -- SUITE 277-4713 ANCHORAGe. A~S~ 99501 11 12 13 14 15 16 17 18 19 20 21 O1 Page 41 that would have to voice their feelings on it once we got a .firm offer, and' we don't have a firm offer. Now, in closing let me say it would be nice, it would save you headaches, i~ would save us headaches, if every last cubic foot of produced gas could be reused once again beneficially above ground after it has served its very effective and beneficial purpose in providing the energy to produce the oil. ~We can't realize this utopian goal; we cannot ever expect to save every last cubi¢:~foot. .We reuse every cubic foot we can economically reuse, but that's it; there is no market available.for the rest of it. I should like to offer my six exhibits into evidence that I talked from. MR. BURRELL: They will be accepted as AMOCO's exhibits one through six. MR. GILES: And I believe I'd like to now turn it over to Oscar for his comments.on that one point, if I may. MR. BURRELL: Ail right, b. SENATOR THOMAS: Mr. Burrell,could I ask a question before be'goes into the legal aspects? MR. BURRELL: Yes. SENATOR THOMAS: I've been puzzled as to why it wouldn't be better, even though water injection .is best, to reinject the surplus, gas just to get rid of the stuff. There's PR problem, atmosphere pollution., I'just wonder why. · -MR. BURR~LL: Mr. Giles did touch on that, but I'll R & R COURT REPORTERS 82~5 WEST EIGHTH AVENUE m SUITE ~ 277-4713 ANCHORAGE, ALASKA 99501 10 11 12 13 15 17 18 19 20 21 23 25 Page 42 ask you to give him your reason. MR. GILES: Well, Senator Tho~as~, it would mess up our water flood; it r~ally would. I mean there's a certain amount of gas saturation ancperator would like to establish before he really gets in gear on a water flood, and we feel w~ are.at that optimum point, and we started our water flood correctly; but if' you get too much gas in there, then you can impede the recovery process of the follow-up water that you inject into the ground. Now, I know that this is difficult to understand, but it takes --- in Our company it takes at least five weeks of reservoir engineeri · school training to understand these things, and you'll have to just accept my word for it that it's ~st not the thing to do here. ., UNIDENTIFIED VOICE: Homer? MR. BURRELL: Yes. UNIDENTIFIED VOICE: I thought I had understood earlier that you said something about a portion of this casinghead gas-. that was having the liquids stripped out on the west side' or on the east 'side, I don't remember which it was --- on the east side and the liquids reinjected into the crude stream, and then later it~ appears you said this was.not being done, so I'm not clear on ~that~ Would you repeat that? MR. GILES: Yes, I will repeat it. We looked at an extraction.plant on the east side, on the shore facility, for , taking the liquids out of the wet gas, and we ~ound that we lacke~ R & R COURT REPORTERS 8~ WEST EIGHTH AVENUE ~ GUITE ~1 277-4713 ANCHORAGE:, ALASKA 99501 AGO 85 tq ng l0 11 13 .14 15 16 17 18 19 20 21 22' 23 24. 25 Page the volume to make it economical to do this. And even~though you took the liquids out of course, you would still have tail gas coming out of that extraction plant that would have to be flared. UNIDENTIFIED. VOICE:· Then is there no butane or propane being produced on the east side, period? MR. GILES: That's correct. It,s not being extracted. Now, we get a little by-product~.'~.from the compression down on the platform in the cooling effect', and these liquids are put back into the oil. Shell touched on that for their platforms. But this is a very small amount of liquid. FaRi%~;'BURRELL'~'%!_Thank~you. Yes, sir? REPRESENTATIVE ROSE: I have one question. Gas is put through compression, isa't it? · · .. MR. GILES: Yes. REPRESENTATIVE ROSE: And doesn't compression by itself separate the gas from the water? MR. GILES: No, not ~otally, no. REPRESENTATIVE. ROSE: But to some extent?' MR. GILES: To some extent, some degree. REPRESENTATIVE ROSE: And if the excessive gas were not compressed, it for storage purposes would/use up the same amount of space that it would in a lesser amount of space .accomplish both storage and some water separation, would it not? MR.' GILEs: If I'm tracking you right. r. REPRESENTATIVE ROSE: Now, in all of this we're talking R & R COURT REPORTERS 277-4713 ANCHORAGE, AL.~$KA Gg~01 AGO 85~. '3 7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about a strictly --- what is an economic recovery or an available market, but all of that is a factor of the price of the 'oil produced, that is correct, isn't it?" MR. GILES: I don't ~follow you there, sir, no. REPRESENTATIVE ROSE: Well, the 'entire cost-of producing . · of your oil includes the cost of either the storing, processing, marketing 'of both the oil and the gas. Ail of thecosts combined go into the total cost of the oil which affects the market price of the oil, isn't that right. · MR. GILES: No, I don't look at it that way, sir, at ail, no. The gas here that"s flared has no value whatsoever, and I can't see that it has any effect on the oil price. REPRESENTATIVE ROSE: But it's all part of the cost of the cperations. When it's flared, Of course, it's at no cost than (inaudible) ' .recovery. whether it's by means of storing, by means of piping'fo'r reusage~ or any other way, it,'s part of t~e tota~ overhead ~hich is.in turn included in the_total, price Of the oll produced MR. GILES: Ail right, yes. REPRESENTATIVE ROSE: For that reason 'if either reusage or .-. storing or marketing were feasible a.t a higher price, the only way that it could be ~ccomplished unless there is a ready buyer for,the gas would.be in a higher cost of'the oil, isn't that right?' MR..GILES:--'No --- , MR. BURRELL: I think that what Representative, Rose is ,, . 6= R C:OURT REPORTERS 62,~ V~'EST EI(~HTH AVENUE- 6UITE D 277-4'713 ANCHORAGE. ALASKA 99501 ~.GO 65 i.%~8 10 11 12 14 15 16 17 18 19 Page 4 5 saying -- correct me if I'm wrong .... is to the effect that any. costs that are incurred in processing the gas, whatever money is spent, whatever cost expenses are incurred in processing the gas are reflected as part of the producing costs of the oil. MR. GILES: Oh, yes. MR. BURRELL: And certainly would lead not to a higher value for your oil but a~lower' value because of the higher cost . to produce. REPRESENTATIVE ROSE.' Well, either a lower value of your oil or a higher price of .the oil --- MR. BURRELL: Assuming the market will --- . . REPRESENTATIVE ROSE: Right. MR. BURRELL: stand a higher price. MR. GILES: Right. REPRESENTATIVE ROSE: That is-right. ., MR. GILES: Right. 'MR.' BURRELL: Are we now communicating? MR. GILES: Yeah, we're communicating. REPRESENTATIVE ROSE: Right. MR. BURRELL: Good~ REPRESENTATIVE ROSE: Now, So far in the presentation by ' both companies, I've only heard of.the economic considerations or the profit motive, none of which consider the possibility of a higher price of the oil produced on the market'at 'the final r~tail end because no matter what the c. ost is, you could wind up & R (~OURT REPORTERS WEST EIGHTH AVEN ~JE- SUITE I~ 277-4713 AN(3HORAGE, ALASKA 99Z~01 10 11 12 13 14 15 17 18 19 20 25 Page 46 with the same kind of profit factor assuming a higher price. There might be some 'point where the market could no longer accept the higher price --- MR. GILES: '.Right. REPRESENTATIVE ROSE: --- but theoretically you can keep on pushing your price higher in order to get the same profit. MR. GILES: Theoretically. REPRESENTATIVE ROSE: But in none of this have I heand a wor~ about' our responsibility to future generations, the criminaIit~.y if you will which is a very harsh word but for lack of. a.better word of wasting anything that we have which is --- known to all of us that we perhaps should not waste, pollution; i haven't heard any of those aspects considered. Yet if all we-are talking about is just an economic factor, then an increase in final retail price could be considered with these aspects taken into consideration, and that has not been discussed up %o this point as I have heard it,~.~ or 'am .I wrong there? MR. SWAN: Represen,tative Rose, the Alaska Legislative Council has a report prepared by the W. J. Levy Consultant Corp- oration that. goes into this' question of the price of crude, and what controls the price of crude i~n Alaska, and quite unfortunate~ y _it is n0% the producers in Alaska who control that price. It's a very good report, and I think you got your money's worth in it, and we wish we could raise the price of crude to~, but we can't. ., We're getting all for it we can right now, and we just can't sell ! R & R COURT REPORTERS ~ w~T ~,o.T. ^w.u~-- su,~ ~ AGO 85[~0 277-47~3 ANCHORAGE, ALASKA 99~0! 10 11 12 14 15 17 19 20 29. 9.5 Page 47 it for more than the market' will bear. REPRESENTATIVE ROSE; price? MR. SWAN: NO, sir. Is that due to some Federal controlled It's due to the law of supply and R & R C:OURT REPORTERS 82B WE~;T Ei(~HTH AVENUE- BUITE 277-4713 ANC:HORAGE, ALASKA AGO 85L45L demand. It's just simply that there are many other sources of crude, and When the Alaska crude price gets too high, it just won't sell because somebody else is willing to sell his oil for less, and --- REPRESENTATIVE.ROSE: Well, (inaudible) --- why is it feasible that when I travel in Europe,. I pay a higher price for gas there than I do here? MR. SWAN: That"s right. " REPRESENTAT'~VE ROSE: SO why are those people willing tO pay a higher price for their gas than the rest of the world is? MR. SWAN: Because nobody's willing to bring it in and sell it for less, and they have to pay that price. .. REPRESENTATIVE ROSE:: And they are .closer to. the Arabian.. · market and other markets, but somehow they're willing to pay it. MR. SWAN: They're not'willing to p.~ it; they pay it because nobody will sell it for less. -REPRESENTATIVE ROSE: Well, if this --- if the' price were to.go higher., automobiles would no longer be driven, or that somehow we would no longer use petroleum products? "' MR. SWAN: I think this is a_ very distinct possibility. . · · .. If'the.--- this'might be the solution to air pollution is we get Page 48 , 10 11 15 17 18 19 9,0 29. 9.5 the price of oil so high that we can't drive cars, but you can't right now. REPRESENTATIVE ROSE: In the meantime, the truth of the matter is that the use of gas driven engines, automobiles, motor- cycles, airplanes, in Europe keeps on increasing even though the price is much higher than here. MR. SWAN: Yes, sir, but --- apparently you have been in Europe --- most of them are driving Volkswagens and much smaller cars .than we drive here in the States. R~PRESENTATIVE ROSE: But. it keeps on increasing, and they keep on buying gas. MR. SWAN: Yes, sir. But the.price is still determined --- if you will go into this report, ~unfortunately it doesn't go into the international'crude pricing, it just goes into how Alaska crude is priced, but it's supply and demand, pure and · simple. There is --- you just can't --- well, now maybe an Arabian sheik.'can control the' price of the gas .that his country. 'produces, but we can't do it here. REPRESENTATIVE ROSE: Well, I think that perhaps the difference between the earlier days when oii was produced and today, is that now for the first time in the hiStory of the product we are getting concerned about such things as the waste and Pollution, and we might have to look at these factors a little 'diffe~ently. ,, (OFF THE RECORD-FOR CHANGE OF~ TAPE.) R & R COURT REPORTERS ~)2~ Wi~3T EIOHTH AVENUE- ~UITf[ ~ 277-47113 AGO 851452 O , 8 10 11 13 14 15 16 9.1 9.5 Page 4 9 MR. SWAN: Well, sir, the notice of the hearing was I restricted to the question of is there a market for the gas'not .I being beneficially used. We really are not prepared on that. WeI would be prepared.to go int° that in detail, but the notice of the hearing just doesn't --- didn't cover that. REPRESENTATIVE ROSE: Well, to me the name of the organi- zationMR.is SWAN:a conservatiOnyes,.sir.--- Gas Conservation Committee, isn't it?. REPRESENTATIVE ROSE: This is a gas marketability commission MR. SWAN: Well, if you don't market it,you haven't conserve it, sir. REPRESENTATIVE ROSE: Now, I'm addressing myself to the question of conservation. MR. BURRELL: Yes, sir. Representative Rose, our statute requires that we --- it imposes two broad duties on the Oil & Gas Conservation Committee. One. is the prevention of waste, and · the other is the protection of correlat%ve rights. What this .. boils down to --- the issue you're raising here is the trading of a barrel of oil. for a few cubic feet of gas;~:.whiCh is more valuabl If the gas .doesn't come out of the ground, 'the oil won't..' NOw, we've'got to make a decision whether we'd rather have the oil or the gas; we.can't have both without wasting one or the other. · REPRESENTATIVE ROSE: Perhaps we look at both aspects and see if_,perhaps there ought not to be somewhere there a common. balancing factor. MR.'BURRE'LL: yeS,sir. R & R COURT REPORTERS B2~ WEST EIGHTH AVENUE -- ~;UITE · 277-4713 ANCHORAGE, ALASKA 995'01 AGO 85 ].4.53 10 11 12 13 15 16 17 18 .19 20 21 22 23 25 Page 50 feasibility of reinjecting the gas into the ground. a way to do it, we want to hear about it. REPRESENTATIVE ROSE: Looking at one side only, the economic side, we are losing track of the conservation side. MR. BURRELL: Well, there are those that think leaving the · oil in the ground is just as bad as burning the gas from a waste standpoint or a. failure to conserve. REPRESENTATIVE ROSE; (Inaudible.) MR. BURRELL: Well, that's why we called this hearing to find out if there isn't some possible use for the gas that's being flared. We intend to ~Xplore that in more detail. REPRESENTATIVE ROSE: Or possible other means of storing it for future use?' MR. BURRELL: If we can find any way to do that, believe me we'll do it. We're trying to get the best engineering advice we can'here tonight just to find out~ if that is possible, sir. REPRESENTATIVE ROSE': Socfarc we'.re only hearing about the immediate economic .... MR. BURRELL: well, sir, we've heard a great deal of ~- · engineering testimony or we've bean5 some, and we can certainly get more by questioning or otherwise from the witnesses as to the If there's Swan? REPRESENTATIVE ROSE: Right. . . · MR. BURRELL: Did you ~ave a few concluding remarks, Mr. MR. SWAN: Yes. I'm sorry, I should have identified myself & R COURT REPORTERS 82~i WEST EIONTH AVENUE ~ SUITE ~ 277-4713 ANCHORAGE, ALJkSKA 99501 AGO 851½5~ 10 11 13 15 17 18 19 9.0 22 I'm Oscar Swan, attorney for AR. OCO; I'm Mr. Giles' attorney. There were two problems that as he pointed out are not insur- mountable that we're going to have to face if we do find a market for this gas. The reason I'm mentioning them is I don't want the Committee to be surprised if we come to you and ask you for your help if we get a market because we will need some help in solving these problems. The first Of course is the question of what the royalty is going to be. As you know, there is a dispute as to the way in which royalties on oil should be calculated and accounted for and paid, and the~eis a lawsuit now pending on that question so I can't comment on the merits o~ it further than to say I know that both sides did thei~best to work it out short of litigation I and..I'm satisfied that litigation is the only. answer. If/was , representing the State, I would take exactly the position their attorneys are taking, and I think if they were represen~ir~us, they would take the same position we're taking. It's 0n~of those things that grows out of the~ fact that when the leases under which we operate, the contract we operate Under, were drafted, we just didn't and couldn't anticipate all ~he problems that we have, and there are some things that jus~ have tO be 'decided in · court. Those have to be .decided about the gas too~ and it's even -more critical on~the!'.gas~bec~use,~'as Mr. Giles has pointed out, · any gas sale is going to be marginal; the profit.'s not going to be very much; and a~i~er~alittla change in the royalty rate could R & R COURT REPORTER~ 8~:]~ WEI~T 'EIG~ITH AVENUE- I~UITI~ ] 277-4713 ANCHORAGE, AI.A$1{A G~01 AGO 851455 9 10 11 12 13 14 15 16 17 18 19 2O ' 21 22 23 25 Page 52 between be the difference/a profitable operation and one that's not. So if we do work a sale out, we're going to have to come to the State and ask the State to join in the sales contract which we haven't done in the case of the crude oil. The other problem is created by ~a law that was passed last year which purports to make a gas producer a public utility if he sells gas to a public utility or a consumer. As Mr..Giles has pointed out to you, the conditions under which we have this gas and will produce it are just inconsistent with the conditions under which a utility normally operates. Our --- this gas supply is not 'a continuous supply; it's intermittent. A utility usually .is required to furnish a continuous supply. It's a very short term supply, maybe three or four.years, or five, and when it's gone, it's gone, an~ we can't' commit ourselves to furnishing , anymore for that particular customer or consUmer. A utility can be required to do it. Most important, as he points out, about two-thirds of this gas we're going to have to have it for our own operations or we're not going to be able to produce this oil economically. So this. means we"re going to have to get a waiver ~ or an exemption from this statute. Fran'kiy¢ I've got some serious doubts about the constitutionality of this. particular provision, but I can't recommend a lawsuit because by th~ tame we have a lawsuit, there 'won't be any gas left to sell anyway; it'll be gone before .we can decide-the lawsuit. So what we'll have to do there too is come to the State and ask you to help us, but there'+ R ~ R COURT R~PORTERS OZ~ WEST EIOHTH AVgNU~- SUIT~ ~ ~.~,~ AGO 85 L4~ 10 11 13 14 17 18 19 20 9.1 9.3 9.5 Page 53 no point in doing it until we've got a sale worked out, but I didn.'!t'want~.'you~to':be.~surprised'.-if we'do get a sale and we do have to come to you. · MR. BURRELL. Senator ?Elmer, you had a question? .., SENATOR PALMER: Yes,~to the attorney and Mr. Giles. MR. SWAN: Yes. SENATOR PALMER: Perhaps it's more of a statement, and I apologize for that, but I'm puzzled by two things. First of all, I sat in the same chair that you're sitting/n now a year ago, and my committee was holding hearings on this very subject, and I was told at .that time that it was impossible to market that casing head gas from the east side because there was no way of getting it ashore, and now you tell me there were pipelines laid in '67 that did have the capacity to transport this gas to shore, and I'm extremely disturbed about this. MR. GILES: Senator, it can be put on shore on the east side, but it takes compressors to do'.this. ....... SENATOR PALMER: I understand that. · MR. GILES: Right. ' SENATOR PALMER: The testimony we had at that time was. , there were no line~ available to take it onshore'. MR. GILES: Well, --- SENATOR PALMER: ~ That the existing lines .were old lines, did not have the capability of transporting gas, and'that was all there was as far as gas was concerned; there was no way roger.. R & R COURT REPORTERS B2~ WEST EIGHTH AVENUE ~ BUITI~ ~ 277-4'/! 3 ANCHORAGE, ALASKA D950! AGO 851. 4~57 10 11 12 13 14 15 16 18. 19 2O 21 23 24 Page 54 it onshore. MR. GILES:. Some of these lines to shore to the east side cannot handle gas; this is true. Shell's lines. SENATOR PALMER: Right. But your Dillon platform lines, lines ..... MR. GILES: Yeah. SENATOR PALMER: --- your terminology two lines laid in '67 would present an entirely different picture than what we got.last year. MR. GILES:. Right. We've got Granite Point gas 3ging out to Dillon now for fuel use. SENATOR PALMER: The'.~.second'].thing~that'i.'bothers me is that last year and now this year again we have tended to ~u~ so much emphasis on the 'useful benefits already obtained from this casing head gas by its~?work in bringing the oil to the shore and that it's already used --- be~n3 made use of, it's served its purpose, and~it really doesn't make so much difference now if you. make no further use of it. I suggest that even though it has used this purpose,' it still has a value, and perhaps the value approaches that of dry gas as it comes from a dry gas well, perhaps not as great, b~t'we do have butanes,. ~e'have methanes,. we have this tail head gas that's left, and the propan~ so it has some value; and-to, say it has no value because it's already hadthis other beneficial use is somewhat like.saying'that the . . carcass of the buffalo could not be used because it has already · R ~ R COURT REPORTERS .2. w~T ~,~.~. ^wN~-- ..,~. AGO 851~58 277-4713 ANCHORAGE, A~S~ 99501 10 11 12 13 14 15 16 17 18 19 2O 9.1 23 Page 55 served its purpose in producing the skins, the buffalo hides to be used as a buffalo robe, and I cannot accept that anymore than I did last year or I do again, and I would hope that in-the future there would be less emphasis put on this usefulness that has already been served and more about how actually can we take care of what's left. Now, I realize you have problems in marketi~ what's left, but it would appear that we're being --- I don't know --- that we're excusing ourselves too much when we spend so much time dwelling on that point. MR.GILES: Well, Senator, I'm sorry, but I have to take total issue with you on this point because --- let me explain my view on the point. SENATOR PALMER: we could --- Ail right. If yodd rather, Mr. Burrell, urgently MR. BURRELL: Yes, unless somebody/has to leave'and can't , possibly come back, I'd like to take. a fifteen minute intermissio: right now and then resume --- give you time to think of an answer;..a~us.t.'~'reserve the question --- (laughter) --- (OFF THE RECORD) (ON THE RECORD) · MR. BURRELL: The meeting will be convened again. I think we'll see.if we have any questions. Do any members of the Committe~ have any questions they want to ask of any of the witnesses that have testified? MR. MARSHALL: Yes. My name is Tom Marshaii; I have a COURT REPORTERS 277-4713 AGO 851~59 .g · 8 10 11 12 .13' 14 15 17 18 19 21 22 23 25 Page 5 6 question for Bart Giles. It worked out fine; you're still here, Bart. I take a little offense in your remarks about comparing the gas in the 'coal mine and the safety aspects~.to'~,our"'Kenai Penin- sula gas. I presume that your comment there was directed at its combustible nature in the coal mines. merely MR. GILES: Right. I was just/trying to give a perspective on the types of gases we can encounter and where. ' · MR. MARSHALL: But none of our gas is produced as a combustible mixture. become'c6mbustible. It has to be ~ixed~.~with air in order to MR. GILES: .That's true. MR. MARSHALL: This point you al.so mentioned ?bout the . water content, the. moisture vapor in the gas, I believe that '~' every installation on ~he Kenai Peninsula'!.~.that?Produces ,merc~antible'gas that water.in some percentage is removed by glycol ex~raction? .... ~ MR. GILES:'- Yes. MR. MARSHALL: And this 'is something that is ---'because of the uolumes that are handled is a relatively simple process?- -MR. GILES: Y~S. MR. MARSHALL: The interruptibility of the gas, we know is that the stream has been interrupted,{,~'h~t/the flow of casing head gas, and I notice in your Exhibit #~fl~m that particular , platform, your Baker platform, tha~ you~ oil production has at remained/above the four thousand barrel a day rate bhroughout & R COURT REPORTERS 277.47~3 ANCHORAGE, ALASKA 99501 AGO 85[~60 Page 57 ,. 4 10 11 12 13 14 15 16 17 19 20 21 9.9. 9.3 9.5 '67, '68, '69, '70, and I'm wondering if a ' if it was necessary for a contract not to be interrupted if this wouldn't be a strong factor in the contract not being interrupted, that --- especially if a number of platforms could be linked~with lines that a cgntin~ity could reasonably expect, to be ~respected? MR. GILES: Yes.. Of course, the production plot on there is on a monthly basis, I believe, but there could be times during a month when there' was total interruption. In'other words, that's a smoothed out curve. ' MR. MARSHALL:. If it is a single, platform curve, it would indicate to me that there was casing head gas produced each day in this period.. MR. GILES: We~l, that isn't necessarily t~ue, no, because that's a plot' on a monthly basis which would assume everything ,we"ve produced in the whole month, and this is not true. This is an average for the montl~y.,.~period in which production did occur, either twenty days, or twenty-nine days, or the whole month. -- 'MR. MARSHALL: "I see. · e MR. GILES: It's a monthly plot. , MR. ~RSHALL: HOwever, if. we averaged all the platforms · on Middle~rouhd;i. Shoal, it would probably be. quite unlikely that .in a single day there wouldn't be any casing head'gas produced. MR. GILES: Well, I have interestingly enough a tabulation . here which I'll,-~igive you on gas interruptions from platforms to shore'for the period from January '68 t~r°ugh. No~ember '70, almos · R & R COURT R~PORT~R$ cz. w~ ~,o.~. ^v~u~-- ~u,~ · AGO 851461 277-4713 ANCHORAGE, A~$KA g9~Ol · . 8 10 11 13 15 17 18 ' 19 20 21 23 Page 58 a three year period, where frozen lines, leaks in lines, stuck pigs which we run through the ~nes, compressors down on various platforms, and this includes Anna, Bruce, Dillon and Baker, and in that particular period oD.time, which is about thirty-three..~. months, there were some 420 total days of down time. Let me hand this in as an exhibit. 'MR. MARSHALL: Would you want to submit that as an exhibit? MR. GILES: Yes, '~et!~ call it Exhibit ~7. MR. BURRELL: This'll be AMICO EXhibit ~7. MR. MARSHALL: Mr. Giles, on last point on that inter- ruptibility, there are I believe thirteen platforms, perhaps~h0ti~'a~l are of which/producin~ casing, head gas at this time. At one time I recall when there were about eight producing wells in the Kenai gas field; 'there were a few crises arose when --- because of individual well workovers or trouble with the dehYdrating plant. We werequite concerned, and I know Union Oil Company was more concerned that there would be interruption of the dry gas pro- duction that's used by the City of Anchorage; however, I don't . believe there ever has been interruption in that service.. My point is that~ looking at the.overal~ question with the number Of platforms, I would believe it would tend to average out' and · , eliminate'the interruptibility 'factor, and I realize this assumes pipeline , gas pipeline , ~terconnections. Another point, your Exhibit 95·indicates that after July 1 of 1991 fuel gas will be needed from another source. Could you R & R (~OURT REPORTERS 82~ WEST EIGHTH AVENUE ~ '~UITE · 277-47~3 ANCHORAGE. ALASKA ggZ;0! · AGO 85~62 Paga 59 10 11 12 15 17 18 19 20 21 explain your present planning on where you would get this source of gas? . ) MR. GILES: Well, we're not sure, Mr. MarshalI, ag this time;'we're really not sure...That's ten years down the line. I Of course., we'd like to plan mead, but.we"ye made no firm thoughts in that regard yet. MR. ~RSHALL:. Would it --- would there be any other alternative than bringing gas by gas pipeline from the shore or' from another platform? MR. GILES: Well, it's possible that at Middle~i~ound Shoal we could use the shallower gas sands as a make-up source of supply. We think at the moment .that that's probably the route we'll take there, but on Granite Point I'm not sure yet. MR. MARSHALL: But it would' either have to be from a --- in reaching this gas source below your platform development area or brought by gas pipeline from the shore? · MR. GILES: That's correct ...... · -. .. MR. MARSHALL: I ha~e another question here. You. threw out a figure of thirty-eight per cen~ of the casing head gas , still being aVailable. Was this for a particular platform or for your joint --- all your platforms? .. MR..GILES: That figure w~s tied, to the excess gas we're \ not reusing on the combined Baker and Dillon platforms. And then I' had a figure of thirty-seven per cent 'which was the correspondi~xc figure for the Anna-Bruce combined platforms in Granite Point. ~ R COURT REPORTERS B2~ WE~T EI(~HTH AVENUE-- SUITE Ii ANCHORAGE, A~ 9~01 Page 60 10 11 12 13 14 15 16 ' 17 18 19 20 9,1 29. 25 MR. MARSHALL: That concludes my questions of Mr. Giles. MR. BURl{ELL: Mr. Gilbreth, do you have any questions while we have Mr. Giles up here? MR. GILBRETH: Yes, sir.. Mr. Giles, could you give us some idea, and I believe this was testified to in one of the earlier hearings, about the cost to extract the Water from the gas on the east side from the Middle{kound Shoal field? MR. GILES: I don't have ~hose':figures'~aVailable. We have a man here who could answer 'that, I believe. .. MR. GILBRETH: I'm interested in the cost to pressure the gas and the cost to clean it up and get it ready for market. MR. BURRELL: Mr. Giles, if you don't have those figures here, I .presume you could get them for us , couldn't you? MR. GILES': Sure.-~could. I think 'that would be best. MR. BURRELL: We might hold the record of this hearing open --- / MR. GILES: Yeah .... MR. BURRELL: ---,fo~ a.few.days. As. for the number_of days,',we'll decide that later on perhaps. If it would help..you any. '- " MR. GILBRETH: The reason for my'questionning, I wanted tO try to elicit some information on'what'the relative, cost would be tO.put, the gas in a marketible condition. We hear that there's not a market. We know that .gas is selling down' there to the Anchorage Natural Gas Company; it's being used in R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE: ~ SUITE ~ 277-4713 ANCHORAGE. ALASKA ~9~01 AGO 851~6~. 10 · 11 -13 14 15 17 18 10 20 is being sold Anchorage; some is being sold to the City of Kenai; some/to the Tesoro refinery; and there are some~'local markets for dry gas. MR. GILES: Right.~ MR. GILBRETH: And I was just wondering what the relative cost would be to place this gas in a marketible condition. Now, you state that the Granite Point gas is being brought to shore, some of which is going back to the Dillon --- MR. GILES ~ ~ght. MR. GILBRETH: --- platform and some being flared onshore. MR. GILES: Th'at's correct. MR. GILBRETH: And I was wondering inasmuch as it is avail- able at some hundred and seventy-five pounds pressure,' I believe you s'aid, what it would cost to place this gas in a condition to be utilized. Do you have any idea at all? MR. GILES: It depends on how you want to utilize it; that's the point. Senator Palmer's brought up questions about the propanesand butane~ ahd~you mentioned apparently drying gas well gas. Why then you'd have' to boost it up to the pressure to get it £nto~.~a~line~ito be transported to market and so forth, so --- I'd like to do like M~..~'Burrell~,~'~sugges~ed and furnish you --- MR. GILBRETH: All right.. MR. GILES --- our economics of that. MR. BuRRELL: Mr. Giles, if I-may interject here, could , that breakdown in economics include first getting the water out of it and then second getting the butane and propane out of it, · R & R COURT REPORTERS B~,J~ WEBT EIGHTH AVENUi~- ~UIT~' I~ 277-471:3 ANCHORAGE. ALASKA B~50~ 10 11 19. 13 14 15 16 17 19 20 21 P~ga 62 and then compare the two, and h~w much of a job would that be? MR. GILES: That's quite a chore. We can do it. MR. BURRELL: You think that's quite a chore? MR. GILES: Well, we can do it. MR. GILBRETH: Well, sir, you obviously have made this comparison? ... MR. GILES: Oh, yes, we've made this liquid extraction business investigation three years ago, and mY only point was if that/it wasn't good then,'how is it going to be good now when we have less volume. MR. BURRELL: Well, why don't we just get a copy of what you did then maybe. MR. GILBR~TH: Okay, this way --- MR. GILES: Well, now, wait a minute; we've got a little problem here. This is proprietary because it was done for not only the Chakachatna but another group, and I think we expressed at that ~ime that we prefer to keep it proprietary. MR. GILBRETH: Let me ask you a-direct question then, Mr. Giles. If there were a w~liing purchaser willing to take. your ., present production on the shore in its interruptible state for .. so'long as you have it freightable as excess, would your'company be willing to sell this gas at some price? · MR. GILES: Exactly. Where are ~hey? MR. GILBRETH: I merely wanted to get it in the record. MR. SILES: Well, I'm glad you did. R 8~ R COURT REPORTERS S2~ WEST EIGHTH AVENUE- SUITE B 277-47]3 ANCHORAGE. ALASKA g~)l~01 AGO 85.[ 4.66 10 11 12 13 14 15 17 18 19 20 21 22 23 25 Page 6 3 ~. MARSHALL: I have a'question relative to this particula~ point. You mentioned your study on the liquid --- the marketibil~ty of the liquid was three years ago or --- I'm not saying that quite the way you did. MR. GILES: We've looked at extraction of liquids from this wet produced gas three years ago, putting a plant on the , beach on the east side, and as I said in my direct testimony, we lacked the volume .to find this was economic. On the west side they have such an extraction plant because they have the Volume to make it. economic. MR. MARSHALL: 'Is there any question in. your mind --- I'm sorry, this is a.-10aded question;.I should rephrase this. There is sold.in Alaska liquids from casing head gas at this point on the Kenai Peninsula; this happened in"the last two years. I'm thinking .~hatlpossibly any marketibility studies should certainly be updated to 1971 in light of the sale of the liquids on the Kenai. In other' words, there appears to be no ~estion that -' there is a market for these liquids, that there are people willin< to handle~them, transport them, and store them and sell them. ~R%' GILES: May I get something from my briefcase? (Pause) Two years ago we --- I have' a list here~-it's about six pages long--of all the contacts that our gas'people have had with various people who say,..well, ~I'd like to look into, to investi- gate the taking.the propanes, the butanes, or your casing head gas, we'll do something with it, various outfits,.tand I make · . R a R COURT REPORTERS AC~ 85[667 82~ WEST EIGHTH AVENUE- ~UITE ~ 277-4713 10 11 13 14 15 16 17 18 19 20 22 9.3 25 Page 64 particular reference to a Northern Gas &~Oil Company, Incorporated two years ago, February of '69. We wrote this gentleman; his name is James R. Henderschott. He inquired as to the availability of casing head gas from our platforms for use by a plant for the extraction of propane gas, and we wrote and said that there are two factors that make it a little unlikely that we can't, reach agreement that would be satisfactory to both parties. First is that to avoid interference with our oil producing operations we'dl have to have a contract that would be interruPtib~e on the · delivery, add the second is the amount of gas which .you indicate'?' you mi~t purchase would not be all of the gas that we would have available, and if we entered into a contract for just a portion of the available gas, it migh~ impair our ability to find a . market for the balance. And if you feel you could rely, we said, upon an uncertain gas supply in the operation of the propane extraction plant, we would certainly like to discuss the possi- bility further with you. We haven't heard a word. Two years ago And I'm just,:~saying that if this didn't interest him thee, bow's 'it going to interest him now when we hav~ less volume of gas · available~ and next year we're going to have less. yet, and we're on the downhill side of the producing gas Curve. MR. GILBRETH: Mr. Giles, your Exhibit #5 shoWs that your~ that present forecast/you'll produce more than your estimated two year= ago and that you'll need a little'bit more. MR. GILES: Well, I would --- 82.~ WEST ~'~GHTF.I AVE~NU~--- B, UITI=' ~ 277-4713 ANCHORAGE. ALASKA {)9~501 AGO 85.[468 10 11 13 14 15 17 18 19 20 21 9.2 23 24 25 Page 65 MR. GILBRETH: I thought your testimony was to the effect that you'd have about the same amount? MR. GILES: Well, you're picking out Granite Point. I was really referring to MiddleGround Shoal when I said that, Gilbz~th. MR. GILBRETH: Pardon me. MR. GILES: But when we get the water flood.in operation this summer at Granite Point,. we're going to start down on gas production there too. MR. GILBRETH: All'right. Mr'. Giles, I believe that letter you read there indicated that you wouldn't be interested or your company felt they might not be interested in contracting or makinc agreement for part of the gas because it Would impair your abilit' to market all of it. It is true, I guess, that you have not been able to market any of it? MR. GILES: That's. correct. MR. GILBRETH: Okay MR. GILES: And we would --- might reassess our position . . on that now. MR. GILBRETH: Well, we've had a complaint from this gentleman that your company would not negotiate on this, this is Why I ask. I'd like to ask, Mr'. Giles, --- the question was raised~iby one of our representatives or senators over there about the injection of gas. Could. y~u tell. us..what-the relative recovery would be, ultimate recovery of oil, under a gas injectiol · · . R & R COURT REPORTER~ 277-47~3 AN=HORAGE. ALASKA 10 11 13 15 17 '18. 19 20 9.1 9.2 25 program as compared to one under a water injection program? Do you have just some ballpark answer? MR. GILES: Well, I want to see if we didn't cover that at a previous hearing and be consistent. (Pause) MR. GILBRETH: Just as a rough rule of thumb would ~u say it'd be four or five times greater than it would be by a gas injection? MR. GILES: I'd like to get the figure. I'm sure I have it in here, Mr. Gilbreth. I'm sorry to hold you up, but -- (Pause) Well, I don't find it, but I would say certainly three times differen~. MR. GILBRETH: If my memory serves me right, I believe your testimony was to the effect that it would cost about nine times as much to inject' gas as water. · . MR. GILES: Well, tha~ was on one of the platforms, but I would say roughly twice as much,.as I explained in my direct is testimony that the compression equipment/generally twice"as much . . as the injection, pumps for water. Not per unit volume now. I'm · . talking about so many injection pumps that are~.