Alaska Oil and Gas Conservation Commission …Presentation for Resources Committees, Kenai Alaska...

Presentation for Resources Committees, Kenai

Cook Inlet Oil and Gas Conservation

Presentation to Joint Senate & House Resources Committee

byDan Seamount, AOGCC

Commissioner February 11, 2005

Alaska Oil and Gas Conservation Commission (AOGCC)

Photo by Lou Grimaldi


AOGCC and Future Cook Inlet

• AOGCC Authority, Oversight, and Function

• Cook Inlet Oil & Gas Investors• History of Cook Inlet Oil and Gas• Remaining Offshore Oil & Gas Resource• AOGCC Cook Inlet Wish List

1993 Seamount Moves to Alaska to Work on Cook Inlet platforms



• AOGCC Authority, Oversight, and Function

• Cook Inlet Oil & Gas Investors• History of Offshore Cook Inlet Oil and

Gas• Remaining Offshore Oil & Gas Resource• AOGCC Cook Inlet Wish List



Protect the public interest in oil and gas resources and protectunderground supplies of drinking water. The Oil and Gas Conservation Act requires conducting all oil and gas drilling, production and measuring operations to prevent physical resource waste, to promote greater ultimate recovery and to afford all owners of oil and gas rights an equal opportunity to recover their fair share of the resource.

Mission


OversightQuasi-judicial State regulatory agency-

Mainly Sub-surface

• Prevent physical waste of hydrocarbon resources- Oversight for underground operations - Regulate drilling and production for oil & gas

• Promote greater ultimate recovery• Protect fresh water

- Manage Class II UIC program

• Protect correlative rights- Jurisdiction over private and public lands- Adjudicate disputes between resource owners


Oversight Strategy

• Statewide Regulations- 20 AAC 25

• Drilling and Sundry Permits

• Orders- Conservation,

Injection, Aquifer Exemption

• Public Hearings• Compliance Reviews• Field Studies

• 5 On-site Petroleum Inspectors

• Well Control Equipment- Drilling and

Production• Metering• Well Integrity

Demonstrations• Visual Equipment

Checks• Incident Investigations• Other Inspections

Regulatory & Adjudicatory Inspection


OIL AND GAS OPERATORS AND OWNERSCOOK INLET/MAT-SU VALLEY

OTHER AREASGrayling Platform

• Unocal Alaska• Forest Oil Corp.• Marathon Oil Company • Phillips Alaska Inc./ConocoPhillips• XTO Energy Inc.• Anadarko• CIRI • Aurora Gas LLC• Northstar Energy Group Inc.• Pelican Hill Oil & Gas Inc.• Alaska Crude Corporation • Frontier Petroleum• Prodigy Oil & Gas LLC• Escopeta• Pioneer of Illinois

• Pioneer Natural Resources AK Inc.

• Andex Resources LLC• Cassandra Energy Corp. • Rutter & Wilbanks• Delphi International



• 14,000 sq mile Area same as San Juan Basin

Cook Inlet Exploration

• Similar in size to lower 48 Basins

Exploration Immaturity

• 385 Exploration Wells & 1000 Total Wells

vs • 28,000+ Wells in

San Juan No 80’s Drilling BoomNo 80’s Drilling Boom


Cook Inlet Basin Oil & Gas History- 1950s & 1960s

• Exploration in the Cook Inlet Basin began in the mid-1950s

• 286 exploratory wells drilled (one well per 30 square miles in Basin)

• 1.3 BBO discovered in 9 fields• 7.7 TCF of non-associated gas discovered

in 19 fields- Late 1960’s

• Industry exits Cook Inlet to North Slope

Cook Inlet Basin History- 1970s & 1980s

• Exploitation of early discoveries• Limited exploration (never saw 80’s

Boom)

- 1990s to present• Unocal attempts rescue of five platforms

and prolongs their lives.• Very limited offshore exploratory drilling• Incentive legislation• XTO saves two platforms from coma by

re-interpreting existing data• Redoubt Shoal

Bill Miller - XTO


0

50,000

100,000

150,000

200,000

250,000

1958 1963 1968 1973 1978 1983 1988 1993 1998 2003

REDOUBT SHBEAVER CKW MCARTHUR RIVTRADING BAYMCARTHUR RIVGRANITE PTMIDDLE GRND SHSWANSON RIV

Cook Inlet Cumulative Oil / NGL production – 1.3 Billion Barrels

COOK INLET DAILY OIL & NGL PRODUCTION RATEPr

oduc

tion

Rat

e (B

arre

ls p

er D

ay)

OnshoreOnshoreSpark, Spur*MonopodGranite Point, Anna, Bruce“A”, “C”, Baker*, Dillon*OnshoreGrayling, King, Steelhead, Dolly

