AOGCC approves gas offtake rate at Milne

The Alaska Oil and Gas Conservation Commission has approved a gas offtake rate for the Milne Point unit.

Hilcorp Alaska applied May 17 for an allowable gas offtake rate at Milne to allow it to sell compressed natural gas to a third party.

In its application Hilcorp said gas produced from the oil pools at Milne Point -- Kuparuk River, Schrader Bluff, Sag River and Ugnu -- is processed through the Milne Point facility where gas is separated from oil and water. At Milne, the gas "is used for fuel gas for power generation, gas lift, and compressed natural gas for in-field fuel for trucks."

In its July 23 approval, the commission said Hilcorp is negotiating to sell Milne Point gas to Alaska CNG LLC, which will then sell to other customers.

The volume Hilcorp proposes to sell is up to an average of 1,500 thousand cubic feet per day, out of some 40 million cubic feet per day currently processed. Of that amount 15 million cubic feet per day is reinjected for enhanced oil recovery. The 1.5 mcf per day which Hilcorp proposes to sell would be some 10% of gas available for enhanced oil injection at the field, the commission said.

The company injects some 120,000 barrels of water per day, some for EOR and some going to disposal, with water injection accounting for some 80% of EOR fluid injection at Milne, meaning the 10% loss of EOR gas injection from sales would be only 2% of total fluids injected for EOR purposes, which would not, the commission said, have a significant impact on ultimate recovery. And the decrease in EOR injection from gas could easily be made up from water currently going to disposal.

The commission approved a maximum annual average gas offtake from Milne at 1,500 mcf per day.

--KRISTEN NELSON