~needed for water. flood versus so much"c0mpression equipment needed to do the job- . with gas; it isn't one for one. MR. GILBRETH: While we have an~O.CXI) representative here, I'd like to ask ;~r. Swan if he could tell us what portion of the .statute,~u see the trouble in where the compar~would be classed as a utility if they. sell gas? & R COURT REPORTERS B21:I WEST EIQHTH AVENUE- SUITE[ ~ 277-4713 ANCHORAGE, A~S~ ~9501 10 11 12 14 15 16 17 18 19 20 21 22 Page 67 MR. SWAN: I have it here. It was passed last year. It's the General' Utilities Act, and quite fankly it's a little ambiguous. We weren%sure whether they intended to make this kind of production a public utility --- I mean this kind of a producer a public utility or not. As a matter of fact, there's a very good constitutional question as to whether they can. Ail I'm saying is I don't want a lawsuit on it. We're going to interpret the law as thought.s, it does make us a public utility and get the exemption if we make the sale because there's.not enough involved to have a lawsuit over .it. So as long as the question exists; we're just going to in effect comply with the law and not Pick a fight with anybody. We're going to --- UNIDENTIFIED VOICE: Do you know which ~AS it is? MR. SWaiN: Here's the.deal. It was .... well, it was a Senate Committee substitute for House Bill Number 202 so I guess it was the House Committee substitute of 202, and I do not have the~n~olled act, but it was a .general revision of your Alaska Public Service Utility Law, and it --- I'll be happy, if you'll let me do what you let'Mr. Giles do, to cite you book and page. MR. ~LBRETH: Ail right., thank you. Mr. Burrell says that we have that information. Mr. Giles, in the Middie¥~ound Shoal pool there are two lines~.~that goto-shore, two sets of lines, one the old line from.the Shell platform and one the new or Dillon. MR. GILES: Yes. MR. GILBRETH: Are the lines f~om the Shell platform ~apabl~ & R COURT REPORTERS WEST F. IOHTH AVENUK- SUITK I~ ANCHORAGE. A~SKA 9B~OI ,' 8 10 11 12 "13 15 16 17 '18 19 20 21 22 23 25 Page 68 of carrying gas t6 shore? · MR. GILES: No. MR. GILBRETH: Why not? You have two lines', do you not? , MR. GILES: Yes. I suggest Shell answer that. MR.. GILBRETH: Ail right. when MR. LOGAN: Yes.'. The reason was that/we Originally planned the lines, they were designed to carry both oil and gas; however, when we --- MR. GILBRETH: Could you speak up. a little, please, sir. MR. LOGAN: Yes. When we laid the lines and we determined the bottomhole conditions, we also determined that the rock--- bottom was quite rocky, and it --- the current forces against the pipeline would reduce --- 0ri increase the stresses on the · pipeline, and therefore because of this increase, in stress which reduced_the safety factor, and therefore we could not'--- we did not feel that we could ship gas in those pipelines continuously and safely. MR. GILBRETH: In the newer lines though .you do'.have One line that you could move gas ashore from the Dillon platform? MR. LOGAN: That's correct. MR. GILES: Right. MR._.GILBRETH: Thi~ would ~eave then under your present hookup in the Middle~round Shoal three platforms that could not move gas to shore? · MR. LOGAN: Oh, no. Ail the lines could move gas to &'R COURT REPORTERS $2tS WEST EIGHTH AVENUE -- SUITE ~ 277-4713 ANCHORAGE, A~S~ 995Oi AGO 85/~72 Page 69 shore from B, A, C, D to~'shore. MR. GILBRETH: The lines are available in the loop? . MR. LOGAN: That's correct. MR. GILBRETH: I'd like to ask Mr. --- well, I'm sorry --- MR. BURRELL: I have a question.for Mr. Giles. I believe in a.~field recently $ .your company' recently discovered or a major operator~iscovered ' Basin 7 east of Denver in. the Denver-Julesberg ~during the last few months? MR. GILES: Yeah, Reoria~ Field. 10 MR. BURRELL: Peoriai!Fi~Id. Ira's my understanding that 11 the Colorado Oil & Gas Conservation Committee recently restricted production from that field to eliminate flaring of casihg.~head~3~ 13 gas. I understand'it's for --- ' 14 MR. GILES: Pending .... 15 MR. BURRELL: Pending --- 16 MR. GILES: --- the. complet~on,~f a gas plant. " 17 MR. BURRELL: Pending construction of a liquid extraction 18 plant. 19 MR. GILES: Right. ~ 20 MR. BURRELL: Ail right. Isthat analagous to what we~.re ~1 talking ~out now? .Could you explain to us why we shouldn't do ~ ~ 'the same thing so we'll all understand it? MR. GILES: Well, --- MR. BURRELL:, . Or do you think we should? 25 MR. GILES: For one thing, there's a substantial· volume R &'R COURT REPORTERS B25 WEST EIGHTH AVENUE -- SUITE 277-47~3 ANCHORAGE, ALASKA AGO 851.4.73 10 11 12 13 14 15 16 17 18 19 20 9.5 O1 Page 7 0 of produc~ '...~iS~ 'isa very rich gas, nine GPM~ and there's a ready market for the products from this plant, the butane gasoline mix and the propane, and there.~s~,a ready market for the dry residue gas with Colorado Interstate or Panhandle Eastern There are several pipeline networks, one of which runs within three miles of the field, interstate'line, so this is the thing; you have the supply and demand that has equated very rapidly right there that we don't see here in Alaska yet. This is not to say that we will not. see it someday, but~we don't see it yet. So essentially then, as I understand it, MR. BURRELL: it's market --- MR, GI. LES: MR. BURRELT. the market? MR. GILES: Ready market, close' to a market. The same thing could be ,:donei~he~e if we had Yes, sir. MR. GILBRETH: I have another question, M r. Giles. This , might apply to the Shell witnesses. I wonder if any of you can give us any idea of what the increased cost per barrel of future oil would'.be to put the gas back in the ground or back in the reservoir? I'm speaking now in terms of future ultimate recovery ,. that in the Middle{.G~ound Shoal.pool, for example, ar~/divided..into, the. cost to .put all'the produced or excess,~as back in the ground. .. Could you give us any idea, anybody, of what youJd be looking at in terms. Of cents'per, barrel or dollars per-barrel?' MR..GILES: Well, that'd take a full economic analysis to & 'R COURT REPORTERS 82~ WEST EIGHTH AVENUE.~ BUITE D 277-4713 · ANCHORAGE, ALASKA ~501 10 11 12 13 14 15 16 17 18 19 21 22 ~3 24 25 Page 71 run something like that. Not off the top of my head, no. But it was again as I answered I believe/Senator Palmer, it isn't going to work here; that's all there is to it. It's going to mess up what we expect to be a pretty nice little water flood. You're alreadY seeing the responses from the curve we showed you, and to solve one problem by hiding the gas and then create a worse problem by messing up a flood, that doesn't make sense. I mean we're talkin¢ about practicalities here, practical resolutions, and like I told you at the end of my direct testimony, I'd love to be able to tell you we're using every cotton picking last cubic foot of gas, but we can't do it. MR. BURRELL: Can I interrupt here? Mr. Giles, can you tell me how we left the issue of your providing the cost of · knocking out .the water from the PrOduced gas? How did.we leave . that? I wasn't sure the way it was left, but I was 'I was interest -. in that. · MR. GILES: I'm going to give you whatever I can'give you -'here. I'm going to try to make it very subs'tantive. MR. SWAN: Mr. Burrell, this is a l~wyer's problem~. Some of this information that,we've got'is confidential and we're not ,, at liberty to release it, and quite frankly marketing is a very touchy subject anyway, and a, lot of the information that you're having given to you today is information that the operators can,'t even exchange among themselves. the MR. BURRELL: We're not interested in/marketing aspect. · R & R ~OURT REPORTER5 ~77-4713 AGO 851%75 ANCHORAGE, A~S~ .10 ¸12 13 15 18 19 2O 22 23 25 Page 72 We're interested in the fiscal costs of knocking it out, not whether you'd make any money or not on it, just how much it costs to knock the water and the ~iquids out of it. MR. SWAN: But you can't separate the cost of'getting this~' gas ready for market from the marketing problem. I mean that's what determines ~hether you can market it. We~Will give you everything we can and what we can't we'll try to explain, to you why we can't. MR. MARSHALL: Mr. Swan, in that analysis or whatever you'r · going to give us,. if you.could furnish us with'a comparison with the opera.tion~,~that is producing LPG in the Swanson' River field and also in the framework that there is dry gas being sold Greater in the/Anchorage-area, it would be helpful. I 3know this is a · ques'tion that is always'asked; it's a question that's asked, us. MR. SWAN: Will you repeat that? MR. MARSHALL: If you're going to start --- if you're going to start on-~that~'~project, you may really make it meaningful, if- you can compare it to.some existing marketing situations. MR. SWAN: Well, we are not an operator in the Swanson. River field, and I ~oubt ~very much if the i~formation.necessary to make the kind of study you want, would be made available to us. I think you have to go to those opera~ors to get that information. I don't think we can do it. And the same thing wi~h respec~tto the marketing of gas in Anchorage; this is proprietary.information that those people have as a part of their R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE -- ~UITE ~ 277-47~3 ANCHORAGE, Al. ASEA 99501 AGO 85~4.76 9 11' 12 13 14 15 16 17 18 19 20 '21 22 23 24 25 Page 73 business, and I don't think it's readily available to. us. .You're asking them to give away their --- give us something that they've paid a lot of money for. And I think it's available to you perhaps if you can show that it is necessary.. · MR. MARSHALL: We're trying to get some testimony in ·the record because we write our order on the basis of testimony. MR. SWAN: Well, I appreciate it, but I'm trYing to point out that When you get into this marketing basiness, it isn"~ ~like ® exchanging logs and other things; we can't exchange that. It's just not available to us. MR. MARSHALL: You're more in ~hg~.marketing business-than we are'. MR. SWAN: Well, we get into it here;, we Just can't exchang~ this. ,, MR. BURRELL: Do you have anymore questions? We have a question over here. Senator'Palmer? I am. extremely perplexed now. SENATOR.PALMER: Mr~ Burrell, this --~/it would appear this whole thing is an.effort in futility. If our testimony is that there's'.no market, the market' is not there because their costs 't'tell you what our costs are, then are too great, but we won.. h6w are you to adequately judge whether there is a market o~ not? I think that"s what this ~whole thin9 is about. I would suggest, that we have to find some way to find these answers if you people are going to ser.ve your job at all or do your jobs at, all. R & R COURT REF~ORTER$ B2~ WEST EIGHTH AVENUE ~ SUITE 277-47~3 ANCHORAGE, ALASKA 99;;0! AGO 851677 10 11 12 13 14 15 16 17 18 20 21 22 23 24 25 Page 74 MR. ~URRELL: Well, I agree with you, Senator Palmer; 'it's a very difficult question. We can look at the market our- selves; I don't think it's our job. ' SENATOR PALMER: Oh, but I believe that it is your job for you to decide whether or not we can allow.this to continue to.be flared. That's the whole subject of this.hearing and has been for lo these many years at hundred and twenty day intervals' as this permit is reissued and reissued and reissued and reissued and yet the whole basis is no market. And I contend that when on~ man can sell this material at wholesale at two cents a_gallon and yet on retail in that area it's being sold at'.somewher~ , between sixty and'seventy cents a gallon, there's a tremendous spread somewhere. Now, again it is my contention that our. market might be tremendously e~panded if the retail price' were t~-go down to forty cents instead .of sixty cents, but until we've looked into this part of the thing, whether these costs are justified, whether, these prices are justified, we can't really- decide whether.there's a market or not. Now, I can understand .. the position of the industry as it is here Until it comes to'the point where we're saying we will not tell you what'it costs us to puti:this,~on.~,.the market as far as stripping costs, that is knocking.out the'water and the liquids'and so on and so forth; when we get to that. point, then I do have to take issue, and I believe the State's in a position that.they can demand this information; I think they have to. R & R COURT REPORTERS 015 WEST EIGHTH AVENUE -- SUITE ~l 277-4713 ANCHORAGE, AkASKA 9950[ AGO 851~,?8 10 14 15 16 17 18 19 20 9.5 Page 75 MR. BURRELL:. Well, I can see the legal restrictions, Senator Palmer, on them giving this proprietary information; however, I'm still inclined to want an account of the cost of knocking the 1,iquids out of this gas. SENATOR PALMER: That's what I'm talking about'. MR. BURRELL: If they can't do it,I assume we'll have to . find room in our budget to hire somebody to figure it out our- selves. SENATOR PALMER: DO you not have other confidential information? MR. BURRELL: Yes. The only confidential information that' , we have that is protected by statute.is .geological information. SENATOR PALMER: Then dO we need perhaps to give you statutory rights --- MR. BURRELL: I certainly Would not want to become, a rate making.body, and we're coming' halfway there,I'm afraid, by your proposal. I think we need a rate making body that should, have access to confidential information. SENATOR PALMER: I'm not asking you ~to make rates. asking you if you're in a position to get the information? · MR. BURRELL: No, but the economic, analysis --- due to ' the.rate making body. SENATOR PALMER: Okay. MR. BURRELL: Yes, Representative Rose? REPRESENTATIVE ROSE: I have another point here. The R & R C:OURT REPORTERS SZE~ WEST Ei(~HTH AVENUE -- SUITE S 277-471~ ANCHORAGE, ALASKA. 99501 10 11 12 13 15 16 17 18 19 20 21 Page 76' testimony that was given awhile ago which was already pointed out that we're told that none of'thisgashas been[ marketed and therefore i~'s necessary to flare it because there was no market. · Then the customer comes along and says' I'd like to buy part of if, and he's told, no, we can't sell you part, of it because that would impair Our ability to sell the rest. Well, this would be an inconsistency there because in order not to sell a part of it, we're going to waste'all of it. Now, the second thing/was --- that I would like to have an answer to, I'm wondering, the statute at this time makes'the wastage -- permits depending upon the regulations that are written, and. I'm wonderinc what the industry could tell us the result would be in terms of either operation', dollars and cents, if the stop~age of the wastage were mandatory. (OFF THE RECORD FOR CHANGE OF TAPE.) MR. BURRELL: This chart may be of some interest; we pre- pared this with this in mind. the effect MR. GILBRETH: This is essentially a chart of/that we State would have on/i-~C~e; if the Committee as~.a result of this hearing were to decide that a certain percentage of gas reduction flaring ~.h~l~ take place and up to a hundred per cent. Now, we've h~d to make some curves on wells that could'not be prorated because of water production and repressure maintenance projects that wouldn't be feasible at all, but the long and the sho~t of it is that there'd be a certain level of production that would be R & R COURT REPORTERS 82,~ WEST EIGHTH AVENUE ~ SUITE 277-4743 ANCHORAGE, ALASKA AGO 85148O l0 11 12 13 14 15 16 17 18 19 20 21 22 23 , ,, Page 7 7 produced and all the gas utilized, and then beyond that there's a certain amount to flare, 'and if we were to order the flaring to to be reduced the amount that's flared/be reduced fifty per. cent, this would result in a reduction of about $900,000 in incoml per month. REPRESENTATIVE ROSE: I'm sorry, but you're not speaking in terms of it in income out of the oil? MR. GILBRETH: Yes, sir. REPRESENTATIVE ROSE: But --- MR. GILBRETH: It would require a reduction of oil volume to keep the gas from being.flared. REPRESENTATIVE ROSE: That was not my question. MR. GILBRETH: Oh, I,m sorry. REPRESENTATIVE ROSE: Stopping the flaring could be done by marketing, by selling, by storing, 'by any other means, --- MR. GILBRETH: Yes, sir. REPRESENTATIVE ROSE: --- which, would still permit, the oil production. MR. GILBRETH: Yes, "sir. REPRESENTATIVE ROSE: Now, the net result would be onW of dollars' and cents, some economic cost to the industry either selIing their propane and other products at a certain price, maybe having a certain loss or whatever, and that's m~question.~,~;~ but I don't believe any of you a~e in.a position to answer that. MR.' GILBRETH: No. This is the other side of-it. If the · R & R COURT REPORTERS ' 6~.~ WE:ST E:IGHTH AVE:NUE -- SUITE: 5 ANCHORAGE, AhS~ 99501 Page 78 10 11 12 13 15¸ 16 17 18 19 20 21. 22 ~ 23 24 25 operators don't dO something, and we're'forced to stop · it, then this would be the effect, in..other 'wOrds` by'proration, · I but I'm sorry i didn't understand your'question· R~PR~SENTATIV~ ROSE: I 'm talking about if the industry. wereto stop it, --- -_ MR. GILBRETH: Yes. REPRESENTATIVE ROSE:. --- and then no matter what you do,' whether you store it, sell it, do something else with it,.,-~. '. MR. GILBRETH: We call %hat utilii'zing it.- . .. ~' ' REPRESENTATIVE ROSE: Right. MR. GILBRETH: Somehow. REPRESENTATIVE ROSE: Then what ,would be .the result? Suppose we pass a law tomorrow saying'.it's no longer'permitted; it's mandgtory? MR. BURRELL: Well, this is what would happen: they have nothing else they can do with it right now; they'd have to shut the wells in. REPRESENTATIVE ROSE: Al~owingc~them~of course --- MR. BURRELL: A proper --- R~PRESENTATIVE ROSE: --- a time in which to get in gear. MR. BURRELL: Allowing a certain time. REPRESENTATIVE ROSE: 'Not from one day to the next, of course. MR. BURR~LL: Well, you're asking the economics of utilizin gas; that,s'your question, --- R & R COURT REPORTERS 825 WE~T EIOHTH AVENUE ~ 277-4713 ANCHORAGE, A L.ASF~% Page 79' 10 15 17 18 19 21 29. REPRESENTATIVE ROSE: Right. ~MR. BURRELL: --- what it would cost per barrel. ~,REPRESENTATIVE ROSE: To be told it's not economic to me doesn't mean anything unless we're given some figures, you know. It~.s costing --- in order to --- we can market it at fifty cents; it'd cost u~ sixty c~nts to produce it; we lose ten cents'. Then you know we've got something to figure with, but just to be told. it's~uneconomic, that's asking us all to accept a conclusion which hasn't been shown'to be so. MR. BURRELL: Quite frankly --- REPRESENTATIVE ROSE: And I'm not denying the conclusion, but the conclusion is. not evidenced. MR. BURRELL: I agree with you. I-can only. conclude that under the free enterprise system if there was a buck. to be made by doing it, maybe they"d'd0 it. That's the one possibility; I' don't know t.hat. I'll tell-you one thing, if they came to me with any kind of a proposal that was even marginally economic,-- I would certainly if necessary go to the Legislature through.my boss the Commissioner and request that' we 'find some way to waive , the royalty and taxes if necessary on this gas if we could get is used rather than burn it.. REPRESENTATIVE ROSE.: But all I'm suggesting that.you..canno arrive at a conclusion unless you'.re given figures rather than a conclusion. , 'MR. BURRELL: Well, that's correct, but I3ve always had .. R & R C:OURT REPORTERS B25 WEST EI(~HTH AVENUE ~ ~,UITE 277-4713 ANCHORAGE, ALASKA AGO 85L%83 1 4 10 11 12 13 14 15 17 18' 19 20 21 22 23 24 25 Page 80 .great difficulty getting the economics out of --- REPRESENTATIVE ROSE: Yes. MR. BURRELL: ---,~ny business, whether it's a shoeshine Rose. Under the contract, the lease contract we operate under, The contract was entered into in good faith by both parties, and I do not think you can change that contract because I do not think we are required to gperate at a loss. REPRESENTATIVE ROSE: Companies tell us you would have a ! loss, but you haven't shown us you Would have a loss, and --- MR. SILES: Well, --- .. REPRESENTATIVE ROSE: then we don't know. --- until you show us the figures, MR. GILES: I have to apologize for not being able to get this information released. I quite frankly took it largely upon · myself to try to get 'it released, and I think we can get enough , 'information for Mr. Burrell so we can at least give some figures. The plant he talked about in Peoria in Colorado,~,~Pan.-American put it in so we know what a plant costs, and:Ii.think we can give you 'some economics that probably we couldn't give last time. MR. BURRELL:' Mr. Giles, by Pan American do you mean AMICO? MR. GILES: AMICO. Pan~..'American put it in, and we changed :~ii: ~" our name.after we put the plant in. I'm sorry, we just changed R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE -- BUITE I~ 277-4713 ANCHORAGE, AL~WSKA 99t~01 AGO 8514.8 ,10 11 12 13 14 15 16 17 18 19 2O 21 23 25 Page 81 our name February 1st, and I can't remember who I'm working for. MR. BURRELL: Are there any other questions of any of the witnesses that have testified, to date On the east side? MR. GILBRETH: Yes, sir, I have some for a Shell witness. MR. BURRELL: Ail right, Mr. Gilbreth. Who do you want? MR. GILBRETH: Mr. Logan and Mr. Casparian. Mr. Casparian, --- is that right? MR. CASPARIAN: That's right. MR. GILBRETH: On one of your exhibits you showed the volum~ of production and the usage in the MiddleGround ShoaL, and.if my memory serves me right I think you were show'in~ a usage of around 3500 ~C2~.' a day with 650 or so eq~ivalent~;'vapor system, giving about 4101M¢~ per day Utilized. I'd like to ask you are,these figures comparable to figu Ms that your company file~ with the Oil & Gas Conservation Committee each month? MR. CASPARIAN: No, they're not. The difference, the only difference, is'of-liquids o~ equivalent gas that was'reported in Platform A of 100 M~2~,liquid recovery system' of equivalent gas , on C which was also 100 ~C~, a~d in.addition, to we-did not repDrt in the past the processing facilities onshore or~3 the fuel gas. .used onshore. This started out as a very small.quantity, and through an oversight was'not reported in ,the past. ,. MR. GILBRETH: So roughly this would show usage, of some- thing in the order of 3000 ~.~E~. per day, Would it not? · . MR. CASPARIAN: That is true. & R COURT REPORTERS WEST EIGHTH AVENUE ~ SUITE 277-47~ ANCHORAGE. ALASKA AGO O 10 11 13 14 15 16 17¸ 18 19 20 21 22 23 25 Page 8 2 MR. GILBRETH: MR. CASPARIAN: MR. GILBRETH: Was this based on --- NO o --- some real recent data? You've been~ reporting to us around fifty?to sixty thousand per month which would be'about 2,000 ~C~ per day, this then.is a fifty per cent increase --- MR. CASPARIAN: Yes. MR. GILBRETH: --- in usage over what you've been reporting to us. MR. CASPARIAN: Well, this is not --- I should qualify here. This'gas usage is the maximum gas usage that we would be required to use for instance during a very cold winter?or when something went (inaudible) --- If we are to use it --- the fuel it gas that we use.~there,is, depending on the operation,/can go up, during a winter; it could go down' during the summer; and so this is not --- it's an upper average, if you like. MR. GILBRETH: I see, all right. That's what I wanted to reconcile because it was considerably.higher than the information available'to us. ... MR. CASPARIAN: Yeah. We report the exact gas --- the fuel gas used on the platform~,,based on the number of hours they're ?'operated during that month. MR. GILBRETH: I'believe you made the statement during your testimony that the cost to compress and dehydrate, the gas is . . high. Could you tell us how high? R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE ~ ~UITE ~ 277-4713 ANCHORAGE, ALASKA 99t~0I AGO 851~,86 \ 10 11 13 14 15 17 18 lg 20 21 9.2 , 9.3 9.4 9.5 Page 8 3 MR. CASPARIAN: Well, I can only compare --- give you very broad or very general numbers. The cost to compress gas could · vary an~here from one to three cents an ~. As I say, these are very general numbers. The.cost of a compressor is --- say for every ten million~feet of cub'lc gas we~.d'~require:.something like a two thousand horsepower~compressor. A two thousand korse- power compressor will run on~.the.'order of.':s~x~hundred.~'- dollars a horsepower installed on the platform; however, this does not include the cost to modify the platfo.rm at the present time. I mean if we~i~worked~wi~h.~'it out on the platform, it would require a .substantial cost,, and I don't have those figures, to modify the p~atform so we could install an additional compressor. MR. GIL~RETH: It would be possible then to modify the platforms to put the' additional compressor in? MR. CASPARIAN: Certainly. I --- let me go back on that. It is possible to get '' it is possible to modify the platforms. made I do not have an evaluation, rDr have/an evaluation that I can say, yes, you can do it, because it all depends on the forces or additional forces on the platform. Ail right' MR. GILBRETH:/ Mr. Logan, I believe you testified that you wer~ injecting about thirty thousand barrels of water per day in your fluid in~gction project. Would it be possibl~ to inject gas along with your water in the injgction stream~downhole? In , other words, something like a carbonated .flood?. MR. LOGAN: I suppose --- I suppose it is possible. Here R & R COURT REPORTERS S25 WEST EIGHTH AVENUE -- SUITE ~ 277-4713 ANC:HORAGE, ALASKA ~91~01 10 11. .12 13 15 16 17 18 19 20 21 9.9. 9.4 Page 8'4 again you'd need the same. comPressor that he was. just talking about and the same modifications to the platform to get the I compressor out there, and you'd need --- well, you'd need a very high injection pressure comparable to. your water injection pressure here. We ~..,are running somewhere around- 3,000 psi right quite now. A~ain, this --- we'd --- this woul'd not be/like a carbonate~ water flood; it'd be quite different. " MR. GILBRETH: Yes, I realize itiis. Do you know enough or not about the ~eservoir geometry:to know whether/the reservoir would even accept gas with your, water flooding? MR. LOGAN: We know enough about the reservoir geometry to know that the gas would cause severe cham~ng problems.- We have a layered reservoir; we already have some problems with the water channeling through the more permeable intervals, and this · would be greatly exaggerated with gas in the system. MR. GILBRETH: I'd like to ask if either one of you gentlemen are awa=e of your.company turning down anyone who · . wanted to bargain for gas that might be available? MR. LOGAN: No, .sir. .. MR. CASPARIAN: No. MR. GILBRETH: That's all I have. MR...BURRELL: Mr. Marshall, do you have a question? MR. MARSHALL: I have a question, of Mr.. Logan. Your Exhibits %1 and %4 included a projected production ~ate. MR. LOGAN:. Exhibit 91, as I said in ~y.testimony, is a R & R COURT REPORTERS 8~5 WEST EIGHTH AVENUE -- SUITE lB 277-4713 ANCHORAGE, ALASKA 99~0! 10 11 .12 ,14 15 16 17 19 2O 21 '22 23 25 Page 85 schematic diagram with rates comparable to what we're seeing at Middle~ound"~Shoal. ~. MARSHALL: My question is does the. Exhibit consider the the fact of the enhancement of the recovery from/water injection program that's currently in effect? MR. LOGAN: Yes. Well, Exhibit #l has nothing to do with Middle~ound Shoal per se; it's a model. This is a dissolved gas drive reservoir. Exhibit $2 again is a model. Exhi'bit is Mi~dle~i%kound.Shoal, and Exhibit $4 is Midd~ound Shoal. They do show the improvement in-the oil production. Exhibit does, and Exhibit 94 indirectly does in t'hat it shows the gas that is coming with the. oil-at a conatant gas/oil ratio. MR.MARSHALL: One other question, in the event of any other oil discoveries in the Upper Cook Inlet area which would be developed from any of the existing platforms or from new plat- , forms, would ~his enhance the disposition problem of the casing head gas? MR. LOGAN: I don't see how .it could. Any new oilfield will have its own casing head gas problems to co.pe:~with. MR. MARSHALL: But would not an. improvement in the gross amo~unt of gas in the Inlet sweeten up the economics of handling the problems? MR. LOGAN: 'If a market were to develop~,yes,. MR. GILBRETH: You want to take a little minute to think about that, and we'll change tapes. R & R COURT REPORTERS $~$ WEST EIGHTH AVENUE -- SUITE ~ 277-47 ! 3 ANCHORAGE, ALASKA g~501 10 11 · '12 13 14 15 16 17 18 19 2O 21 22 23 25 Page 86 (OFF THE RECORD FOR CHANGE OF TAPE.) MR. BURRELL:~ We're working again. MR. LOGAN: Okay. I'd like to come back to that question. , I believe it Would enhance or sweeten the pot in that you would have an additional supply which would make the supply perhaps more constant rather than interruptible as it is right now and possibly extend a longer period of time than it would. REPRESENTATIVE ROSE: ~ould it be possible for the gentle- men to speak louder? MR. BURRELL: Yeah. They 'can't here you over there. MR. LOGAN: Yes, a new discovery would add to' the supply if it were discovered now. If you had something say past 1981, which appears . to be the limit for us right now. MR. BURRELL: Mr. Gilbreth, you had a question? MR. GILBRETH: Yes, sir. I'd like to ask what would be - · , necessary in your opinion or what would it cost your company'-to or would it be possible to move your excess gas to shore~now if there were a market? MR. LOGAN: Well, I think the previous remark --- the cost is dependent --- the cost is dependent on the volume of com- pressed gas, of gas that we would have to compress. MR. GILBRETH: Well, if you compressed your. excess gas. ~" MR. LOGAN: Compression of. excess-.gas.could be on the order of a million, dollars or more, depending on the structural modi- fications that are required on the platform and if the.platform · R & R COURT REPONTERS .~ W~sT Z,~.T. AW~U£ -- SU,T~ . AGO 8,51490 277-4713 ANCHORAGE, A~$~ 99501 O . 4 10 11 12 13 14 15 16 17 18 19 2O 21 22 '~ 23 24 25 Page 8 7 will withstand another .compressor, the heavy load for an additional comPressor. MR. GILBRETH: You don't know at this stage --- MR. LOGAN: I do not know at this stage, no. MR. GILBRHTH: Well, then I don't, guess it would do/any good to ask if your company would be willing to sell gas if it was~onshOre then? MR. LOGAN: Well, certainly we would be willing to if we had a market, yes. MR. GILBRETH: But you don't even know. if you can get it . to .shore or not. MR. LOGAN: Oh, we do know we can get it to shore, but we don't --- I don't have an exact figure to tell how much it will cost us to get it to shore. MR. GILBRETH: Well, you have to have that. to know whether or not you want to sell it, wouldn't you? MR. LOGAN: That is correct. MR. GILBRETH: But you don't have that information? MR. LOGAN: Well, we do have that information, but it's '. part of a study that'was carried out sometime ago. MR. GILBRETH: With regard to the gentleman that AMOCO , mentioned'awhile ago, do you have any knowledge Of your company having turned that gentleman down, or refused to 'negotiate? MR. LOGAN:. I have searched through all our files, sir, , and I have not. found"any information on that.. · R & R COURT REPORTERS "~ ' -~'!' ~1 ,' , Page 8 8 10 11 15 17 18 19 20 21 9.9. 9.5 MR. GILBRETH: So you're not in a position to say that you could or could not negotiate for a gas sale onshore at this stage MR. LOGAN: Whether we are or not? MR. GILBRETH: Yes. Are you in a position to negotiate for a gas sale onshore? MR. LOGAN: ,Yes, sir. ' MR. GILBRETH: Thafs all I have. MR. BURRELL: .Mr. Casparian, is the big problem with the platform out there with respect to this mi~'tion dollars? tn other wDrds, if we filled the Cook Inlet in for you tomorrow so you can drive a truck out there with your compressor on it and just lay alongside the platform, 'how would that change the economics ? - MR. CASPARIAN: Well, MR. BURRELL: I'm not~ trying to be silly. I'm just trying to pinpoint is the platform the economic problem, your limited real estate out there? ..... MR. CASPARIAN: That is correct, and as' I say, I don't have --- I can't --- I don't., have the numbers to show; we~'re looking into it right now. · !, .don't have the numbers to point out. The design has not been finalized to the point that we can push in a two thousand horsepower --- an additional two thousand horsepower compressor or a four thousand horsepower compressor depending on the requirements of each platform. MR. BURRELL: Can you give me what it costs .to get the R & R COURT REPORTERS · . 10 11 17 18 19 21 Page preseD~ly flared casing head gas to shore from your platforms? Can..~you~.provide us that information if we hold the hearing record open for a period of time? MR. CASPARIAN: I' believe we can get general numbers, yes. MR. BURRELL: How much time will you need? MR. CASPARIAN: About a month. MR. BURRELL: About a month?. We ~have to write our order within a month~after the hearing, and that cuts~it a little' short. Well, we've got a month after the time we close, it, but the present order expires April 27th. I personally would think we could hold it open the rest of this month. MR. CASPARIAN: We can PrOvide you the numbers, as I Say, the general numbers and not the final say cost numbers, the · ballpark figures --- MR. BURRELL: Can you give us ---' MR~ CASPARIAN: --- in a shorter period of time,, yes. MR. BURRELL: Wel~, what numbers would you give~.~.us, at the.' end, of March MR. CASPARIAN: Well, the cost of compression, the modifi- cation for the platform, and possibly the additional costs that would, be to get this gas to Shore and to the bank. So it's --- ~ does require a study because it does invo.lve~other people's pipelines. We share our pip~lines f~m B all the way to --- to mean B, C, D, A and/shore, so it does present more --- we can · give you the numbers on the basis' that this is an idealized R & R COURT REPORTWR~ Page 90 10 11 12 ,: 19 2O 22 23 25 situation, but this does affect the Chak group as well if we tie up one of the p&pe~ines, but on that basis we can provide you with those numbers. MR. BURRELL: Could you provide us with the numbers for knocking the 'liquids out of it at the-onshore facility also? MR; CASPARI,AN: Very ballpark numbers again. · MR. BURRELL: Of course that would depend on whether or not you used your neighbors also, whether you joined in with the AMOCO and partners, isn't that correct? MR. RUDD: Again I was going to interject at this point what you've just mentioned, that there are --- in.working up the numbers and the costs on these things, there are other companies, both the Shell partners on their own lease plus the Chakachatna with group which is ¢oncerned als0/che same plumbing arrangements here, and as Mr. Swan has mentioned, there may be some problem in coordinating the figures between the companies and the release of figures. .... MR. BURRELL: Mr. Rudd, you're not just giving another reason why we aren't going to get the numbers, are you?. MR~ RUDD: 'No. MR. 'SWAN: No, I think what we'd like to say is that I think Shell and Pan American .could work tggether and give you --- ~LR. BURRELL: COnsider. this a formal request for them. · . MR. SWAN: All right. ! .MR. BURRELL: And I'll hold the record open through March . . R & R COURT REPORTER~ --, '~' Page - 6 10 11 13 14¸ 15 17 18 19 20 9.1 ~ 23 for the purpose of getting.those numbers. MR. RUDD: What I think we were trying to point out is the time necessary to deal with the other people that are involved --- MR. BURRELL: Right. MR. RUDD: --- in putting them together. MR. SWAN We have to touch so many bases to get it, that's 'what Mr. Rudd was trying to point out; but we will work it up just as quick as we can. MR. BURRELL: Good. Mr. Gilbreth, do you have one? MR. GILBRETH: The thing that kind of concerns me here, we keep saying that we,re trying to sell~this gas, and apparently nobody's worked this stuff up. You don't know whether you can sell it or not, do you?- This is what I keep running up against when I ask these questions. Nobody seems to know, you know, , about the valuation or what you could do with it. Isn't the information available somewhere? Wouldn't this be worked up? MR. GILES: Well~, let me ask you': where would you sell it if you were trying to sell it? We.'ve tried to sell it to. the Anchorage Natural;.'we've tried to sell it'to the Phillips!; people we've tried to sell i't~for use in the Swanson River field; and if the flare is there onshore, wa have some gas available. We have contacted the people that are in the business now of either using it or distributing it; and they're not interested. MR. BURRELL: Mr. Giles, that.question isn't as to whether or not you could sell it. Our question is can you get it'to s~or R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE ~ 277-47]3 ANCHORAGE, ALASF~. ~]950~ ~GO 851495 O 10 11 '17 18 19 20' 21 9.9. and get the liquids out of it and give us~numbe~ for that. We don't give a darn whether you sell it'or not right now. If we~can find out whether~you can get it to shore and. get the liquids out of it, we'C~anworry about whether or not it can be sold after we know that. MR. GILES: We've got some'to shore right now. MR. BURRELL: But with the liquids in it? MR. GILES.: Correct. MR. BURRELL: We'd like to know what it would cost to get it all to shore. SENATOR P.ALMER: Mr. Burrell? MR. BURRELL: Yes. SENATOR PALER: I think Mr. Gilbreth's questions 'are extremely relevant. How can we really say that we don't have~ market again if we don't know what it would cost us to get it If there? /We've never gone to that extent to find out what our costs are going to be, how can we really say we've tried.to sell it; how can we offer those~opie a price if we 'don't know what our costs~were...I believe this'is what Mr. Gilbreth's saying, and I think he's exactly right.' (INAUDIBLE COMMENT). MR. PALMER: Well, but if you have.'