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Home My WebLink About2009 Nicolai CreekAurora Gas, LLC www.aurarapower.com May 3, 2010 Mr. Winton Aubert Alaska Oil and Gas Conservation Commission 333 W. 7th Avenue, Suite 100 Anchorage, AK 99501 Ms. Laura Gregersen Department of natural Resources Division of Oil and Gas 550 W. 7h Avenue, Suite 800 Anchorage, AK 99503 RE: 2009 Reservoir Surveillance Reports Nicolai Creek Field Three Mile Creek Field Dear Mr. Aubert and Ms. Gregersen: RECEIVED MAY 032010 J*J0118Ga6C0ts.UfflV s " Anchntle This letter transmits the above referenced reservoir reports, pursuant to Aurora Gas, LLC's obligation to you. This data is relative to operations at the Nicolai Creek and Three Mile Creek Fields, Cook Inlet, Alaska. If you have questions, please contact myself, or Ed Jones at the Houston number below. Sincerely, (J� Bruce D. Webb Manager, Land and Regulatory Affairs 1400 West Benson Blvd., Suite 410 -Anchorage, AK 99503 • (907) 177-1003 • Fax: (907) 277-1006 6051 North Course Drive, Suite 200 • Houston, TX 77072 • (281) 495-9957 . Fax: (281) 495-1473 NICOLAI CREEK UNIT WELLS NO. 1131 2, and 9 RESERVOIR SURVEILLANCE REPORT RE: CONSERVATION ORDER NO. 478A HISTORY AND SUMMARY AS OF 12/31/09 BACKGROUND Aurora Gas, LLC re-entered and side-tracked the abandoned Texaco Nicolai Creek Unit (NCU) No. 1A in 2002 and completed the well in three Upper Tyonek sands, the Carya 2-4.2 at 3137-3157' TVD, the Carya 2-5.1 at 3307-3348' TVD, and the Carya 2-6.1 at 3506-3521' TVD. These intervals were commingled upon completion and tested with an AOF of 3.1 MMCfpd. Unfortunately, in spite of free -hanging sand control screens in the completion string, the well produced water and sand along with the gas, and, consequently, produced very little gas for sales to date. Unable to control the sand production by surface means, the well was recompleted in June of 2006: 1) plugging off the Carya 2-6 sand, from which the sand and much of the water was being produced (as evidenced by sand fill and a "sand -blasted" hole in the screen at that depth), 2) adding perforations to the Carya 2-3 sands at 2783-2864' TVD, the Carya 2-2.2 sands at 2550- 2568' TVD, the Carya 2-2.1 sands at 2426-2434' TVD, and the Carya 2-1.2 sands at 2254-2316' TVD, and 3) completing selectively (see attached well bore diagram). As of December 2006, the Carya 2-3 to the Carya 2-1.2 sands were mechanically open and producing (perfs at 2307-2918' MD, but some now plugged by sand --see note below Development plans), and the deeper sands, 2-4 to 2-5 (perfs at 3191-3401' MD) are shut in with a retrievable plug at 3184' in the stinger of the packer at 3145'. These open perfs have produced 282.6 MMcf of the 289.2 MMcf produced by this well through 12/31/09. The NCU No. 2 well was also re-entered by Aurora Gas in 2002 and re - completed into the Upper Tyonek Carya 2-1.1 sand at 2141-2177' TVD, the Carya 2-1.2 sand at 2342-2354', and the Carya 2-2.1 sand at 2493-2511' TVD. These commingled intervals tested for a calculated AOF potential of 14.6 MMcfpd. A production facility and gathering line were constructed in 2003 and the well started producing to sales December 2003. The well has produced 750.5 MMcf since the re-entry thru 12/31/09. The NCU No. 9 was drilled on the same pad as the two directional wells above in 2003 to capture reserves behind two strings of pipe in the two old wells. It was completed in a Beluga Tsuga 2-7 interval at 1320-1447' TVD/MD (now the Middle Completion). This well tested yielding at calculated AOF potential of 49.1 MMcfpd. It also started producing to sales in December 2003 and produced 1071 MMcf from this Completion. Because this completion has depleted significantly, a recompletion adding additional Tsuga 2-8, 2-7, and 2-6 sands from 1148-1904' was completed in September 2006. The well produced 326 MMcf from the Lower Completion at 1552-1904' (9 different Tsuga 2-7 and 2-8 sands) between the recompletion in October 2006 and October 2008. In October 2008, the pressure of this Lower Completion had declined to near that of the Middle Completion, so the sliding sleeves for the Middle Completion were opened, allowing both the Middle and Lower Completions to produce commingled. The well has produced 1721.9 MMcf thru 12/31/09 of which 345 MMef is allocated to the Lower Completion and 1377 MMcf to the Middle Completion. NOTE: All three of the above well are on the same pad, with the #113 and #2 being directional, so all have the same ground level elevation (22' AMSL) and nearly the same KB/DF elevation, so TVD's are very nearly TVDss and, thus, almost directly correlative. CONSERVATION ORDER NO. 478A REQUIREMENTS This Order issued October 16, 2003, by the AOGCC has three items pertaining to reservoir surveillance at Nicolai Creek Unit wells No. 113, No. 2, and No.9, requiring: 1) (0) Initial reservoir pressures, 2) (#4) Annual