Cook Inlet Cumulative Production by Field

F ie ld M M B O

We s t M c A rthur R iv e r 10 .5B e a v e r C re e k 5 .7N o rth Tra ding B a y Unit 2 3 .7Tra ding B a y 7 8 .0Gra nite P o int 14 1.7M iddle Gro und S ho a l 19 1.7S wa ns o n R iv e r 2 3 0 .1M c A rthur R iv e r 6 2 8 .3

To ta l 13 0 9 .8


Platforms


Cook Inlet Gas Field Reserves

0.10

1.00

10.00

100.00

1000.00

10000.00

Alber

t Kalo

aNi

colai

Cre

ekSt

ump L

ake

Wes

t For

kLe

wis R

iver

Prett

y Cre

ekBi

rch H

illNo

rth F

ork

Moqua

wkie

Falls

Creek

Ster

ling

North

Trad

ing B

ay U

nitTr

ading

Bay

Ivan R

iver

Middle

Groun

d Sho

al

Canne

ry Lo

opGra

nite P

oint

Beav

er C

reek

Belug

a Rive

r

McArth

ur R

iver

North

Coo

k Inle

tKe

nai

BC

F

F ie ld B C F Ga s

A lbe rt Ka lo a 0 .1N ic o la i C re e k 3 .1S tum p La ke 5 .6We s t F o rk 7 .2Le wis R iv e r 8 .8P re t ty C re e k 9 .0B irc h Hill 1 1 .1N o rth F o rk 1 2 .1M o qua wkie 1 3 .0F a lls C re e k 1 3 .0S te rling 2 5 .5N o rth Tra ding B a y Unit 3 0 .3Tra ding B a y 8 9 .7Iv a n R iv e r 1 0 4 .3M iddle Gro und S ho a l 1 1 1 .9C a nne ry Lo o p 1 1 5 .7Gra nite P o int 1 1 6 .0B e a v e r C re e k 2 4 1 .7B e lug a R iv e r 1 2 6 6 .3M c A rthur R iv e r 1 3 8 4 .2N o rth C o o k Inle t 2 3 2 7 .9Ke na i 2 4 2 5 .1

To ta l 8 3 2 1 .6 0

Cook Inlet GasCook Inlet Gas



• Remaining Offshore Oil & Gas Resource

- Un-recovered oil in Known Pools- low risk with new technology/oil price

- Undeveloped Fault Blocks- mod risk/mod potential

- Pre-Tertiary- high risk/high potential- Other Identified Prospects accessible from

Platforms- see industry

http://www.dog.dnr.state.ak.us/oil/products/slideshows/ogactivity_feb1999/sld025.htmAlaska Department of Natural Resources, Division of Oil and Gas

Whole lotta undrilled rocks down here

Oil Comes from down here-only 4% found- all in Tertiary

Less than 55 wells have penetrated the entire tertiary section. Oil is generated deeper where no wells have boldly gone before.

Jurassic Closure at MGS Field

• Both porous Naknek and fractured Jurassic can be targeted where Naknek is present

Pioneer

Low Recovery

from known Pools

Undeveloped Fault Blocks

Undeveloped Fault Blocks

Pre-Tertiary Play- Another 5000’ deeper

Other Identified Prospect

Pre-Tertiary Subcrop Play Upper

Cook Inlet Basin

Mesozoic Subcrop Priorto Late Tertiary Tectonism

• Naknek is immediately above Tuxedni


AOGCC Cook Inlet Offshore Reality

• Majors had a 40 year run at the offshore• Four of 16 platforms have been “light housed”• Operators can’t be forced to continue• Much liability may exist for operators• Many new potential investors have arrived.• Much oil is left in the developed reservoirs• Many exploration prospects exist within reach

of the platforms• High $$$ Oil Price

AOGCC Cook Inlet Offshore Wish ListLook at Platforms as Assets/ don’t destroy

• Recover More Oil from Developed Reservoirs- Sell to motivated low cost operator?- State takes possession/ protection of

former operators- Tertiary oil recovery and/or stimulations?


AOGCC Cook Inlet Offshore Wishlist

• Use Platforms as Exploration Structures- Re-enter Non-utilized well bores- Drill 5000’

below known reservoirs where the Oil is generated

- Explore untested fault blocks- Drill the other identified prospects within

reach• Incentivise re-development and exploration




Contact Information

Phone: (907) 793-1221 Fax: (907) 276-7542

www.aogcc.alaska.govPhoto by Daniel T. Seamount Jr


AOGCC Goals and Strategies

PREVENT PHYSICAL WASTE OF THE RESOURCE

• Evaluate drilling programs to ensure proper well design, construction and well control equipment. - Permitting.

• Inspect wells and drilling projects to verify compliance with approved regulations, procedures and safety requirements for drilling and production practices. - Inspections.

• Evaluate proposals for reservoir development. - Field Studies.