~mething teosell, don't you .usually find out what~ you can sell it for and then go out and try to find'a market for it at some figure above what your . costs are? . , ,o 1 10 11 13 14 17 18 21 Page 94 REPRESENTATIV~ ROSE': I had the impression that each was talking about its own cost of going through this process. MR. BURRELL: No, that --- I didn't understand it that way. I understand they're to bring in a joint effort on this. Not on the marketing, you understand, at all, but strictly on the getting i~to shore~and getting the liquids out of it, no further than that. REPRESENTATIVE~ROSE: I understand that, and the answer might be that if no ~e else would have it, perhaps the State · might be interested in going into business. MR. BURRELL: That's an idea. UNIDENTIFIED VOICE: We have enough problems already. MR.. BURR~LL: Do any other members of the Division of Oil & Gas have any questions of any of the witnesses, or have you already passed them along? Does anybody else in the audience have any questions of any of the witnesses who have testified : here at this time? RE~RESE~T~i~E. HUBER: ... I ldo (inaudible) --- to know, considering that if you'Can't' find a market for the gas, what it wou~d cost'per million cubi¢"feet to-store the gas, put it back in the ground wherever you..want to, -another pool,.whateve is most efficient; how much a million'cubic foot would that cost · MR. BURRELL: I thi~k the first question is whether or not. the space is available with which to store it in, and as I R & R COURT REPORTERS B25 WEST EIGHTH AVENUE ~ SUITE I~ 277-47 ~ 3 ANCHORAGE, ALASKA ~9~01 10 11 14 15 16 17 18 19 20 21 9,4 Page 95 one of recall some of the testimony in/the fiel~there, was no such pool available, no such reservoir available, inasmuch as all the reservoirs were already filled with ~luids, and by pressuring them up with gas, you might have a burst situation and have' gas escaping~.~to~.the....surface and pollution of the water and every-' thing ~lse. Now, I think that was presented --- UNIDENTIFIED VOICE: On one pool. MR. BURRELL: Right, --- UNIDENTIFIED VOICE: The one pool --- MR. BURRELL: --- that was the Granite Point.pool. MR. S!LBRETH: Might carry this just a step further. We worked up some information for Senator Palmer last year somewhat along this line, and there are no reservoirs in the Inlet where this could be done; and if my memory serves me right,it was around forty-four or forty-five cents an._ .we figured for this to be carried to the Swanson River field, even if necessary contractual arrangements could"be'made. This is just to.put it. in the ground. RE~~%~!.~i'HUBER: . How about back into its own formation, any figures on that? MR GILBRETH: No, we didn't because the engineering informatio indicates that this would reduce the oil recovery in the water flood project because' of channeling..' · 'HUBER: I wonder --- I have one more question. MR. GILBRETH: I didn't mean to answer their question. R 8< R COURT REPORTERS ~25 WEST EIGHTH AVENUE -- SUIT~ ~ 277-47~3 ANCHORAGE. AhASKA 99501 AGO 85~t98 Page 96 10 1! 12 13 15 17 18 19 21 9.5 REPRES~N~ATI%~E HUBER: I don't care which one of the oil People answers this. What would happen if it cost more to flare the gas than itdid to do something else with it? · MR. GILES: We'd do something else with it. REPRESENTATIVE HUBER:~ What would you do if it ~ost,~more to flare the gas than to do something else with it? MR. GILES: I don't know..".We'd have to find out what this something was that we could do. ~ REPRESENTATIVE HUBER: Well, anything that you can do ~that would cost less? MR. GILES: Well, it would depend on where you are. If it were in Cook Inlet, I' don'~!~t know offhand. MR. BiURRELL:Well, I think I '11 answer that question if I may speak for him. Shut-in the oilfield. If they could find nothing else to do with the gas that was cheaper than your penalt5 think they'd shut-in the oilfield; I don't see any alternative to that ..... REP~%ESENTA~LVE .HUBER:~ But'I doubt 'if that would happen if I could find the exact am'ou%t~ might continue to be .flared, but it might be pa~d,.~. I don't know, MR. BURRELL: It might be what, sir? REPRESENT;~T~VE 'HUBER:'~ It might continue to be fl~ared until somethin.c else could be done with it, but~ it might be paid for the flaring instead of just burning it. MR. BURRELL: Well, there's no question but what a tax or & R COURT REPORTERS WEST EIGHTH AVENUE -- SUITE · 277-4713 ANCHORAGE, A~S~ ggS01 , I 10 11 13 14 15 16 17 18 19 20 21 Page 9 7 a penalty or whatever you want to call it can be strictly imposed on the flaring. I wouldn't say legally, _ but I --- I won't get into that; that.,.s too complicated. There's no question but what but one could- be imposed/of course the practical effect of that is it moves directly into the cost of producing a barrel of oil; it amounts to an additional tax on the barrel of oil that's pro- I just want to point that out as the duced with that gas. practical effect. MI{. MARSHALL: I'd like to make a statement that deals on?the question thatRepresentative Huber asked about the · reinjection of natural gas into a natural reservoir. I think this study that Mr. Gilbreth, referred to was confined to known oil and gas reservoirs, is that correct? There is this at least theoretical possibility that there is what we might consider now a water reservoir'in ~he proper~structural environment very similar to the oilfield itself and very likely on the same structure which, if gas were injected into it, would depress.~'~ad. water' table and move the water down and create a space for the 'gas. I mean the assumption .... and here I'm throwing a rock at . some testimony here this evening-that injectiDn:;of gas into a · reservoir containing water would cause a ruptUre,isn't neces- sarily true because you see an example of it now in fields where we are injecting 'fluids into formations where the volume injected is at one time or other during ~he life of the field greater than the fluids which were'originally in there. I mean.this is a & R COURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE' B 277-471:3 ANCHORAGE. ALASKA 9~501 AGO 851500 3 , .10 11 12 13 14 15 16 1'7 19 2O 21 Page 98 reservoir mechanism which-if it works'for you , the water can move an oil, for instance, cap to a well bore and up the bore; likewise this thing can be made to reverse itself where oil or another fluid or for instance gas can move the water down the structure. This is a possibility no one has touched on. It's an unknown, and it would have to be determined experimentally if.t thing would work, but I don't think you could rule it out as a possibility. MR..$WAN;:r Would the State take the responsibility if one of these things? we do :upture /' If I may question Mr. Marshall, we don't have any evidence of water drive in.any of these reservoirs; there- . fore it seems to me that you're taking a terrib'ie unnecessary- risk. MR. MARSHALL:. But, Mr. Swan, have you tested formations in this vein which have not contained hydrocarbons? MR. SWAN: Well, it seems .to me that if the oil'bearing ... reservoir~ don't have any water drive mechanism, it'd he"fairly unlikely that anything but a shallow surface aquifer would have a water drive also, and I just --- the trouble with the test is that when you find out you're wrong~ ~he damage is done. MR. MARSHALL: Well, I would think in_light of the producti history and the knowledge we have of what our 'casi~g,,w£11'2. stand~: we're looking· at, as you say, the ihighest gas injection pressures that are commonly known in the oil industry are exceeded in the. Granite Point field, that considering a hydrostatic overburden R & R ~OURT R~PORT~RS 02~ W~$T ~IGHTH AVENUE ~ SUIT~ ~ =77.47,3 AGO 851,501 his )n 5 10 11 12 14 15 16 17 18 19 20 21 Page 99 which isn't too difficult t9 calculate, I think this thing ~ an experiment. Could be made - within proper engineering limits. This wouldn't necessarily involve the risk that we're assuming it does here, MR. GILES: You would have cne problemwith you in defining this reservoir you're talking about. There'd be little incentive to drill wells and to describe a water reservoir. You'd have to count on zones that maybe were partially defined by drilling for oil, and you wouldn't know what the limits of this reservoir were. MR. MARSHALL: That's true. It's unwise to drill, for water in oil basins, but if it was a necessity,.then it tends tO put a different light on it. MR. GILES: This just adds to the. economic disadvantage that we already see with what we have. MR. MARSHALL: I realize that. But what I'm saying is that I' think that~Ze/~Ssumptio~ made that t~.~ not.entirely correct that this'could not be done, witness.numerous gas storage pro- jects scattered all over the United States. · MR.. GILES: In depleted '.,oil or gas resergoirs. MR. MARSHALL: Not e~tirely. MR. GILES: .Well, there,s some in salt domes.. MR. SWAN: I'dOn't know of a single gas storage reservoir that's underwater, and that's Where we are; we're under the Cook Inlet. & R COURT REPORT£R$ BZ~ WEST EIGHTH AVENUE -- BUITE 277-47~3 ANCHORAGE, ALASKA 851502 I0 11 12 I3 15 17 18 19 2O 9.1 9.9. 9.3 Page 100 MR. BURRELL: SenatOr Palmer, do you have a question? SENATOR PALMER: Not a~question. I'd like some information that I think it not available here tonight but I would hope your Committee would b~ able to get this information. I think it's relevant to the entire picture. First of all, the capacity of -the liquid extraction plant in the Swanson River area; secondly, the operating level expressed in terms of percentage of capacity at the ~esent time for that plant; and thirdly, the approximate cost of a liquid extraction plant~ of a plant of that size, that capacity.%.'...~wo items 6f this information should be available through your records, I would assume, and the third.~one (inaudibl. MR. BURRELL: Does anybody else have any questions of any of the witnesses that testified so far? Does~anybody else want to testify on any of these fields on the east side'of the Cook Inlet with respect to any of the oilfieldsthat are moving their oil from the east side? If not, we'll move along to the west side of the Cook Inlet, that is oil going to the west side. , Before.we do that, I want to rea~ a couple of communications I've received which --- one of them ~elates to both sides, and one of them relates specifically to the west side, and I'd like to read them for the record. · First is a telegram from James E. Fischer, the.President of the Kenai Chapter of the Alaska Conservation Society, addresse to the Alaska Oil & Gas' conservation committee, c/o the Depart~ ment of N~tural ResOurces, Juneau, reads as follows= The Kenai , R & R COURT REPORTERS 82~ WEST EIGHTH AVENU~ -- SUITE 277-4713 ^NCHO~^~£.^~ ~o, AGO 85 Page 101 10 11 12 13 15 16 17 18 19 2O 21 Peninsula Chapter reiterates protest regarding waste resulting from flaring casing head gas. This waste is inexcusable for presentday economic reasons when other energy sources are repeatedly described as limited in supply. Recommend immediate curtailment leading to termination of such gross waste. The second one is from W. A. McBean, c/o W. A. McBean & Associates, Calgary, Alberta, Canada. It's addressed.to me, Chairman of Oil & Gas Conservation Committee, and reads as follows: Our clients Calgary Group willing invest $1,700,000 marketing two to four thousand barrels per day propane and pos- sible butane, five year contract, from West Foreland plant. Firm market available for Period to net back at plant for two cents, possibly two and a quarter cents, per gallon based on two thousan~ barrels per day, equal to approximately $600,000 per year at plant.For conservation residuals C-4, C-2, C-1 --- for conser- vation reasons, I believe that residuals is a typographical error --- for conservation reasons, C-4, C-2, C-1 should.be -. · reinjected until markets available. we will proceed with the testimony --- Mr..Giles? MR. GILES: Mr. Chairman, before you close, we have some · , extra copies of some of AMOCO's exhibits if any of-you gentlemen or any of the oil people would like to hav~ them. Why don't we leave, them until after the hearing is over.. MR. BURRELL:· All right. Thank you very much. MR. ~ILES: Mr. Burrell? & R COURT REPORTERS WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANC:HORAGE, ALA$1~ 9~05 AGO 851504~ O. 7 10 11 12 15 17 18 19 9.0 21 22 Page 102 MR. BURRELL:, Yes. MR. GILES: Oneadditional point, Request..for information along.with that ~.the volume~f casing head.~hat~are available from these east Side fields, (OFF THE RECORD) " (ON THE RECORD~ MR. BURRELL: The hearing is reconvened. We'll move ahead. with the west side of the Cook Inlet. Would everybody who ....... . ~peaks identify themselves before they do so so it'll make it . easier to figure out for the .record. And .we're going to ask that the witnesses who are going to testify perhaps all be identified and sworn in at once. MR. ANDERSON: 'Mr. Chairman, I am Robert T~. Anderson, , District Land Manager for the Alaska District, Union Oil.CompanY of California, 'and I have been asked by the operators on .the west side of the,I~ieti.~to act as a moderator, so I will introduce the witnesses, and make a brief opening statement. I'll. adjourn to the map here just one second. We have heard testimony to this point*i.'.dealing with the gas and oil production from'fields where the oil production end's up on khe east side of'the Cook Inlet.. From this point on, we will hear 'testimony from operators of the Inlet who send their oil to the west side of, the Inlet, eventuall, coming out at Drift 'River. To give' this testimony, we will' start with the south portion of the. G~anite' Point ~ield with testimony , to be'given by Mr. Van¢'e Porter of the Mobil Corp~r&tion'. .. & R COURT REPORTERS WEST EIGHTH AVENUE -- SUITE ~ ANCHORA(~E, ALASKA ~BZ;OI AGO 8515O5 9 11 13 14 15 16 17 18 19 20 21 22 23 24 Page 103 , Mr. Porter, why don't you come up, and then we'll get you all sworn in at once, introduce you and go from there. Moving south from the Granite Point,Oil Field, Mr. Ron Cook,Of Atlantic Richfield· who is operator of the west portion.:." of the Trading Bay .~ield's ~ortheast pool will testify for their platforms. Mr. Cook. Moving to the west of that, Mr. Fred wagner of Texaco, Inc. will give testimony'for their operation on their portion of the Trading Bay ~,~ield's Northeast ~ool. His testimony will.be followed by Mr. Bud Isaacs of Union Oil company of California. Who w~ll"offertteStim~ny::fo~..the.;!~Tra~in~' Bay ~ield, the ~onopod. This fellow's testimony will be followed by Mr. Jerry Diuer~'~. Marathon Oil Corporation,'who will give testimony for the McArthur River .~ield or sometimes known as the Trading Bay Unit. The.latter two fields, the Trading B~7 ~ield and the McArthur River ~ield, all put production ashore at a common · facility at'~the West Forelands. The other, platforms put their bit production ashore at just north and a little/east of Nikol~i . Creek. Mr. Burrell, would you like tO --- 'MR. BURRELL: Mr. Marshall will swear the-witnesses. MR. MARSHALL: Gentlemen, please...'~aise your right, hands. In the matter now appearing, do you swear to tell. the truth, the whole'truth,, and nothing but the truth, so help you God? .. R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE: ~ 277-4713 ANCHORAGE, ALASKA 99501 AGO 851506 1'0 11 12 13 15 16 17 18 19 9.0 21 9.2 9.3 Page 104 (Affirmative response from witnesses.) MR. MARSHALL: You may be seated. · · MR. ANDERSON: Mr.. Chairman, we ask that each individual witness who has not been qualified as an expert give you his· qualifications before he testifie~. Mr. Vance P~rter of Mobil. MR. BURl{ELL: Mr. Anderson, we'd like each witness, ~hether or~nOt<~they've been qualified before, to requalify this·.~time.,~if they would. MR. ANDERSON: -Fine. MR. BURRELL: There are.~.,people here who haven't.heard their qualifications, and I'd like them to hear them. MR. ANDERSON: Very good. Thank you. MR. PORTER: My name is Vance B~,'?Porter. I reside at 2567 Arlington Drive in. Anchorage and am employed by Mobil Oil Corporation as Division Joint Interest in Gas Development Administrator for Mobil'$&Alaska ExPloration & Producing Division I received a Bachelor of Science degree in Chemical Engineering from Texas A & M University in 1949. I was employed by Shell Oil .Company for ten years as a drilling andmud engineer in South Lousiana, a petroleum reservoir engineer-in t, he Rocky · Mountains, east and south Texas, and as a.district production engineer in south Texas. For, two years I supervised drilling and production activities in Canada for an independent operator. I joined Mobil/in 1961.and Was assigned as a senior petroleum reservoir engineer in Texas and Lousiana Gulf Coast for five R & R COURT RE~ORTER$ B2~ WEST EIGHTH AVENUE ~ ~UITE ~ 277-47,3 ~O 85L507 6 10 1! 12 13 15 16 17 18 19 20 21 22 25 Page 105 years before a four 'year assignment to Mobil's New York head- quarters in the. Planning & Evaluation group for~ Mobil's North American Exploration and Producing Division. My current assign- · merit commenced in August of 1970. I am a member of the American Institute of Mining & Metallurgical &~.Petroleum Engineers. MR. BuRRELL: Mr. Porter, your qualifications are accepted for ~h~e~.~ record. (OFF THE RECORD FOR CHANGE OF TAPE.) My testimony MR. PORTER:/ wi~-lconcern the south end of the Granite Point F. ield where Mobil Oil Corporation is' operator~.:'of the Mobil- Union jointly owned State Lease No. ADL'18761. This lease is.. shown on AM~CO's Exhibit 96 below the red line there, which as mentioned by AM~CO was prepared as a~ joint exhibit. The portion of the Granite Point Field underlying our .leaSe produces from the Middle. Kenai Zone and is developed 'by ten producing wells and six water injection wells, including the two lease line wells. The injectors are on a peripheral configuration 'and are .shown · as blue spo,ts on AF~CO's Exhibit %6. The current daily prOductio rate is-..approximately ~,6~00 ~ barrels of oil .and' 10~.5 million cubic feet of gas. Water inaction was commenced in mid-1970 to provide for an increase in oil recovery. The current rate of water .injection is about.l,7,000 barrels per day. The source, · of the inje=ted water is Cook Inlet. The water is filtered, deaerated, and'injected th'rough~,the six i:~jectors previously , . mentioned Surface injection pressures'vary from well to 'well R & R COURT REPORTERS ~,~ w~ ~,~.~'. ^w.u~ -- ,,u,'r~ ,~ ,', AG(] 851.508 277-47 ! 3 ANCHORAGE, AhASKA 99501 10 11 13 14 15 16 .17 18 19 20 21 22 24 25 Page 106 and range from 4,600 to 6,800 pounds per square' inch. Our injection system is capable of providing up to 7,500 pounds per .. square inch pressure. Production~from~.-.the~'.south end of the Granite Point field commenced in May, 1967, and through June, 1970 the.withdrawals of oil and gas amounted to 16,000,000 barrels on a reservoir ' volume basis. This means the volume that was occupied in the reservoir' by the produced oil and gas was 16,000,000 barrels. .. Water injection was commenced in June, 1970, and since that time we have withdrawn on a reservoir volume basis. 3.1 million barrels and have.'i£~jected 1.5 million barrels of water. At the..present' · time on a reservoir volume basis we are injecting water at about the same rate:~tthat we'are withdrawing oil and gas; I'd like to refer, now to Mobil's'Exhibit A on the easel. This is.~ ai.'~graph showing for the period 197~~7 the forecast of gas production and gas. usage attributable to opera~ions on the Granite Point platform. The total gas estimated to be pro2' duced is the upper line, and th~e~timated gas t~ be utilized is the lower solid line. I've lost my place. (Pause) On the vertical scale, two inches represents: 1,000,000 cubic feet per . . day. The total volume'of gas now forecasted to be. produced is only about seventeen per' c~nt greater than that forecast for this . , -same per_i_Q._d.._,~a_,~.~...~h,9_.~iB,g~.~,~..,,~,!.~$,~' ...... .~,969...'hearing. The produced gas has been' and will continue to be beneficially used to move the oil to the well bor~'and lift the o~1 to the SurfaCe. As · R & R COURT REPORTERS 825 WEST EIGHTH AVENUE -- SUITE I~l 277-4713 ANCHORAGE, ALASKA 99505 AGO 851509 10 11 13 15 18 19 20 21 Page 107 mentioned earlier, we are now supplementing this gas with water injection. A second beneficial use is made of the portion of the produced gas which is extracted~as liquids and which is used to fuel generators, compressors, water pumps, provide gas lift gas, and deaerat£on~':of.!~_ '.:;iin.jection water on the platform and oil treating and pumping facilities located onshore. ~We have recently entered into an agreement to sell a quantity of the gas that is surplus to our needs to Atlantic Richfield Company'for use on their Spark. platform and shore site. This market has become available in recent weeks for reasons ~ that will be. explained'by Atlantic.Richfield in their subsequent testimony. The delivery of gas to Atlantic Richfield Will be on an interruptible basis, and for only such time as gas is available surplus to our needs. Gas utilization, other than the sale, on the platform and shore site is essentially the same as that forecast in August of 1969, plus a small volume as extracted bY liquids ~that wilk be shown on the next exhibit. Now, over fifty per cent Of the gas usage other than the anticipated sales is -to carry out the water flood operation. (Pause) The utilization of the produced gas is'detailed on Mobil'~s Exhibit B. Also shown on ] , this exhibit is the daily average gas requirement in thousands of cub'ic 'feet per day required by each piece of equipment.. Other uses. are also detailed. On the'Granite Point platform, gas used to~ fuel'a 750 KW electric generator,fa;-1550 horsepower- . ¢ompresso~ for gas lifting.the oil, S50 horsepower standby R & R ~OURT REPORTERS B2~ WE~T EIGHTH AVENUE ~ SUITE Page 108 10 11 12 13 14 17 18 · .2O 22 23 24 25 compressor, and two 1650 horsepower~water injection pumps.~ Onshore are located two' oil treating vessels used to. make-the~, oil salea~le,'.a~.>standby electric generator, and two 500 horse- power oil shipping pumps. Makeup lifts for gas' lifting and deaeration of injection water and liquid extraction also require a second use of the gas. Th~ total amount of gas required for fuel when all equipment is in operation is about 1,580 MCE_per day. 470 ~Q~ per day are utilized for deaeration'and makeup .gas and gas sales --- oh, and makeup gas. And gas~sales, to commence. soon will be about 800 ~ per day for a total usage~of 2,8.50 ~Q~ per day. Oh, you took it off. Now, could you flip Exhibit A back over?/ (Pause) 'Referrin{ again to Mobil Exhibit A, the' difference between the top· line, produced gas, and'the lower?.li~e~: gas Utilization, is ~the gas · which is forecast to be flared from our Granite Point operations over the.period covered. Our current forecast Shows ~hat by'the mid-1980's, ·'there will be little or no gas production in excess of platform, and shore site usage requirement of 2,050per day. Total gas estimated to be produced from the' present 'through ~987~ ~i~l be'.~6 BC,~, of which some 17..1 ~ or forty~seven per cent of the total will be used and sold. It should be noted that this forecast indicates that~ithe gas 'sales_to Atlantia Richfield will not be available after midr1984'i~.~2~hrough 1976 about seventy'per cent of this surplus'gas wilt have been produced, and the avail- ability will be about 3,000,000 cubic feet per day~ which is- · R & R COURT REPORTERS ~, ~ ~,~. ^~ -- ~u~.= ~GO 851511 277-4713 ANCHORAGE, A~S~ 9950I 10 11 12 13 ~14 15 16 17 18 19 20 2I 22 23 24 25 Page 109 about one-third of the current surplus. This exhibit illustrates that the availability of this casing head gas-in quantity is of short duration, at declining rates, and is of course subject to directly interruption at anytime as it is/related to oil production. Investigation of uses for gas which is surplus to our fuel needs has been and will continue to be the subject of engineering and economic studies within Mobil. Included in past studies surplus were consideration of, one, storing th~/gas in formations other 'than the Middle Kenai Zone; two, reinjection of the gas into the Middle Kenai Zone; three, participating in industry efforts to collect and move the gas ~t any market that may become availabl~ four, extraction of natural gas liquids both on the platform and onshore; and five, direct sale to anyone Who may desire,to · 'purchase the gas.. The results are updated from time to time, but the results continue to be negative. Concerning storage, we have no gas reservoir, available in the Gr&nite Point ~iel~ to Conduct such an operation,_ Gas inject . . ~ into the'oil zone as.a means of increasing the oil recovery was investigated; but it was determined that~ter injection would provide for a greater oil recovery. Application of gas injection , is incompatible with water flood operations and would cause. ultimate /loss of oil in.any area~ swept by gas injection. ~There is a--['.~free gas satura~ion"in the reservoir at the present, time, and therefore the relative, permeability.to'gas is high, and injected gas would Probably break through to oil producing wells R & R COURT REPORTERS 825 WEST EIGHTH AVENUE ~ SUITE 5 277-47~3 ANCHORAGE, ALJ%SKA 99501 ..~ 10 11 15 · 17 18 19 2O 21 9.3 9.4 Page 110. and cause early abandonment. In effect, a c~cling of the gas would occur rather than a storage of the gas. If gas were to be injected into the oil zone, the pressures required are esti- mated to be in the four thousand to five thousand pounds pe= ~ square inch range. The dangers of such pressures in handling natural gas are apparent, but economic and safety, considerations both aside, there is simply not room on ithe.~platform for/gas, injection equipment and the currently installed water injection equipment. To my knowledge, there have been no viable economic results from tho industry efforts to ga~h~r and market the surplus gas. As to the extraction of liquids¥'~we have been extracting only about forty barrels per day of liquids, and a recent detailed.engineeri: , study indicated that additional ~equipment would optimize liquid .recovery. This equipment has been installed, and liquid recovery is now calculated to be one hundred' and forty barrels per day. · · Let me explain here that aY. the time, I left Anchorage they were putting'.it on production. I .say..that it's operating, and.I"m -- not at all quite sure, but they.were on the platform trying to get it in operation. ~., ..... ;~-~ In previous'testimony it' was reported to you that the cost of transporting the surplus gas to the Marathon West Forelands liquid extraction facility would exceed the value of the liquids available for extraction. This is of course still true. We also found it uneconomical to delivery gas to Phillip's East Forelands liquification plant. In the past, we have supplied R & R COURT REPORTERS a2~ WEST EIGHTH AVENUE ~ SUITE ~ - 277-4713 ANCHORAGE, ALASKA gg~O! ~g 10 11 12 13 14 15 16 17 18 19 20 22 23 25 O1 Page to.requesting parties our estimates of surplus casing head gas reserves and volume rates, but have received no offer to purchase the surplus casing head gas other than the recent development with Atlantic Richfield. We have made a contact with the village of Tyonek and explained to them that we do-have some surplus gas available, and our,technical people, will meet with them shortly. to explain to them the situation that t~is is wet. casing head .gas and the equipment that might be necessary to make it useable to the Tyonek'village, but this contact has been made.:. We stand ready to pursue any prospective market and are Willing to se'il this surplus gas' into any"market ~hat might become available and so long as we 'have gas volumes produced in excess of our fuel needs on the platform a~d shore 'site. , In summary, I'believe that all reasonable actions relative to the conservation of natural resources are being taken'by Mobil as operator'of the MobilrUnion interest in'.the Granite .. Point ~ield. We shall, continue 'to undertake any study and actup~nour conclusions therefrom in the best in interests of conservation commensurate with our obligations under our lease ,, 'agreement and applicable laws and regulations. I respectfully request that the Committee, after consideration of my testimony, find that the current.provisions of Conservation Order Ng- 61 should~e continued in force and effect without 'change,. Thank, you. MR. BURRELL: Thank'you. Let the record show that these R & R COURT REPORTERS 8~.~ WEST EIGHTH AVENUE ~ S,UITE B 277.4713 ANCHORAGE, ALASKA 99501 AGO 85! 514. 10 11 12 13 14 15 18 17 18 lg 9.0 9.3 9.5 Page 112 two exhibits were entered as Mobil's, Exhibits A and B.. By 'the way, a little housekeeping rightnow. This map or. chart entitled . "Depletion Savings in Numbers in Reduction of Flaring of Excess Gas" was prepared by the Oil & Gas Conservation COmmittee drafts- man. This will-be 'entered as Oil & Gas Conservation Committee Exhibit #1. And furthermore, in every case where~we have a reproduced copy of-these la~ge exhibits, we will enter those into the record instead of~U~s~ large ones; we find them much easier and file to handle/for reproduction purposes., so everytime we have reproduction we feel contains essentially the same information, some of which .have been passed out tonight, we will substitute those. That's all the housekeeping. MR. ANDERSON: Mr. Chairman, this is Bob Anderson again. Ir'might be well to supplement Mr. Porter's testimony in .light of the sale of casing head'gas to Atlantic Richfield for utllzzatzon on the Sparks platform that .Union.Oil Company of California has also entered into a similar ~greement for:'itheir share of the casing head gas. I~d like now to call°on Mr. Ron Cook of Atlantic Richfield. MR. COOK: My name is Ron Cook. I'm a graduate of Stanford University with a Bachelor of Science degree in Petroleum Engineering. I'm a Registered Professional Engineer in the'State of California. I have been an employee of Atlantic Richfield- company for-the past sixteen years and have' spent most of my career as petroleum engineer on various development, producZion~ R & R COURT REPORTERS 8Z5 WEST EIGHTH AVENUE -- SUITE S 277-47 J3 ANCHORAGE, Ai..ASF,.A 99~0J aGO 85~5~5 10 11 14 15 t7 18 19 20 Page 113 and reservoir engineering assignments~ in..the San Joaquin Valley and Los Angeles area of-California. My most recent job before coming to Ataskai'was as District Engineer forLthe Southern California District in Long Beach,. California. I am currently the District Engineer for the South Alaska District, headquartere~ in Anchorage, Alaska. MR. BURRELL: Let'the record show that. Mr. Cook is accepted as an expert witness. MR. COOK: The Trading Bay ~ield Northeast ~,ool located approximately sixty miles southwest of' Anchorage was'discovered by Atlantic Richfield well Trading Bay State #1 in July, 1967. We usually refer to this field as the North Trading Bay ~ield. Atlantic Richfield operates platform Spark .~'in the east~hatf of the'field and Texaco produces the west half from'their platform. , Development drilling from our platform commenced in November, 1968 and terminated in October, 1969 with the completion of .five wells, which is~a rather small operation compared With mos't of the others in the Inlet. ~ Exhibit #1 shows a general outline of the field; it. also shows the location 0f the platfornsand the bott0mhole locations of the WelL.. Atlantic Richfield leases are colored in red. AS in most of the reservoirs in the area, the oil is. under saturated and has no free gas. Ail of the gas is in solution in · the oil at a ratio of approximately 250' standard cubic feet.per barrel of oil. The original reservoir pressure was 4500~.~pounds R & R COURT REPORTERS 82.~ WEST EIGHTH AVENUE; ~ SUITE 277-47 i 3 ANCHORAGE, ALASKA 10 11 13 15 16 17 18 19 20 21 23 per square inch, and the bubblepoint, pressure is 750 pounds per square inch, the bubble point being the pressure at,which gas first comes out of solution. The reservoir producing mechanism to date has been expansion of oil, water, and rock. In order to produce the oil, the gas must also be produced. In fact, the- gas in solution is a great aid in. lifting the,?oil to the surface as it comes out of solution and expands on its way up the well bore. The December, 1970'oil and gas production rate.'~for plat- form Sparks was 4976 barrels per. day and 781 MC~ per day res-- pectively. Cumulative produc~i~m~.as of January 1, 1971 is 5,536,284 barrels of oil and 1,253,085 ~ of gas. The. five' wells are artifically lifted by a ¢onventiona!~.gas lift system. The oil is transported to shore for further processing at our Gr, anite Point facility and delivery to the Cook'Inlet,Pipeline Company. The associated produced gas has in the past been.used for both platform and shore facility .... . .fuel, with'the surplus ., being flared. You have heard previous testimony here this evening about each platform becoming fuel deficient at some futur.e point in time. This will-vary from'fie-id to field. Atlantic Richfield has already reached that point on platform Spark.. Exhibit %2 shows a ~ot of.our 1970 ~as!production and fuel gas requirements. volume'of Note that the fuel requirement=cexceededcthe/gas produced in March'.. Since that time we have been running our 5,~000 horsepower · Nordeburg turbine generator on gas purchased from an onshore gas S~ WEST EIGHTH AVENUE -- SUITE 277-4713 ANCHORAGE, AEASKA 99~OI AGO 851517 Page 115 4 7 10. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 well and diesel oil when gas well gas was unavailable. In the January of this year/~as~.well sanded up so we are' now running the turbine on diesel oil fulltime. Exhibit #3 gives a more detailed breakdown of our normal fuel requirements. The Nordeburg turbine requires approximately 1100 mcf per day of gas to ~erate. Obviously it also has' the dual capability of operating on diesel oil. This was in the original design for use in startup after a full platform shutdown or in an emergency. However, the unit will not run on half gas and half diesel oil.; it's either one or the other. When~vert%he total gas available in our present situation,ithis is..the gas production, drops below the necessary total fuel requirements even so slightly, the N0rdeburg-turbine has to be fired with diesel oil because the other facilities are only gas. fired. \ , Consequently, there'will be some surplus gas over and above that which is n~eded'to supply the boiler and onshore facility. .This surplus will vary between three hundred a~6 five hundred ~CP. per . day, dependent on production, and it will have to be 'flared since it is insufficient amount to fire the turbine. Of course, we ' always maintain a small safet~i,..~tl~ flare in case of emergency; this is just good oilfield safety practice. We have just signed, as you heard in Mr. Vance Porter's testimony, an agreement with Mobil Oil Corporation, and'this is the first news I've.heard abou' UniOn, but.obviously t~ey have a contract with them. also for use of some-of their surplus casing head gas which will be made R & R COURT REPORTERS B2~ WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANCHORAGE, ALASKA 99~0! AGO 851518 10 , 12 13 14 15 16 17 18 19 20 21 9.2 Page 11 6 available at our onshore facility. We will then ship the necessary gas volume out to our platform throMgh.~.one of the two seven mile .long, six inch lines. This would then put us in a' no flare condition for our operations..f~om then,~on-except for the safety flare.. This source of fuel is undesirable for two reasons: one, it is an interruptible supply, and two, it lacks longevity. If Mobil should shut down for some operational necessity, then we would be unable to'--- they would be unable to supply us any gas. Someday they may also become fuel deficient. However, in the meantime we plan to make use of as ~urDlus much/¢aszng head gas as possible and thereby reduce the amount .- being flared. Current unitization negotiations with Texaco could alter o~r gas production forecast. If'a unit is formed and a water~ flood project started which is the present plan~ oil and gas production would increase and consequently we would be back in a gas surplus status again for a year or two. We believe that~' · this approach to surplus casing head gas utilization is in the best interests of all concerned.. And.that. cOncludes my testimony MR. BURRELL: Thank you very much, sir.. We'll continue the with all/testimony on the west side here and then get back to the questions. MR. WAGNER: My name is Fred Wagner. My present position is District Petroleum Engineer for Texaco, Incorporated in their Anchorage District. I received a. Bachelor of Science degree in R & R C:OURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE · 277-4713 ANCHORAGE, ALASKA 9950! 10 12 13 14 15 17 18 19 9.0 9.1 Page 117 Petroleum. Engineering from the University of. Southern California · in June, 1962. After'serving .two.years in' the United. States Navy, I undertook employme~ with Texaco, Incorporated in July, 1964 and worked in various petroleum engineering positions in California until assignment to Alaskan operations in August of 1967. I received a'Master of Science degree in Petroluem Engineering fromm, the University of Southern California in.January of 1968. I've been involvedw%~Texaco's Alaskan operations since August of 1967 and have worked in drilling, production, and reservoir engineering phases. MR. BURRELL: Thank you, Mr. Wagner. Let the.record show you are accepted as an expert witness. MR. WAGNER: This testimony is presented by Texaco, Incorporated on behalf of itself and the Superior Oil Company. Incorporated the In April, 1968, Texaco/as operator for itself and/Superior Oil Company jointly erected a tender assisted drilling and production platform in the Trading Bay area of the Cook Inlet, Alaska. Pipelines were laid from the platform to a treating..and shipping facility located near Granite Point on the west side of the Cook Inlet. To date nine wells have.been drilled, and at the present time six of those wells are being produced. Present average. production is 4600 barrels.of oil.