monitoring of reservoir pressures, and 3) (#5) Annual reservoir surveillance reports. INITIAL RESERVOIR PRESSURES Form 10-412's for both Pools (Nicolai Creek—South undesignated and Nicolai Creek—Beluga) for 2002 and 2003, show initial reservoir pressures. The initial reservoir pressures for #1B and #2 were obtained by bottom -hole pressure surveys (No. 1 B and 2) and confirmed by quartz -crystal surface pressures extrapolated to subsea datum. These initial pressures were: #113-1625 psig at -3293' TVDss, and #2-1025 psig at -2285' TVDss. The #9 well was taken by quartz -crystal surface pressure recorder and was confirmed by open -hole MDT measurements—it was 673 psig at -1348' TVDss. Subsequent work, i.e., the 2006 recompletions of #113 and #9, has added the following original pressures (see attached 2006 Well Test Summaries for both wells): #1B-1211 psig at -2537' TVDss (commingled currently open perfs of Carya 2-2.1 to the 2-3 at 2480'- 2918' MD) and in #9-666 psig at -1706' TVDss (Lower Completion). ANNUAL MONITORING OF RESERVOIR PRESSURES Attached are Form 10-412's for both Pools (Nicolai Creek—South undesignated and Nicolai Creek—Beluga) for 2009, showing annual reservoir pressures, along with some comments. Surface pressures have been used exclusively for annual pressures after initial pressures in Wells #2 and #9, which have made very little water, so they are consistently in single-phase condition. Surface pressures in #113 maybe affected by some minor buildup of water in the wellbore, but no bottom -hole pressures were obtained in 2008 due to the low volumes produced. Note that due to the recompletions of #113 and #9 in 2006 and the subsequent production of different intervals, the datum TVDss's for these wells have changed since the 2006 submittals. The reservoir pressure survey data and production data from the three producing wells have been plotted to yield P/Z vs. Cumulative Production curves, providing a material - balance projection of reserves. Those plots (using Ryder Scott Excel templates) are attached. These show the the #113 having an EUR of 440 MMcf from the open perfs, of which 283 MMcf were produced thru 12/31/09. The #2 is shown to have an EUR of 947 MMcf, assuming 3 -stage compression (now available), of which 751 MMcf had produced thru 12/31/09. The Middle Completion of the #9 is given an EUR of 1776 MMcf, of which 1377 MMcf had produced thru 12/31/09—this interval is now commingled with the Lower Completion, which is shown to have an EUR of 547 MMcf, of which 345 MMcf were produced thru 12/31/09. The recompletion of the NCU #1B in June 2006 provided additional pressure information of some of the Upper Tyonek Carya sands that have been producing in the #2 well. This pressure data from the tests indicates that there is no depletion of these zones in the No. 1B from the No. 2 production. In particular, the Carya 2-1.1, 2-1.2, and 2-2.1 are commingled in the #2 and had an initial SIBHP at -2285' TVDss of 1025 psig. The comparable zones in the #113, commingled 2-2.1 and 2-2.2 and the 2-1.2 had bottom -hole SIP'S estimated at 1045 and 1040 psig at datum of -2484' and -2272' TVDss, both close the the original pressure in #2 and much higher than the then most recent SIBHP's of 221 psig at -2285'. This indicates that there is a geological barrier and no communication between the two well bores. POOL PRODUCTION ALLOCATION FACTORS The production from NCU 113, 2, and 9 is metered several times and allocated back to each well on the basis of these meters. Each of the three wells has an individual separator into which the well flows, eliminating any free water from the flow stream, then immediately downstream of the separators, each well is individually metered. The flow from the three wells may be combined at this point and then compressed before going thru the glycol dehydration system. After dehydration, the combined flow from these three wells is metered again before going into the gathering system. The gathering system takes the gas to the CIGGS Meter 6103/8103 where it is joined by the flow from NCU #3 upstream of the sales meter. It is metered before being commingled into flow going into the Marathon -operated CIGGS pipeline system. The total sales volume through this meter is allocated back to each well proportionally based on the individual well meter volume divided by the sum of all the wells meters' volumes minus lease -use gas, where lease -use (fuel) gas is allocated proportionately to each well at a facility. RESERVOIR DEVELOPMENT AND DEPLETION PLANS NCU 1B—This well produced no gas in 2009, due to lack of market and the fact that the well produces some water and sand. In October 2008 a slick -line baler was run to check for sand fill and cleanout the tubing, as the well had been producing some sand. It was discovered that the well had significant sand fill, and in fact, the well was