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AOGCC approves Milne spacing exception abutting Kuparuk unit
Kristen Nelson Petroleum News
A recent spacing exception approval by the Alaska Oil and Gas Conservation Commission deals with a proposed well at the boundary of the Milne Point and Kuparuk River units, with the potential for a small amount of oil to be produced across the unit boundary in the initial pre-production phase of an injection well.
The application, from Hilcorp Alaska, is for an injection well closer than 500 feet to the boundary between Hilcorp's Milne Point unit and the ConocoPhillips Alaska-operated Kuparuk River unit.
The commission's July 12 approval of the application included conditions agreed to by Hilcorp and ConocoPhillips.
Hilcorp applied Jan. 12 for an exception to spacing requirements for Milne Point unit H-31, an injection well, which would be drilled, completed, pre-produced and then used for injection within 500 feet of the external boundary of the Schrader Bluff oil pool at Milne. The well is on the western edge of Milne Point where it borders the Kuparuk River unit.
Issues in the conditions are primarily related to the pre-production before the well begins to be used for its intended purpose -- injection.
The commission tentatively scheduled a hearing on the application for Feb. 29 which was rescheduled to April 11 at Hilcorp's request. On March 20, ConocoPhillips requested that the hearing be held, then withdrew its request April 10.
The commission held the hearing April 11, closing the record with no public comments received.
MPU H-31 is an onshore, horizontal, extended-reach well planned for 2024.
Drilling from H Pad In its approval the commission said H-31 will be drilled from H Pad, and "will open reservoir along a course that lies parallel to, and 70 feet from, the external boundary of the Schrader Bluff Oil Pool, which coincides with the boundary line that separates the MPU from adjacent leases within the CPAI-operated KRU. This horizontal, extended-reach well will open a two-mile long section of Schrader Bluff reservoir to injection."
"MPU H-31 will be the peripheral well of a line-drive injection pattern," the commission said, with fluid injected into H-31 pushing oil toward a planned parallel horizontal H-32 production well some 800-1,000 feet to the north, while also pushing "a uniform, linear bank of oil toward the south into the KRU."
Polymer injection, planned for H-31, has been used at the Milne Point Schrader Bluff formation since 2018, AOGCC said, greatly improving the efficiency of pattern sweep and expected ultimate recovery while reducing matrix bypass events, the channeling of injected water from injectors to producers.
Expected recovery H-31 polymer injection will impact reserves within 500 feet of the external boundary of the Milne Schrader Bluff oil pool. Those reserves, the commission said, would not be swept by a well conforming to existing spacing requirements.
"Assuming 35% recovery through polymer flooding, Hilcorp estimates 2.1 million barrels of oil reserves are recoverable from the 230 acres of reservoir that lie between the MPU H-31 injector and MPU H-32 producer," the commission said, while only a small portion of those reserves would be recovered from a production well 500 feet from the external boundary.
Pre-production There will be limited pre-production from H-31 prior to injection to "clean out the well bore, improve injectivity, and recover a portion of the oil reserves" from Hilcorp's leases within 70 feet of the unit boundary. "Such limited-duration pre-production will not significantly impact oil reserves on adjacent CPAI acreage," the commission said.
Hilcorp will keep injection pressure at a level which will not hydraulically fracture the reservoir sands.
Commission order The commission said that when ConocoPhillips withdrew its request for a public hearing it listed constraints to which it and Hilcorp had agreed and asked that AOGCC include those constraints in its spacing exception decision.
The constraints were included.
AOGCC said in its conclusions that a spacing exception was "necessary to allow drilling, completion, testing, pre-production, and regular injection into the Schrader Bluff Oil Pool in MPU H-31 well to maximize ultimate resource recovery."
The constraints listed below apply until Dec. 31, 2030:
Limit on injection pressure gradients; no gas injection; pre-production not to exceed 60 days; and downhole gauge pressure data will be provided to ConocoPhillips on request or as reasonably necessary.
A further constraint, applying to the life of the well, is that it will be used only for injection and cannot be converted to production.
In its July 12 order the commission found that granting the spacing exception "will not result in waste or jeopardize correlative rights of adjoining or nearby owners, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater."
Pool vs unit issue While the current decision concerns Schrader Bluff oil, it reflects an issue the commission noted in a 2023 decision -- oil pools follow reservoir boundaries, not unit boundaries -- and the requirement that wells be no closer than 500 feet to a boundary where ownership changes may result in stranded production at unit boundaries.
A July 2023 decision, which concerned the Nanushuk oil pool in the Pikka, Colville River and Kuparuk River units, reversed a commission finding from 2022 that "a pool should ordinarily be defined by its geologic limits and not arbitrarily established property lines."
In July 2023 the commission said that while all evidence points to the Qannik oil pool, the Narwhal reservoir, Pikka and the Coyote reservoir "occurring in one broad geologic formation," a single set of rules applying to multiple units "is impractical as each operator may have somewhat different ideas about the best way to develop the Nanushuk Formation on their acreage."
There is a downside, however.
A pool developed by multiple operators across multiple units "has the potential to result in the waste of resources along the unit boundaries if the operators do not coordinate their operations and because of the property line offset requirements in place to protect correlative rights," AOGCC said in July 2023. It encouraged ConocoPhillips and Oil Search "to coordinate their development activities across the Nanushuk Formation and investigate ways to prevent waste of resources along property lines."
--KRISTEN NELSON
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