~.per..day and.~.t.,.080 mcf of casing head gas per day. Oil production comes"from"two's'eparate accumulations~ One accumulation is' the Middle Ken~i Oil. Pools Oil of the Trading B~ field, and the other is the Northeast/Pool of .. R & R COURT REPORTERS S2S WEST EIGHTH AVENUE -- SUITE ~$ - 277.4713 ANCHORAGE, ALASKA 99501 O 10 11 13 14 15 17 18 19 20 21 22 23 the Trading Bay ~ield. initially. Original reservoir pressures were in the range, of~- ~00 psig%~.at 9700 feet subsea, and the bubble point pressure is in the range of 1850 psig. The measured solution~gas/oil ratio.. was approximately 270 standard cubic feet per barrel~ The producing mechanism of the oil poolSis the expansion of water and rock. At the pr~sent.!~time only'dissolved gas is being produced as th~reservoir'pressure is.g~, eater than the bubble point pressure. As .pointed out in other testimony, the primary beneficial use of the produced-casing head gas is to 'lift the bil .to the surface. ~o.'~February.,:.~197I less than' one million ~ of casing. head gas have assisted in the production of more than three and . one-half million barrels of oil& About 100~,000 ~ of this. casing head gas has served a secondary use as fuel for platform operations. At the present time produced casing head gas is the only fuel'source normally utilized on the Trading BaY'plat2 form. For the following reasons, the casing head gas not utilized as fuel. coUld_not be further utilized: one, studies indicated that recovery could not be enhanced by reinjectio~.. of the casing head gas into the oil zone due'to the 'limited areal extent, .rock characteristics,. ~nd formation structure. oil In fact,/recovery may have decreased had injection been under- . _ taken. Two, there were.no shallow wa~er or gas sands.which were suitable for'the economic and safe storage of the surplusccasing , · R & R ~OURT REPORTERS ~77.47,~ AGO Both reservoirs were highly under saturat~d 10 11 12. 13 16 17 18 19 2O 23 9.5 .Page 119 head gas. Three, 'we have been unable to develop a market the surplus casing~head gas because the volume of casing head gas available for sale is small.and the sales'period is short. ~Submitted herewith is a'casing head gas production forecast' dated February 17, 1971 which shows a graphical plot of the. casing head gas production in mcr per day versus time.' This graph was prepared under my direction, and it'~is~.:requested that Texaco it be accepted as/Exhibit #1 as marked. MR. BURRELL- Let the record show it is. MR. WAGNER: The graph is an extrapolation of current produ¢.tion~',under a primary depletion mechanism. The graph · indicates that with a fuel gas requirement of 700 ..~CF~ .... produced insufficient/casing head gas will be available for fuel after May, 1972. From February, 1971 until the breakeven point, in · about one year, 74N~ of casing head gas will be produced in excess of our fuel gas requirement; however, in the four and a half years following the break even point, our casing head gas will fail to meet our fuel req=irement by 496~/~C~. This fore- cast clearly indicates a sustained fuel gas deficit over. the next four to five years. In summary, we believe that we'have and are continuing to make the most beneficial use .of our casing, head gas possible, mainly that of assisting in lifting the oil to'.the surface.. In . a secondary manner we are utilizing casing~head gas to the full'es extent possible as fuel. Every effor.t has. been made and will. & R COURT REPORTERS B,?.~ WEST EIGHTH AVENUE ~ ~UITE ~ 277-4713 ANCHORAGE, ALASKA ~I~0~ AGO 85~522 .3 ,10 . 11 12,, · i 1:3 14 21 9.2 9.5 Page 12 0 continue to be made to develop maximum secondary utilization of casing head gas consistent with economic and prudent operating .practices. Th~.$ concludes my presentation. MR. BURRELL: Thank'you, Mr. Wagner. MR. ISAACS: My name is Bud Isaacs. I'm a'graduate of' Colorado School of Mines in 1964 with a degree'of Petroleum Engineer. After graduation, I worked for Standard Oil of California, ~CA~O.') down in Lousiana, as a drilling engineer. After two years in the service, I came to work~ithUnion Oil Company in Sante Fe Springs, California. I worked there in per development/forming primary and secondary development work in the number of/fields in the Sante Fe·Springs area. In Ma~h of 1968 I came to Alaska in the capacity as reservoir engineer for' .- Trading Bay ~ield. In this capacity, I've been involved with primary and secondary development. MR. BURRELL: Let the record show that Mr. Isaacs is . . . accepted as an expert witness. MR. ISAACS: The monopod platform'from which all wells are completed in the Trading Field structure is located twenty-six miles northwest of Kenai. As you can see On the reference map provided by Marathon Oil Company,. Trading Bay Field is a separate structure from the Trading Bay ~ortheast ~o01 mentioned in the. previous two testimonies. It is also separated from the McArthur River unit to the south. You will note on this map that ~he two eight inch' pipelines from the platform terminate.~at the Trading · R & R COURT REPORTERS ~ w~ ~,o.~. ^~.u~ -- ~,~ o AGO 851523 277-4713 ANCHORAGE, A~$~ ~01 ' 10 11 12 13 16 18 19 20 22 23 Page 121 Bay production facility from which oil is shipped to the Drift River terminal. My testimony this evening will support the beneficial use of gas in the Trading Bay ~iel~. Earlier. testimonies this evening have.~.re~iewed.:ithe various uses of casing head gas; past and present testimonies have established that the primary beneficial use' of gas is its ability to produce crude oil. Additionally,~the casing head gas is beneficially used to supply platform:~; and onshore facili ".'~' · t~:~.~.,..fuel~:~requir~ments ' Casing head gas not utilized for fuel has little value until a market becomes · available. Currently casing head gas ~utilization on the monopod can be broken down as follows: l%000¢ubic feet. per day for plat- form fuel, 85,000 nV~F per day shipped to the Trading Bay .pro-. duction facility where it is partially --- where it used partially for liquid extraction plant fuel, onshore facility fuel, and liquid extraction. In addition, casing Read gas is being utilized in a closed gas lift gas system. Plans for expansion of' this sytem have been budgeted for the last half of' this. year. Recent development~ in the-Trading Bay ~ield~hasincreased oil production from 12,600 barrels per day in December of 1969 to 19,500 barrels per day. in December of 19.70. Due to this. additional oil production, gas production has also increased from 18.6 to 21,000,000 cubic feet per day. However,. the ~ield average, gas/0il ratio during'the same period, as shown in Exhibit ~#1, has actually~decreased from 1480 to 1080 standard, cubic feet per R & R COURT REPORTERS 8~ WEST EIGHTH AVENUE ~ SUITE ANGHORAGE, A~$~ O 10 11 12 13 14 15 17 18 19 20 21 22 23 25 ,Page 122 barrel. This is a decrease'of 4001. standard cubic feet per barrel. Additional development drilling has extended the field 'limits thereby brlinging;,additional low gas/oil.ratio oiI into our system. Further remedial work was also successful in lowerinc gas/oil ratios in the. existing wells. The additional oil'and gas reserves proven by this program account for the difference in the gas production forecast as presented in an earlier public hearing. Please get Exhibit %2. This is shown in red on Exhibit ~2. By the way, both Exhibit #1 and Exhibit #2 were.. prepared under my direction, and I submit' them as Union Oil's Exhibits %1 and #2. MR. BURRELL: .They are'accepted for the. record and will be marked Union Oil's Exhibits %1 and %2. MR. ISAACS: The PreSent gas production forecast ~hown in black in Exhibit ~2. Additional control of gas/oil ratios will be achieved by pressure maintenance. During the hearing before the Alaska Oil & Gas Conservation Committee on Conservatio File No. 93, June, 1970, Union Oil presented ahd was granted permission to commence pressure maintenance projects i~he. three pools in the Trading Bay Eield. At this hearing an exhibit, Reservoir Fluid Characteristics, was presented as a portion of that testimony. This exhibit is pertinent to this hearing in that it points'out that the three pools under pressure..maintenanc~ were under saturated with bubble point pressures ranging within 400 pounds per square inch guage of original pressure~. This R & R COURT REPORTERS B2~WE~T EIGHTH AVENUE -- SUITE~ 277-4713 · ANCHORAGE, AkASKA 99~0! AGO 85~525 O · 8 10 11 15 17 18 19 9.2 9.4 9.5 Page 123 makes these three pools somewhat unique compared.~with other Cook Inlet oil fields in that the Trading Bay Field reservoirs initial conditions were close to being saturated with gas. During initial phases of p~oduction, these pools dropped below their bubble point pressurem Consequently, pressure maintenance was initiated as soon as the'equipment became available. To ensure maximum recovery of the oil and utmost.utilization~of the natural resources, we have commenced injection into two of the three pools. In order to optimize recovery, we'are striving to match voidages in these projects. This means for every equivalen~ barrel of oil, water or gas produced, an equivalent volume of water will be injected into the pool to supplement the. reservoir energy. .What.effect does this have on produced cas~ng~'.head:gas? By maintaining reservoir pressure, we should, curb the gas/oil . . ratios and reduce the casing head gas production. The new beneficial reuse of gas curve, black dashed curve, in Exhibit #2 represents the platform.fuel, the onshOre si~e fuel., liquid extraction plant fuel, and liquid shrinkage. You will note that in 1977 this curve coincides with the. total gas produced curve. The ,Utilization curve then declines with the total gas produced curve until 1981 when the platform fuel requirements will exceed the total casing head.gas production.. However,. at this..point, gas well gas.should, be.available on the platform. tO. provide this fuel The upper of the two dashed curves r_epresents total gas R & R ~OURT REPORTERS .2~ w~sT ~,~.~. ^~.~ -- su~T~ ~ AGO 85 ~ 526 277-4713 ANCHORAGE. A~$~ , 10 11 15 17 18 19 9.5 Page 124 utilization, plus the sizable gas stream which is~being shipped to the Trading Bay production facility. Further processing, at this facility provides additional use through the extraction of the liquid products. Basically, all fuel for/equipment on the mono- pod is supplied by casing head gas with the exception of ~he standby generato~ In the first quarter of this year, two additional 1100 horsepower Solar turbines were installed for increased water injection and power generating capacity. Tt~is installation will utilize an additional 500,000 cubic feet per day. In summary, the Trading Bay field through additional development and various pressure maintenance projects is striving to maximize oil recovery which s~ould in turn prevent the waste of any natural resource. For each barrel of oil produced from an under saturated reservoir, an associated amount~of casing~head gas is also produced. This gas is instrumental in the production .. Of every barrel of crude oil. First, it pr°rides energy'~ithi~~ ti reservoir to push the oil %o the well bores.; second, it provides~ ¥ through expansion a means of lifting each' barrel from 'the. reservoir up the tubing to the stock ~a~ third,' it pro~ides the fuel to run the filtration plant~nd inj.ection, pumps which in turn supply additional energy which, maximizes the recovery .. .of crude'oil; fourth, it provides the fuel to run the. support. equipment, gas lift package, and shipping facilities that-trans~ port this oil' to a marketable outlet; and fifth, it provides the R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE 277-4713 ANCHORAGE, A~$KA 99501 ,, Page 125 10 11 12 13 14 15 16 17 18 19 20 .21 22 23 25 i ii fuel to compress a percentage of the remaining casing, head gas for shipment to shore for the extraction of any remaining liquids found in the gas. Without a market on the west side of Cook Inlet or a means of transporting this volume of gas to the east side of the Inlet, no further utilization of this byproduct is possible.' Thank~u. MR. BURRELL: Thank you, Mr. Isaacs. MR. DIVER: My name is Jerry Diver. I'm a graduate of the Colorado School of Mines, CLass ~ 1952. I have a degree in Petroleum Engineering. I spent two years ~the Corps of Engineers and have worked for Marathon Oil Company for sixteen years. I'm a Registered Professional Engineer in the State of~ Oklahoma. With Marathon:~Ilve~..,~worked in various engineering assignments.in Wyoming, Oklahoma, Colorado,'-I~diana~Illinois, in California and now/Alaska, I reside.in.Anchorage and. am.Chair- man of the Engineering and Plan~i~Group. for the Trading Bay ,Unit. -- MR. BURRELL: Let the record show that Mr. Diver's qualifications are accepted as an expert witness. MRi DIVER:. Thank you. Mr. Chairman, members_o~ the commi~ae, all of my' comments~ wi.ll.'~deal 'strictly with the Trading -Bay Unit, the .McArt/%ur=Ri'var~..~iel~ and the LEX Plant-at-the Trading Bay production facility. My testimony will encompass a review of past testimony,-discuss the current'opera~ing status in the field, and review with you some predictions as .to gas R & R COURT REPORTERS 8~.~ WEST EIGHTH AVENUE -- ~UITE ~ 277-47~3 ANCHORAGE, ALASl~A 99501 AGO 85L528 10 11 15 17 18 9.2 9.3 ¸24 ¸9.5 Page 126 production, and set forth the conclusions as we see th~m. The McArthur River Field. is, located approximately seventy miles southwest of.Anchorage_in the. Cook Inlet. Three platforms were built by the'operators to develop the oil reserves discovere~ in 1965~ Three reservoirs currently contribute the oil.prodUctio~ from this unit: they are the West Forelandp, the Hemlock, and the G Zone Sands of the Middle Kenai ~rie$. Production from this field is transported through underwater pipelines to the Trading Bay production facility where the oil and water are the separated and the produced gas is processed for/recovery of additional liquids. The first production from this-field was in late October, 1967, and by the end of 1970 the cumulative pro- duction was about 94,000,000 barrels. At a hearing held in Anchorage on .February 7, .1968, just three months after the initial production, testimony on the McArthur River Field was presented outlin~ng the methods which would utilize the produced casing head gas. That hearing was reconvened on May 8, 1968 at which time further, discussion on-the use. of casing head gas was heard. On May 10, 1968, Order 61 was issued by the Alaska Conservation Committee. Four specific findings particular to the McArthur River ~ield were contained in Order 61. They are: nmmber one, the fie%d is in an early stage of development, and a considerable amount of ~drilling wilt be necessary-to thoroughly evaluate the reservoirs, but enough is know~ to' permit. reasonable Predictions of.gas production and gas usage; number~two, gas , '' R & R COURT REPORTERS 82~; WEST EIGHTH AVENUE -- SUITE 15 277-4713 ANCHORAGE, ALASKA {)9'~S01 · 8 10 11 12 ¸13 14 16 17 18 19 2O 21 22 23 24 25 Page 127 production will exceed gas usage for slightly over ten years, but the volume available will be constantly'decreasing after the first five years;~ number three,-the produced gas has a high : nitrogen content which may render it undesirable for uses other than heating; number four, the high nitrogen content will pro- hibit use of the gas in the liquifaction plant being constructed on the east side of the Inlet. In addition, seventeen other findings were considered by the Committee to be pertinent to the McArthur River Field and other fields covered by Order 61. They are: number one, there is no feasible way to lay a pipe- line from the..productive areas on the west side to the east side of the Inlet across the deep trench with present pipeline technology; number two, gas available for market is concentrated will in th~ early years, and a deficiency/exist~o. from 1974 to 1979;. number three,' all gas now being produced is originally found in solution with the oil, and in order'to produce the oil, the gas must also. be produced; number four, the gas being flared is casing head gas which is. quite different' in character and propertl from gas well gas;' number~five,-the small volume of gas is pro- duced with each barrel of oil and the~amount'~,~of~..~gas does not. exceed the amount~reasonabty necessary to iift the oil to the surface; number six, the reservoir energy is being efficiently utilized;, number seven, all gas produCtion'which exceeds 'gas .consumption is' being flared and burned for safety purposes; number eight, Operators have installed gas lift equipment or R & R COURT REPORTERS B2~ WEST EIGHTH AVENUE -- SUITE ~ A~C~O~^~, A~s~ ~o. LeS .4 10 11 12 13 14 15 16 17 18 19 20 21 25 i iI Pag~ 128 made plans to install equipment to utilize as much of the heat energy on the offshore platforms; number n~ne, lines and~most facilities have been installed to move the gas production from the platforms~;to the shore for possible marketing if and.when a market develops; number ten, there is no market for casing head _gas at present since cost to dehydrate, compress, transport, and process the:~_~gas exceeds the value of the tail gas.plus the extracted liquids; number eleven, opDrators are investigating and installing pilot water injection projects, and it is not feasible to reinject gas into the oil reservoirs until the success or failure of the water injection projects are.-~p~oven; number twelve, if water injection does not prove feasible, the operators will re-evaluate-the-'feasibility of~. gas injection for pressure maintenance; number thirteen, it is not feasible._to._' in this field store gas in undevelopgd reservoirs/because of high compression and injection costs, possible loss of hydrocarbons, safety hazards, and contamination dangers; number fourteen, there are no depleted oil or gas reservoirs in which to store the gas; number fifteen, the operators~have utilized all gas possible for lifting the production, fuel, and generation of power, and have attempted'to secure a market for the remaining gas. (OFF THE RECORD FOR CHANGE .OF .TAPE.) MR. DIVER: --- nUmber sixteen, maximum beneficial use of the gas is being 'obtained 'under the circumstances; seventeen, no illegal use'&S being made of the produced gas. R & R COURT REPORTERS S2Z$ WEST EI(~HTH AVENUE -- SUITE ~ 277-471:3 ANCHORAGE, ALASKA 9~01 AGO 8 5 ]. 53 L 10 11 19. 13 17 18 19 2O 21 23 9.5 Page 129 · These findings have been reviewed because we believe~the testimony which follows will show that with few exceptions these .. same~.findings;are, i.~va~id,~today. Subsequent to the 'hearings in.1968, Order No. 61 was extended for one hundred twenty day periods on eight occasions. Each extension of the order contained the Committee's decision the operators were actively pursuing a program to beneficially utilize the gas which is being flared. In 1968 an exhibit was used which included a prediction of gas to .be produced and an estimate of the amount of gas which would.be utilized. Exhibit #1 was prepared under my supervision, and I ask that it be entered in the record. MR. BURRELL: Let the record show that this will be Exhibit %1, Marathon Exhibit #1. MR. DIVER: Thank you.. Exhibit %1 shows the most recent estimates 'of these volumes, and I. refer back to the volumes being produced and utilized.. We have 'shown the gas volumes in-. millions of cubic feet per month versus time. on this exhibit is plotted the gas production for the Trading Bay Unit, the amoun' of gas utilized, the vo1.%~ of gas shipped to the Trading Bay production facility, and a prediction of these volumes-. The gas production e~timate'reflects the expected decline in oil production over the life of the field. .We do not anticipate- . .. producing these-reservoirs be%0w.the~bubblepoint;.therefora, the estimated casing head gas production should correspond very nearl . R & R COURT REPORTERS B25 WEST EIGHTH AVENUE ~ SUIT~"I~ 277-4713 ANCHORAGE, ALASKA B950! O 10 11 12 13 15 16 18 19 20 21 22 23 24 25 Page 13 0 with crude oil production decline. Produced gas is partially utilized by being shipped to the Trading Bay production, facility. This accomplishes a dual purpose by collecting the gas in one place for processing and supplying residue gas to fuel the production facili~.';e$. A potential benefit is that the residue gas is at a central point should a~-~'market develop. The dashed curve on Exhibit #1 shows the amount of gas shipped from the platforms to the Trading Bay production facility for processing. The LEX plant at the Trading Bay production facility processes the produced gas and extracts from it liquids which are recombine¢ with the crude oil stream. The recovery from the Trading Bay Unit gas is approximately 1700 barrels per day and represents an equivalent volume of gas of about 60,000,000 cubic feet per month. This volume is included in the utilized curve on Exhibit %1. Another use of produced gas ia fo r fuel on the platforms. We anticipate the fuel requirements resulting from the addition~O~ gas fueled units On platforms Will result in a total fuel con sumption of some 520,000,000 ~cubic feet per month. This compares with the original estimate made in 1968t/%a~t fuel requirements in the Trading Bay Unit would approximate 540,000,000 per month. This volume is combined with the shrinkage volume mentioned earlier to make up theuUtilized curve shown on Exhibit #1. At the present time, some gas well gas is being .used. as fuel on board platformsf~n~the'~'~Trading~Bay.~uni~. Two platforms have .. integral compressors which it was hoped would be capable of R & R ~OURT R~PORT~R$ ANCHORAGE, ALASKA 99501 AGO 85 t 5',33 10 1! 15 17 18 19 , . Page 131 utilizing casing head gas for fuel. Experience has shown that it is impossible to fuel these units with casing head gas. ~any attempts have been made to utilize casing head gas, and in every case severe damage resulted t° the power portion of the compres- sor, resulting in extensive downtime and expensive replacement of pistons and cylinders. Downtime can cause severe curtailment of oil production. the The other major power source on/platforms is turbine driven units. ~xperience with these units has shown that casing head gas is not as desirable a fuel as the drSer gas well gas. The turbine driven units have been run on casing head?gas, and this has caused severe turbine degradation and resulted in several ~urbines having to be replaced prematurely. The manufacturer of these turbines has been contacted and has de~ised new. com- bustion systems which will'allow us to use casing head gas for fuel. In summary, it would appear that the internal combustian- engines will have to be fueled with gas well gas, but. the turbine driven units will utilize casing head gas for fuel. Extending the anticipated utilized gas curve and observing the production curve, one can see that we expect to become deficient in the amount of casing head gas available for fuel in 19.80. This agrees with the estimate made at the original hearings in 1968 wherein we projected a fuel deficiancy in 1979. Our current estimates indicate we will'flare approximately R & R C:OURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANCHORAGE, ALASKA 99501 10 11 12 17 18 19 20 22 23 25 Page 132~ twenty-~even billion cubic feet of casing head gas from now until we are fuel deficient in 1980. This volume represents the entire amount of casing head gas that would be available. for sate if a market existed at this time. Observing the curve, it ~s apparent 'that over a third of this' excess gas production · will occur in the next two years. Considering the small size~of this gas package and the manner in.,~which it is produced, you can appreciate the difficulty in finding a market for this gas. the same The performance of the field then is very nearly/as we predicted in 1968. The amount of gas utilized has been somewhat less than originally predicted primarily as a resUltcof the amount 6f time required*tol~'.desig~,.order and install some very complicated producing and pressure maintenance systems onboard the Unit platforms. The amount of gas produced has exceeded to a slight extent that originally anticipated, and this results primarily from greater oil produc, tion rates than were estimated at the original-hearings'on this issue. In general, we believe' the production and utilization of this produced gas is nearly as was predicted .in 1968. In reference once again to the .original findings, I would like at this time to discuss specific findings on which current information indicates changes would be-in order. These are: number one, the first specific finding which indicated the field was in an early stage of development. Obviously this is no longer true; ~owever, we do feel that reasonable predictions of ,- ,. R & R COURT REPORTERS o2~ w~s~ ~,o.~. ^w.~- ~u,~. AGO 851535 277-4713 ANCHORAGE, A~$~ 9950I 10 11 19. 13 14 15 16 17 18 19 20 21 25 Page 133 gas production and gas usage can be made. Number two, general Conclusions number eleven and twelve. - These conclusions referred to the installation of pilot water projects and the' evaluation of these projects. Semi-annual 7reSsure maintenance repor'ts which have been filed with the" Conservation Committee have pointed out our optimism on the success of these projects, and.they are no longer pilot projects but are in fact full scale pressure maintenance. Current injection rate$,;~.~as these reports indicate, are in the order of 130,000 barrels of water per day in the Hemlock reservoir. 'Pressure maintenance has been measured indicabing this project is successful; therefore, we are no longer'considering gas injection for pressure maintenance. These are the only three things in the original hearing which we believe have in anyway changed.' The order issued by the Conservation Committee dated' January 21, 1971 extending the original findings for a 120 day period indicated that a market.may exist for the gas now being flared. We have investigated and are continually investigating means of moving this gas to market. At every turn we are'stymied by the small volume of'gas available, for some markets the quality of the gas, and the interruptible nature of its productio~ Our most recent experience with this.,interruptible feature was Borne out in January of this year. .,.As I'm sUre you're aware, heavy ice conditions in the Inlet prevented th~ production of a considerable amount of oil and its solution gas. This occurred R & R COURT REPORTERS 82,1~ 1N£ST EI(',~HTH AVENUE ~ SUITE ~l '~'77-4713 ANCHORAGE, AL~kSKA 99501 AGO 851536 Page 134 10 , 11 '12 14 15 16 17 18 19 20 21 9.9. 9.3 9.5 at a time when temperatures were reaching alltime lows in a potential'.Consuming',~area.,...'~and the demand for gas was at alltime .highs. Had we been attempting to supply domestic markets with" this gas, both the consumers and the producers would have been in dire straits. The liquid~.~extraction plant mentioned earlier was con- structed at the Trading Bay production facility. Its purpose was to further beneficially utilize produced gas from the Trading Bay Unit and the Trading Bay ~ield by removing as many marketible liquids as-possible. The plant is designed to process 40,000,000 cubic feet of solution gas, which includes six, or-seven million- cubic feet per day of very rich treater'and stock tank vapors gathered'by the vapor recovery system. Essentially all of the butane and heavier liquid hydrocarbons are removed and injected into the crude stream. The plant can be expanded to recover propane should a market develop. The plant was placed in . operation on February-9, 1970. As of January 1, 1971 about eight billion cubic feet of casing head gas from the Trading Bay Unit'and Trading Bay ~ield had been processed, including 1.4 billion cubic feet of true vapor.' This resulted in the recovery of over 440,000 barrels of .liquid which were sold'with the. crude. The extraction of these..plant liquids along with the fuel required to recover them reduced the excess'gas volume during 1970 by almost one billion cubic feet. That concludes my testimony, Mr. Chairman. R & R COURT REPORTERS G2~ WE~T EIGHTH AVENUE -- SUITE I~ 277-4713 ANCHORAGE, ALASKA ~950! aGO 85153 ? 10 1! '19. 15 17 18 19 2O 21 9.4 9.5 Page.135 MR. BURRELL: Thank you, Mr. Diver. once MR. ANDERSON: Mr. Chairman, this is Bob Anderson/again. I do, have one short concluding remark, We are still not content with the flaring Of gas in the west side of~the Cook Inlet, and our plans include active pursuit of ways and means to develop a viable project. The reason is obvious since seven-eighths of .the gas produced accrues to the benefit of the west side operators.if]ila practical solution can be found. Almost all alternatives require a pipeline to be built across the Inlet, and although such a project appears.~'!~eVentual.ly:~attractive, it has occurred to us that such an undertaking would be expedited by State assistance. We offer .our complete cooperation. Thank you. MR. BURRELL: Thank you, Mr. Anderson. We're going to start asking questioRs here now. I don't care about the order'. Let's get one witness and get all' the questions at ·one time while we have him up h~re. Does anybody have any questions' here in the Committee? Mr. Gilbreth? MR. GILBRETH: I'd like to call Mr. Cook of ARCO. Mr.· like Cook, .I don't have~p~questiom'.' It lode/your platform is in · pretty good shape, but you made th~statement about keeping a safety flare burning. About how much gas doe~your,~safet~ flare use a day?. MR. COOK: Well, right now it's using about three hundred because that's all the excess gas we produce above what we use · onshore and in the heater. · · ,. & R COURT REPORTERS WEST EIOHTH AVENUE ~ SUITE ~ 277-4713 AGO 85~538 '8 10 11 13 14 15 17 18 19 20 Page 136 MR. GILBRETH: Well, I mean though' if you had --- if you could use everything else, how much would the flare itself take if you· kept it burning? MR. COOK: Somewhere between a hundred and two hundred MCF a · day. MR. GILBRETH: You made the statement also that' if.~ you were able to form ,a~.~unit there, I believe,with Texaco that the gas usage and the production might change somewhat from what you have predicted, would there be more gas produced, or would this' put more gas available for you to use that Texaco now flares, or what? MR. COOK: No, just from the oil increase itself. We expect .the oil rates would go up. MR. GILBRETH: From the project? MR. COOK: . From the project, from injection, and then con- s~quently you'd produce more gas. I see, all right, sir. That's all I .have of MR. GILBRETH: Mr. Cook. on the Committee MR. BURRELL: Does anybody else/have any questions of Mr. Cook? Do any of you gentlemen'l, have a question of Mr. Cook? Does anybody in the audience have a question of Mr. Cook? Mr. Cook, I believe.you're excused. MR. GILBRETH: I'd like to talk to Mr. Porter. Mr. Porter, first.just a little technicai,·.~de&l here. I believe that you test that your present usage is about two million a day on your platfol I believe the volumes that you have been reporting to us are somewhat under that. Is this a maximum figure, the two million? R & R C:OURT REPORTERS 825 WEST EIGHTH AVENUE -- SUITE 5 277-4713 ANCHORAGE, ALASKA 99501 AGO 85! 539 fie( 'ms. Page 137 1 10 11 12 13 15 16 17 18 19 20 21 22 23 25 . . MR. PORTER: Yes, sir. I stated in my testimony that this is the volume we need when all our equipment is running at the same time. MR. GILBRETH: Ail right, sir. And so therefore this is what we have to have MR. PORTER: a call on. MR. GILBRETH: All right, sir. Can you tell us is allof your excess gas being flamed on the platform now, or is it being taken ashore? MR. PORTER: No, some of it is being flared on shore and some on the'platform. About a million a day onshore. MR. GILBRETH: Do you have any figures on what ir'would cost you to puc your gas ina saleable condition at your onshore' battery?' Yes, sir. , MR. PORTER:/ It'd be in excess of three-quarters of a 'million dollars. ' .... ' " MR. GILBRETH:- What would this figure out to be for what you have available? About how much an )~MC~. MR. PORTER: Well, this is investment you're speaking of. I mean this is a capital outlay. I mean I didn't have operating costs in that. MR. GILBRETH: Okay. Well, do.you have any idea what the overall cost would be to put it to the shore for sale? MR. PORTER: Yes, as I stated, about three~quarters of a & R COURT REPORTERS 277-4713 ANCHORAGE, ALASKA 99501 · A GO 8 5! 5,~0 -. 10 11 12 13 15 17 18 10 9.0 21 23 25 Page 138 million dollars. ~. GILBRETH: Okay. Well, then I'll ask it another way. How much gas do you have available, how much surplus? MR. PORTER: Well, as of right now, what did I state, that including the sale to ARCO, projected sales, we'll have about 13 BCF the way things are today. It's pretty late at night f~.r m~'~o¢ipher that; I don't have my slide rule. MR. GILBRETH: Well, I just wondered .if you could give us any idea of magnitude, wh~ther it'd cost fifty cents an ~C~f to get the.~s in a condition to sell or five cents an M~:~' or what? Do you have any figures along that.line? Is it completely prohibitive to try tO get the' gas ready for market? MR. PORTER: Well, no, ~ut there's no market, I mean except 'for what we're taking care of. I mean it just depends on the .. ~arket, I mean. MR. GILBRETH: I know. But if you could do it for four cents an ~,, there.might be a market where other people.are paying fifteen; they might pay eight or nine for it. That's my question. How much does~it cost? MR. PORTER: Well, nobody's offerred us anything. MR.. GILBRETH: Well·,~'are you offerring it to anybody? MR. ~ORTER: Yes, sir. We're dealing with ARCO, and I mentioned' that we:have~contacted the Tyon~k .village because their gas supplY --- I mean they were taking from the same.well that ARCO was~ . . R & R COURT REPORTERS IBZ~ WEST EIGHTH AVENUE -- SUITE 277-4713 ANCHORAGE, ALASKA 99501 AGO 85L 541 10 11 12 13 14 15 16 17 18 19 20 21 9.2 24 9.5 O1 Page 139 MR. GILBRETH: Yes, I --- MR. PORTER: We're pursuing every market 'that we have knowledge of. MR. GILBRETH: But you don't know then what.it would cost to put it in a retail condition? MR. PORTER: No, sir, because I know of'no retail use for it as to what the specifications would be for this use. MR. GILBRETH: Ail right, let me ask this: have you tatted anyone who might want it for that purpose? MR. PORTER: You mean to take the gas and then they try to. put it in a.condition where there --- MR. GILBRETH: Yes,to generate power, or to move it to .Anchorage, or to liquify it, or --- MR. PORTER: Well, I know what they want --- well, yeah. We have had contacts with Chugach Electric and, hmm, Rock Island- ~Oil of late, but there's been no result from it at all. Ail we did --- they asked us, .as I stated in my testimony, to provide them volumes and rates which we may be able to. deliver to them. MR. GILBRETH: That's allt'the~:~questions I have of Mr. Porter. MR. 'B URRE LL: Mr. Porter? (Pa. us.e) · Does anybody else have any questions here of Yo~'re excused, Mr. Porter. Thank you, sir. Does anybody have any additional questions? MR. GILBR~TH: I feel alone. I'd like to ask.Mr. Isaacs SZ~ WEST EIG'HTH AVENUE -- SUITE 277-4773 ANCHORAGE, ALASKA 99150! AGO 851542 10 11 12 13 14 16 17 18 19. 2O 21 22 23 24 25 Page 140 some questions. (Pause.) Mr. Isaacs, we've seen quite an increa~, the in/production fz~authe Trading Bay pool. I believe that's the one ~u testified on. MR. ISAACS: That's right. MR. GILBRETH: There's a rather sizable increase there. JuSt looking at the curves, it looks to me like maybe a five or six fold increase in the volume of gas flared in the last two or three years. This is all due to increase in 921 production, is it not?' MR. ISAACS: That"s correct. , MR. GILBRETH: Mainly. I realize that your compauy has been trying to utilize as much gas as possible, but are you again in the same position that you have the gas out there and nobody. has made you an offer for it? Are we going to face this from now on that nobody's going to make anyone an offer for the gas? MR. ISAACS: Well, we have;~%as was testified in on the McArthur River-Trading. Bay Unit~testimony, we. do ship a certain' volume of gas to the Trading Bay production facility where it is being reutilized again.for liquid extraction. For me to give you a ValUe as far as the costs coming out on the downstream side I'm not qualified; I'll have to defer that portion of the questi, to Mr. Diver or somebody that haqdles the Trading Bay production facility. But we are in fact compressing our' gas and shipping it to the beach, a portion of the gas. ·' MR. GILBRETH: Well, would all of your gas be available on .R & R COURT REPORTERS 82.5 WEST EIGHTH AVENUE -- SUITE · 277-4713 ANCHORAGE, A~ASKA 99501 AGO 85 15/+:~ ;e ~n O 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 Page 141 the beach if there were a market? Could you get it all to the beach? I mean all except for the platform usage. MR. ISAACS: With our current set-up we couldn't ship it · all to the beach; however, with a market and certain incentive, I 'm sure ,.that we would find a way to get it to the beach. . The pipelines are available, in other words, to get it to' the beach. MR. GILBRETH: Well, would it take additional compression facilities, on the platform to push it to shore? That's , . MR. ISAACS: / Right. MR. GILBRETH: I notice that the --- there's been actually a forty to fifty per cent increase in volume this year. I'll put the question again: is that all due to increase in productiol I'm looking at your curve. MR. ISAACS: Well, again we have a unique'i~.situation on the monopod; we are below the bubble point; consequently we are seeing some free gas, but we have in turn, commencing in March' of this year, pressure maintenance projects into two of t.he three pools, and we're trying to get one started into the third pool, and this is why we have been expediting pressure maintenance projects to curb the increase or cuib the casing head gas pro- in that duction. We are fortunate/we have increased reserves by a sizabl percentage, and th~s again has naturally increased our gas pro- duction also. MR. GILBRETH: Anything on =~st..'