Photo Courtesy of Texas Energy Museum


AOGCC Goals and Strategies (Continued)

PROMOTE GREATER ULTIMATE RECOVERY

• Analyze production data, including reservoir pressures, gas-oil ratios, water cut, etc., to ensure these variables fall within the required parameters necessary to provide for greater ultimate recovery. - Field Studies.

• Review and approve development proposals, including plans for enhanced oil recovery operations and gas development. - Field Studies.

INDEPENDENTLY ASSESS OIL AND GAS DEVELOPMENT

• Independently audit/verify that oil and gas proposals are in compliance with the purposes and intent of Title 31. - Field Studies & Permitting.

PROTECT ALASKA'S UNDERGROUND SOURCES OF DRINKING WATER

• Provide engineering and geological review of all applications for EOR & underground disposal of drilling wastes. - Field Studies & Permitting.

• Provide engineering and geological review of all applications to drill oil and gas wells. – Permitting.


AOGCC Goals and Strategies (Continued)

PROTECT CORRELATIVE RIGHTS

• Provide all owners of oil and gas rights the opportunity to recover their fair share of the resource through well spacing regulations, permit review, and pooling authority.

WHEN NECESSARY, ADJUDICATE DISPUTES BETWEEN OWNERS

• Provide a public forum to resolve disputes that are within the Commission’s jurisdiction.

Texas, 1901


Cook Inlet

“WEST TEAM”KRU/CI W & OS Decision

Soldotna

Ninilchik

Hope

Nikiski

Homer

Seldovia

ANCHORAGE

Whittier

Girdwood

WasillaPalmer

Seward

Moquawkie

Trading Bay

Middle Ground Shoal

West Fork

Swanson RiverWest Forelands

McArthur River

Granite Point

North Middle Ground Shoal

Albert Kaloa

RedoubtShoal

North Fork

Lewis River

Stump Lake

Pioneer Unit(Generalized Bdry)

Pretty Creek

Beluga River

North Cook Inlet

Tyonek Deep

BLT-1RE,3 CBM Wells

AnadarkoLone Creek 3

MarathonGrassim Oskolkoff 1

ForcenergyRedoubt Unit 2-5

ForcenergyKustatan Field 1

Gas-ProNorth Fork well

PhillipsCosmopolitan 1

GRIHouston 1

Ivan River

Birch Hill

Falls Creek

Sterling

Beaver Creek

Cannery Loop

Kenai

Nicolai Creek

Drift RiverTerminal

Tesoro

Military

Products

Products

Line

Line

Gulfof

Alaska

Cook

Inle

t

Kachemak Bay

Turnagain Arm

KnikAr

m

Parks

Hwy

Glen

n

Hwy

Seward

Seward

Hwy

Hwy

SterlingHwy

Ster li

ng

Hwy

KalginIsland

FireIs.

ChickaloonBay

W. McArthur River

Kenai

DO&G 01/01

0 5 10 15 20 25 Miles

Inspections of Cook Inlet Wells may take 2 days due to travel logistics & weather.

“EAST TEAM”PBU/Kenai Decision

Geographic Delineation of

Decisions Teams

Map Legend

Map Area

Oil Field / Accumulation

Gas Field / Accumulation

Unit Boundary

Platform

Production Facility

Proposed / Active Wells

Pipelines

Selected Wells


0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Cook Inlet

Prudhoe Bay Unit

Kuparuk River Unit

Other Fields

Colville River &Northstar Units

PRO

DU

CTI

ON

RA

TE (B

arre

ls p

er D

ay)

Cook Inlet Cumulative Oil / NGL production – 1.3 Billion BarrelsArctic Slope Cumulative Oil / NGL production – 14.0 Billion Barrels

AlpineN.star

ALASKA’S DAILY OIL & NGL PRODUCTION RATE


Where Does AOGCC Fit In?

Owns Minority of Production (Royalty Interest)

Manages Owned Resources for Revenue & Other Values

Owner’s Land Only

Landlord & Lessorof Oil & Gas Lease

Land Owner (e.g. DNR DOG

or Native Corporation)

Owns Majority of Production

Profit Oriented

Only on Lands Where They Have Right to Drill and Produce

Lessee of Oil & Gas Lease (Has Right to Drill and Produce)

Oil Company(Regulated

Community)

None- Regulates Only

None- Regulates Only

Net $$ Interest

Regulates to Prevent Waste, Protect Correlative Rights, & Promote Greater Recovery

Regulates to Protect environment

Economics

State, Federal and Private Lands

State, Federal and Private Lands

Jurisdiction

Role Is Regulatory, Not Proprietary-Mainly Sub-surface

Role Is Regulatory, Not Proprietary-Mainly Surface & Air

Ownership of Resource

AOGCC(Exercises

Police Powers of the State)

ADEC(Exercises

Police Powers of the State)

Issues

AOGCC generally regulates sub-surface activities.ADEC and other agencies have regulatory authority over most surface activities.

Alaska Oil and Gas Conservation Commission …Presentation for Resources Committees, Kenai Alaska...

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