left with fill in the tubing at 2660', which left only the top production sliding sleeve open—thus, only the Carya 2-1.2 perfs at 2307-2370' are open and capable of production. Therefore, Aurora plans thru-tubing work to clean out the well and install additional sand control. This work will be deferred until 2010 or when the market demand increases to justify the costs. NCU #2—This well has produced with a booster compressor, giving it 3 stages of compression, but at this point is hasn't increased the rate significantly. It has (as of 12/31/09) produced 751 MMcf of the 942 MMcf EUR and was producing at about 200 mcfpd at 135 psi in Feb. 2010 (average for 19 days on). No additional development is anticipated in this wellbore, as the only remaining apparently productive sands are behind two strings of casing in #2 and are available in the #9 well bore. However, the reservoirs in this well are being investigated for gas storage. An Storage Injection Order for the well, SIO -8, in the process of being approved by the AOGCC. NCU #9—On October 29, 2008, the Middle Completion (the original producing interval --see NCU 9 Wellbore Configuration attached) was opened to be commingled with the Lower Completion. The Lower Completion still apparently had higher SI BHP than the Middle Completion (estimated at 270 psia vs. 179 psia), but the surface flowing pressures were comparable (80 psig for the Lower vs. 140 psig for the higher when it was SI in 2006). The commingled completions now being produced an average of 887mcfpd at 145 psi for 28 days in February 2010. The Upper Completion will be opened and commingled with the Lower and Middle completions when pressures equalize, by opening the sliding sleeve isolating those perfs. Following the 2006 recompletion workover, this well bore still has 8 potential Beluga Tsuga 2-5 and 2-6 sands between 668' and 1054' that have apparent gas production potential. These sands were not completed at the time of the 2006 recompletion workover for 2 reasons: 1) the large pressure differential expected between these shallow sands and the deeper ones, and 2) the cement bond log indicates a top of cement at 840', so remedial cementing will be required for the shallower sand completions. Thus, at least one more recompletion workover is expected in the life of this well bore. NCU #11—The Nicolai Creek Unit #11 well was drilled in September 2009 to a depth of 3600' (MD/TVD) and was completed on October 6, 2009, in 14 Beluga sands and 2 Upper Tyonek sands isolated by packers and sliding sleeves into 4 selective completions. The well was tested in the commingled completions in the Belgua Lower Tsuga 2-7 and 2-8 interval from 1736-2099' TVD and in the Upper Tyonek Carya 2-1 interval at 2260-2362'. These commingled intervals were tested (4 -point) to give an CAOF of 5466 mcfpd with a static pressure of 924 psia (909 psig) at a datum of 2049' TVD (-2033' TVD SS). Production was initiated from the Tyonek Carya 2-1 completion in December 2009, and the well produced 11,281 mef that month. Following commingling approval, the well is now producing 1700 mcfpd at 330 psi from the Beluga and Tyonek perfs at 1736-2362'. Two shallower selective completions were briefly tested upon completion and are know n to be productive, but will not be produced until later: these completions cover Beluga Tsuga 2-5 thru 2-7 sands at 1004-1675' TVD. Commingled production from the two completions is being allocated back to the Lower (Tyonek) completion at 30% and to the Lower Middle (Beluga) Completion at 70%, based volumetric reserves and supported by production test rates. No additional development of either Pool is anticipated, as the Pools (and PA's) are now outlined. RESERVOIR PRESSURE MAP AT DATUM Because each well had its individual reservoirs, a reservoir pressure map at datum seems to be irrelevant. However, now that there are some common sands open in the #1B and #2 it may have more relevance, although the sands are apparently not continuous between wells. Attached is a pressure maps of the Nicolai Creek --South Undesignated Pool and the Nicolai Creek—Beluga Pool, showing initial and current pressures at the several pertinent subsea Data. Ed Jones (10/7/09) NICOLAI CREEK FIELD SOUTH UNDESIGNATED & BELUGA POOLS N NCU-9 TSUGA GAS EXTENT —80 ACRES NICCLAI CREEK 11 DATUM -1527' TVDSS DATUM -2033' TVDSS INITIAL — 663 psig INITIAL — 909si 909psig 5/2009 — 212 psig s SEC 30 SEC 29 NCU WEST PA ('oa tGne NC 11 its_ q 1 � ? i DATUM-2285'TVDSS DATUM -2285' TVDSS INITIAL — 1025 psig INITIAL — 1041 psig ----- - - --� — 5-------- 5/2009- 240 psig 5/2009 — 329 psig CU 1A -228 i DATUM-2537'TVDSS NCU SOUTH PA INITIAL — 1211 psig 5/2009 — 331 psig NCU 1 1/4 MILE NCU CARYA GAS EXTENT NCU 4 NCU s '144 ACRES 1 Aurora Gas, LLC §7 ) \ \\ 76 C/) \ }_ LLI o - z \° LIJ $ e - \ k \ }( 0 z w - ! 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