~,~'~a~ai~)-' MR.. ISAACS: Yes, I think they'll be prepared~ , R & R COURT REPORTERS ~. w~T ~,~.~. ^~u~ -- ~,T~ ~ ~G0 851.5~ 277-4713 ANCHORAGE, ALASKA 99501 ~? 10 11 12 13 14 15 16 17 18 19 20 9.1 22 23 25 Page 142 Mr. Marshall, you have any questions? Ye's. I'd like Mr. Isaacs to. review the --- MR. BURRELL: MR. MARSHALL: composition of the gas in the Trading Bay Field was there's a high nitrogen content in another field. Does the Trading Bay gas have that? MR. ISAACS: Our nitrogen content runs as low as one per cent to as high as --- to my knowledge to as high as about four per cent normally. MR. BURRELL: MR. MARSHALL: MR. BURRELL: Thank you,Mr. Isaacs. I think we're now ready for Mr. Diver. MR. GILBRETH: I have one of Mr. Diver. First of all I'd like to ask on your Exhibit #l,your gas. utilized.curve and then your 'ship to the TBPF --- doe's your utilized curve there include the amount of gas shown as shipped to shore',or are those two additives? .... MR. DIVER: They're additives'of --- they"re additives in a sense. They're portions of gas shipped to Trading Bay Field to the Trading Bay production facility that is included in the utilized gas. This includes shrinkage and fuel at the Trading Bay production facility. Those are in the utilized curve. MR. GILBRETH: There's been a rather substantial increase there, 600 MMCF per month to over 16-1700 MMCF per month. Is that all due to increase in oil production? Do you have any-other questions, Tom? No. Does anybody have any questions of Mr. Isaacs? R & R COURT REPORTERS 825 WEST EIGHTH AVENI. J;' -- $UITF. ~ 277-4713 ANCHORAGe. ALASKA 99501 AGO 851545 10 11 12 13 14 15 17 18 19 20 21 22 23 25 Page 143 MR. DIVER: No. MR. GILBRETH: Is this dry and casing head gas? MR. DIVER: ~his is --- the produced gas curve in the historical portion of my exhibit indicates the same there's been a plotting error, that you normally'receive'or do receive on the ~¢-~ forms, and 'it corresponds with your plat~.: The only place this-curve differs is in the utilized curve. The the increase from '68 to/'70 period certainly reflects an 'increased oil rate. ~.~ can sm~ in 1970 that the average daily'rate in the unit was about 110,000 barrels a day; it certainly was not any- where near that in '68, and I don't know the number, I can't tell you what it is. In addition, ,there is gas well gas in here utilized a portion of the time for lift and has been utilized'for fuel as I testified, and that we're.now trying to in every way possible to keep from using i~ fuel, but we'll ' never be able.to escape'using some gas just in the ·.produced. gas'' curve MR. GILBRETH: Is all of the gas over and a~ove your platform~.~usage..sent to shore now? MR. DIVER: No, not all of it. There are occasional flares on the platforms. If a compressor, is down, for instance, we will be flaring gas on the p,latform because we've lost, horsepower..~to, s -. -to shore, 'obviously,and .this ~'iS.,.especially.~.~tr, u~e~ -~.-..~ ~we'll,, it' s tr~ on..any of them. MR. GILBRETH: But normally you do ship it to shore? MR. DIVER: If everything's running, we're shipping .it to shore,, yes. Z77-4713 ANCHORAGE. ALASKA 99501 AGO 85 t54,6 hip 10 11 12 O' 13 14 15 16 17 18 19 20 21 22 23 24 25 O1 Page 144 MR. GILBRETH: Your --- after going through your plant, is the gas fairly clean from the standpoint 'of needing anymore dehydration or anything like that? · MR. DIVER: I wouldn't anticipate it needing more deby-~ dration. It has a certain amount of propane in it.which we dot 'not'have~a~deaetinizer (phonetic) there, for instance. So whether this is a marketable gas in its state from that point, I couldn't say without an investigation. It's not.as dry as Kenai. gas, let me say that; it certainly doesn't approach Kenai gas for methane content. MR. GILBRETH: What about with --- realizing it still has. some ~pi~ in it, what. k'ind of a heating val'ue does it have, do you know? MR. DIVER: I couldn't answer that;perhaps I can find out for We've got a plant expert here. 1300 BTU .I think is about -- . UNIDENTIFIED VOICE:- Mr. Chairman, may I speak off the record for ~ust a moment? MR. BURRELL: Ail' right. ( OFF':~'~THE RECORD) MR. BURRELL: Thank~you very much. Marathon. · · That's Mr. Howard of MR. GILBRETH: I would like to find out --- there's a rather 'substantial volume of gas --- we hear in the testimony that these are sma!l..volumes, and I realize, that a~'big long transmission line Or something like that --- I believe you said R & R COURT REPORTERS 02~ WEST EIGHTH AVENUE -:--- SUITE ~ 277-4713 ANCHORAGE, ALASKA 99501 9 10 11 12 13 16 17 18 19 20 21 22 23 24 25 Page 14 5 that you expect twenty-seven billion cubic feet to be flared after 1980, and a third of that falls within the next couple of years. Here again I'll ask the question are yourpeople actively trying tO negotiate with anyone for sale of this gas for extraction'or anything? MR. DIVER:, I'm not aware that we are in active negotiation at this time with any party or parties to sell gas. We are always looking for markets, and ~e general statement could be made that we have in the past had conversations with potential purchasers. If.we look at the volume of gas that's available here and on the.whole west side, the casing head gas is just not a marketible gas in a competitive sens~ ~ It can't compete with Uny other fuel unless you can find a market on the west Side. MR. GILBRETH: I believe Mr. Burrell read a telegram here from somebody purporting to want --- who was interested in the gas. I assume your~people would at least consider the --- you may not.be the one to ~answer this; I don't know. Here's~.~man. · that says he has ~li~nts willing to invest $1,700,000 to try to and get a market for-some of the propaneJ 9ossible butanes five year contract with West Forelands at a possible two..~o~iltwotand a.'>qUart. cents per gallon. I'd like to hear some comments from somebody associated with your company's group as to whether this is a --- would even halfway be 'considered, or this is out of the ballpark, · , or-what. MR. DIVER: "'I'll defer to Mr. Howard. AGO 851548 Page 14 6' ' 8 ' 1! 12 13 14 15 16 17 18 19 9.0 21 22 23 25 MR. BURRELL: testify? MR. HOWARD: about this area. Mr. Howard, do you want to come up and I'm not the expert witness I was referring to MR. BURRELL: I understand you're here not to testify as an expert witness, but to give us some data on these alleged negotiations or the possibility of them; is that correct? MR. HOWARD: Speaking at large in this area,Mr. Chairman,' I'm not aware that there is much hope. MR. GILBRETH: Well, I just wondered,Hr. Howard,jjust on , the surface of it, does this sound like a reasonable offer, or is it unreasonable, or is it too low,or negotiating stage, or what? MR. HOWARD: We'd certainly like to examine the offer and consider it. We have explored numerous offers,, as you're well aware, in the past several months.for marketing propane, and we , believe we can pr0duce.a small quantity of propane from the LEX plant on West Forelands without a substantial investment.as the-. plant stands today. We've absorbed some small market facilities, not a great capacity due. to the transportation problems involved from West Foreland. And we certainly would like the opportunity to explore that proposal. MR. GILBRETH: We'll be happy to make a copy of it availabl( and get you in touch with the people. MR. HOWARD: I would think if he was really interested he would probably contact us.. R & R COURT REPORT£RS 825 WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANCHORAGE, ALASKA 99501 -- 851549 Pago 147 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 25 O1 MR. BURRELL: Mr. Howard,that was my question. MR. GILBRETH: This hearing came to them as a surprise apparently. MR. BURRELL: That was my question. Why do you suppose this telegram was addressed to us? Did they think that we were in the gas business? MR. HOWARD: Well, Mr. Burrell, I don't believe I'd be qualified to answer in that area either. MR. BURRELL: Nor I. MR. GILBRETH: Well, for the record --- this is Gilbreth --- I might state that these people called me day before yesterday and had just heard about the hearing an d did not have an opportunity to come to the hearing. They wanted to come, and I suggested that they send a telegram and say whatever they-wanted to say, 'and that's the reasOn from the telegram. I was called from Calgary, Canada about the telegram. MR. HOWARD: What is the name of this firm,Mr. Gilbreth?. MR. BURRELL: W. A. McBean, M-c-b-e-a-n,~McBean & AssOciates Calgary. MR. HOWARD: We were contacted a few days ago by a local firm, and some of the numbers contained in that wire sound very similar to the proposal I heard from a local firm whose name was not mentioned to me on the telephone (inaudible) --- MR. MARSHALL: I have a question'for Mr. Howard. A number of months ago we were talking to a group; they were basically R & e C:OURT REPORTERS 82~ WEST EIGHTH AVENUE -- SUITE ~ 277-4713 ANCHORAGE, ALASKA 9950~ AGO 85 15 50 O 11 12 13 14 19 25 Page 148 petro-chemical people; they were interested~in making methanol. They declared that they could make methanol from just about any . hydrocarbon; they could make it from crude naptha; they could make it from natural gas. I'm sure that --- do you --- I know we have been asked many questions of why a --- what is the limitation on the gas situation on the west side that there can't be a petro-¢hemical plant of some sort there to utilize that gas?/' I realize the east side is where the dry gas production is. Is this the limiting factor? Is it the reserves? What is the situation there? MR. HOWARD: Well, several of the witnesses tonight have testified as to the use of excess gas, and some of them did not, but if you mentally added those up as they went along,ther® is a very small quantity of gas to be considered for a petro-chemica] plant. There are other reserves on the west side, gas well reserves --- I should say unassociated gas well reserves --- but even adding those up, it is'not a real substantial voiumeOf gas'~ and other than that you have an acute transportation problem on the west side. There is no deep water to the shore as for instanc in the Nikiski area. This presents a real transportation problem MR. BURRELL: Are ~there any other.questions for Mr. Howard while we've got him standing up here? I guess that's all. Mr. Diver, I have a question for you. Do you know of any techno- logical breakthrough that might justify the pipeline being laid across the Inlet now, gas lin~. across the trench or near the trem · . COURT REPORTERS £10HTH AVENUE: -- SUITE: ]5 277-4713 ANC:HORAGi~, ALASKA 99501 ~? 10 11 13 14 15 16 17 .18 19 20 21 22 25 Page 149 Has there been any further advancement in that area? One of the findings you mentioned was that it was not feasible. MR. DIVER: No, I know of none. They build longer stingers and lay deeper, but this won't solve the problem of an abrupt dropi I know of none. MR. BURRELL: One other question. Somewhere in this utilize, i gas or gas shipped to the production.facility, somewhere in there you had some figure for the barrels, 1700 odd barrels per day, of liquids, that were being extracted. Could you run over that little bit again? You lost me right there. MR. DIVER: Yes, sir. In 19 --- well, the current' configu- ration we,re operating in, we producer';about 1700 barrels of ~iquid per day --- recover that, I should say, recover that in the pro- cess plant. That's equivalent to about two million cubic feet a day or sixty million cubic feet a month. I have chosen to put that in as utilized gas, that equivalent volume in. That's why until~February of 1970 my utilized curve will correspond with that the one/your department plots.. After that it will not correspond exactly because I have put the shrinkage number in mine. MR. BURRELL: Well, Mr. Diver,don't you think that in order to call that'utilized gas you would have to figure on utilizing all of it? Aren't there some tail products there going Out --- some propanes and some methanes? MR. DIVER: Oh,certainly. The only-portion that.'s included in that utilized curve is the part that's put in the crude oil R & R COURT R~PORTERS eZPI WE;ST I:'IGNTH AVENUE -- SUIT 277-4713 ANCHORAGE, ALASKA AGO 85~552 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 Page 150 pipeline, the equivalent volume that's put in the crude oil pipeline. MR. BURRELL:. Ail right. you. I didn't, understand that. Thank MR. DIVER: I didn't say that, I guess. MR. BURRELL: No, that's my fault. Does anybody have any · . . questions of Mr. Diver?. MR. MARSHALL: IS there one or two gas pipelines going to the LEX plant from the platforms? MR. DIVER: There is a gas line from each platform, from the four platformS, the Trading Bay Field and.then the three unit platforms. Each have a gas line to shore. MR. MARSHALL: And each is a'si~gle line or a double line is my question? MR. DIVER: ' Well, it's a single gas line. They are dual ~" lines; one's 0it, one's gas, right now. MR. MARSHALL: 'In view of that plumbing arrangement, has there been any great fluctuation in your --- I was looking at. interruptibility --- has there been an interruption in your production at the LEX plant? I mean with all these feeder lines does~ this. tend to average out? ' MR. DIVER: No. It doesn't'level it out to the point where you have a smooth plant operation; you don't, have a smooth plant' operation. It's certainly smoother than if you had one, I'll ,admit. " R & R COURT REPORTERS 82~ W'EST EIGHTH AVENUE ~ SUITE ~ 277-47~3 ANCHORAGE, ALASKA 99501 10 11 13 15 17 18 19 21 9.3 Page 151 MR. GILBRETH: With the LEX plant now.being installed and operated and products being taken out, the tail gas then would be readily available for sale if there were a market. It would appear to me that with the gas being in that condition that it could be sold fairly reasonable if somebody wanted it, could it not? MR. DIVER: Certainly, it could be made available and is available to any reasonable offer that comes along or one that we can scare up. Anyone out there want any gas? MR. BURRELL: Does anybody have any further questions of Mr. Diver? Thank you very much, Mr. Diver. Does anybody else want to testify on the west side, or the east'side, or any side? Does anybody have any questions? The hearing record will stay open through the end of March for this additional information we'vezrequested. Does anybody have a statement-they want to;'~make~ MR. ANDERSON: Mr. Chairman, we do have copies of the west side testimony available for you. MR. BURRELL: Thank you. MR. GILES: And we have some copies of our. east side testimony. MR. BURRELL: Thank you very much. Hearing adjourned.. (END OF .PROCEEDINGS) R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE ~ SUITE 5 2'77-4713 ANCHORAGE, ALASKA 99501 AGO 85.1554- DECREASE ~,; S.,.. E ] OM · i.. REDUCTION ~N :' '*~"'"^ ~ ~.~r~i,~ OF EXCESS GAS ALAS KA DEPT COOK IN LET, NATURAL RESOURCES ALASKA O.&G.C.C. DIVISION OF OIL and GAS MARCH 2.0 CASE NO.IO0 1971 i.5 l.O .5 0 PTF--D i OiL ond ~AS 0 25 ,.50 75 FLARING EXCESS GAS- lO0 PERCENT AGO 85].555 ENGINEERING TESTIMONY PUBi,IG liD-tiliNG h£~-~RGH 4, 1971 BENEFICIAL USE OF GAS TP~DING BAY FIELD - COOK INLET, ALASKA The Monopod Platform from which all wells are completed in the Trading Bay Field structure,' is located 26 miles Northwest of Kenai. As you can see on. the reference map provided by Marathon Oil Company, Trading Bay Field is a separate structu[-e from the Trading Bay NE Pool. It is also separated from the McArthur River Unit to the South. You will note on this map that the two, 8 inch pipelines from the platform terminate at the Trading Bay 'Production Facility .frOnt Which the oil is shipped to '[he Drift Rive~ Terminal.. My testimony this evening will support the beneficial use of gas in the ~.rad~:,x3 Bay Field Earlier testimonies this evening have reviewed the various uses of casinghead.gas. 'Past. and present {estirnonies have established '[:hat. the primary,beneficial use of this gas is its ability to pro'duce crude oil. Additionally, the caSinghead gas is beneficially used to supply platform and onshore facil'[ty fuel requirements. Casinghead gas not utilized for fuel has little value until a market becomes available. Currently casinghead gas utilization on the Monopod can be broken down as follows' 1.200 thousa'nd cubic feet Per day for platform., fuel , 850'0 thousand cubic feet per day shipped to Trading Bay Production Facility , where it is used partially for Liquid Extraction Plant fuel, Onshore AGO 85L556 Page 2 BENE?~,fG':_.:.L USE OF GI~S Facility fuel and Liquid Extraction. In addition casinghead gas is being utilized i'_.: a closed gas lift gas system. Plans for expansion of this system have been budgeted for the last half of this year. Recent development in the Trading Bay Field has increased oil pro- duction f:'om 12,613 barrels of oil per day in December 1969 to 19,509 barrels of oil. per day in December 1970. Due to this additional oil pro- duction, gas production has also increased from 18. 636 to 21. 024 million cubic feet per day. However, the field average gas-oil ratio during t:he same period, as sh. own in Exhibit I, has actually decreased from. 1480 to 1080 standard cubic feet per barrel, a decrease of 400 standard cubic feet per barrel. Additional development dri].ling has extended the field limits thereby bringing additional low gas-oil ratio oil into the system. Further remedial work was also successful in lowering gas,oil ratios in existing wells. The additional oil and gas reserves proven by this program account · for the difference in the gas production forecast as presented in. an earlier' public hearing (shown in red in Exhibit II) and the present gas production forecast (shown in black in E.xhibit II). Additional. control of gas-oil ratios will be achieved by pressure maintenance. During the hearing before the Alaska Oil & Gas Conservation Committee on Conservation File Number 93, June, 1970, Union Oil presented and was granted permission to commence pressure maintenance projects into 3 pools in the Trading Bay Field. At this hearing an. exhibit, "Reservoir A GO 85 ].5 57: Page 3 BENEFICIAL USE OF GAS Fluid Characteristics" was presented as a portion of that testimony. This exhibit is pertinent to this hearing in that it points out that the 3 pools under pressure maintenance are undersaturated with bubble point pressures ranging within 4d0 psig of the original pressures. This makes these pools somewhat unique compared with other' Cook 'Inlet Oil Fields in that Trading Bay Field reservoirs at initial conditions were close to being saturated with gas. During initial, phases of productiOn these pools dropped below their bubble point pressures; conseque~tl.y, pressu're maintenance was initiated as soon as the equipment became available. To insure maximum recover'}., of the oil and utmost utilization of natural resources we have commenced injection into 2 of the 3 pools. In order to optimize re- covery we are striving to match voidages in 'these projects. This' means for every equivalent barrel of oil, water or gas produced, an equal volume of water will be injected into the pool to supplement the reservoir energy. What effect does this have on the produced casin, ghead gas'? By main- taining reservoir pressure we should curb the gas-oil ratios and reduce casinghead gas production. The New Beneficial Reuse of Gas curve (black dashed curve in Exhibit II) represents Platform fuel, Onshore Site fuel, Liquid Extraction Plant fuel, and Liquid Shrinkage. You will note that in 1977 this curve coincides with the total gas produced curve. The utilization curve then declines with the total gas produced curve until 198]. when the platform fuel.requirements well exceed the total, casinghead gas production..H, owever, at this point Page 4 BENEF]'GtAL USE OF GAS gas well gas should be available on the platform to provide this fuel. T. he upper' of the two dashed curves represents total gas utilization plus the sizeable gas stream which is being shipped to the Trading Bay Production Facility. Further processing at the facility provides additional use through the extraction of liquid products. Basically a].l fuel for the equipment on the Monopod is supplied by casinghead gas with the exception of the standby generators. In the first quarter of this year two additional 1100 horsepower ~olar Turbines were installed for increased Water injection and power generating capacity. This installation will uti].,ize an additional 500 thousa~.~d cubic feet per day. In summary the Trading Bay ]f~,eld through additional development and various pressure maintenance projects is striving to maximize oil recovery which should in turn prevent the waste of any natural resource. For each barrel of oil produced from art undersaturated reservoir an associated amount of casinghead gas is also produced. This gas, is instrumental in the produ, ction of every barrel of crude oil, First It provides energy within th'e reservoir to push oil to the wellbore. Second It provides through expansion, a means of lifting each barrel from the reservoir up the tubing to the stock tank. Third It provides the fuel to run the filtration plant and, in- j ection pumps which in 'h~rn supply additional energy which maximizes the recovery of the crude oil. AGO 85!559 Page 5 BENEFICIAL USE OF GAS Fourth it provides ti~e fUel to run the support equipment, gas lift package, and shipping facilities to. transport ti'sis oil to a marketable outlet. Fifth It provides the fuel to compress a percentage of the reniaining, cas{nghead gas for shipment to shore for extraction of any remaining liquids found in the gas. Without a market on .the Westside of Cook Inlet or a means of transporting this volu~ne of gas to the Eastside of the Inlet no further utilization of this by-product is possible° S o o , o i ............................. ; . _ t . . ....... :~,,~., ~l).,~ .. - A / !\ . ".'. . .... !. - -: . ~ ' :-:--/ . i ...................... : , ~ .... : L ":~.-/--~ ..... '/ '' ":-\/""-:-' II ...... : - -' ..... : ..... . ........ ' .... ~ .... '-; ...... /?"-'",- : i'.. .... J_~/' 'l-'~ ~ ' .... 1, ' .......... .................... ~ ........................ t ........ . ...... Ii ....... ~ ..... ~ i~ ..... ~ ........... :., ............... : ..... ~"~ ............................. ~ .................. ~'~'i ...................... : ........ -: ............... fi ....... :"-': .......... ~ ...... .-"-.'--'-~ .... 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I ...... , . . ,: i'": ~:' ':'- '": :," !: ,.: ...: · :i .,,: 2, t 31'~;¢- ...... :,..._k':~ ~.~ ............... ~ ......... i ~.~ .7o I ' ~,~ ......... -_~,.L.:J.....A .L...,_":_.:.:~2_.:._2L_;...: .. i :'-"-::" ,...'_i_.L-..:..__:LL.£_ _2..._-"...,i.:_£_..i-__J_'L. 2::_21_.i:'__..', ..::.:..:..:..i:._: L:-2~-'i...:.,_]..L'.._'_.' ff .i_L:.. ','.....:,:,..:..2,'_-'._..i.,-:.,.--:. c~ (5 8 · 6() ,' ~GO 85 ',t 561 t F- O fl_ EXHIBIT 17 UNION OIL COMPANY OF CALIFORNIA TRADING BAY FI ELD PRODUCED GAS & GAS BENEFICIALLY REUSED BENEFICIAL REUSE OF GAS ,50OO 2000~ I000 5OO 400 $oo 2O0 IOO · ~ t ' ,I ' I / I OLD ~EN6r C. IAL REUSE ;'; . i" ; .~ . 'il! :fN~,,' t/ : ! OF ,:S,"~..,'5. f-ORECAST ~ .... :':T ,i':" l'l:"-:'i~i -r-'!'x~-~" , .... .~ .; ~'~ , .. .... ...... ,_,; ....... ,. . .... ',.." .: .......... ~';'~!~ ............... ~ /'t ..... . ~/,,. .... f .................. ;, .... ~, ..... } ' ........ OLD GAS PRODUCTION ~. ..... t .......... 4 ....... 'Jl"7" t ......... ~ .... ; ........... ~ ' f ' ' '. ..... ~ .......... ~ ' ' ' FORECAST ~ " / , / / t , i ' ~ .... f"" -~ ....... ~ ./ ...... ~ ........ ~ ....... '~ ' : .... '~ · : ' , ': , ,:t '~ 1., , ' ~:', ...... ~ ...... r. :~.~ : 1'~ II .... t i ' ' ; "~ ' ' ...... ~ I / ............. . , ~ . , .... ¢ ...... ~ .. ~. , ,~ ...... I- ~ ~ -~ ,' ~' ' , ~ ~ · ',.,.:-:.',. ~'.,%,[: -.:-i ......... ~: ::: .; -'. .... : .... :.: .... ~..:.,, i -. i ..... ' ~ ........ ,,. ~ , ~ I ,l I, , , ~ ~ , ,,,~ . .: ...... ~ . Ii'.'.'', ',:'',' .;~" ': ~,'' '1 ~ , = ~ .... . , ....... ................. ........ , ..................... ~ ................................. ~ ............................ ~ ................ ; .............. ,c, 67~ t a 68 ~ 4 69 I l', 70 : 71 72 ., 75 74 75 76 77 78 79 . t ' ' ~ NEW GAS PRODUCTION .... ....... ....,.r ~ ~ i * ~, , - ~ ............... 80 AGO 851562 '1 To begin, let's reier-,~-,e,o_~~0, from some of the -cas%' ' ...... 4':,o~ ~.,, 'ore- c-ssc:'.,tial facts that a~' ' - . of us sP. ou!G - cc:.',mon misconceptions can be avoided· CO[,ibiON b.',.iSCONCEPm?n~ ~,..,,.., S common misconception about nacuraz gas natu,~ai c~'.~,, wherever-_ and under whatever condo. pro}:CrtlC~S, is ALWAYS an in)!erenti,z p, se.,_ul and vc~]..u..-~;uz.e :.3~: .sir.::~- not. so. Gas ma,/ be vaiuab].e, worthless or a distinct 1 i al.; i ]. i t.:l. Natural gas often contains water vapor. Unless removed, vapor can form hydram0:.s ~..'b.~¢~ rasembte snow in av~3aarance and rest:rict" or stop the :{!or; of na~_~i'"'-",--, cas_ in a pi?}e~ine. _ . hydroca,-; ..... .z:,.:.~o such as ethane, propane, bunanes and peri'dan's, tho. se comnonents ~oo must be removed from ~he gas be cran~:}~zc~ for an appreciable aiscance - haven.t: rule. Wl:.'-s;i the cuannities of such ¢'~as are suffi, cie?~t ar..d a z:,et zor ._.~e_.r;roducts is re-'-'~diiy ava_~lab!e, nba extrac,aio'a A~ 8~ 1.563 ) . .. sumar. ~'2he .~res:-..;,are of 'al:e ,l,'-'s m'as'a be careful].,/ reguiaual; the nauurai ':press:.;~ra mus~a be su'2pleme'.-;te.d. z~.,.i~e~- erve~ of ~ur~! gas, ~,_u_~ o ~ ~ $~. ' ' ~;-~ ' ~- ..... ' ~'-: on ~ f remote fro - - .' .~-ao ~ ma'.z w,_c~'~ou~ value. ~as of wou]. ~ ' " .... - ' e reneer ~'c valuab'~ ",-~- na'zurailv '0.neet _.e as & z'~.e:_ a.i. so occ~_o · conditions where no use can be made of it. Natural gas occurs zn coa± mznes, occasion-;iv: ~_ . in ,,,,~~;-"-'"czes suzficier;t 'ac con~z- tute a sere'ay :.aziza:. i% ,~',~st .... be removed zrom the mi~':e as ra:}id!,f as possible· .......... ~::~....~:~ belief zs 'she one ':aha-c -.abe o.'as lies ,zr£-c'ire!v in its chemic:al comoosi%ion. The value o---- the physical e;ne energy which is proanced when the gas is burned. : ....... "..:":: energ~y zs ~~,~ zz ~.e gas zs to be put to-any use° :;_is pr'assure '' "x"'""' "' '' iDe!ine '' ' '~ enoz'fly moves -one 9'as ,-;~.,-,~g.-'~ :ne ~ _ and tO 'one ........... · __ ~;.e gas as produced a'a the we±!P~eaS. Goes non have enough ofunzs" '- eressure~ ~,~ .... ,--.v _ ....n *t, _ be bo0qi:nd wi. tN ex'3ep, sive co:?,L, ression ecuir3ment in orde'- tile c'jc~S 'aO 7?tar,<o-c .... _ .~o ~.~ ....... y o~. a g~s to suore up cr.e-.~Tv in the~_..,=~'-~ of oresoure,~ which can be used _~ate~_ to eerform, use~.uz ~..~.~ ..~.-~ ,t posslb~e Lo us~: uno san:e gas severai, t'~P. os a\.'c_~ nature ~n' solution ~", an el±' rese,-vo~-.-- the oressure e.,~_~.:'-.'-" .... z in that gas is used very effectively 'do produce .~.~ o~"i. Gas ma-./_ also be i~jccted ',,nto a we:~ bore to supplement thc, ~ ~ t'he gas in solution and to assist in lifting the oil to ...2 '-- · t~n0 · ~ surzace , further asszst ~n the oroduction of o~I . g-as may be injected back into the reservoir itself to promo'ae better = ' " ~' denser reservoir rock movement of the oil out o~ the tighter, thereby ~-' ~ '~, _ ' ' ' ' ~,__o~,,_~ng it to be produced more e*fzc:ennly. C. Perhaps the most daraagin~ misco'..%cention of all is tlne one that t~e way to secure .~,reater -'' atio:~ '- ~"~-~] tltl±i.,~. Or na~.~_ ~as reoe~vas ~-~'?~ ion res ' n . 2k is ~,~,~,~. ~oroduct trier!ohs or ounitive recu!atio s is misconception is often expressed in questions such as: Texas has put ou'c the flare - why can't Alaska? its proponents seem unaware that: Texas has not put out the f~a,.-e ~' ......... ~-~a.o~. of gas, used to produce oil, and which cannot be economically put to further use, is still being flared. The very .substantial reduc- tion in flares in these states has been made.possible by greatly expanded markets. The greatly expanded markets have not been created or made possible by the severe restrictions on gas use, are sometimes cited as examples ,oz what Alaska sho'a~c, do. AGO 85156~ - 4 - .... zevo-..-s~ ...... is tzue Zt .r~. 't]:e a"..;-,:ost 'ant:mitect ..... :~: ...... ' :u :'.~",-.: develo;~ed in these s-acres ~S~ch has reade -the res,aric'a~cr.s on flaring of gas usea -co p_~~ oil 2oss,o!e ant; '.,,'orl: This is simply the : ......... ' . . =..~e_~zng zorces of supply and , coming : ~..~ being azlowed to work uninhibited towaras a proper ma%ch-up. The present level of gas usage achieved in o~;hor states is ........ ~~ ~ yeazs of ~'dzu~ii~ wi~h ~he problem, s, 'rne · laws and ~eguiations which ~ ~.~aska now has, are patJa2 ..... after c,. have worked mosz successfully ~'- oS;ncr state~, .... feel that Alaska has secured and will ~n~-~-'~ a ' of u.%iiisation o~. its gas reserves equal to or better than that of Texas or any Other s~a-ae a~ a comparah!e stage of ceve!opr:.an~. 5ne important thing to remer~ser is that development of adequa'ae markets takes time and effort.. That's wha= tnLs ,,earLng ~out. SPECIFIC PRO3LE~.!S IN ALASRA Fortunately, the natural gas reserves found thusz~r:~ in Alaska do not have some of the handicaps which natural gas reserves in other parts of the world have. A. Gas Well Gas Gas that's produced from a gas reservoir is usually dr,.;, a merchantable product under several thousand pounds pressure when it arrives at the well head. The only problem to be solved utilization of gas well gas in Alaska is that of finding a market for the gas and then ~- - .... : ~.,~z.~..~. l-a is ~r~n~po~ng the gas to that '~-~-' .... ~_/ · 8:~1566 .............. . ............. .... - 5 - eas,~.. '~o pmnpo_..t the pz-oblcm, ou'a it may not bc ~o e~.~';_ 'co solve it; at least, however, gas well gas c~,_.. b~ left in ~-'~-~..~ ~2rou unti~ - ~a problem of a market is soivcd. B. Casinghead Gas ~he ..... situation involving cas~gnead' gas is ~z~:ffer=~. if we are to produce the oil, then we have to produce the casinghead gas associated with it. The same market problem ~.-.? had wiuh gas well gas must be solved. Some additional problems however, each being .costly to solve. Water and higher hydro- carbons must be removed from this gas before it can either be trans'oorted or utilized for any purpose. The energy in the fo of pressure which was stored in this gas in the oil reservoir and bene '= ~ =~cia!!y used to produce the oi!; must be restored. Then the gas must compete with gas well gas for the limited market. 'Whether caslnghead gas can be fur~her u=~!ized economically depends upon whether ~ne return which can be realized from its sa~e. is greater than the cosu of dehydrat~..g it, reoressurinc_ ~ it, and processing it. ~-~imony.==~ presented to +he. Alaska Conse~ation Cc" ._u.'~ee three years ago at gas disposition hearings put the casinghead cas true '~3erspective. The work energy of this gas '~hat's in soiuuion with the oil down in the reservoir performs two very benefici~a! uses before one ever sees this gas when produced at the surface: i. In the work energy that forces oil from the resorvoir rock toward the well bore, a point, of lower pressure, A[~ D ©: - ~-"~ ,<OO'D %:10 -aSSOCLS.'CEC c"~:3 {~O",."i "" 'ZAO rO or'voLt 'a~'.Llr. i. .5a. 12-- could draw a beer &r.d kee? all 'the bubb':es ': .... ' ....'--~.-- Let Shell :--~-'~ ' ,..,.,-:~,~ over at th~'~s point and exolain. · , s:.tu~tioP, on ~l&tforms "A" a~d "C" zn Mfddle Ground DISCUSSION O? iSAi,:i,:R AND DILLON GAS IRE-USE our gas forecas-c an~ c3'as re-use '",xhzol'c No. i. S-al~es s: -.-~u~d gas -'e'orosen-ts_ o-'a.<er ~ .... Di~_on;_ usage curve skews only 3aker because ~'~" · ' ' ' ~.±!on uses Granz-te Po'_n'a gas for fuei ' ' ' ~ .... ~wnzcn we snow on the Granite ~oint to be reviewed ~ Skew 'chat the convert'once 'ooint (when '!:uei ~-'-:' -' ' -- occurs) would essentially occur at the same :soinz in ' ., 'Lime even -: f Di ~ ion ~}roduced gas were not -' 'Chis exhibit. New forecas-c d',.ffers -,-rom 'a:te o forecas-c becadsa '~..~o are seeing alot less q'as produc'tion"by virtue o .... aha wa'herflood Also, wa saw ~!~:~ue a drop in gas '2roauc'a'.on ., "'- 1969 ' ' slt r,~a':i bean -:~ when we uz-in ,, _ No. !0 which hca' ~ro- ~ d'acing quite a bit of gas from the HGS "A" poe' AGO 851568 ," :~oo' koi~inaj ~.:e~ ...... ~ ~ _ _= a~ovo tko ~u~u po_n'a while 'rr".": ..... =-'~ ,.~-' .... ~..~ S-C-D 'pool are si!ch'fir ~aiow ~..~ bubble 'polnt. ~e ~ to add anot~,,-''- i-~oc'tlon :0umo for t!ia ~-.~-~ ,~ol ~n tko next ~ew months s~. ~ to :-.'--~ "':,,a a ~ss/-~i'v'~ ':..'i'Zk- drawa! ca!anco for -62a~ '.poe~ The ~_~a arc'eno platform never did get below the bubble poin'.a. ~ asked: ?~el'~ {}9 Si -will znlect '~to "~s-C" {cs6' doesn~t run into :~D"}. '= ec.rui~ment re-using o~oduced gas The specific pieces o~ are detailed every !20 days in our affidavits filed with the Conservation We are ~}ianning %his year to replace the reci:2ro- caring internal cors~us-~on e~.%g'ines on -a!%e elatfc'rms with gas turbines ho run tile A~C. generators because main- tanance and ~e:sair costs ef the ..... ' ~DLiUaS are m~:~ less . 'zne turbines generally use about ~w~ce ~n~ gas reciprocating engines use¢ but 2n a~zec'a,, re~!acin~ two Waukes!%as wit:~ one turloine ~n c~cr~ ~ .... ~aanca so our fuel gas usage will not apercciah!y We are now bone-~-:cia'li2' re-using for fu,al .~,.e~ abou'~ !~uO 2,1Ci,'D ................ Ora aS abou'~ .. c~rrent Baker and Di' '~ ..... _ "' gas usage ckart ~s that fro:'.', here on out, w.a ara going . ~ ., ,. ,- _ ... .... ,y',. .~ .'; 'Lo bo re-using for :~:u:.'~ d! cz our '.-on',aixi. lu,.; '..} a .............. ~, <i,,.~a. iiVOil if ',~.;e coule :fJ.:':~./ a : ....... ,.u.t {ic::'.orrovf AGO 851569 , ... ~ ,.,511.,? ,:'~:,_",~. ',~ ',--:~,,~'q, ~.~ .... ~ ,_: .... £.: ..... { av'aii3bla 'to -'ust:.::_v :. iv, erTl:ate:: continui:~.c' -Ut u:2:o "". gas usage curve represex'as ~..~ toZai volume of gas \ "~ .... ' .... mae 2:.:hibit No 2, o'= Xiddle C:ound E:.:'sl ""; n,. tile Cl:ak,..~,.~ ~ ~ , Shoal field. S t re s s: Wi -ah -'- '~ ~ ' '~ ~ ~ ' "-- ~,~: cooperatzve l~se zzne injectors opera iva between 'the SAS and tko C>. ..... ' ............... ' - ' axac~.a,-~le ~._O,-.':.:.,s J..'c both borders, e~c:l group has its waterf!ood working quite wall. Sisal! is injeczing ..... ~"'~"' ' 'o~,S orooer-a'~es .... ~s injecting 12,000 P>PD a0 ~Uu0 ~.,92 ~ O;I ~'kS ~ . lz_iIOCO ' at tn.a Chakachatna '~B" Pia'afor::, anc injecting !0,000 ~r{mD au 'c,,e Chakachatna "D': Platform. v'o'~a:'.~ Baker and Did!on perzozqmance curves, Stress: ~;,',:re are seeing som.a ,nice flood responses around each pla-azcrm. Baker's response is mos'cly from 'one E-F-G poc.: soma of the response -~s from the ~':A" pool. The big increase in early !~70 resui'aed zrom ot}enzng 'aha :'~::' pool in Wall No. 7 plus production :'- ' _ ~ ' :.~ uno E-P-G with a workover on that we~i. gila s'absecuen'u drop resulted when our gas lift compressor on Baker wan':- do'.:.,'n for two-thirds of a month } ..... ": ..... . _., ,.=o,. 'to e,,~p:~asize -chat ~.....'e '.'plan . ,o aaa an 'r.:lactzon pump ~n the nexz row months to boos"- 'the ~-C-D poe 'par 851570 Explain our cas~ forecas'a and gas re-use; E:.:k::':_~_~ .... ;.o..' ~.- i. Usage curve includes ~ran-:~ 're Po_._.a~ '~' c.'s~ ~ used zor~ rue- - Dillon. (Note the solid sUi.'oo!cd area.) While 'the new f.orecast of produced gas -- tk.a solid ' -' ' ..... ~" '~ "~ %'aS ~o.,~e~g~._~ .ahan refaces.aec 'to you at the 1969, hearing on Granite Point~ the volun:.a of L'~ ~-.L: . ,' ..... :. ~'~ gas, eve;~ and above to the time · ~ ~ ' .... ~-: .... "-'' ' W~ze.z W~2 ;&~lCOl'.IO rUG'! de-,r~cient. ',fie CS ~LiAa'CO 20 ~Cz '~ ~ surp!u-s from now to convergence. A ,lear and a half ago, we Lnvo!ves three - ':-' ..... ' ' - ac as%'.'neil'~s': Solllew~a'h l'~lOL-e prod'acec~ gas to convergence o=.~=~ by the zact we were one ~na a half years later in 'time be,lend 'cna t-.me of our a~__ e .... fore- cast, aa3usted'' downward _<="'-"~.~_=;;er bY 'aha' ae=z'c'~ona'-~' ~' ' ' ' re-us ..... e silion 'o±au',-orm. gas to fuel '~" " _ .... (if asked- We still vic.";..,' the ultimate t~roducc'.'.i volume to be on the order of 72 BCF because we foresee solid a forecast curve tipping bezow the old forecasuea green curve after convergence.) -. - - ' '"~ rfc ' c: ated ~ New vs. o±c/ forecas.a ~:__ rs oecause of. an 'c':iall' has been occasioned by a vibration problem i'.n 'the injectio:: AGO 85157! · ';--obi~m has bee'_': so!'t,'~,:.~ ','l'a ,~.-. ............. ;~c ~ ~..~'--' _:-',_.-~ _ . _ .... .... '-ooO:;~ op~ra'c&oxal iL~ Xa,~, '~7'J_. ?70 ~l:':')~c ...... '~.c ~,; .... -~c~ (designed for~,~" CO0 .3r'r~D,. at 7,500 psi). 3. The specific pieces el equipment re-using produced detailed ever',/ 120 days " _ . mn our affidavits /{!ed wi--'~ " ~,,servation Conm?,ittae. its ex"~iained = '~ i~ake '- ' Dm , our r~'.nzua"- iht .. ~. ~_o~ '"anc~ 'lion at G .... ' '- .'o ~-,u~" .... ~nte rna i c:oro3u s t ~o:'~ e',. ~, c~.: ~{ ne s w ~-~. g a s %urb in o s to r'c, the A.C. s~""nerators. We aze now bene~cza~zy re-using for =' ~' . ~,., , . , --, . . , !,'~>ECFD. This represents about 23% of curren~ Graniua produced gas. ' ~'-is _, , - '~ ¢~'}~ imoortant message in reviewmng -~. ~.~ cas forecast vs gas usage chart is th~-"- ,':'"om here on om%, we ara going ",~ .... be re-using for ruex 6~'' gas. Even if we ceuld find a market tomorrow for "~'~ 37% excess gas mnat wenld be available~ it zs only go .... g to be four to five years 'Chat this excess gas is going to be available in any sig'nificant q'eantity. Than, beyond 1975 there may no~- sc enough excess g~,s av~ '' ~'o~me o~ gas 'anat '~ gas usage curve represents une 'total '- "'- - " - ..~s been a::& ':.'iLL isa flarad i:'. '::ha fu-a-c.-~~. 'Li-.is 'aot~:_ ':.,'o.a...,u '...'iLL we will too by_ s'o?a:ar . The '":'~ -*.-- "-- '"'~-" installed at South n~at.= .... '-= ' ' ' " ~ ~ 1969 ~zz asked: Use our old Exiizb;t No. 6 of Augusn :~, , hearing uo exo!ain, by the recent pressure at ~'~-- ~ the"- i'a our op'~n'_on ~:~ ap:pro:.:-_mate one yea. r cazay zn smaruzng our flood no't appreciabi'.f ~' ' ~nanga the forecast on gas saturation by wh-% we now see fror~ the 'serformance curve. ~..'Te should still be w-: ':-?'~'~ the previously zo~ecasted 5 uo ~°-,..o trammee.~ gas sauu~_on'! r:', .... ga ~;ne .... ~e ~eczn our flood, an o'.suimum '0oin"- 'to suar-a preso'',',~,'-- m~_..~..¢:,ce zn or{er to rea!' za optimum el* recovery a-c Gra:~..ite Point. SU)Z~iARY POP, EAST SiDE O~~ ....;.~.~'~-',,,'~'r'em~ _-r.~t=s wrap up the s-tory for the east side of .=x~,,~ first, e~aborating on the short ii ..... s"."-~ng which the excess ~" '~ ........ '~ ' ~i'~ t)e . ' ' p~o(.t~c~, ga:; w .... availat~l.~ lln 'L:rying to m,"~:.:'hn::L:~(~ recovery, we operators contribuZe to -eke short life produced gas. llere's how we do it~ Once the field limits ~ave been reasonably well defznad by development drillznc~ we znztzate steps %o conduct a secondary recovery p=og~m uo opUimize o: ' ~ recovery Waterf!oo~'ng is -a~'~e ROS~ secondary AGO 85! 573 2' O C C. '." ~ 2'_." 72 a -a.. U 2 0 r O 'd. ;;: C 0 ~.- ' ,: ;". 2 o 'a o < "l O l Ca S., "'-' l' .... ............ C.". ~'.'O S '22.~-2 --''5 OO'2~2l~ '2.'.: 2'202' ~ ~.~2 ;3.0C~212 2-2',2~8 8~22'2~' "-""--' ....... 0 .... .., ,-,~ -.-'' ',:'.'2liCil ~"= ' ~ "- = ...... '- - ~:.,0-., ~. Gl g&s "-"' :: -" ...... b l,-'--- O U ...... the gas-el~ ...... ~ ~nc s er ' ' r a::c, ~ r:~_o histories of" .... ~oo! und" ba:<o ' t)i~ platforms which we showed on 'fha oerfo?mance char'as. A further bencfi-c occurs when water injection ............ Ua beneficially re-use more oroduccd~ gas in fuei{~,-~..,~ ~-"~.:~ tu}.:bine- driven {~jection ~ ,~' -' on 'oiatfo and" 'axe onshore dril~ing_ facilities, we and Shell re-use the cas -: n~:.ie ad gas benBfioial!y once again in these ways: 1 "'O "a ..... : ~ ..... "' ~ ' ' ' power, the steam genera'hors furnishing Neat, the DO genaraters eowering dri. l~ ~'.~ ~ne plat; wells; to run hydraulic li!t pumps for oil -~na'c are no~c gas imzt'a{i'. 3. To operate 'turbine cor~'pressors to ship ~nyorocarson~ ~ s to the shore facilities. OXCO ~o'' ' ~ ~s=~n w,~ must emuhasi',e that .... ~ . ~ ~ne ~ -uses will eau 62 to 63% of the remaining produ~ -'~ . - ~ee gas Shell's estimata zor its ~}~:_atform uses is in Ute same high ..o-~-s.~,r_..~ of -'~c'-:-~..;~.:~u~.=~.-~--. %'ia-a ~.,.:oro care :" l': -f : ' ' ' - ...... ; ..... 21'cos'oig~!-ha~. :.a'.'craz i,'a .... s a,3'o. '.2~.01 o: , ': ' ' ' ._, rejec'ced 'chon when there was a=ot more gas of these alternatives warrant a re-invest~ ~'~: ...... ' '~ ~gc~OP. XOW :,',,'lI .q llO~ is far less excess gas ava-'l, able. OTPiER }'.'r.~"'"X'i2~.T!V2S; ,,'-~-~, i},~P~.:~RC investigated ex-erecting tile liquids from this ....... ',',,~ ~ prO- gas. Our investigation showed -chat, un!-~xe "-" ' - ~n~ zor prod'aced weu gas tha-c is '~ow operative on 'c:l.a wast s zee o'~-' -one :nle'~, we issked '~:evoiumes %0 -~'- ..... m~u an e}rtraction economical Even i . ~ z'c be,an economicai~ ~,ave h~.,<~ '"- ~ h-ave ~ to avoid ~nte"r-'__~'are'~ce with our oil 'orod'aciP.%' operations, which would '...permit us to interrupt eno: stop deiiverzes ., at unorea~taoze intervals o~'z shor'c nom-:ce and fo'" . ,r:~.c;.~ ~::.r- tenddd .~.eriods of time Aiic, uid a:.rtraction 'o"~,,',~- a:,ou!d ',~.- -- ~ _ ',.,2 ~ '~"" ~ ~ ~"' ' { of course, put o'c:t tl:'a gas fz~.ze. Re-.'F_,,X.e~"~i. ng,..; ~_.~ Produced Gas considered re-injecti, na' ti-:,2 9'as into 'L-he oil reservoir ~rORl~'~t.~OP.' ''''' ' ._.~', .-4.~ ~.~ ' ~ : ' reje ' ' o_~_v~.~!y came~ Tn:s was cted because 2~c just wouldn:t do nearly the good 'hkat water injection can do. ........ '..=~..: ..= :':.Olaf '~ " ..... '-~ "' ~ ~ ~C''~ - - .... : - ' " ' Poi "~ ' .... ~ie -to do an,, good at=~,,ite ...... Po~:~ .... intouch inZection of cas ) ~.~ater in~ection,~ with cc'uipmnnt.~ costing, only ~..~[S ~S :uuch as com~}ression~ equipment needed for gas injectio",, ~, [~ ,~ .... p,~:.~sh ~ch more ~han gas in '~ .....'" _ res ~ ~ co~,~c~.;..~,g fa~' moro arvo_r _oc;,, providing much greater oil recevery; by raaintaining reservoir pressure ' ~ ~' ~,cn stabil, i~ed the 'oroduced gas volumes; and by ', ..... '" ~ .,. ' ,~,z.~9 tke ~'~ost efficient use of the remaining %he re~:~voi_~ ~' ,,- as reservoir- energy. Store Gas in S~,-,}lc, w... ..... o~'a~<'}s.. ~'~e considered storing '~-' - ~- ' ..... for use later, when our pi~--~ ' ~ ' = ~to~s secon!e zuei deflcleil% Tkere are some shallow gas sa .... in l, lidd~e Groune Shoa~ ~ne~e axe no shazlow gas sand~ ~n ~.:,;,.~'ge 2oint, ................ some ~elatlvely shallow water sands above the oil i ' . ' '::-':: ,.or~zons ~ Grani%e Point .... o~u~ are -talking ~,oo~;= gas or wa'her saxds, ~,ese sa:l~s wllic:i are iiot co/,ipo%eil~, ,~- cemented rocks, are already ioadea with a fiuia !f we '~ ' ' .... " ' .... ~ ',~ flui-: ' ~lad to~to'~e_ gas i~ ally O~ tilese ~,,~a,~ ~en'C~C~c~_, e-fl sanes, we might rupture Ho ...... ' .... ~ = -~ if un=~ napoane~, we would 'ahan have :'.:o}:e oz a p.~o:~=em than ':'~ .... problem we ha~ set out to soz',,e ~,.e zirst place. - L£ - The low p::os~ure ~:. ~.. o prociuceci gas whzch will require cestiy wetness of ti:is 'producea gas w!:icll ,.,.-ill requ±.re . . some treattng first 'Lo dry -~'~ up. ,'.;. "2he e:c':2.ac'tar~c'.2 tha'L "'ckis gas supply wc,'~ti~ /ce_ :.:'...','.r- ,up'c. ed-- ' - at odd t''~;::es', '.':ever _':~::ed2':-ctabl'.z_. 5. Fine!!!, our attor:',ays advise ~2s there will be legal problems i?ivoived %0o, but ,,.~eo,_. five SiiO,' =CORI!ilci'S I']4 'aE "["he excess gas, Pin',ccc re:.'aains aler~ in its market search for any 'prell%able means of disposing of =' : ' =n~s gas Thzs brings us to pose of this hearing as cai'~a.d by "'- Cons -' _ ~ u:~e erva-cion Cc:::mz'a'Lea" Is ~.,~re NON a ~oten'cla! :~arke-d '- ~ ' ' ' "~ produced from the Cook Inlet fi,aids which would a ....... .. ;.:!':o ':.'.-use o= tho proc:'aced g,:s even more cc-,','. . :.~.eco!,,: than it ......" Used? - ' ' ' .~ ic~.:ve to a pOSSLS±~: sa Our g~s people's is'~esu co:".'aact~ re ~-:'~ '"'-' ' lc'., of the excess gas than zs .[,v;: ',:. i::b!a a,.'c ~.~ Cnaxac:tatna o":shorc g ......... s c'..!orago ~,~.uz. at s p'..':ot.~.o:.,a! to exchange our cxo.ass AGO I]51577 a:iswa, r o2 !?obr'carv 2az ~i"" ' - _ -.:- .... ~- ~ ., ~; ..... 'C. llC;'.,z &r~ S'h',~ ' "iO'c ....... . ....' '-" . 'LO clac-,'~,e .~ ...... s ava~]_""~.,s.;'a gas _ . Feral. ands onshore faci:_i.'hies" ,.t is tha-h po .... ~-i_o:~ of Grani':.a ' ' '' ' ~" some ?:: 2,i.'.,iCPD 'Lit.-...',:: Poillt gas ::ouuea ~'7 w-a,.~ of -:"""":. 2)o,ac.. - ..... '.' s '-.lot _'.loaded -' "' :) '~ '""~ : ' ~ _atform Dil!o-t fo"," ":"':"'," ....... ':.~i S caS~ beach at 175 lbs. ~ s,;u~._..i ba a_ ~ more " b,'ve r '"- ~' po'aon'a~ai ~ ~.an -aha low pressure casingheac the platforms which would "?cqui. re additional costly equipment to put it onshore.. Dosp.-.:.'ao. tho seemly at"hradt:~.ve pressu e at wltich this excess ,.:,::a~li.LU"Ll :- l:'l't9'~" ~o ........ ~.~ ;VQ~ el', ",.::_: beach, =..~.s gas . · "' '- ' th a L] :to " margL;~.ai as i~c ,~,av_ ;:e -- t :.','~:,."; e of Alas~-'',;.~ would "='" \,.'ii!i',t,; uo '~cco':.)h :for it:::, roy"'i.<.: ".oxLion.. of thi. s gas ,x.: tile ooac;l '>rov,,..",-.('i :to ~c,t;'~'h!O:l:.: cos'cs )i:2 AGO ., · available for the rest of /,./ ~ 851580 I0000 go00 AMOCO'S EXHiBiT NO.~ .... PRODUCTION PERFORMANCE · ~i' BAKER PLATFORM !-i,''-~ MIDDLE GROUND SHOAL 8OOO 7000 6000 5000 4000 3000 BOPD 2000 I000 66 67 68 AGO 851581 6g 70Dele~ ALAS~o~ OiL o, nd OAS CONSERVATtOfq ~..~ ~ i? .... ~,,.~. ~ ~ C,O. FILE 72 I0000 gO00 8000 AMOCO'S EXHIBIT NO. 4 PRODUCTION PERFORMANCE DILLON PLATFORM MIDDLE GROUND SHOAL 7000 6000 5000 4000 3000, 2000 I000 0 67 ,, 68 851582 25, 20 COMPARISON OF OLD AND NEW FORECASTS PRODUCED GAS AND PORTION ABLE TO BENEFICIALLY REUSE ........... ' ~'"i'~ CHAKACHATNA PLATFORMS ANNA AND BRUCE · .PILOT WATER INJECTIVITY TESTS,.- GRANITE POINT FIELD FULL SCALE WATER INJECTION FINISH DEVELOPMENT DRILLING PRODUCED GAS IRECAST PRODUCTION--PRODUCTION OLD FORECAST PLATFORM & SHORE FACILITY PLATFORM SHORE & SMGS DILLON PLATFORM EW FORECAST NEW FORECA~ From this time on, fuel gas will be needed from another for secon(lary lecovery , , DILLON ~LATFORM FUEL NEEDS- , , : TOTAL FUEL GAS CONSUMPTION FORECAST 68 69 70 7! 7~ c.o. FILE: ~/o o ,,, .............. ..~~~.CO'S EXHIBIT NO. ,,~ GAS INTERRUPTIONS FROM PLATFORMS TO SHORE Period 1/7/68-1/15/68 1/12/68-5/31/68 6/5/68-7/18/68 10/23/6'8- 11/3/68 12/26/68-4/9/69 12/18/68-2/27/69 6/10/69-6/24/69 Jan. 1970 March 1970 April 1970 June 1970 6/22/70~7/11/70 Oct. 1970 Nov. 1970 Occurrence Frozen Line - Dillon to Shore Frozen Line - Anna to Shore Leak in Line - Anna to Shore Leak in Line- Shell to Shore (Shell "C" Production routed through Dillon "D" Line to Shore) Frozen Line - Shell to Shore (Shell "C" Production routed through Dillon "D" Line to Shore) Stuck Pigs - Anna to Shore Leak in Line - Anna to Shore Compressors Down on Anna & Bruce Compressors Down on Anna & Bruce Compressors Down on Anna & Bruce Compressors Down on Anna & Bruce Line Break - Anna to Shore Compressors Down on Anna & Bruce CompreSsors Down on Anna & Bruce Downtime 9 Days 140 Days 44 Days 12 Days 105 Days 69 Days 15 Days 1.2 Days 1.3 Days · 7 Days · 3 Days 19.5 Days 2.2 Days .6 Days TOTAL !,} .... 7 ...... ..,, ~,~.;OE~::::.u~ ,,. ~ , .:/ ~, . r~ .,', ,'t, ",~'. ":' ,~ ,,,>,., , ,; ,. ~ , .... , . · ...... ,, '~ .:; , ....... ........ :,~.'; ~ .,~ . :}~ ~ ............. ~'2 :Z:. :~:, '~,~. ,~¢..::. ~ :.y~; '%;' i' '7::'". 419.8 Days ~TLANT. IC ltlCIIF~ELJ) CQMI]ANY TESTIMONY FOR FLARING OF CAS INGIfEAD GAS BEFOR. E AI_,4SKA OIL ..~NI) GAS CONSEIIVATION CO~ZMITTEE ltIARCH 4, 1971 TRADING BAY FIELD, NORTi-~AST OIL POOL The Trading Bay Field, Northeast Oil Pool, located approximately 60 miles southwest of Anchorage, was discovered by Atlantic Richfield well. Trading Bay State #1 in July, 1967. We usually refer to this as the North Trading Bay Field. Atlantic Richfield operates Platform "Spark" in the east half of the field, and Texaco produces tl~s west half from their platfo~m~. Development drilling' from our platform commenced in November, 196S, and terminated in October, 1969, with the completion of five wells, which is a rather small operation compared to most others in the Inlet. Exhibit 1 shows the general ou't'line of the field. It also shows the location o£ the platforms and the bottom hole locations of the wells. Atlantic Richfield's leases are colored in red. As in most of the reservoirs in the area, the oil is under-saturated and has no free gas. Ail of the gas is in solution in the oil at a ratio of approximately 250 standard cubic feet per barrel of oil. The original reservoir pressure was 4,500 psig, and the bubble point pressure i.~ 1,750 psig, the bubble point: being the pressure at whlch gas first comes out of solution. The reservoir producing mechanism to date has been expansion of oil, water, and rock. In order to produce the oil, the 94as must aJ. so be produced. In fact, the gas in solut:ion is a g'reat aid in lifting the oil to the surface as i'/ comes out of solution and expands on its way up the wellbore. - 2 - The December, 1970, oil and gas production rate from Platfonn "Spark" was 4,976 B/D and 781 MCF/D, respectively. Cumulative production as of January 1, 1971, is 5,536,284 barrels of oil and 1,253,085 MCF of gas. 'l' The five wells are artificially lifted by a conventional gas lift system. The oil is transported ashore for further processing at our Granite Point facility and delivery to Cook Inlet Pipe Line Company. The associated produced gas has in the past been used for both platform and shore facility fuel with the surplus being fi. areal. You have heard previous testi- mony here this evening about each platform becoming fuel deficient at some future point in time. This will vary from field to field. Atlantic Richfield has already reached that point on Platfo~ "Spark." Exhibit 2 shows a plot o:f our 1970 gas production and fuel gas requirements. Note 'that the 'fuel requirements exceeded the Volume of gas produced in March. Since that time, we have been running our 5,000 hp Nordberg turbine generator on gas purchased from an onshore gas well and diesel oil when the gas well gas was unavailable. In January of this year, the gas well sanded up; so we are now running the turbine on diesel oil full time. Exhibit 3 gives a more detailed breakdown of our no.~m~al fuel requirements. The Nordberg turbine requires approximately 1,100 MCF/D of gas to operate. Obviously it also has the dual Capability of operating on diesel oil. This was in 'the original design for use in startup after a full platform shut- down or in an emergency. However, the unit will not run. on half gas and half diesel oil. It's either one or the other. AGO 851587 - 3 - Whenever the total gas available, and in our present situation this is the gas production, drops below the necessary total fuel requirements even so slig'htly, the Nordberg turbine has to be fired with diesel oil because the other facilities are only gas fired. Consequently, there will be some surplus gas over and above that which is needed to supply the boiler and onshore facilities. This surplus will vary between 300 - 500 MCF/D dependent on production, and it will have to be flared since it is an insufficient amount to fire the turbine'. Of course, we always maintain a small safety pilot flare anyway in case of an emergency. .This is jus.%-good oilfield safety practice. We have just signed an agreement with Mobil Oil. Corporation for use of some of their surplus casinghead gas which would be made available at our onshore f. acility. We would then ship the necessary gas volume out to our platform through one of the 'two seven-mile long, six-inch lines. This would then put us in a no-flare condition for our operation from then on except for the safety flare. This source of fuel is undesirable for two reasons: (1) It is an interruptable supply, and (2) it lacks longevity. If Mobil should shutdown for some operational necessity, then they would / be unable to supply us any gas. Someday they may also become fuel deficient. However, in the meantime, we plan to make use of as much of the surplus casinghead gas as possible and thereby reduce the amount being flared. Current unitization negotiations with Texaco could alter the gas production forecast. If a unit is i'ormed and' a xva't, erflood project started, which is ,851588 - d - the present plan, oil and gas pro¢tuctJon would increase and, consequently, we could be back i.n a gas surplus status again for a year or two. We believe that this approach to surplus casinghead gas utilization is in l'he best interest of all concerned. This concludes my testimony. RIvlC ' s r 2/2 5/71 54 CoNsr::RVATtq~~''1 COt~ NtITTEE c.o. FILE "FF~ADIt'tG BAY UNIT Cook Inlet, Aloska .d'",r d / d / '~ f AG:0 8:51590 IlI 0:~ ~500 2.000 1500 I000 5O0 EXHIBIT 2 ATLANTICRiC HFi ELDrn~,?' PANY PLATFORM SPARK OPERATION 19 70 aGO 8515.91 EXHiBiT ~ PLATFORM SPARK AND GRANITE POINT S"OR'-F,.,,.,CiI_iTY FU~:'L GAS REC)tJtR~r:~ ON,,. ~ .u. '"" , ,.,., E N T S ATLAN'FICRICH F tE LDCOM PANY (TYPICAL- DAY') · I - NORDF.3ERG TURBINE GENERATOR (5000hp) I - HEATER BOILER (25Ohp) MCF/D I100 250 PLAT'FORM 'FOTAL, 1350 ONSHORE FACILITIES 30.0 TOT'AL REQUIREMENTS t650 ,, PREPARED TESTIMONY - TEXACO INC. ALASKA OIL AND GAS CONSERVATION COMMITTEE HEARING' BENEFICIAL USE OF GAS - CONSERVATION FILE ~100 This testimony is presented by Texaco Inc. on behalf of itself and The Superior Oil Company. In April 1968, Texaco Inc., as operator for itself and The Superior Oil Company, jointly erected a tender-assisted drilling and production platform in the Trading Bay area of Cook Inlet, Alaska. Pipe- lines were laid from the platform to a treating and shipping facility located near Granite Point on the west side of the cOok Inlet. To date nine wells have been drilled and at the present time six of those wells are being produced. Present , average production is 4600 barrels of oil per day and 1080 MCF of casinghead gas per day. Oil production comes from two separate accumulations. One accumulation is the Middle Kenai Oil Pools of the Trading Bay Field and the other is the Northeast Oil Pools of the Trading Bay Field. Both reservoirs were highly undersaturated initially; original reservoir pressures were in the range of 4300 psig at 9700 ft. subsea, and the bubble point pressure is in the range of 1850 psig. The measured solution gas-oil ratio was approximately 270 std. cu. ft. per barrel. The producing mechanism of the oil pools is the expansion of oil, water and' rock. At the present time only dissolved gas is being produced as the reservoir pressure is greater than the bubble point pressure. As pointed out in other testimony, the primary bene- ficial use of the produced casinghead gas is to lift the crude oil to the surface. "To February 1971, less ~b~n on~ m~]]~nn M~f - 2 - of casinghead gas has assisted in the production of more than 3½ million barrels of oil. About 100,000 Mcr of this casing- head gas has served a secondary use as fuel for platform operations. At the present time produced casinghead gas is the only fuel source normally utilized on the Trading Bay Platform. For the following reasons, the casinghead gas not utilized as fuel could not be further utilized: · 1. Studies indicated that recovery could not be enhanced by reinjection of the casinghead gas into the oil zones due to the limited areal extent, rock characteristics and formation structure. In fact, oil recovery may have decreased had injection been undertaken. 2. There were no shallow water or gas sands which were suitable for the economic and safe storage of the surplus casinghead gas. 3. We have been unable to develop a market for the s~rplus casinghead gas because the volume of casinghead gas available for sale is small, and the sales period is short. Submitted herewith is a casinghead gas production forecast dated February 17, 1971, which shows a graphical plot of the casinghead gas production in MCF per day versus time. This graph was prepared under my direction. It is requested that it be accepted as Texaco Exhibit I, as marked. The graph'.is an extrapolation of current production under a primary depletion mechanism. The graph indicates that with a AGO 851 - 3 - fuel gas requirement of 700 MCFD, insufficient produced casing- head gas will be available for fuel after May 1972. From February 1971 until the breakeven point in about one year, 74 MMcf of casinghead gas will be produced in excess of our fuel gas requirements; however, in the 4½ years following the breakeven point, our ca~nghead gas will fail to meet our fuel requirements by 496 MMcf. This forecast clearly indicates a significant sustained fuel gas deficit over the next 4 to 5 years. In summary, we believe that we have and are continu- ing to make the most beneficial use of our casinghead gas' possible, namely, that of assisting in lifting the oil to the surface. In a secondary manner, we are utilizing casinghead gas to the fullest extent possible as fuel. Every effort has been made and will continue to be made to develop maximum Secondary utilization of casinghead gas consistent with econo- .miCs and prudent operation practices. This concludes my presentation. · FAW: jom 3/1/71 mGO 85~595 2200 1800 HISTORY FORECAST CASINGHEAD GAS PRODUCTION FORECAST TEXACO-SUPERIOR TRADING BAY PLATFORM "A" ADL 17597 - COOK INLET, ALASKA FEBRUARY 17, 1971 TEXACO EXHIBIT # 1 ,' 110 , 'ilO0 1600 eo ~ 1400 7o 1200 ~o 1000 so 4O 400 ¢o 200 ~o 0 0 7O 6O FUEL REQUIREMENT , L .- DEFICIT i.I PROJECTED GAS PRODUCTION 19 68 19 69 19_7_0__ 19 71 19_7.2-__ 19._7_~ 19_.7_4_. 1 AGO 851596 19 75_ z9 76 ~9. 77 ZO 10 TESTIMONY TO BE PRESENTED BEFORE TttE ALASKA CONSERVATION COMMITTEE JUNEAU, ALASKA March 4, 1971 C. J. Diver Chairman, Engineering & Planning Group Trading Bay Unit All of mb' comments deal strictly with the Trading'Bay Unit, the McArthur River Field, and the LEX plant at the Trading Bay Production Facility. My testimony will encompass a review of past testimony, discuss the current operating status in the field, review.with you some predictions as to gas production and set forth the conclusions as we see them. The McArthur River Field is located approximately 70 miles southwest of Anchorage in the Cook Inlet. Three platforms were built by the operators to develop the oil reserves discovered in 1965. Three reservoirs currently contribute the oil production from this Unit. They are the West Foreland, the Hemlock and the G Zone sands of the Middle Kenai series. Production from this field is transported through underwater pipelines to the Trading Bay Production Facility where the oil and water are. separated 'and the produced gas is processed for the recovery of additional liquids. The first production from this field was in late October 1967 and by the end of 1970 the cumulative production was about 94 million barrels. At a hearing held in Anchorage on February 7, 1968, just three months after -1- AGO. 85159 7' tile initial production, tes'tiniony on the McArthur River Field was presented outlining the methods which would utilize the produced casinghead gas. That hearing was reconvened on May 8, 1968, at which time further discussion of · the use of casinghead gas was heard. On May 10, 1968, Order 61 was issued by the Alaska Conservation Committee. Four sPecific findings particular to the McArthur River Field were contained in Order 61. They are' 1. The field is in an early stage of development and a considerable amount of drilling will be necessary to thoroughly evaluate the reservoirs, but enough .is known to permit reasonable predictions of gas production and gas usage. 2. Gas production will exceed gas usage for slightly over ten years but the volume available will be constantly decreasing after the first fi ve years. 3. The produced gas has a high nitrogen content which may render it undesirable for'uses other than heating. 4. The high nitrogen content will prohibit use of the gas in the liquification plants being constructed on the east side of the Inlet. In addition, 17 other findings were considered by the Committee to be pertinent to the McArthur River. Field and other fields covered by Order 61. They are' 1. There is no feasible way to lay a pipeline from the productive areas on the west ~ide to the east side of the Inlet across the deep trench with present pipeline technology. 2. Gas available for market is concentrated in the early years and a deficiency will exist from 1974 to 1979. 3. All gas now being produced is originally found in solution with -2- AGO 85~598 orde~~ the oil and in ~o pro. duc. e the oil the gas must~ so be produced 4. The gas being flared is casin~head gas which is quite different in character and properties from gas well gas. 5. The small volume of gas is produced with each barrel of oil and the amount of gas does not exceed the amount reasonably necessary to lift the oil to the surface. 6. The reservoir energy is being efficiently utilized. 7. All gas production which exceeds gas consumption is being flared and burned for safety purposes. 8. Operators have installed gas lift equipment or made plans to install equipment to utilize as much of the heat energy as possible on the off-shore platforms. 9. Lines and most facilities have been installed to move the gas production from the platforms to the shore for possible marketing if and when a market develops. 10. There is no market for casinghead gas at present since costs to dehydrate, compress, transport and process the gas exceed the value of the tail gas plus the extracted liquids. ll. Operators are investigating and installing pilot water injection projects and it is not feasible to re-inject gas into the oil reservoirs until the success or failure of the water injection projects are proved. 12. If water injection does not prove feasible the operators will re~6'valuate the feasibility of gas injection for pressure maintenance· 13. It is not feasible to store gas in undeveloped reservoirs in this field because of high compression and injection costs, possible loss of hydrocarbons, safety hazards, and contamination dangers. 14. There are no depleted oil or gas reservoirs in which to store the .qas. - 3 - AGO 8.~ ~. ~99 15. The operators have' ut~ilized all gas possible for lifting the production, fuel and generation oi~ power, and have attempted to secure a market for the remaining gas. · 16. Maximum beneficial use of the gas is being obtained under the circumstances. 17. No illegal use is being made of the produced gas. These findings have been reviewed because we believe the testimony which follows will show, that, with few exceptions, the same findings are still valid today. Subsequent to the hearings in 1968 Order 61 was extended for 120-day periods on eight occasions. Each extension of the Order contained the Committee's decision the operators were actively pursuing a program to beneficially utilize the gas which is being flared. In 1968 an exhibit was used which included a prediction of gas to be produced and an estimate of the amount of gas which would be utilized. Exhibit I shows the most recent estimates of t~'ese volumes. We have shown the gas volumes in millions of cubic feet per month versus time. On this exhibit is plotted the gas production for the Tra'ding Bay Unit, the amount of.__gas utilized, the volume of gas shipped to the Trading Bay Production Facility and a prediction of these volumes. The gas production estimate reflects the expected decline in oil production over the life of the field, We do not anticipate producing these reservoirs below the bubble point; there- fore, the estimated casinghead gas production should correspond very nearly -4- AGO 85 ~1-60° with the crude oil ~oducti.on,decline. Produced gas is partially utilized by being shipped to the Trading Bay Production Facility. This accomplishes a dual purpose by collecting the gas in one place for processing and supplying residue gas to fuel the production facilities. A potential benefit is that the residue gas is at a central point should a market develop. The dashed curve on Exhibit I shows the amount of gas shipped from the platforms to the Trading Bay Production Facility for,processing. The LEX plant at the Trading Bay Production Facility processes the produced gas and extracts from it liquids which are recombined with the crude oil stream. The recovery frown the Trading Bay Unit is approximately 1700 barrels per day and represents an equivalent volume of gas of about 60 million cubic feet per month. This volume is included in the "Utilized" curve on Exhibit I. Another use of produced gas is for fuel on the platforms. We anticipate that fuel requirements resulting from the addition of gas fueled units on the plat- forms will result in total fuel consumption of some 520 million cubic feet per month. This compares with the original estimate made in 1968 that fuel requirements in the Trading Bay Unit would approximate 540 million per month. This volume is combined with the shrinkage volume, mentioned earlier to make up the Utilized curve shown on Exhibit I. At the present time some gas well gas is being used as fuel on board platforms in the Trading Bay Unit. Two platforms have integral compressors which, it was hoped, would be capable of utilizing casinghead gas for fuel. Experience has shown that it is impossible to fuel these units with casinghead gas. Many attempts have been made to utilize casinghead gas and in every case severe damage resulted to the power -5- AGO 85160[ portion of the compressor resulting in extensive downtime and expensive replacement of pistons and cylinders. Downtime can cause severe curtailment of crude oil production. The other major power source on the platforms is turbine-driven units. Experience with these units has shwon that casinghead gas is not as desirable a fuel as the dryer gas well gas. The turbine-driven units have been run on casinghead gas and this has caused severe turbine degradation and resulted in several turbines having to be replaced prematurely. · The manufacturer of these turbines has been contacted and has devised new combustion 'systems which will allow us to use casin~head gas for fuel. In summary it would appear that the internal combustion engines will have to be fueled with gas well gas but the turbine-driven units will utilize casing- head gas for fuel. Extending the anticipated utilized gas curve and observing the production curve one can see that we expect to become deficient in the amount of casinghead gas available for fuel in 1980, This agrees with the estimate made at the original hearings in 1968 where we projected a fuel deficiency in 1979. Our current estimates indicate we will flare approximately 27 billion.cubic feet of casinghead gas from now until we are fuel deficient in 1980. This volume represents the entire amount of casinghead gas that would be available for sale if a market existed a't this time. Observing the._,curve it is apparent that over a third of this excess gas production will occur in the first two years. Considering the small size of this gas package and the manner in which it is produced you can appreciate the difficulty in finding a market for this gas. -6- AGO 85,~602 The performance of ~i,~ field then is very nearly the'~me as was predicted in 1968. The amount of gas utilized has been somewhat less than originally predicted resulting primarily from the amount of time required to design, order, and install some very complicated producing and pressure maintenance systems on board tile Unit platforms. The amount of gas produced has exceeded to a slight extent that originally anticipated and this results primarily from greater oil production rates than were estimated at the original hearings on this issue. In general we believe the production and utilization of this produced gas is nearly as was predicted in 1968. In reference once again to the original findings I would like at this time to discuss specific findings on which current information indicates changes would be in order. These are: (1) The first specific finding which indicated the .fi el d ~ was in an early stage of development. Obviously this is no longer true; however, we do feel that reasonable predictions of gas production and gas usage can be made. (2) General Conclusions, Nos. 11 and 12. These conclusions referred to the installation of pilot water projects and the evaluation of these projects. Semiannual pressure maintenance reports which were filed with the Conservation Committee. have pointed out our optimism on the success of these projects and they are no longer pilot projects but are, 'in fact, full scale pressure maintenance. Current injection rates, as these reports indicate, are in the order of 130,000 barrels of water per day in the He~n-¥ock reservoir. Pressure response has been measured indicating this project is successful; therefore, we are no longer considering gas injection for pres- sure maintenance. These are the only three findings from the original hearing which we believe -7- AGO 851603 have in any way chg,~.:d. The ,order issued by the Coh~ervation Committee dated January 21, 1971, extending the original findings for a 120-day period indicated that a market may exist for the gas now being flared. We have investigated and are continually investigating means of moving this gas to market. At every turn we are stymied bY the small volume of gas available, for some markets the quality of the gas and the i nterruptable nature of its production. Our most recent experience with this interruptable feature was borne out in January of this year. As I am sure you are aware, heavy ice conditions in the Inlet prevented the production of a considerable amount of oil and its solution gas. This occurred at a time when temperatures were reaching all time lows in a potential consumin~q area and the demand for gas was at all time highs. Had we been attempting to supply domestic markets with this gas both the consumers and producers would have been in dire straits. ,, The liquid extraction plant mentioned earlier was constructed at the Trading Bay Production Facility. Its purpose was to further beneficially utilize produced gas from the Trading Bay Unit and the Trading Bay Field by removing as many marketable liquids as possible. The plant is designed to process 40 MMCFD of solution gas which includes 6 - 7 MMCFD of very rich treater and stock tank vapors gathered by the vapor recovery system. Essentially all the butane and heavier liquid hydrocarbons are removed and injected into the crude stream. The plant can be expanded to recover propane should a market develop. -8- AGO 8§1.60~* The plant was placeu ,n ope. rat, ion on February 9, 197 As of January l, 1971, about 8 billion cubic feet of casinghead gas from the Trading Bay Unit and Trading Bay Field was processed including 1.4 billion cubic feet of crude vapors. This resulted in the recovery of over 4.40,000 barrels of liquids which were sold with the crude, i'he extraction of these plant liquids along with the fuel required to recover them reduced the excess gas volume during 1970 by almost 1 billion cubic feet. -9- AGO 85~605 1800 1600 1400 1200 !-. = 1000 co 800 6OO 400 200 HISTORY FORECAST ZED G 1968 1969 1970 C.o. FILE, EXHIBIT T TRADING BAY UNIT GAS PRODUCTION AND UTILIZATION C. J. DIVER UARCH 1971 1976 1977 1978 1979 1980 1981 . MOBIL OIL CORPORATION T]ESTIMONY GAS USAGE HEARING - JUNEAU MARCH 4, 1971 The remaining testin~ony by industry representatives will be concerned wifla fields from which production is piped to the west side of Cook Inlet. These fields are shown on the field and facilities map, on .. . the easel, and are, moving in a southerly directio.n, the south of Granite ........ P~.i. Bt, Tr._~d~ing ._Bay..~_n__d_McArt~_h. ur ~iver. The testimony concerning these fields will be presented in the order nan~ed. ..... The re~ainder of my ~es[imony will concern the sou~h end of the Granite ~oin~ Field where Mobil Oil Corporation is Opera~or of the Mobil-Union jointly owned S~ate lease No. ADL 18761. This lease is shown "5'fi"Amoco's Exhibit No. which, as mentioned by ~oco, ~as prepared as a joint exhibit. The portion of the Granite Point field underlying our lease produces from the Middle Kenai Zone and is ~.~.y.~l_9.p. ed_by..l.0.pEgd~ci~g.wells and six water injection wells including the ~o ].ease line wells. The injectors are in a peripheral configuration . . and are shown as triangles on A~moc0"s Exhibit . The current daily production rate is approximately 6800 barrels of oil and 10.5 million dubic feet of gas. Water injection was commenced in mid 1970 to provide . for an increase ii~ oil recovery. The current rate of water injection is about 17,000 barrels per day. The sourceof the injected water is Cook Inlet. Water is filtered, dearated and injected through the six injectors previously mentioned Surface injection pressures vary from well to well and range 'from 4600 to 6800 psig. Our injection system is capable · of-prOviding up. to 7500. psig pressures. Production from the south end of Granite Point field commenced in May 1967 and through June 1970, the .withdr.awals of oil and gas anaounted to 16.0 million barrel's, on a reservoir volu¢~.e'basis. This means the volume that was occupied in the reservOir .. by the produced oil and gas was 16.0 million barrels. Water injection was commenced in June 1970 and since that time we have withdrawn on a reservoir volume basis, 3.1 million barrels and have injected 1.5 million -.'barrels[of water. At the present time, on a reservoir volume basis, we are injecting water at about the same rate that we are withdrawing oil and Mobil's E~ibit "A" is a graph showing, for the period i971 through .. 1987 the forecast of gas production and gas usage attributable to operati6ns ...... ...... .,.~.. .:,, , on the Granite Point Plat~' in. The total gas estin~ated to~ .e produced is the upper line and the estimate of gas to be utilized is the lower solid line. On the vertical scale two inches represent one n~illion cubic feet per day. The total volume of gas now forecasted to be produced is about 17 percent greater than that forecast for this same period at the August 15, 1969 heari'ng. The produced gas has been and will continue to be beneficially used to move the oil to the well bores and lift the oil to the surface. As mentioned earlier, we are now supplementing this gas with water injection. A second beneficial use is made of the portion of the produced gas which is extracted as liquids and which is used to fuel generators, con~pressors, water pumps, provide gas lift gas and deaeration of injection wa~er on the Platforn~ and oil treating and pumping facilities located onshore. We have recently entered into an agreement to sell a quantity of the gas that is surplus to our nee ds to Atlantic Richfield Co~r~pany for use on their Spar'k Platform and shoresite. This'market has become available in recent weeks for reasons that will be explained by Atlantic tKichfield in their subsequent testi~nony. The delivery of gas to Atlantic Richfield will be on an interruptable basis and for only such time as gas.is available surplus to our needs. Ga.s utilization shown is essentially the same as that forecast in August, 1969, plus the volume now 'extracted as liquids and the volume.that will be sold. Over 50 percent of the gas }~sage other than anticipated sales is to carry out the water flood operation. The utilization of produced gas is detailed on Mobil Exhibi~ "B". Also shown on this exhibit is the daily average gas require~nent in thousands of cubic feet per day required by each piece of equipment. Other uses. are also detailed. On the Granite Point platform, gas is used to fuel a 750 tfV~ electric generator, a 1550 Horsepower compressor for gas lifting the oil, a 350 Horsepower standby compressor and t~vo 1650 Horsepower water injection, pumps. Onshore are located t~o oil treating vessels used to make the oil Salable, a Standby electric~generator and two 500 Horsepower oil shipping pu~nps. Make up gas for gas lifting and deaerationor injection water and liquid extr ~].ction also require a second use of the gas. The total amount of gas required for fuel when.all equipment is in operation is about 1580 MC1~ per day. 470 M.CF per day are utilized for deaeration and make up gas and gas sales, to commence soon, will be about 800MCF per day for a total usage of 2850 MCF per day. AGO 851608 Referring again to( .obil E×hibit "A", the differen~~ oetween the top line (produced gas) and the lower line (gas utilization) is the gas that is forecast to be flared fro~ our Granite Point operations over the period covered. Ck~r current forecast shows that, by n~id-1980's there will be little or no gas production in excess of platfor~r~ shoresiteusage requirement of 2050 MCF per day'. The total gas estimated to be produced from the present through 1987 will be 36 billion cubic feet of which some !7.1 billion or 47 percent of the total will be used and sold. It should be noted that this forecast indicates that the sales gas to Atlantic Richfield will not be available after mid-1984. Through 1976, about 70 percent of this surplus gas will have been produced and the availability will be about 3 ~illion cubic feet .per day which is about one-third of the current surplus. This Exhibit illustrates that the availability of this casing head gas in quanti['y is of short duration, at declining rates and is, of course, subject to interruption a~ any time as it is directly related to oil prod'action. Investigation of uses for gas which is Surplus to our fuel needs has been and will continue to be the subject of engineer~.ng and economic studies within Mobil. Included in past studies wet& consideration of (1) storing th~' surplus gas in formations other than the Middle Ixlenai zone, (Z) reinjection of the ga~into the Middle t<ienai zone, (3)'participating in industry efforts to collect and ~r~ove' the gas to any market that may become available, (4) extraction of natural gas liquids both on the platform and onshore, and ~ (5) direct sales to any one who may desire to purohase the gas. The results are updated fro~ time to tinge but the results continue to be negative. Concerning storage, we have no gas reservoir available in the Granite Point field to conduct such an op~eration. Gas injection into the oil zone a~ a means of increasing oil recovery was investigated but it was determined that water injection would provide for a greater oil recovery~. Application of gas injection is incompatible v~ith the water flood operations and would cause ultimate loss of oil in any area swept by gas injection. There is a free .gas saturation in the reservoir at the present tim. e and therefore the relative permeability to gas is high and injected gas would probably break through to oil producing wells and cause AGO 85~609 .ea,i~ly abandonnxent. Ir~ e~,"~"ct a cycling of gas wou].d occu~,~''' 'ather than a storage of gas. If gas were to be xnjected into the oil zone the pressures required are estimated to be in the 4000 to 5000 pound per square inch range. The dangers of such pressures in handling natural gas are apparent. Economic and safety consider'ations aside, there is not room on the platform for both gas injection equipment and the currently installed water injection equipment. To my kno~vledge there have been no viable econon~ic results from the industry effort to gather and market the surplus gas. o AS to the extraction of liquids, we have been extracting about 40 · barrels per day of liquids and a recent detailed en'gineering study indicated that additional equipment would opti~r~ize liquid recovery. This equipment' has been installed and liquid recovery is now calculated to b'e 140 barrels per day. In previous testimony, it was reported to you that the cost of transporting the surplus gas to the Marathon West Forelands liquid extraction facilSty would exceed the value of the liquids available for extraction. This is, of course, still true. We also found ituneconon~ical to deliver gas to Phillips East Foreland liquification plant. In the past, we have supplied to requesting parties our estimates of surplus casing head gas reserves and vo!um.e rate~ but have received no offer to purchase the surplus casing head gas other than the rece~nt~ development with Atlantic Richfield. We stand ready to pursue any prospective market and are willing to sell this surplus gas into any m. arket that ~w~ight become available and so long as we have gas volumes produced in excess of our fuel needs on the platfor~n and sho'~eSite. Insummary, I believe ali. reasonable actions, relative to the conservation of natural resources are being taken by Mobil as operator of the Mobil-Union interest in the Granite Point field. We shall continue to undertake any study and act upon our conclusions therefrom in the best interests of conservation commensurate with our obligations under our lease 'agreement and applicable laws and regulations. I respectively request tha~ the Cornn~ittee, after consideration of my testln-~ony, find that t-he current provisions of Conservation Order No. 61 should be continued in force and effect without change. 3/Zl?l AGO 851610 GRANITE POINT FIELD 0 ' PLATFORM & SHORESiTE USE ' ' YEAR EXHIBIT A OIL GORPORA-"i .... ION GAS UTILIZATION ITEM INSTALLATION DATE ~ ~ ~ · 'PLATFORIVI FUEL ' :- 750 K.W. TURBINE POWERED GENERATOR set . . ~$5o H.R COMPRESsor' - - - ~ 350'H.R COMPRESSOR -" ' ' 2-t650 H.R TURBINE poWERED WATER INJECTION PuMps SHORESITE FUEL . 2 HEATER=TREATERS ' 125'K:W:GENERATOR SET STANDBY 2-500 H.R GAS ENGINE DRIVEN SHIPPING PUMPS 1 ONLY USED~ OTHER GAS USAGE GAS LIFT MAKEUP GAS GAS FOR DEAERATtON OF INJECTION WATER GAS LIQUIDS ,RECOVERY OAS SALES TOTAL GAS UTILI.ZATION 10-1-68 210 1 I- 1- 68 220 60 6-1-70 890 1-1-67 160 1-1-67 - - 7-1-68 40 11-68 to 12-87 210 6-1-70 120 3-71 140 4-71 EST. 800 2850 AGO 851612 EXHIBIT PUBLIC HEARING ON THE BENEFICIAL USE OF CASING HEAD GAS IN COOK INLET, ALASKA ALASKA STATE CAPITAL BUILDING JUNEAU, ALASKA 7:30 P.M. - MARCH 4, 1971 SHELL OIL COMPANY - WEST COAST DIVISION OPERATOR FOR SAS GROUP MIDDLE GROUND SHOAL FIELD TESTIMONY BY T. L. LOGAN - DIVISION PETROLEUM ENGINEER A. O. P. CASBARIAN - DIVISION MECHANICAL ENGINEER ,AGO 851613 QUAL IF ICAT IONS MY NAME IS THOMAS L. LOGAN. I AM A GRADUATE OF THE UNIVERSITY OF HOUSTON WITH BACHELOR OF SCIENCE DEGREES IN PETROLEUM ENGINEERING AND MATHE}~kTICS. I HAVE BEEN AN EMPLOYEE OF SHELL OIL COMPANY FOR THE PAST TEN AND ONE-HALF YEARS. MY PETROLEUM ENGINEERING EXPERIENCE CONSISTS OF DEVELOPMENT, PRODUCTION AND RESERVOIR ENGINEERING ASSIGNMENTS IN OKLAHOMA, TEXAS, OFFSHORE LOUISIkNA, CALIFORNIA, Ah']) NOW ALASKA. I ALSO HAVE SPENT TWO YEARS AT SHELL'S RESEARCH CENTER IN HOUSTON WHERE I WAS BRIEFLY INVOLVED IN THE EARLY RESERVOIR SIMULATION STUDIES TO DETERMINE THE FEASIBILITY OF WATER FLOODING IN THE MIDDLE GROUND SHOAl FIELD. HOWEVER, MOST OF MY WORK AT THE RESEARCH CENTER INVOLVED DEVELOPING COMPUTER PROGRAMS FOR' AIDING IN OPTIMIZING GAS FIELD DEVELOPMENT AND PRODUCING OPERATIONS. I AM CURRENTLY THE DIVISION PETROLEUM ENGINEER FOR SHELL'S WEST COAST DIVISION - NORTH WHICH COVERS ALL OF SHELL'S WEST COAST PRODUCING OPERATIONS FROM THE SAN JOAQUIN BASIN OF CALIFORNIA NORTHWARD TO ALASKA. qUALIF ICAT IONS · MY NAME IS PETER CASBARIAN, DIVISION MECHANICAL ENGINEER WITH SHELL OIL COMPANY AND A GRADUATE OF THE ROYAL COLLEGE OF SCIENCE AND TECHNOLOGY, GLASGOW WITH A BACHELOR OF SCIENCE IN CIVIL ENGINEERING, OF HARVARD UNIVERSITY WITH A MASTER OF SCIENCE AND OF CORNELL UNIVERSITY WITH A DOCTOR OF PHILOSOPHY, ALSO IN CIVIL ENGINEERING. I HAVE BEEN WITH SHELL OIL COMPANY SEVEN YEARS AND DURING THAT TIME HAVE WOI~KED INITIALLY IN RESEARCH, AND FOR THE PAST FIVE YEARS IN OPERATIONS, PRINCIPALLY ON FACILITIES HANDLING OIL AND GAS. MY TIME HAS BEEN SPENT IN THE GULF COAST OF CALIFORNIA AND FOR THE lAST SEVEN MONTHS MY RESPONSIBILITIES RAVE INCLUDED THE MGS FIELD. I AM A REGISTERED PROFESSIONAL ENGINEER IN THE STATE OF LOUISIANA. AGO 851615 TESTIMONY - T. L. LOGAN AS I UNDERSTAND IT,. THE PURPOSE OF' THIS HEARING IS TO DETERMINE IF THERE IS A POTENTIAL MARKET FOR THE CASING HEAD GAS PRODUCED FROM THE · COOK INLET FIELDS WHICH WOULD ALLOW US TO UTILIZE- THE PRODUCED GAS EVEN MORE COMPLETELY THAN IT IS NOW BEING UTILIZED. AS ONE OF THE OPER4.TORS IN THE MIDDLE GROUND SHOAL FIELD, WE (SHELL) BELIEVE THAT EVERYTHING ECONOMICALLY FEASIBLE HAS BEEN DONE TO UTILIZE AND TO MINIMIZE THE FLARING OF CASING HEAD GAS BEING PRODUCED IN THIS OIL FIELD. TO GIVE YOU ALL A FEELING FOR OUR .OPERATIONS I BELIEVE IT WOULD BE BENEFICIAL FOR .ME TO DISCUSS T}{E FOLLOWING ITEMS: 1. I WILL BRIEFLY DESCRIBE THE TYPE OF OIL RESERVOIR WE ARE DEALING WITH AT MIDDLE GROUND SHOAL. THAT IS, WHAT ARE THE MAIN PRODUCING CHARACTERISTICS? WHAT KIND OF PERFORMANCE, BOTH OF OIL AND CASING HEAD GAS, MIGHT WE EXPECT UNDER NORMAL PRIMARY PRODUCTION OPERATIONS? 2. I WOULD THEN LIKE TO DESCRIBE THE EARLY PERFORMANCE OF THE MGS FIELD, BOTH AS TO PRODUCTION CHARACTERISTICS AND RESERVOIR PRESSURE DECLINE. YOU WILL SEE WHAT COULD HAVE OCCURRED HAD NOT AN AGGRESSIVE PROGRAM TO MAINTAIN THE RESERVOIR PRESSURE BY WATER FLOODING BEEN FOLLOWED. 3. THE EARLY PERFORMANCE UNDER WATER FLOOD COI~rDITIONS WILL BE ILLUSTRATED. THE EFFECT ON ULTIMATE RECOVERY OF OIL AND GAS WILL BE DISCUSSED. 4. WE WILL SHOW YOU OUR CURRENT PREDICTED PRODUCTION PERFORMANCE. THIS · WILL ILLUSTRATE THE ANTICIPATED OIL AND GAS RECOVERIES VS. TI~. A GAS USAGE HISTORY AND FORECAST WILL ALSO BE SHOWN TO FURTHER ILLUSTRATE HOW WE MINIMIZE FLARING. FROM THESE PERFORMANCE PREDICTIONS YOU WILL BE ABLE TO SEE WHAT RELATIVELY SMALL VOLUMES OF GAS WE ARE TALKING ABOUT FLARING AT MIDDLE GROUND SHOAL. THIS SMALL VOLLrbfE, OF COURSE, IS ONE OF THE KEY RESTRICTIONS WE RUN INTO WHEN ATTEMPTING TO FIND A MARKET FOR THIS GAS. · FOLLOWING MY DESCRIPTION OF THE RESERVOIR AND PRODUCING PROC'ESSES, MR. PETER CASBARIAN, SHELL'S WEST COAST DIVISION MECHANICAL ENGINEER, WILL. · DISCUSS THE HANDLING AND MOVEMENT OF OIL AND GAS BOTH OFFSHORE AND TO THE ONSHORE FACILITIES. HE WILL SHOW YOU THE NUMEROUS WAYS IN WHICH WE ARE UTILIZING A LARGE PORTION OF THE GAS ON THE PLATFORMS AND OUR PLANS TO INCREASE THIS USAGE. HE WILL TELL YOU HOW WE HAVE }[A~XiMIZED LIQUID RECOVERIES AND FINALLY, DISCUSS SOME OF THE PROBLEMS ASSOCIATED WITH CASING HEAD GAS AT MGS . WHICH PRECLUDE THE OBTAINING OF A MARKET FOR THIS PRODUCT. TYPE RESERVOIR IN ITS ORIGINAL STATE, MIDDLE GROUND SHOAL CAN BE CLASSIFIED AS A DISSOLVED GAS DRIVE RESERVOIR. THE NAME IS NOT TAKEN FROM THE SHAPE OR CONDITION OF THE RESERVOIR BUT FROM THE SOURCE OF ENERGY WHICH PRODUCES THE* OIL. THE ENERGY IS DERIVED FROM THE LIGHT HYDROCARBONS (GAS) WHICH OCCUR IN SOLUTION IN THE HYDROCARBON LIQUID MIXTURE IN THE RESERVOIR. THESE LIGHT HYDROCARBONS ARE LIBERATED FROM SOLUTION AS THE OIL IS PRODUCED FORMING A G~S PHASE IN THE PRODUCED STREAM AS CONTRASTED TO THE LIQUID PHASE IN WHICH THE REST OF THE RESERVOIR HYDROCARBONS REMAIN. THIS GAS, BEING HIGHLY EXPANSIBLE FURNISHES THE ENERGY TO' PUSH OIL INTO THE WELL BORE AND UP THROUGH THE PRODUCTION STRING. DISSOLVED GAS DRIVE RESERVOIRS BEHAVE CHARACTERISTICALLY DURING THEIR PRODUCING'LIFE. THESE BEHAVIOR PATTERNS PERTAIN TO THE OIL PRODUCTION PERFORMANCE, RESERVOIR PRESSURE CHANGES WITH TIME, AND THE RATIO~OF GAS AND OIL PRODUCED DURING THE LIFE OF THE RESERVOIR. - 2 - AGO 851.617 . MY FIRST EXHIBIT ILLUSTRATES THESE CHARACTERISTIC TRENDS. THE RATES AND PRESSURE LEVELS SHOWN HERE ARE OF A SCHEMATIC NATURE BUT ARE SIMILAR TO THOSE OF THE MIDDLE GROUND SHOAL FIELD. AS YOU CAN SEE OIL PRODUCTION RATES INCREASE EARLY IN THE LIFE AS THE WELLS ARE DRILLED, CLIMBING TO SOME PEAK RATE DURING THE FIRST YEAR OR TWO (DEPENDING ON THE RATE OF DEVELOPMENT AND THE SIZE OF THE RESERVOIR). DURING THIS TIME WE SEE A STEADY GAS-OIL RATIO ALTHOUGH WE ALREADY NOTE A RAPID DECLINE IN RESERVOIR PRESSURE. WHEN THIS PRESSURE DROPS TO THE RESERVOIR BUBBLE POINT THE GAS IN SOLUTION BEGINS EVOLVING IN THE RESERVOIR. AT THIS POINT THE PRESSURE CONDITIONS EXISTING IN THE RESERVOIR ARE NO LONGER SUFFICIENT TO KEEP ALL THE GAS IN SOLUTION. ALTHOUGH BOTH THE REMAINING SOLUTION GAS AND THE EVOLVED GA'S CONTINUE TO SUPPLY THE ENERGY TO PRODUCE THE OIL, THE PROCESS BECOMES LESS EFFICIENT. GAS FLOWS MORE EASILY IN · THE RESERVOIR BECAUSE IT IS LIGHTER, LESS VISCOUS AND DOES NOT TEND TO CLING TO THE SURFACES OF THE PORE SPACE IN THE ROCK AS DOES THE OIL. ONCE FREE GAS COMMENCES TO FLOW A SORT OF CHAIN REACTION TAKES PLACE; THE REMOVAL OF GAS CAUSES THE PRESSURE TO DROP FASTER AND ALLOWS GREATER AMOUNTS OF GAS BE RELEASED FROM SOLUTION. WE THUS EXPERIENCE A RAPID INCREASE IN THE PRODUCING GAS-OIL RATIO AS THE GAS FLOW CHANNELS INCREASE IN SIZE AND THE OIL CHANNELS CORRESPONDINGLY DECREASE. DURING THIS TIME GAS FLOWS MUCH MORE EASILY WHILE THE OIL FLOWS WITH INCREASING DIFFICULTY. BECAUSE OF THE RAPID DEPLETION OF · PRESSURE OR NATURAL ENERGY, SOME FORM OF ARTIFICIAL LIFT MUST EVENTUALLY BE EMPLOYED TO LIFT THE OIL TO THE SURFACE. THE RECOVERY OF OIL FROM A DISSOLVED GAS DRIVE RESERVOIR BY ITS OliN ENERGY AND ARTIFICIAL LIFT TECHNIQUES IS NEARLY ALWAYS LOW, SAY IN THE RANGE OF 15 TO 20 PERCENT OF THE ORIGINAL OIL-IN-PLACE FOR A MIDDLE GROUND SHOAL TYPE FIELD. -THE LOW RECOVERY FROM THIS TYPE DRIVE - 3 - AGO 851618 MECHANISM EMPHASIZES THAT LARGE QUANTITIES OF OIL, THE MORE VALUABLE OF THE TWO HYDROCARBON PHASES PRODUCED, CAN BE LEFT REMAINING IN THE RESERVOIR ROCKS. UNDER THESE CONDITIONS ENERGY MUST BE SUPPLIED FROM SOME EXTERIOR SOURCE TO PREVENT THE WASTE OF THIS HIGHLY VALUABLE PRODUCT. TO PREVENT WASTE IN A DISSOLVED GAS DRIVE RESERVOIR WE MUST THEREFORE MAINTAIN THE RESERVOIR PRESSURE AT A LEVEL IN EXCESS OF THE BUBBLE POINT. THAT IS, THE PRESSURE LEVEL AT WHICH GAS IS EVOLVED FROM SOLUTION IN THE RESERVOIR THUS STARTING THE CHAIN REACTION THAT RESULTS IN THE POOR PRODUCTION PERFORMANCE I HAVE SHOWN ON THE EXHIBIT. THIS IS THE CASE IN THE MIDDLE GROUND SHOAL FIELD. THE ORIGINAL RESERVOIR PRESSURE WAS APPROXIMATELY 4200 PSI. THE BUBBLE POINT PRESSURE IS JUST UNDER 1500 PSI. BETWEEN THESE TWO PRESSURE LEVELS, THE GAS IN SOLUTION IS £'LIGHTLY IN EXCESS OF 400 SCF/BBL. OF OIL.. THIS OIL IS RATHER UNIQUE IN THAT THERE EXISTS SUCH A LOW SOLUTION GAS CONTENT AND RELATIVELY LOW BUBBLE POINT PRESSURE. THESE CHARACTERISTICS ARE FOUND IN SEVERAL OF THE COOK INLET OIL RESERVOIRS. IN CONTRAST, IN OTHER AREAS MANY RESERVOIRS AT EQUIVALENT DEPTHS, PRESSURES AND TEMPERATURES WITH SIMILAR GRAVITY OILS CONTAIN ABOUT 1200 STANDARD CUBIC FEET PER BARREL AND THE BUBBLE POINT IS QUITE OFTEN VERY CLOSE TO THE ORIGINAL RESERVOIR PRESSURE. BY VIRTUE OF HAVING ONLY ABOUT A THIRD OF THE NORMAL AMOUNTS OF SOLUTION GAS WE ALSO HA\rE. LESS AVAILABLE ENERGY TO HELP PRODUCE THE OIL. HOWEVER, THE LARGE SPREAD BETWEEN THE ORIGINAL RESERVOIR PRESSURE AND THE BUBBLE POINT DID ALLOW SUFFICIENT TIME TO PLAN AND IMPLEMENT A SECONDARY RECOVERY PROCESS FOR THIS FIELD BEFORE THE BUBBLE POINT WAS REACHED. MY NEXT EXHIBIT ILLUSTRATES THE EFFECTS OF INJECTING WATER IN A DISSOLVED GAS DRIVE RESERVOIR TO KEEP THE RESERVOIR PRESSURE AT A LEVEL ABOVE THE BUBBLE POINT. THE MAJOR THINGS TO LOOK FOR ARE THE MAII~VfAINING OF A RELATIVELY LOW AND STABLE GAS-0IL RATIO AND MUCH IMPR0%rED 0IL PRODUCTION RATES. - 4 - AGO 85161,9 IMPLEMENTING THIS PROCESS EARLY IN THE LIFE OF A RESERVOIR OF THIS TYPE' PREVENTS THE WASTE OF RESERVOIR ENERGY IN THE FORM OF EXCESS GAS PRODUCTION. THE PRESSURE IS MAINTAINED BY REPLACING HYDROCARBON WITHDRAWALS WITH WATER. THE · GAS IN SOLUTION IS ALSO USED MORE EFFICIENTLY TO PROVIDE THE MUCH NEEDED ENERGY TO MOVE OIL TO THE SURFACE. THE RECOVERY OF OIL UNDER THESE CONDITIONS CAN BE IMPROVED SIGNIFICANTLY. TYPICAL IMPROVEMENTS CAN RESULT IN RECOVERIES IN THE RANGE OF 40 TO 50 PERCENT OF OOIP. THIS THEN %S THE MAIN CONCERN IN THE OPERATIONS OF A FIELD SUCH AS MIDDLE GROUND SHOAL. THAT IS, WE STRIVE TO MAXIMIZE THE RECOVERY OF OIL WHICH IS SO VALUABLE TO THE WELL BEING OF THE AMERICAN PEOPLE AND ALSO TO THE NATIONAL DEFENSE OF OUR COUNTRY. MY NEXT EXHIBIT SHOWS THE ACTUAL PRODUCTION PERFORMANCE OF THE SHELL OPERATED PORTION OF THE MIDDLE GROUND SHOAL FIELD. YOU CAN SEE THAT THE EARLY PERFORMANCE FOLLOWS THAT OF OUR EARLIER MODEL 'OF A DISSOLVED GAS DRIVE RESERVOIR PERFORMANCE. THE OIL PRODUCTION RATE INCREASED RAPIDLY AT FIRST AS THE FIELD WAS DEVELOPED. THE PRODUCING 'GAS-OIL RATIO IS RELATIVELY CONSTANT AS PRESSURE REMAINS ABOVE THE BUBBLE POINT. SECONDARY RECOVERY OPERATIONS WERE INITIATED WITH WATER INJECTIVITY TESTS IN EARLY 1968. FULL-SCALE WATER FLOOD OPERATIONS WERE IN PROGRESS BY MID 1969. WE ARE CURRENTLY INJECTING UP TO 30,000 BARRELS PER DAY OF COOK INLET WATER INTO THE SAS PORTION OF THE FIELD. SIMILAR OPERATIONS ARE BEING CONDUCTED IN THE AMOCO OPERATED PORTIONS OF THE FIELD. AS YOU CAN SEE THE INJECTION ~ROGRAM HAS BEEN EFFECTIVE IN MAINTAINING A STABLE PRODUCING GAS-OIL RATIO. IN FACT, BASED ON THE EARLY OIL PRODUCTION PERFORMANCE OUR EARLIER PREDICTIONS OF OIL AND GAS RECOVERIES HAVE BEEN REVISED UPWARD. IT 'APPEARS THAT THE WATER INJECTION PROGRAM WILL PROVE TO BE QUITE SUCCESSFUL. - 5 - AGO 851.620 SHELL'S OPERATIONS IN THE MIDDLE GROUND SHOAL FIELD HAVE BEEN IN LINE WITH THE BEST KNOWN TECHNIQUES TO MAXIMIZE OIL RECOVERY AND MINIMIZE THE LOSS OR INEFFICIENT USE OF OUR NATURAL RESOURCES. OUR CONCERN HERE TODAY IS OVER THE FLARING OF GAS IN COOK INLET. AT MIDDLE GROUND SHOAL WE HAVE BEEN SUCCESSFUL IN MINIMIZING CASING HEAD GAS PRODUCTION. THE GAS PRODUCED IS THAT MINIMUM AMOUNT NECESSARY FOR THE EFFICIENT PRODUCTION. OF OUR WELLS. IN FACT, IT IS LESS THAN THAT AND WE ARE REQUIRED TO REUSE MUCI~ OF THIS PRODUCED GAS FOR ARTIFICIAL GAS LIFTING TO MAINTAIN OUR PRODUCTION RATES. MY FINAL EXHIBIT SHOWS THE ACTUAL GAS PRODUCTION HISTORY OF THE SHELL OPERATED PORTION OF MGS AND OUR CURRENT PREDICTION OF FUTURE PRODUCTION. ALSO SHOWN IS A PLOT OF GAS USAGE DURING THIS SAME TIME PERIOD. THE AREA BETWEEN THESE TWO CURVES IS THE TOTAL VOLUME OF GAS THAT HAS BEEN AND WILL BE FLARED IN THE FUTURE. WE ESTIMATE SOME 9 MILLION MCF. OF SURPLUS GAS WILL BE PRODUCED FROM NOW UNTIL THE CROSS- OVER POINT OF THE TWO CURVES. THIS REPRESENTS A RELATIVELY SMALL VOLUME WHEN COMPARED TO GAS FIELDS IN THE COOK INLET AREA.. MR. CASBARIAN WILL ELABORATE FURTHER ON THIS EXHIBIT FOLLOWING MY DISCUSSION. I WOULD HOWEVER, LIKE TO SAY THAT BASED ON MY EXPERIENCE IN THE FIVE MAJOR OIL PRODUCING STATES, I FEEL THAT THE MIDDLE GROUND SHOAL FIELD IS A MODEL OF GOOD ENGINEERING TECHNIQUES AND OPERATIONAL METHODS TO MAXIMIZE THE RECOVERY AND USE OF OUR NATURAL RESOURCES: IN THIS CASE OIL AND GAS. WE .ALL REALIZE THAT THE TOTAL AND COMPLETE USE OF ALL HYDROCARBONS PRODUCED FROM A RESERVOIR IS DESIRABLE. BECAUSE OF THE ,, PHYSICAL LOCATION OF MGS AND OTHER COOK INLET FIELDS AND THE LACK OF A MARKET FOR THESE RELATIVELY SMALL VOLUMES OF GAS, SOME GAS IS NECESSARILY FLARED. HO~EVER, THIS GAS IS NOT CONSIDERED TO BE WASTED AS IT HAS BEEN EFFICIENTLY UTILIZED IN THE OIL PRODUCING PROCESS AND SUBSEQUENT 'OPERATIONS TO THE MAXIMUM . BENEFIT WE CAN ECONOMICALLY ATTAIN. - 6 - AGO 851621 MR. CASBARIAN, WHO WILL FOLLOW ME IN TESTIMONY, WILL FURTHER DISCUSS TH~. HARDWARE OF OUR OPERATION. MY DISCUSSION HAS BEEN PRIMARILY CONCERNED WITH WHAT HAS HAPPENED FROM A RESERVOIR VIEWPOINT. I WOULD, THEREFORE, LIKE TO TURN THE DISCUSSION OVER TO MR. CASBARIAN WHO WILL APPRAISE YOU OF OUR CAPABILITY TO PRODUCE AND HANDLE GAS, THE MANY BENEFICIAL USES WE PUT TH~ GAS TO, AND SOME PERTINENT FACTS ON THE MARKETABILITY OF THIS GAS. ' - 7 - TE ST IMONY BY A. O. P. CASBARIAN SHELL OIL COMPANY OUTLINE OF PRESENTATION I WOULD LIKE FIRST TO OUTLINE WHAT I PLAN TO PRESENT TO YOU TONIGHT AS PART OF MY TESTIMONY. FIRST I SHALL BRIEFLY REVIEW OUR FIELD PIPELINE GATHERING SYSTEM TO DEMONSTRATE THAT OUR CASING HEAD <;AS COULD, IF NECESSARY, BE TRANSFERRED TO SHORE, AND CONTINUE WITH A REVIEW OF OUR EFFORTS IN MAXIMIZING THE BENEFICIAL USE OF THIS CASING HEAD GAS IN OUR OPERATIONS AND FINALLY TO BRIEFLY COMMENT ON THE PROBLEMS ASSOCIATED WITH .DEVELOPING A MARKET FOR THIS CASING HEAD GAS. REVIEW OF MGS GATHERING SYSTEM DURING THE INITIAL LIFE OF THE MGS FIELD, THE SAS A PLATFORM AND THE CHAKACHATNA B PLATFORMS WERE CONNECTED BY A SERIES OF TWO FLOWLINES AS SHOWN IN THIS PLOT. I WOULD LIKE TO SUBMIT THIS AS SAS EXHIBIT 5. THE COMBINED PRODUCTION WAS TRANSFERRED TO SHORE (THROUGH A'S TWO 8" LINES) FOR PROCESSING IN OUR ONSHORE DEHYDRATION FACILITIES. THESE LINES UNFORTUNATELY ARE NOT CAPABLE OF HANDLING GAS PRODUCTION. HOWEVER, IN THE SUI~R OF 1967, PLATFOlh~4S C AND D WERE INSTALLED AND PIPELINES WERE LAID CONNECTING PLATFORMS A TO C AND C TO D AND D TO SHORE. THESE PIPELINES WERE DESIGNED AND ARE CAPABLE OF HANDLING NATURAL GAS. AS YOU CAN SEE FROM ~XHIBIT 5, THE INSTALLATION OF THESE LINES PROVIDES A LOOP FOR ALL PLATFORMS, PROVIDES A ROUTE TO SHORE AND PROVIDES AN ALTERNATE FUEL SOURCE OR GAS LIFT SOURCE FOR EACH OF THE PLATFORMS. THIS LOOP, PROVIDES THE BACKBONE OF A SYSTEM THAT CAN BE UTILIZED FOR GATHERING ALL GAS IN THE MGS FIELD TO A POINT ONSHORE' AS A POSSIBLE SALES OUTLET. IN ADDITION, IT ALLOWED THE CONVERSION OF MOST OF OUR ENGINES ON EACH PLATFORM TO NATURAL GAS AS IT PROVIDED FOR A CONTINUOUS SOURCE OF FUEL. - 8 - AGO 8.51623. REVIEW OF EQUIPMENT USING NATURAL GAS AS WAS POINTED OUT BY MR. LOGAN, THE PRIMARY BENEFICIAL USE OF GAS REMAINED AND IS THE FUNCTION IN MOVING OIL TO THE WELL BORE AND LIFTING IT TO THE SURFACE AND MAKING IT POSSIBLE TO DELIVER THAT OIL TO MARKET. I WOULD LIKE NOW TO DISCUSS THE SECONDARY BENEFICIAL USAGE OF THIS CASING HEAD GAS IN OUR OPERATIONS. I HAVE HERE A CHART SHOWING IN CHRONOLOGICAL ORDER FOR EACH PLATFORM AND THE ONSHORE FACILITIES WHERE AND HOW THIS GAS IS BEING UTILIZED. I WOULD LIKE TO INTRODUCE THIS AS EXHIBIT 6. ON PLATFORM A WE HAVE APPROXIMATELY 2600 HP OF COMPRESSION BEING USED IN OUR GAS LIFT OPERATIONS. THIS COMPRESSES APPROXIMATELY 9 MMCF/D OF GAS FROM 40 PSI TO 1000 PSI FOR INJECTION INTO THE CASING TUBING ANNULUS, WHERE IT IS METERED INTO THE TUBING STRING BY GAS LIFT VAL.V~S, IN ORDER TO LIGHTEN THE PRODUCING FLUID COLUMN AND INCREASE OUR PRODUCTION RATES. THIS GAS IS MERELY A PRODUCING AID AND DOES NO MORE THAN THE ORIGINAL GAS IN SOLUTION IN THE RESERVOIR. TWO STEAM GENERATORS TO PROVIDE HEAT ON THE PLATFORM WERE CONVERTED FROM DIESEL TO CASING HEAD GAS AS FUEL IN LATE 1967, IN ADDITION TO THREE AC ENGINATORS IN EARLY 1968. OUR WATER FLOOD PROJECT REQUIRED THE ADDITION OF TWO 1100 HP TURBINES TO DRIVE OUR PUMPS FOR WATER INJECTION, THESE WERE INSTALLED IN LATE 1968, AND A DEAREATION TOWER TO REMOVE OXYGEN FROM THE COOK INLET WATER USED IN THE WATER FLOOD WAS ALSO INSTALLED AT THAT TIME. IN LATE 1969 WE · INSTALLED A SYSTEM TO REMOVE LIQUIDS FROM OUR COMPRESSED GAS, WHICH WERE REINJECTED INTO THE CRUDE PRODUCTION STREAM FOR SHIPMENT TO SHORE. I HAVE INCLUDED THIS IN THIS CHART, TO SHOW THAT WE ARE STRIPPING SOME OF THE HEAVIER ENDS OF OUR GAS LIFT GAS AND INJECTING THESE INTO OUR CRUDE PRODUCTION STREAM. THIS AMOUNTS TO APPROXIMATELY 100 MCF/D OF EQUIVALENT GAS. PLATFORM C'S HISTORY IS SOMEWHAT THE SAME. SINCE MAY 1968 WE HAVE CONVERTED TWO AC ENGINATORS, AlqD o 9 INSTALLED TWO 1100 HP COMPRESSORS AND TWO 1100 HP TURBINES, AND A DEAREATION TOWER. IN ADDITION, WE PLAN TO START UP A NEW 660 HP COMPRESSOR DURING THE FIRST QUARTER OF THIS YEAR FOR ADDITIONAL COMPRESSION. OUR ONSHORE FACILITIES REQUIRED TO DEHYDRATE OR REMOVE .MOST OF THE PRODUCED WATER IN THE CRUDE CONSUMES AT PRESENT APPROXIMATELY 500 MCF/DAY. WE ARE PRESENTLY INVESTIGATING ~ FEASIBILITY OF INSTALLING A VAPOR RECOVERY SYSTEM ON OUR ONSHORE STOCK TANKS TO RECOVER ADDITIONAL GAS LIQUIDS THAT WOULD OTHERWISE BE LOST, WHICH, OF COURSE, WOULD BE REINJECTED BACK INTO THE TOTAL PRODUCTION STP, F~. WE ESTIMATE THIS WOULD AMO~UNT TO APPROXIMATELY 150 MCF/D OF EQUIVALENT GAS. THUS, OUR TOTAL GAS USAGE AT PRESENT AMOUNTS TO SOME 4000 MCF/DAY OR 4 MMCF/D. LET US NOW kOOK AT THE NEXT CHART WHICH SHOWS TOTAL GAS PRODUCTION VERSUS OUR ESTIMATES OF FUEL GAS REQUIREMENTS. THIS WAS SUBMITTED AS EXHIBIT 4. AT THIS POINT IN TIME WE ARE USING APPROXIMATELY 40% OF THE TOTAL PRODUCED GAS AT MIDDLE GROUND SHOAL FIELD. WITHIN THE NEXT TWO YEARS WE WILL BE USING APPROXIMATELY 50% OF THE PRODUCED GAS AND BY 1981 WE WILL BE UTILIZING APPROXIMATELY 100% OF THE GAS PRODUCED IN OUR OPERATIONS.~ I WOULD LIKE TO POINT OUT SOME OTHER FACTORS FROM THIS CHART. INTEGRATING THE UPPER CURVE WOULD GIVE YOU, OF COURSE, THE TOTAL ESTIMATED GAS PRODUCTION. THE AREA UNDER THE LOWER CURVE GIVES THE TOTAL ESTIMATED FUEL USAGE WITH THE DIFFERENCE OF COURSE BEING THE SURPLUS GAS AVAILABLE FROM OUR OPERATIONS. THIS SURPLUS GAS AMOUNTS TO SOME 9 BCF. AS WE POINTED OUT IN PREVIOUS TESTIMONY THIS EXCESS GAS IS APPROXIMATELY LESS THAN THREE PERCENT 'OF WHAT WE ANTICIPATE OUR BELUGA RIVER GAS FIELD TO BE; LESS THAN 27° OF WHAT WE THINK THE NORTH COOK INLET GAS FIELD TO BE AND LESS THAN ONE PERCENT OF %~{AT - 10 - AGO 851625 · WE THINK THE KENAI GAS FIELD TO BE. EACH OF THESE SOURCES HAS ATTRACTED A MARKET. I BELIEVE THAT YOU CAN SEE BY THE SMALL SIZE OF THIS ACCUM~TION WHY NO MARKET HAS YET BECOME AVAILABLE. IN ADDITION, I WOULD LIKE TO MENTION SEVERAL OTHER FACTORS THAT MAY HINDER TRE DEVELOPMENT OF A FUTURE MARKET. THE AVAILABILITY OF EXCESS GAS IS SHORT, LESS THAN TEN YEARS WHICH iSA SHORT LIF~ DURATION FOR A GAS CONTRACT SALE COMPARED TO THE USUAL 15 TO 30 YEARS, THAT THE COSTS TO DEHYDRATE, COMPRESS, TRANSI~ORT AND PROCESS THE GAS IS HIGH, AND THAT THIS SOURCE OF GAS IS INTERRUPTIBLE, UNLIKE GAS WELL GAs. DESPITE THESE SHORTCOMINGS, WE REMAIN CONTINUOUSLY ALERT IN OUR MARKETING ENDEAVORS FOR ANY PROFITABLE MEANS OF DISPOSING OF THIS GAS. . THIS LATTER ASPECT WILL BE COVERED, I BELIEVE, IN MORE DETAIL BY AMOCO'S RE PRE SENTAT IVES. IN CONCLUSION, I HAVE REVIEWED WITH YOU OUR EFFORTS TO GATHER OUR GAS PRODUCTION TO A POINT ONSHORE, OUR PRESENT AND FUTURE FORECASTED UTILIZATION OF THE CASING HEAD GAS AVAILABLE FROM OUR OPERATIONS, AND SOME' OF THE SHORTCOMINGS ASSOCIATED WITH LOCATING A MARKET FOR OUR EXCESS cASING }WAD GAS. IN MY OPINION, THE MAXIMUM SECONDARY BENEFICIAL USE OF THE GAS WHICH CAN BE MADE AT THE PRESENT TIME IS .BEING MADE AND WE HAVE PROVIDED FOR FUTURE USER OF THIS EXCESS GAS, IF AND WHEN THEY BECOME AVAILABLE. - 11 - ~GO 85~6Z6 LIST OF EXHIBITS EXHIBIT NO o TYPICAL DISSOLVED GAS DRIVE RESERVOIR PERFORMANCE EFFECT OF WATER FLOODING ON DISSOLVED GAS DRIVE RESERVOIR BEHAVIOR MIDDLE GROUND SHOAL FIELD - HISTORY AND PREDICTICN SAS ~[[DDLE GROUND SHOAL GAS PRODUCTION AND USAGE FORECAST · MGS AND GRANITE POINT GATHERING SYSTEM SAS MIDDLE GROUND SHOAL GAS USAGE (TABLE) 4000 I~1 3000- n,- ~000 - IOOO - 50,000 40,000 30,000 - 0 <~ ~0,000 - 0 ~0,000 - PRESSURE PSI \ - \~GAS MCF/D /.'- , . I I I I I I I I I I I I I I I I I I I t I I I I [ I I I [ 1965 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 9~ 1994 YEARS EXHIBIT I 500 - 400 - $00- 200- I00 Om 20,000~ I 0,000 - ~ yGOR - m,mmm m mm ,mm mm lmm mmmmmmm mm m ~ m,m m, mm m m, m mm re, mm m ,mm m m mm m m ~--WITH WATER INJECTION ; OO?,.~L,,j~ 0, ' ~"- '~," {[ ~ '"t~L~'.~.":'~ ,'")... "-.."'- ,'... . !1 ~_ /~~':'-- ~.~ ~ ~~// x,x ... %% ~WITHOUT ~/ WATER INdECTION I I I I I I I I I I I I I I I I I I ° I I t ! I I I I I I I 1965 66 67 68 69 70 ~71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 1994 YEARS EXHIBIT 2 0 5O0 ~ 40O 300 20O _.! ~ I00 20,000 I 0,000 - 0~ 0 k'"'--BUBBLE 'POINT PRESSURE \ \ \ \ ~-CURRENT OIL FORECAST INAL OIL FORECAS OIL PREDICTION WITHOUT PRESSURE 'MAINTENANCE I 1965 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 1994 YEARS EXHIBIT - 5000 b.I - 4000 - 3000 2000 ~- I000 I 0 SAS MGS GAS PRODUCTION 8~ USAGE FORECAST . 12- II- I0- 9I eI 7- 6- 5- 4m ! 1965 PRODUCTION FORECAST ./--TOTAL GAS ~ ~ ~ ~mmm ~m~ ~m. ~ ~ ~mmmm ~ ~ ~ ~ I I I I' I I I I I I I I I I I I I I 66 67 68 69 70 71 72 7;5 74 75 76 77 78 79 80 81 82 8:5 84 85 86 87 88 89 90 91 92 93 1994 EXHIBIT 4 M G~'$ t~ GRANIT~~' PO. INT GATHERING SYSTEM M.'G. S. GRANITE POINT ! CRUDE t~ PIPELINE 21~~' SAS/CHAK JOINT SHORE FACILITY ' "-- FACILITY LEGEND CRUDE LINE GAS LINE I ,-:-':~'" ACCEPTED . ' I! ..... ,..._-: Do~.~II. AGO 851632 pIpELINE EXHIBIT. 5 PLATFORM A 440 HP COMPRESSOR CONVERSION OF TWO STEAM GENERATORS I100 HP COMPRESSOR I100 HP COMPRESSOR CONVERSION OF THREE AC ENGINATORS TWO I100 HP TURBINES DEAERATION TOWER LIQUIDS RECOVERY SYSTEM (EQUIVALENT GAS) PLATFORM C CONVERSION OF THREE STEAM GENERATORS 660 HP COMPRESSOR CONVERSION OF TWO AC ENGINATORS I100 HP COMPRESSOR TWO I100 HP TURBINES DEAERATION TOWER LIQUIDS RECOVERY SYSTEM (EQUIVALENT GAS) 660 HP COMPRESSOR ONSHORE PROCESSING FACILITIES VAPOR RECOVERY SYSTEM (ESTIMATE) AGO 85].633 .SAS MIDDLE GROUND SHOAL GAS USAGE STATUS COMPLETE X X X X X X X X IN PROGRESS PLANNED COMPLETION DATE I st QUARTER 67 3rd QUARTER 67 I st QUARTER 68 2nd QUARTER 68 2nd QUARTER 68 4th QUARTER 68 4 th QUARTER 68 4 th QUARTER 69 4 th QUARTER 67 I st QUARTER 68 3rd QUARTER 68 3rd QUARTER 68 2nd QUARTER 69 2nd QUARTER 69 4 th QUARTER 69 I st QUARTER 71 i st QUARTER 72 GAS USAGE MCF/D 77 150 192 192 4O5 526 8O I00 150 116 365 192 526 120 I00 '160 5OO 150 TOTAL 1722 1729 65O 4,101 MCF/D EXHIBIT 6 EXCESS GAS UTILIZATION COST STUDY Prepared under the direction of and presented jointly to the Alaska Conservation Committee members on March 30, 1971, as a part of the March 4, 1971, hearing record, by: A. O. P. Casbarian Shell Oil Company oductlon Company A GO 85 ! 634. BASIC ASSUMPTIONS FOR COST STUDY 1. All gas and products find a market. 2. Assumes an eight year life.Due to interruptibility of oil operations, this may be conservative. 3. Initial gas rates and total excess gas over the eigbt year life are keyed to earliest possible (Mid 1972) start up. 4. If propane only is sold, required revenue from propane to recover investment without interest and profit increases from 4 cents to 10.4cents/gal. 5. Tail gas available from liquid extraction plant is reduced through shrinkage. 6. No amortization for existing pipelines. 7. Amortization of capital costs does not consider the time value of money, i.e. interest. i EXCESS GAS UTILIZATION MIDDLE GROUND SHOALS AND GPe\NITE POINT FIELDS Case I (1) Platform Compression - Compress and dehydrate excess gas from each platform for delivery to shore at 50 psi. (2) Onshore Compression - Compress all exce'ss gas arriving onshore to 1000 psi for delivery to sales gas line. Note: This gas may not meet required hydrocarbon dew point criteria. Case II (1) Platform Compression - Same as Case I. (2) Onshore Compression - Compress all excess gas arriving onshore to 500 psi for input to gas plant. Compress tail gas from gas plant to 1000 psi for delivery to sales gas line. (3) Onshore Gas Plant - Provide gas plant to recover 80% of propanes and ail of butanes +. Propanes to be sold, butanes + to be stabilized for injection into crude oil with 50% effective recovery. COST ESTIMATE SUMMARY Initial Gas Item Rate ~ Mcf/D Compression-Pl~atform Baker~,~',~/~. 3.3 Compression-Platform A 2°75 Compress ion-Platform C 2075 Compression-Granite Point 8.2 C ompres s ion-Onshore 17.0 Gas Plant-Onshore 17.0 Sub-total - Operating Cost Amortization of Investment (based on 25.3 Bcf total. Sub-total Propane Value 3 gal/Mcr @ 4C/gal. 80% recovery Case I Capital Operating Cost Cost SM C/Mcr 350 ) 425 ~ 4.5 ~25 200 1,900 3.0 m -- $3,300 7.5 13.0 20.5* Case II Capital Operating Cost Cost SM ¢/Mcf 350 ~! 425 ~,.[~ ~+. 5 425 ~ 20O 1,900 3.0 2 ~500 11.7 $5,800 19.2 22.8 42.0* - 9 ,. 6** Butane + Value 3' gas/Mcr @ $3/b'bl, 50% effective recovery -10.8 Required revenue to recover investment without interest and profit 2015 21.6 Includes Investment Amortization Propane value assumed at 4c/gal. This is very questionalbe since propane market may not exist. C ...... ' · WIRE TO: F ROM: NATURAL RESOURCES JAMES E. FISHER, PRESIDENT, KENAI PENINSULA CHAPTER CONSERVATION SOCIETY KENAI PENINSULA CHAPTER REITERATES PROTEST REGARDING WASTE RESULTING FROM FLARING CASINGHEAD GAS. SUCH WASTE IS INEX- CUSABLE FOR PRESENT DAT ECONOMIC REASONS WHEN OTHER ENERGY SOURCES ARE REPEATEDLY DESCRIBED AS LIMITED IN SUPPLY. RECOMMEND IMMEDIATE CURTAILMPNT LEADING TO TERMINATION OF SUCH GROSS WASTES. DATE: MARCH 3, 1971 TIME: 8:20 a.m. /brac AGO 85~L6 38 WIRE TO: HOMER BURRELL FROM: W. A. MC BEAN, MC BEAN ASSOCIATES, CALGARY, ALBERTA OUR CLIENTS CALGARY GROUP WILLING INVEST $1,700,000 MARKETING TWO TO FOUR BSD PROPANE AND POSSIBLY BUTANE FIVE-YEAR CONTRACT FROM WEST FORELAN PLANT FIRM MARKET AVAILABLE FOR PERIOD TO NET BACK AT PLANT FOR 2¢ POSSIBLE 2-1/4¢ PER GALLON BASED ON 2,000 DFD EQUALS APPROXIMATELY $600,000 PER YEAR AT PLANT FOR CONSERVATION RESIDUAL. C-FOUR SC-TWO S AND C-ONE SHOULD BE RE-INJECTED UNTIL MARKET AVAILABLE. DATE: MARCH 3, 1971 TIME: 8:15 a.m. /bmc AFA~59 NL PDF TDA KENAI ALASKA 2 OIL AND GAS CONSERVATION COMMITTEE ~' CARE DEPT NATURAL RESOURCES JUN I~CA ALAS~ COMMUNICATIONS, INC. PHONE 586-7477 JUNEAU, ALASKA 99801 KENAI PENINSULA CHAPTER REITERATES PROTESTS REGARDING WASTE RESULTING FROM FL&RI,qG CASINGHEAD GAS. SUCH WASTE IS INEXCUSABLE FOR PRESENT DAY "ECONOMIC" REASONS ','HEN OTHER ENERGY SOURCES ARE REPEATEDLY DESCRIBED AS LI,b1ITED IN SUPPLY. RECOMMEND IMMEDIATE CURTAILMENT LEADING TO TERMINATION OF SUCH GROSS WASTE JAMES E FISHER PRES KANAI PENINSULA CHAPTER ALASKA ..CONSERVATION SOCIETY. , ,' ELEGRANI C~A026 CNTO,~5 NL PD RCA ALASKA COMMUNICATIONS, 'INC, CALGARY ALTA 2 PitONE 586-747Y j'%7~;~f~L ~ASKA 99801 MR HOMER ~URRELL CHAIRMAN OIL AND GAS ou~S~<vAIION CARE DEPT NATURAL RESOURCES GOLogTEN BLD~,'/U~A]]~ A~E SKA OUR CLIENTS CALGARY GROUP WILLING INVEST ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS MARKETIN 2 TO ~ THOUSAND' BSD PROPANE AND PO~SISLE BUTANE 5 YEAR CONTRACT FROq WESTFORLAND PLANT FIRM MARKET AVAILA~'.LE FOR PEROD TO NET B~ACA AT PLANT FOR TWO CENTS POSSIBLE 2-1/4 CENTS PER GALLON BA~ED .ON 2~ EFD EQUALS APPROX 6~ THOUSAND. DOLLARS PER YEAR 'AT PLANT, FOR CONSERVATION[REolDUAL~ C-FOUR C-TWO S AND O-ONE S SHOULD 2E REINg~GTED UNTIL YARKETS AVA'IL~E W A MCBEAN CARE W A ],:CBEA ,, A~{D ASSOC ,52~06 5~5 6 ST 5W CALGARY I 2 4 BSO 5 2-1/4 20'2~ FD 6~g. C-FOUR SC-TWO 5C5 6 SI SW AND C-ONE .AGO 851640 Febrtm~, 16 ~ ].971 I ,mu in receipt of yo~r letter of February' 6 e~ressiag iaterest 'in ~ ~,:~s o[ 'he~n~ ~o be '~,ld i~ ~ tn ~ ,Inlet ~1 ,fleI~. ~ h~e tht y~ ~,~ ~ able to ~t~d t~ ~Ir~uE ,~ vi~ be~ 8~ ~ pT.,de y~ Sincerely. ~ka ~i,'l .aed :b Couser~t:~ Comdt~ee , 8516 41 SENATOR W. i. "BOB" PALMER P. O. BOX 103 NINILCHIK, ALASKA 99639 WHILE IN JUNEAU POUCH V JUNEAU, aLASKA 99801 REPRESENTING THE KENA! PENINSULA CHAIRMAN: RESOURCES COMMITTEE, SPECIAL SENATE COMMITTEE ON AGRICULTURE VICE CHAIRMAN: HEALTH, WELFARE AND EDUCATION COMMITTEE MEMBER: JUDICIARY COMMITTEE, LOCAL GOVERNMENT COMMITTEE February 6, 1971 Mr. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee State Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99504 Dear Mr. Marshall: I C. ENG -- I 2 ENG .J__.3 ENG. .... I 4 ENG I 5 ENG ---'[- 1 GEOL I 2 GEOL ,_ --[3 OEOL I DRAFT CONFER: C. a , ~,, ,,,, I am in receipt of your Alaska Oil Conservation Committee report, dated January 21, 1971, regarding Extension of Con- servation Order Nos. 32 and 61 for an Additional 120-Day Period. I am very much interested in this subject and I wish to be kept notified of the results of the hearings being planned in Conservation Order Nos. 32 and 61. Sincerely, .................. ~. Zo ?~lmer State Senator WIP/sgn AFFIDAVIT OF PUBLIC kTION STATE OF ALASKA, ) THIRD JUDICIAL DISTRICT, ) ss. .... I'L~r.~..L. ~qhake ...................... being first duly sworn on oath She deposes a~nd says that ................ is the .... .L..e..g~..l_...C..Z...e..r..k. ..... of the Anchorage News, a daily news- paper. That said newspaper has been approved as a legal news- paper by the Third Judicial Court, Anchorage, Alaska, and it is now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all of said time was printed in an office maintained at the aforesaid place of publication of said news- paper. That the annexed is a true copy of a .... ~..e.g~.l...p!.o.~.c...e...~075 as it was published in regular issues (and not in supplemental form) of said newspaper for. a period of ..... ~.r3.?. ...... insertions, commencing on the ..... 2 ..... day of ..... ~'i~br.~.~L..,19 ...7.1, and ending on the ........ ?.. ........ day of both dates inclusive, and that such newspaper was regularly distributed to its subscribers dur- ing ~11 of said period. That the full amount of the fee charged for the foregoing publication is the sum of $ 10,*:'00 which amount has been paid in full at the rate of 2~¢ per line; Mini- mum charge, $7.50. 8ubsdib~nd ~worn to before me this _~ ..... da~ o{ .... Ee~uar.7 ~o*~ ~ublk in ~nd ~r the State of Alaska, Third Division, A~hor~ge, .Al~sk~ Y CO~I~ION EXPIRfiS STATE OF DEPARTMENT or NA~ ~OURC~ . I ~S~a Oi~ and ~as . ' ' ~m~tee' ....... ~o,t Iben.efi~ :'.'~ed.,~:;:~he.' Gran- ite Pcdnt," M~rth~,-;Rt~er.. Trading B~ and Mtd~e..~,~,~. Schoal Fields, exPi[e. &~f~l' 27,.,1~t. The Oil and Gas' · '¢o~s~r~aM~:"~Oommittee [1, Al~k~"~~0~"Code, Sec- ;ion 2009, to con~i~er ~sua~ce of an .;h.rde¢ affecting..the use ~ ,ghs pro- ~e,d .as, the' .'~es~t' I preseflt t~i~' .a~d affected and / i~terested Parties ~ffi be heard.' - t.~' ~ ~ ~.'x~. · L Homer~'..~.,~: ~'.. : c~:, :~0~1. ~ord~e:' D~e ~Pub~sh: F,~b~.,,.2; AGO NOTICE OF PUBLIC REARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES Conservation File No. 100 Conservation Order Nos. 32 and 61, permitting flaring of casinghead gas not beneficially used from the. Granite Point, McArthur River. Trading Bay and Middle Ground Shoal Fields, expire April 27, 1971. The Oil and.Gas Conservation Committee will hold a hearing pursuant ,. to Title 11, Alaska Administrative Code, section 2009, to consider issuance of an order affecting the use of gas produced as the result of crude oil producing operations at Cook Inlet oil fields. The hearing will be held in the Superior Court Room, Alaska State Capitol Building, Juneau, Alaska, at 7:30 P.M., March 4, .1971, at which time the operators may present testimony and affected and interested parties will be heard. Chairman Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Publish February 2, 1971 AGO 85 , STATE OF ALA~S~KA DEPARTMENT OF NATURAL RESOURCES A~a~l~a Oil .an.d (~as Oon~ervz/~i~n C~omm~ttee · Om~'er~atton. File .'No. . O0n.se.rv~10n Order No's~ 32 arid 61~ per~t~.~ fl~g~ c~s~he~ :gas no~t benefi~ly 'use,d ,.fl~om the Gr'an- lie Point,. MeArth~r .~v~. Trading Fields, ex, re Ap~l. 27: "1971. The ~d. G~s [c6ns~wfiin' Comm~ee w~ ~h~id ~ :he,ar~ pur~ 'to Title 11~. AI~.~ A~sM~n ~ode, Sec- '.'~on 2~.9, to ~n~.ider is~su,ance ol an [c,~der a~ee~in,g 'the use o~ .'duce~d as the~ reset. ~ ~'c~d~? o~I ~o.i[ ~ields; Th'e hear~g' ~li .be h'eid ~n ~he Supe~r ~u.~ ~m~ ~ask.~ ~az~a, ~'~t 7:3~0 P,M~, M~h 4 ~97~ present' tes~m~ ',and ~e~ted and 'i~ere.~ted pa~t~es ~ be heard. ~omer L. C,~a~rm~ ~0nse~a~on Com~Vtee g0~l. Poreup~e D~ve .- A~ge, ~s'~a 99594. Publish: .FebPtm,r~. Leg, al ,,,~p~tice No. .,~ AGO 85'15 ~.5 NOTICE OF PUBLIC HEARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES Alaska Oil and Oas Conservation Committee Conservation File No. 100 Conservation Order Nos. 32 and 61, permitting flaring of casinghead gas not beneficially used from the Granite Point, McArthur River. Trading Bay and Middle Ground Shoal Fields, expire April 27, 1971. The Oil and..Gas Conservation Committee will hold a hearing pursuant to Title 11, Alaska Administrative Code, Section 2009, to consider issuance of an order affecting the use of gas produced as the result of crude oil producing operations at Cook Inlet oil fields. The hearing will be held in the Superior Court Room, Alaska State Capitol Building, Juneau, Alaska, at 7:30 P.M., March 4, '1971, at which time the operators may present testimony and affected and interested parties will be heard. Chairman Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Publish February 2, 1971 NOTICE OF PUBLIC HEARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES Alaska Oil and Gas Conservation Committee Conservation File No. 100 Conservation Order Nos. 32 and 61, permitting flaring of casinghead gas not beneficially used from the Granite Point, McArthur River. Trading Bay and Middle Ground Shoal Fields, expire April 27, 1971. The Oil and Gas Conservation Committee will hold a hearing pursuant to Title 11, Alaska Administrative Code, Section 2009, to consider issuance of an order affecting the use of gas produced as the result of crude oil producing operations at Cook Inlet oil fields. The hearing will be held in the Superior Court Room, Alaska State Capitol Building, Juneau, Alaska, at 7:30 P.M., March 4, 1971, at which time the operators may present testimony and affected and interested parties will be heard. Homer L. Burrell Chairman Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Publish February 2, 1971 FC)~M SA- lB ,;~, MEMORANDUM TO: l-' ChaFle8 Y. Herber~ CousbsAoner State of AJaska DKPARTH~'~ OY HATURAL RESOURCES DIVXS%0~ OF' OIL ATID (:AS DATE : 311II.I~E~' 22, 197]. FROM: )~ouer L. hn-rell .. Director ....... ..- SUBJECT= T, xr~uslon of C~uservatten Order ~os. 32 ~nd 61 for ~n AddtttonL~ 120-Day Period Enclooed is a copy of our Not, Lee to Cook Inlet Cas Producers vhich exCends Conanrvatton Order Boa. 32 and 61, details ~he extent o£ the flaring, end advtse~ 'the producers of a forthcoming hearing. plan to atoll thio early nex~ week to our 0il and Gas Conservation List, vlLich includes tJ~e lagl~l~tozu. JiL]~:zk AGO 8516 48 TELETYPE RECEIVED: 1/28/71 9:30 A.M. TO: HOMER BURRELL FROM: COMMISSIONER HERBERT RE.GARDING YOUR MEMO OF THE 22ND. HAVE NO OBJECTIONS. HOUSE RESOURCES WILL APPRECIATE JUNEAU HEARING AT ANY CONVENIENT DATA. PLEASE ADVISE ME OF SUITABLE DATE SO THAT CONFERENCE ROOM MAY BE SCHEDULED FOR EVENING }{EARING. Jm ALASKA OIL AND GAS CONSERVATION COMMITTEE January 21, 1971 C.o/0o , TO ~ SUBJECT: Extension of Conservation Order Nos. 32 and 61 for an Additional 120-Day Period The Alaska Oil and Gas Conservation Committee has reviewed the affidavits and statements submitted pursuant to Conservation Order Nos. 32 and 61 and directive dated July 15, 1968. Essentially all of the equipment on the thirteen oil-producing platforms in the Cook Inlet have been converted to use casinghead gas as fuel. Additional equipment to be installed in the foreseeable future on the Grayling, Dolly Varden, King Salmon, Monopod, MGS "C" and Granite Point Anna and Bruce platforms will be fueled by casinghead gas and consume an estimated 7,200 MCF per day. The attached table tabulates pertinent production data by fields. In 1970 casinghead gas produced at Cook Inlet platforms averaged 3,016,823 MCF per month; of this amount 2,518,414 MCF per month, or 83.5%, was flared. Flaring of Cook Inlet casinghead gas increased from 6,120 MCF per day in 1969 to 7,540 MCF per day in 1970, or 12.8%. The Committee believes a market may exist for the gas now being flared. Decision It is the Committee's decision that the operators are beneficially utiliz- ing the casinghead gas to a substantial extent but that a market may exist for the gas now being flared and its development should be encouraged by every means possible other than· reducing ultimate recovery of oil. .Di.rec tive Conservation Order Nos. 32 and 61 are extended for an additional 120-day period, from December 27, 1970 through April 26, 1971. A public hearing on the matter of extension of Conservation Order Nos. 32 and 61 beyond the April 26 termination date will be held upon not less than 30 days notice. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 851650 Comp arative Disposition of Casinghead Gas Produced Monthly Average Casinghead Gas in Cook Inlet Fields Granite Point Middle Ground Shoal McArthur River Trading Bay Totals Produced MCF MCF Utilized Produced 722,390 500,517 797,048 552,322 2,572,277 1969 % MCF % MCF MCF Flared 649,632 415,354 679,436 489,204 2,233,626 89.9 72,758 10.1 818,452 83.0 85,163 17.0 511,838 85.2 117,612 14.8 1,130,443 88.6 63,118 11.4 556,090 86.8 338,651 13.2 3,016,823 1970 (11 Months) Flared Utilized MCF 712,308 421,466 916,429 468~211 2,518,414 87.0 82.3 81.1 84.2 83.5 106,144 90,372 214,014 87t879 498,409 13.0 17.7 18.9. 15.8 16.5 Fields Granite Point Middle Ground Shoal McAt thur River Trading Bay Totals 1970 Monthly Average Casi_nghead Gas Produced MCF ± % of 1969 818,452 511,838 1,130,443 556~090 3,016,823 +13 · 3 +2.3 +41.8 +0.7 +17.3 Flared MCF ± % of 1969 712,308 421,466 916,429 468~211 2,518,414 + 9.6 +1.5 +34.9 - 4.3 +12.8 MCF Utilized ± %of 106,124 90,372 214,014 87~879 498,409 +45.9 + 6.1 +82.0 +39.2 +47.2 1969 COOK INLET OIL FIELDS TOTAL CASINGHEAD AND DRY GAS DISTRIBUTION Year & Month 1967 1968 1969 Granite Point Middle Ground Shoal May June July Aug. Sept. Oct. Nov. Dec. Total 4,200 4,500 4,650 4,650 4,500 4,550 4~500 36,200 Jan o Feb. Mar. Apr. May. June July Aug. Sept. Oct. Nov, Dec. Total '10,669 4,650 4,650 33 3,032 15,037 18,932 41,034 46,.428 92,042 102,887 ~0,949 12,870 15,722 15,711 18,626 79,427 96,763 93,931 102,106 108,083 105,376 .732,858 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total 61,962 80,915 85,394 78,371 72,517 49,705 63,266 66,968 66,276 71,140 89,392 87,488 ,873,094 74,768 76,635 86,244 73,985 80,131 78,032 86,613 87,534 89,108 89,911 98,716 100,279 1,02~,956 McArthur River 20,485 24,006 28,923 41,168 45,613 52,537 . _7! ~_038 283,770 73,913 69,295 105,376 145,938 159,561 140,251 182,533 179,264 176,172 194,928 136,279 .... 151,624 1,715,138 Trading Bay 9,690 10,404 11,126 14,425 17,296 17,828 26,153 !06,922, 25,513 21,303 :42,253 54,120 68,488 108,957 81,454 67,212 60,518 78,858 79,464 ,69,275 ~57,415 Total 4,200 4,500 4,650 4,650 4,500 4,550 4,500 3.6~200. 10.669 i7,520 20,372 15,804 21,658 124,639 150,105 175,014 204,127 253,034 278,628 ..... 24.7~929 1,534,499, 236,156 248,148 319,267 352,414 380,697 376,945 413,866 400,982 392,074 434,839 403,851 4o8,:6~6_ 3,6 ~0,188 COOK INLET OIL FIELDS TOTAL CASINGHEAD AND DRY GAS DISTRIBUTION UTILIZED Year & Month Granite Middle Ground McArthur Trading Point Shoal River Bay · 1970 Jan. 113,510 Feb. 105,825 Mar. 116,249 Apr. 105,583 May ~ 94,82,3 June 73,341 July 72,854 Aug. 114,190 Sept. 98,629 Oct. 130,864 Nov. 141,747 Dec. 159,545 Total "1 ~327'160 1971 164,280 116,395 98,791 93,938 97,455 76,226 85,418 76,082 84,524 88,319 88,372 88,579 93,270 ..I..,087,369 '94,902 220,672 83,95 I 135,728 87,781 311,858 107,173 274,866 109,163 340,022 119,31 8 359, 184 I0 I ,350 381 , 191 75,630 431 ,008 86,009 426,725 66,765 418,663 70,125 407,503 59,399 412,467 80,198 ,0__246,8 346,205 73,133 Total 534,528 428,125 629,128 587,067 630,389 619,293 605,757 715,731 680,438 708,024 697,228 745,480 ,7,~581 ,284 678,520 AGO COOK INLET OIL FIELDS TOTAL CASINGHEAD AND DRY GAS DISTRIBUT"iON FLARED I,'cn t h & Year 19d, 5 July [!e c Iota I 1906 J an. Feb. Mar. Apr. May June July .Aug. Sept. Oct. Nov. Dec. Tota I 1967 Jan. Feb. Mar. Apr. May June Aug. Sept. Oct. Nov. Dec. Total 1968 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Iota i Granite Middle Ground McArthur Trading Poi nt Shoa I Ri ver Bay 10,294 34,225 192,997 300,605 389,063 54~, 165 6 72,752 960,319 923,852 _ 82 5.~...0..7 8_ 938,608 996,908 997,842 950,606 963,215 731,578 ' 915,042 598,268 638,425 71 I ,068 539,913 644,009 9,625,482 575 10,405 t0,405 515 23,054 40,407 14,134 5,142 96,508 72,457 30,774 50,922 41,453 66,275 79,233 79,626 I, 99,985 194,553 2 I I, 569 219,699 2 I0,060 223,196 2 13,343 226 ,~502 245,323 292,904 ~340 ~, 607 409,657 427,390 3_~214,803 467,659 566,755 593,607 571,239 528,761 542 ,O59 533,767 437,813 410,420 405,302 442,064 424,353 5,923,799 I01,349 103,749 ' 205,08~8 202,870 200,655 357,736 397,464 523,,745 561,676 609,482 623.,235 51.2,864 579,930 642,709 659,295 5,871,661 9,835 4,572. I0,839 II ,545 24,989 19,717 52,456 61,088 92,030 107,759 159,728 167,362 721,920 205,472 165,949 189,228 20 i, 702 222,446 231,629 253,374 285,307 211~,755 218,352 297,948 371,044 2,854,206 Total 515 I0~, 405 23,054 179,233 179,626 I ,2 I0,905 204,388 216,141 240,832 255,830 441 , 182 533,665 668,02 I 850,576 I ,057,686 1,408,685 1,594,586 ]_~ 523,569 9,025,16 I I ,814,609 1,930,267 2,138,41'3 2,121,011 2,238,167 2,066,942 2,311,665 I ,944,623 1,773,464 2,079,483 1,921,634 2,098,701 24,275,148 85 ~.6 55 COOK INLET OIL FIELDS TOTAL CASINGHEAD AND DRY GAS DISTRIBUTION FLARED Month & Year Granite Middle Ground McArthur Trading Poi nt Shoal Ri ver Bay 1969 Jan. 624,593 573,250 587,024 368,989 Feb. 407,392 504,203 546.735 414,776 March 545,342 514,255 .699,860 484,240 Apr. 569,698 451,258 970,524 524,279 May 626,996 427,394 I ,033,186 524,252 June 599,329 392,343 I ,038,851 471,476 J u ly 732,304 394,447 896,067 517,614 Aug. 743,988 366,924 I ,058,307 598,538 Sept. 715,725 356,276 I ,287,220 594,908 Oct. 754,195 353,928 I ,324,933 614,232 Nov. 721,71 I 327,402 i,591,951 614,006 Dec. _~ 754.~308 322 564 1,426,452 634,472 Total ?_,795,581 4,984,244 12,561, III 6,361,782 1970 J an. Feb. March Apri I May June July Aug. Sept. Oct. Nov. Dec. Tota I 1971 Jan. 727,706 641,437 738,197 746,016 761 , 727 800,204 785,85 3 700~,089', 673,252 623,503 637,37 I 580,339 698,448 345,269 306,897 483,333 414,911 437,424 433,494 475,779 440,437 ~442,977 448,270 407,331 ~_,049,618 408,616 ,299,24t 617,602 ,053,763 466,281 , 115,863 367,135 ,395,806 408,649 ,363,256 424,070 , 112,436 403,132 , 143,428 438,854 , 199,366 428,605 ,021,789 323,600 ,137,329 678,507 ,260,348 731,940 ';229','579 : ... ,6.2.3,4.26 ,,' i~l .4';.3.~3.2., 204 946,342 411,256 Total 2,153,856 I ,873,106 2,243,697 2,515,459 2,611,846 2,501,999 2,640,432 2,767,757 2,964,453 3,047,825 3,255,070 3,137,796 32,460,132 2,947,596 2,468,368 2,704,618 2,965,382 2,986,477 2,749,266 2,843,914 2,768,497 2,461,618 2,887,599 3,036,990 3,046,840 7.09,3 7 2,501,251 AGO 8516 56 COOK ISLET OIL FIELDS TOTAL CASINGHEAD AND DRY GAS TOTAL GAS PRODUCED DISTRIBUTION Year & Granite Middle Ground McArthur >~on th Point Shoal River 1965 1966 1967 1968 July Dec. ~0~405 7o'~a~ 10,405 Jan. 23,054 Feb. 40,407 Mar. 14,134 Apr. 5,142 May 96,508 June 72,457 July 130,774 Aug. 150,922 Sept. 141,453 Oct. 166,275· Nov. 179,233 Dec. ' 179,627 TOTAL 1,!99,985 Jan. 194,553 Feb. 211,569 Mar. 10,294 219,699 Apr. 34,225 210,060 May 197,197. 223,196 June 305,105 213,343 July 393,713 226,502 Aug. 548,815 245,323 Sept. 677,252 292,904. Oct. 964,869 340,607 Nov. 928,352. 409,657 TOTAL 4 889 550 3 244,803 Jan. 949,277 467,659 Feb. 1,001,558 579,625, Mar. 1,002,492 609,329 Apr. 950,639 587,010 May 966,247 548,387 June 746,615 621,486 July 933,974 630,530 Aug. 639,302 531,744 Sept. 684,853. 512,526. Oct. 808,110 513,385 Nov. 642,800' 547,440 Dec. 710~56~ 5p~,536 Total 10,0~,431 ~6,65~, 657 101,349 103,739 2_o5, oSS 202,870 200,655 357,736 '397,464 523,745- 582~161 633,488 652,158 554,032 625,543. 695,246 730,333 6~155,43~ Trading Bay 515 9,835 4,572 10,839 ~11,545~ 24,989 19,717 52,456 61,088. 92,030 107,759~ 159,728 167,362 ~l,~2Q. 205,472 165,949 189,228 201,702 222,446 241,319 263,778 296,433 226,180 235,648 315,776 ..... 97,19. 2,96~,%2~ Total 515 23,054 40,407 14,134 5,142 ~6,508 72,457 130,774 150,972 141,453 166,275 179,233 17~,626 _ 1,210,905 204,388 216,141 240,832 255,830 445,382 538,165 672,671 729,100 1,062,186 1,.413,235 1,599,086 .!,52~,21~ 1,825,278 1,947,787 2,158,785 2,136,815 2,259,825 2,191,581 2,461,770 2,119,637 1,977,591 2,332,513 2,200,262 ~2,346.63Q 25,809,64~ 4 GO 85 ! 6 5? COOK INLET OIL FIELDS TOTAL CASINGHEAD AND DRY GAS DISTRIBUTION TOTAL GAS PRODUCED Month & Year 1969 J an. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Tota I 1970 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Tota I 1971 Jan Granite Middle Ground McArthur Trading Poi nt Shoal Ri ver Bay. 686,555 648,018 488,307 580,838 630,736 600,499 647,769 525,243 699,51 3 507,515 649,034 470,375 795,570 481,060 810,956 454,458 782,001 445,384 825,335 443,839 801,103 426,118 841,796 422,843 8,668,675 !6,006,200 841,216 461,664 747,262 405,688 854,446 577,27 I 851,599 512,366 856,550 513,650 873,545 518,912 858,707 551,861 814,279 524,96 I 771,881 531,296 754,367 536,642 779,118 495,910. 739,884 506,766 ~_,_742,854 ~ _!t],452,0..91 660,937 394,502 616,030 436,079 805,236 526,493 , 116,462 578,399 , 192,747 592,740 , 179,102 580,433 · 178,600 599,068 ,237,575 665,750 ,463,392 655,426 ,51'9,86'i' 693,090 ,728,230 693,470 ,578,076 703,747 1~4 ,276 ,248 7, 119,197 ,519,913 701,559 , 189,491 554,062 ,427,721 474,308 ,670,672 517,812 ,703,278 543,388 ,471,620 504,482 · 524,619 514,484 ,630,374 514,614 · 448,5 i 4 390,365 ,555,992 748,622 ,667,851 791,339 ,642,046 703,62_~4 ~ _6,958.~ 6,69 , 862,728 503·518 I ,329,136 484,389 Total 2,390,0 12 2,121,254 2,562,964 2,867,873 2,992,525 2,878,944 3,054,298 3,168,739 3,356,527 3,482,124 3,658,921 3,546,462 36,070,320 3,482,124 2,896,493 3,333.746 3,552,449 3,616,866 3,368,559 3,449,671 3,484,228 3, 142,056 3,595,623 3,734,218 3,792,320 41,290,67L! 3,179,771 Z 0 0 Z O I LIJ 0 GAS PRODUCTION AND ~~-~--~--?--fdd-:~?~'.- ~J..1 ' UTILIZATION ~~.::F~~;,~[~r~~[-'t~,~ ~:.['~:.~/~.~ ~__~:' ' Cook Inlet Fields, Alaska ~-~---{ .... I--H-H .... --F-~-+-~-'-. -~-F-;I.-, I {-;r~ [~ . '. Alaska Dap, Nat. Resources ~-~'~ ~--~t-J- ~k ........ t-[';;;-: ~ .... '~ Division of Oil and ~s ~ J J -% H-~-iH- j-'-~t-?-~--'- -I' ~ ..... ]~!-' i /_. '~_L L. - Z .2[;Z -~Z ~ Z;' JZI-F-' ;' '-' ] ]ZI2 i ' =___~_i '_2_' '-'_X '-LL-- L"X" ,I _;._[_ : '."'" -- t +-. .... ~--~ '.- ' .......... ' .... ~--: '~' ~ t~ '-~'-: ..... i : mzzz ___u.:zz~.zzz- . z~ :.acm -z.:z-- :: ~::: _ch, ::, :~:':'z:: t ...... 1---~ ~ ........... i , ....... ~' :: ___ z __ :.z.~: ,.::t .- -. .... , .... .................. ...... ...... ~ ~'--~- :' ~ ......... ' ~ i ~ .... '- '~ .... ~-~--.~'-~- - ....... ~. = ~_L__ , ........ ~ ,_F ~ ....... flt_~:~N. -.__iJ_E ...... ~_, ..... I_~ ...... ; ..... , ~ ,,,~ ~ ' , i I -:7 =_ i-:: _- - _~ i i :~:1(t"-~7~--:-- .... r.- ................ ...... ~ .... ---1 ..... -- ~ "~" ! -,:'A:Ij:U-V~m : ..... ~ ~--~--.:---,;.-.~.%- .... 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I L~ ~ - ~ ~ ............... ~ ...... l-- ~-~ ' --.~--: -- _ _ -'~:-- ..... -~ _ Z~ _ ........... ~- t.... ,- ~:1-~.,: -- ::-,:~.--,] ........ _ _ ~__~?::_; -~ .... ~__ ~ ..... ~ ' Z-~ ~ ..... ,'x ................ -'.~ .... .......... .... ~_.: ........ ~ .... ~* ........ ~: .... ....... ~ _~ ~ ,~k--~.- 19 66 1967 1968 1969 1970 , ~ , ~ n ~ '' ' "'"' '"' ............ " ............... i ~ Z Comparison of Actual and Estimated Gas Production and Utilization , UNION OIL CO · .Trading Bay Field (:look Inlef) Alaska Alaska Depf NC~ Resources Pefr. Engr. Branch Division of Oiliand Gas Z 600 500 0 400 ILl O3 3OO <1: I-':' 200 IJ_ I00 AGO 85 ].660 o i "ii' 1968 1969 -1970 1971 1972 · GAS Alaska Dept. Nat. Resources Division of Oil (~nd Gas PRODUCTION ANi~' DISPOSITION ATLANTIC-RICHFIELD CO TRADING BAY FI ELD COOK INLET~ ALASKA Petr. Engr. Branch z I00 90__ 801 701 60 50 40 ~0 20 I0 AGO, 85 [66! 19 72 19 73; LIJ ::::) ._J 0 -; .... t__~ ..... t I ..... i-I--I--L 1- I I l ----; ! : , ! __; I i I I I { I I l--I--'l--t--/ ....... ~ -~'-'-~. ,::~-.,.-: ;--,.':u:.-x;.:::i±r:j---::l:zh?:I-:: ':. GAS PRODUCTION AND UTIL-IZATION :':,--~ '-:-i.:::~: '-_'i:~;':L:i4:.: _zl:;:~.:,._-l::_ cbL_-_i~L-_-~- -: TEXACO I NC, --;-!' ~-l--t'-I ',--t--~-',---I-'- .... I--1-~--[ .... 1-4- t ....... ~ TR'~n~N~ ~Y ~n .... L.._I _4__b_ I h. ~_-!__~_~ .L_L_ _' .... i .... ~'~._-~' - m-t.-!-!--:--:-'-{--t-!-x'- ..... t ..... !":-l-J .... , ..... l-i--t ..... : coo K ~NLET, ALASKA -,-~--P-~--t--k--l-.~--'~--~--~.--x-.-~----n--'.--~---I .... j ..... .~_i_ u_ i - ::~::[::l:J-~--[~::?::l::~l-: :__qL~_ _[_:_j .... h'--L'L-:~: ', AIoskQ Dept. Not. Resources Pefr. Engr. Branch :.~-.-i'-l-?l----l--t"~lu--t-l-i-'l-Z :J~:¥" :'-'::t-::--j-: :::i Division of Oil and Gas : --~-~--~--~-~ ..... ~I .... l--l---t---½ ....... ~-:.:~ --I ,. I. ~ .... 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'.-.: ::TZ ..... i ,2 ..... - .................... .............. ..... ,_,._ . ......................... ............ -- .............. - - _~ -i~ ~'.I .... - ........ ____~.. " -I ' __: ..Z. 7-'Z _'Z "- - :.: Z.': :_. z -- --J ....... i L ................... -~---~ 4-~ ....... :. - '~ -- . ~-- _:::i::: :-'1' .i -: ::-t::ll-f- ...... -::---:' . -.!::-~ ' -.- ~ - .::: Z~ ...... i__: ':-- -Z ': ~'-c-: ~ .............. : !--:: -..- :::_- .................. ~.IIL_.L_ ....... IL ....... [ _ . ! ,/ :h--'--'"~' ' . I-- -- ; ~---'. ........ ~ .......................... ......... I ..... !,~rt---t- .... --,-%-, ! --!a~ ~--"~a ..... : - - i I' !- --I--~. - '- ======================= ............................... ~.____~r__ .... ~- ..... , ......... ;._.__ ] ! :I --~_--'--r-- --3 ....................... -~r-t--i-- [~' O=. t-- - -~:--- .............. --; --~ ~ ;t' _'I--'~- -1_, ....... - AGO 851:662. , ~.-' F '- "-!: ............ ' . - _.~ _. _~ .... -- ......... · , ....... -, ...... .-. -,<-,= =,', ~:= .<,,,,,,~, ~-< . ~ = o i 1968 1969 If) 70 , 1971 197'2 i iiii i , ii i i , ,, i , i i ii iii lu i i ,l,n , i I nl i i nl i I _~1,, i ,J~,, , 70 SO 5O 40 30 20 I0 5 0 GAS PRODUCTION AND UTILIZATION McARTHUR RIVER OIL FIELD COOK INLET~ALASKA Alaska Dept. Nat. Resources Division of Oil and Gas Petr. Eng r. Branch Z 7 Z LLJ :2000 ,I 800 1600 1400 1200 I000 800 600 4O0 200 19 68 1969 1970 AGO .851.663 1971 1972 Z Z I-- Z 0 o 0 ,' ''- i ', ,~ } ~ ~ -- -~ .... '- - ' - ' · ' · · ; c:;~x~_~:~..;Ic~';c;-_l_.-_~_-~._~:-q--sF_l: Production and Util,zat~on '.'-i-'-~-'-t ..... ,----c-i t--~- -'k'-~-t --L-_~..~ci-_ :' I ........ t ..... --. PAN AM OIL ORR · --i---.~ j~- -~ ..... ~- h ........ I~-F-,--,-,'"~"¥-~ ~ f,--iH, J-q !-q- 1_ I~!~-q-I--i-I .... ~m~-'j--~l~~-l-~--~--t-J-- Alaska Dept. Nat. Resources Pet. Engr. Branch -_-_.-_-_-- ,,___-j- _-_~ '- t- ;~_ -- _ ~ ~-; - ... -- ]~- -----~'---- i+i~14' .................... .... -t,,,, 11_II, ,., , '-. ,, , , , , ....... I I / t _ I J_Ll:q ~ I -- ~-'-_,_-~_ i 4_ ¢¢,H' ',.', ', ' - ......... -.-. = ......... , .... ,- ...... ':'-; ..... ,-: _ -FI I .I ,, I.I, .................................... i I I I .... 1 !'?fi .'" -~t=k,, ,:~.I=1'4=',::~:~i~=_ - -= ....... Ft - ---- ::_t~,'-'l-~' -~ III ._ lq-t~_- _~.__~ .... L~4 7',"_~L_ ,-~'_'h,'. :~ ;±h!-H4''"'"¢~-,i ~: :.._', ,~..:-_::; .-~_-t ......... H-H-t-- , ........ i -i .................... P-44:.- , - ....... i ................. : .................... L%-.=:: :=:; ..... ,: :~--,:, _,.., '-, 4-4:+H+-.-.-~ ....... :- :---- ~--~:: :~, = :.= = ::-.: := :_- -..-_ _-.: ..:::_~ : :: ::: :::: 'l_-~d ; i :,::~' ._ .11~!~_ ~j__z~H:t , ,_., ............ - :: ........ ~ ....... ~ .... ~ .......................... 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' : ~ : ~ :------ ~-4 ......... , Il~, , ,4~H.~-[,~=.;- , ~ .., ........................ I ~-H'~ ............. i 1 i i~il ..... ? ---~- _ _ i ; ~,: I i J I-t~ - --.9~~__~.~-~.~-~,,,,~ _,- i i ..... i '~ AGO 85Z6&~ I:t-~ l '._-5'TI-- ii-I -: t i T T -- 1-1 1 I 1 I I ' , [ -L_ ~ ~ ' ' ' ' r- I I 1 I ~r~-~t~. I I I t i I I I I_ I 1 I I 1,1 I 1 .I I L -j--.r-'l : I... I i J i i i i . I I I I I ! i i . i i [- . i i , ;. i i i TI i i ~ ~ , , . - " ""1'96e "1 "' , 9 97'i' ......... ",9 J ," .... 1,9'69 J 70 ............. I' 900 800 700 600 500 400 ;500 2:00 I00 Z 0 Z I000 900 800 700 600 500 400 500 200 I00 -,-!-t~ ....... '"-'-'~-~ '- ! .I i Com'parison of Actual and Estimated Gas :. :;,,. [.~ ,,', ~ ~ ~ ~ ; ; ~ ' MOBIL OIL CORR , ,, . '~~.~i~ ....................... ~-~ ............................. .... ~ II ........................... - ~ .... ~ .-~ ..... ~ .... ' ..... I ~-~ -- -" ... ....~-- - - ': ........ - .............. II.......................... =============================== _ __~li __ . . . I Comparison of Actual .and Estimated Gas Production and Utilization PAN AM OIL CORP. Middle Grd. Shoal, Alaska Alaska Depf. Nar. Resources Division of Oil and Gas Petr. Engr. Branch Z Z I-- Z 0 n~ W 5OO 400 300 200 I00 0 AGO 851(56,6 1968 1969 1970 1971 1972 0 Z 6OO 5OO 400 300 200 I00 0 r Comparison of Actual x~nd Estimated Gas .,, t..i- , -tcj-t-t-t- "~'-'~-'-~-~-'--'-'---'-' .......... ~ --'~'--""" .... -'-"- :~-:[-:!:[-:.i: ::;i:~:Fl:{:-:! Production and 'Utili=ation : ". .... ~",-':-:=-",'i-;-;-'-[- ,., ['~'::I L ' SHELL OIL CO. - ..... -'-~'-'--'--~'-"-' .... ' .... i-i::2':___!:_ "::~::+'-~:'"-~-i -il ' '. - -i-. :.--L- i._L _3 _l~_i--J--J._ -,.-,--, .... : ..... , .... , ;-:-~:~..{::- '::l:-:i M,ddle Grd. Shoal, Alaska . i. ~ I ~ ~ I I ~ ~ j .... Alaska Dept. Nat. Resourc'es Pet. Engr. Branch ...... ........ 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J ,.';.~' 4 ~ Ii . ';. --~ ~ , .., ..4. j~ . ,' ' : .' .i, '- ' . ,J a,,.- ~, ,,f..~-t ,, 1/,,4., , /,,/.',..¢''.~..;., ~¢..,, , .¢,.~ ,~...,.,, I , ,I ,. -,.--;..... : . ,~_.,,,,.. ~, ;__._',:'.Z_..-,__.~._,,__'¢~_ ,,.~.~...,..;,~___. , , ,.z.¢~ . , ,,. ~ .l;/,¢.,,,.,,,,.,..r, :,.~, · '. L ~; ' , ' ..,,, ,'. il . ; .- ~ !I '.. .... ' ' -:,'~" ' ' I .,T----'-- '~ "%--% ...... !':'.':~" ', '~ tCvi' ." ,' II . ~ .o .~ _ I ~ .r.,'~--. J'. '~ *'7-_" ' . j "~i--~"rJ 0 · , i , , I I , : '-ill..,'i"~,t//'"u~ i · .. '·.... ,-, .'; ;~ I ~; ' ¢ ~ ~,,?' I 't, " . I " .' ~ . ' , ~' ,' i ' .' · · '.;. ,~' ~,~ ' ,~/' '/ z'/,,9~'~';'(' i o,/ ,,,~:,,,, ~ .;, .i~/,. /, :/.'. / I · I i.., .... ~, ~ ,/.,,/ ..,~; ":"~ ...... . ~ ' ":"~ ~' ........ .....7.." l'~;T '-'i ........... :-'7'T ...... --"~ ............ !""'I :: ........... -'~ ........ :-~??---:~r-;- ~- -t ...... -i~1 ...... : ........ ~..:.r. ~ ..... . : ~':~ = ' .... . ............ : ".~=',-.:.&~--'~'~',,,. ~' %- :;-t:'~-~=,;:; .. "."~~~ ,', ,:--~,' :: .! ": ',L.: .--.~:'" .~ : ..... :.. '..,., .:. ,' : . '.. ............. ,,,.. :..,; ..... ~.-'.. ., ~ ,._'..'.,--:--....' .., .... .,. . "t~.- ..... .,- ....... :.,,.,...,,.~ ............. ................................. ' ......... ""' .~..'..t.~:-.'.:"?,, 7,:T,,~TM ~.:--~- ~~.i,."" ;..,-i,,,-,..~',;.;.,.,.,~_.~.; ..... '.,.',.;.'~,¢.,.-.;,,~..',.......,..,v&.....~:s..... :...~.,.: .,,~....,~;.,~ ,~ ..... :~..,.~. ~ ...,.,...~,..:',.. 7<¸ .,! D ¢.."7 ¢ b/ -' · ,! . ., i:! , h-If:lq ? · , , STATE OF ALASKA DEPARI/4ENT OF NATURAL RESOURCES Alaska Oil and Gas Conservation Co~ttee 3001 Porcupine Drive Anchorage, Alaska Re: The beneficial use of gas produced as ) a result of crude oil producing operations ) in the Middle Ground Shoal Oil Field ) Conservation Order ~32 Middle Ground Shoal Oil Field May 10, 1968 IT APPEARING' THAT: 1. The Oil and Gas Conservation Committee, pursuant to Section 2012 of the Alaska Oil and Gas Conservation Re§ulations (1964), published the notice of a public hearing concerning the referenced matter in the Anchorage Daily News on October 21, 1966, to be held on November 1, 1966. 2. Each of the affected parties received personal service on the notice of the public hearing. 3., .A public.hearing washeld in the offices of the Division of Mines and Minerals onNovember 1, 1966. The hearing was continued for a maximum of twelve, months. 4. By letter ~ated October 9, 1967, Pan American Petroleum Corporation re- quested a further continuance o.f the hearing beyond November 1, 1967. 5. Each party attending the November 1, 1966 hearing was notified by certi- fied mail that the hearing would be reconvened on January 16, 1968. 6. A notice of the reconvening of the public hearing on January 16, 1968 was published on December 22, 1967 in the Anchorage Daily News and waivers of personal' service were received from all of the affected parties. 7. The public hearing was reconvened on January 16, 1968 in the City Council Chambers of.Z.J. Loussac Library. Testimony and exhibits were presented by Shell Oil Company and by Pan American Petroleum' Corporation. A wire from Phillips Petroleum Corporation concerning a possible purchase'of the Middle Ground Shoal.casinghead gas was made part of the record. 8. A notice of continuance of the public hearing until April 10~ 1968 was published February 16, 1968 and republished for clarification on February 23, 1968. A further notice of continuance until May 8, 1968 was published April 10, 1968.. These' publications were in the Anchorage Daily News. . each notice" ...... '.. · · · · ~'. ~ ', ; '~.~. , ; ~ ~,~ .,'.; .'. . ..::,,.. ;,., ,. ~ 4 ,, ...... '~'... ~' -' · ,e~.. ,~., ~,. · / Waivers of personal service were.received from the affected parties for .f i I CO~!SERVATION ORDER #32 Page 2 May 10, 1968 10. The public hearing was reconvened on ~y 8, 1968 in the City Council Chambers of the Z. J. Loussac Library. Testimony was presented by Shell Oil Company and by Pan American Petroleum Corporation, and a statement was made by Union Oil Company o£ California. AND IT FURTHER APPEARING THAT: 1. All gas now being produced is originally found in solution with the oil and in order to Produce the oil the gas must also be produced. 2. The gas being flared is casinghead gas which is quite different in character and properties from gas well gas. 3. A small volume of gas is produced with each barrel of oil and the amount of gas does not exceed the. amount reasonably necessary to lift the oil to the surface. 4. The'reservoir energy is being efficiently utilized. 5. All gas production Which exceeds gas consumption is being flared and burned for safety purposes. ~ 6. Operators have installed gas lift equipment or made plans to install equipment to utilize as much of the heat energy as possible on the off- shore platforms. .. 7. Lines and most facilities have been installed to move the gas produc- tion from theplatforms to the shore for possible marketing' if and when a m~rket develops. 8. The gas production'will exceed gas usage for eight years or less, which is a short life'duration for a gas contract s.ale compared to the usual fifteen to thirty years. 9. There is no market for casinghead gas at present since costs to de- hydr.ate', compress, transport and process the gas exceed the value of the tail gas plus the extracted liquids. 10. Operators are investigating and installing a pilot water injection project and it is not feasible to re-inject gas into the oil reservoirs until the success or failure of the water injection project is proved. .11~ If water injection does not prove feasible the operators will re-ev- aluate.the feasibility of gas injection for pressure maintenance. .. , / / CONSERVATION ORDER ~32 Page 3 1,ray 10, 1968 12. It is not feasible to store gas in undeveloped reservoirs in this field because of high compression and injection costs, possible loss of hydrocarbons, safety hazards, and contamination dangers. 13. There are no depleted gil or gas r~servoirs in which to store cha gan. 14. After providing energy for lifting the oil to the surface approximate- ly 10% of the produced gas is now being consumed for fuel, power or heating, about 33% will be consumed within the next fifteen months, 50% will be con- sumed in four to five years and 100% of the production will be consumed within eight years, after which gas from an outside source will be needed. 15. The Operators have utilized all gas possible for lifting the produc- tion, fuel and generation of power, and have attempted to secure a market for the remaining gas. 16~ Maximum beneficial use of the gas is being obtained under the circum- stances. , 17.' No illegal use is being made of the Produced gas. NOW, TKEREFORE, IT IS ORDERED that the oil producing operations in the Middle Ground Shoal Oil Field be conducted in such a manner that the maximum quantity of casinghead gas be utilized and the quantity of gas flared be kept to a minimum. IT IS FURT}~R ORDERED that the burning of the gas produced with the oil be authorized only in the amount that the gas cannot be beneficially utilized for fuel, power, drilling, pressure maintenance, storage or market sales. The Oil and,Gas Conservation Committee will maintain continuing surveilance of the disposition of casinghead gas in the Middle Ground Shoal Oil Field. This Order will be effective for 120 days and may be extended i~ successive 120-day periods upon a showing by each operator to the satisfaction of the Committee that the operator is actively pursuing a program to beneficially utilize the gas which is being flared. ., ~GO 85t.bT9 CONSERVATION ORDER #32 Page 4 May 10, 1968 DONE at Anchorage, College, and Juneau, Alaska, and dated b~y 10, 1968. Thomas R. Marshall, Jr., Executive Secretary Alaska Oil and Gas Conservation Committee Concurrence: ~am~s A. Williams' Chairman a Oil and Gas Conservation committee Alaska Oil & Gas Conservation Committee ~ :',.,.' 7" ~'' '/~'~"~ ~-"-- Harry W. Kugler, Member Alaska Oil and Gas Conservation Committee AGO 851680 STATE OF A~iSIQ% DEPART}bENT OF NATURAL RESOURCES DIVISION OF brINES AND ~NERALS Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Re: The 'beneficial use of gas produced ) as the result of crude oil producing ) operations in the Granite Point, McArthur ) River, and Trading Bay Fields ) Conservation Order ~61 Granite Point, McArthur River, and Trading Bay Fields May 10, 1968 IT APPEARING THAT: 1..The Oil and Gas Conservation Committee, pursuant to Section 2009 of the Oil and Gas Conservation Regulations, published in the Anchorage Daily News on January'il, 1968, the notice of public hearing on the referenced matter to be held on February 7, 1968. 2. Waivers of personal service were received from each of the affected parties. 3. A public hearing was held on February 7, 1968, in the City Council Chambers of the Z. J. Loussac Library. Testimony and exhibits were presented by Marathon Oil Company, t.~bil Oil Corporation, .Pan American Oil Corporation, and Union Oil Company of California. 4. l%e public hearing was continued until April 10, 1968, by a notice published in the Anchorage Daily News on March 11, 1968. ~e public hearing was further continued until May 8, 1968,'by a notice published in the Anchorage Daily News on April 10, 1968. 5. Waivers of' personal service were received from each of the affected parties for each of the two continuances. · 6. ~e public hearing was reconvened on May 8, 1968, in the City Council Chambers of the Z. J. Loussac Library. Testimony was presented.by Mobil Oil Corporation, Pan American Petroleum Corporation, and Union Oil Company of California. ;2~D IT FURTILER APPEARING THAT the following findings apply to the McArthur River Field: 1. The field is in a Very early stage of development and a considerable amount of drilling will be necessary to thoroughly evaluate the reservoirs, but enough is not known to permit reasonable predictions of gas production and gas usage. COi;SE%VATION ORDER ~;61 Pass 2 h'ay 10, 1968 2. Gas production will exceed gas usage for slightly over ten years but the volume available will be constantly decreasing after the first five years. 3. The produced gas has a high nitrogen content which may render it undesir- able for uses other than h~a~ing. 4. The high nitrogen content will prohibit use of the gas in the liquifica- tion plants being.constructed on the east side of the Inlet. AND IT FURTHER APPEARING THAT the following findings apply to the Trading Bay Field: 1. Field limits have nit been defined. '2. The producing formations are folded, faulted and truncated creating a complex geologic structure which will result in loss of control of injected gas. 3. Gas production will exceed gas usage for six years, but the volume available will be constantly decreasing after the first two years. AifO IT FURTHER APPEARING THAT the following findings apply to the Granite Point Field. 1. Field limits have not been defined. 2. P'roduced gas will exceed gas usage for eleven years but a constantly declining volume will be available after the first two years. AND IT FURTHER APPEARING THAT the following findings apply to all fieIds covered by this order: 1. There is no feasible way to lay a pipeline from the productive areas on the west side to the east side of the Inlet across the deep trench with present pipeline technology. 2. Gas available for market is concentrated in the early years and a deficiency'will exist from 1974 to 1979. 3. All gas now being produced is originally found insolution with the oil and in order to produce the oil the gas must also be produced. 4. The gas being flared is casinghead gas which is qui~e different in character and properties from gas well gas. , COh'SEXVATION ORDER #61 Page 3 1.~ay 10, 1968 : y 5. A small volume of gas is produced with each barrel of oil and the amount of gas does not exceed the amount reasonably necessary to lift the oil to the surface. 6. ~e reservoir energy is being efficiently utilized. 7. All gas production which exceeds gas consumption is being flared and burned for safety purposes. 8. Operators have installed gas lift equipment or made plans to instal'l equipment to utilize as much of the heat-energy as possible on the off-shore p 1 a t'f orms. 9. Lines and most facilities have been installed to move the gas production from the platforms to the shore for possible marketing if and when a market develops. 10. T1~ere is no market for' casinghead gas at present since costs to dehydrate, compress, transport and process the gas exceed the value of the tail gas plus the extracted, liquids. 11. Operators are investigating and installing pilot water injection projects and it is not feasible to.re-inject gas into the oil reservoirs until the success or failure of the water injection projects are proved. ].2. If water injection does not prove feasible the operators will re-evaluate the feasibility of gas injection for pressure maintenance. 13. It is not feasible to store gas in undeveloped reservoirs in this field because of high compression and injection costs, possible loss of hydrocarbons, safety hazards, and contamination dangers. 14. There are no depleted oil or gas reservoirs in which to store the gas. 15. The operators have utilized all gas possible for lifting the production, fuel and generation of power~ and have attempted to secure a market for the remaining gas. 16. Maximum beneficial use of the gas is being obtained under the circumstances. 17. No illegal use is being made of the produced gas. NOW, Tt~LEREFORE, IT IS ORDERED that the oil producing operations' in the Granite Point Field, the McArthur River Field, and the Trading Bay Field be conducted in such a manner that the maximum quantity of casinghead gas be utilized and the quantity of gas flared be kept to a minimum. ./ ,, . .. . ',. AGO 851683 COUSE;IVATION ORDER ~;61 Page 4 l.:ay 10, 1968 IT IS FU!12qIER ORDERED that the burning of the gas produced with the oil be authorized only in the ~ount that the gas cannot be beneficially utilized for fuel, power, drillzno, pressure maintenance, storage or market sales. ~e Oil and Gas Conservation Committee will maintain continuing surveilance of the disposition of casinghead gas in the Granite Point Field, the McArthur River Field, and the Trading Bay Field. · This order will be effective for. 120 days and may be extended in successive 120-day periods upon a showing by each operator to the satisfaction of the Committee that the operator is actively pursuing a program to beneficially utilize the gas which is being flared. AGO 851.684 ' CO:.:SERVATION ORDER #61 Page 5 May 10, 1968 DONE at Anchorage, College, and Juneau, Alaska, and dated May 10, 1968. Thomas R. Marshall, Jr., Executive Secretary Alaska Oil and Gas Conservation Committee Concurrence: /~am~s A.' i~illiams, Chai'rma~'7 ' ' ka Oil and Gas Conservation Committee Dale Wallington, ~fember~ Alaska Oil and Gas Conservation Committee Karl L. VonderAhe, Member Alaska Oil and Gas Conservation Committee }4~rry W. Kugler, ~.lember / Alaska Oil and Gas Conservation Committee AGO 8 5~'685
