MORE PRUDHOE GAS HANDLING CAPACITY OKAYED

Principal Prudhoe Bay interest owners have approved a $1.1 billion project to further expand gas handling capacity in North America's biggest oil field. The project will boost ultimate recovery in Prudhoe Bay field by 330-450 million bbl of liquids reserves and add about 100,000 b/d to previously expected production in 1995. In addition, companies have settled disputes between oil interests and gas interests by drawing up a new development plan, paving the way for future development and

Oct. 15, 1990

5 min read

Principal Prudhoe Bay interest owners have approved a $1.1 billion project to further expand gas handling capacity in North America's biggest oil field.

The project will boost ultimate recovery in Prudhoe Bay field by 330-450 million bbl of liquids reserves and add about 100,000 b/d to previously expected production in 1995.

In addition, companies have settled disputes between oil interests and gas interests by drawing up a new development plan, paving the way for future development and enhanced recovery projects that will boost reserves still further.

Meantime, field operators ARCO Alaska Inc. and BP Exploration Alaska have agreed to a joint review of operations to cut costs by sharing common services and cooperating to increase efficiency.

Areas of possible consolidation include drilling, health, safety, and environment functions, major project construction, technical training, business systems, materials management, overhaul crews, camp operations, aviation, pad and road maintenance, vehicle and heavy equipment maintenance, and security.

Each consolidated function will be operated by the unit operator best able to do it. Each of the two Prudhoe operating companies will devote personnel to the consolidated operating units.

GHX-2

Plans call for a second expansion of field-wide gas handling capacity (GHX-2) at Prudhoe Bay to 7.5 bcfd.

Equipment for GHX-2 will travel to the North Slope on summer sealifts scheduled for 1993-94, expected to be the first such major sealifts since last summer's.

Contracts for module fabrication have not been awarded.

Tie-in of the first expansion, GHX-1, was completed last month. ARCO expects GHX-1 to boost Prudhoe Bay oil production beyond natural decline by 75,000 b/d by yearend and 90,000 b/d early next year (OGJ, Oct. 1, p. 38).

GHX-1, costing $470 million, hiked gas handling capacity to 5.3 bcfd from about 3.9 bcfd. It is expected to add an incremental 400 million bbl to ultimate oil recovery.

GHX-1, together with a stepped up hydraulic fracturing program, has bolstered Prudhoe Bay reserves and production.

ARCO estimates the earlier project will result in a net increase of 7-10% in oil reserves from the yearend 1989 estimate of 4.6 billion bbl. Original Prudhoe Bay crude reserves were about 9.6 billion bbl.

ARCO pegs current Prudhoe Bay production at 1.41 million b/d, up from an average 1.3 million b/d through August 1990, and for the year at 1.35 million b/d.

The estimate for 1990 represents a field-wide decline in production of only 6% from 1989 levels. Prudhoe Bay production of crude and condensate in 1989 fell by 12.6% from 1988 levels, according to OGJ calculations.

Alaska's Division of Oil and Gas projects Prudhoe Bay oil production in 1995, when GHX-2 is expected to add another 100,000 b/d, at 857,000 b/d.

With GHX-1 on line and a successful fracking campaign, ARCO now projects 1991 production at Prudhoe Bay to be flat with 1990 levels.

Like GHX-1, GHX-2 also will allow increased production of miscible gas, in turn allowing expansion of the Prudhoe Bay water/alternating/miscible gas injection EOR project.

Contributing to the GHX-2 investment are ARCO, BP, Exxon Corp., Phillips Petroleum Co., Mobil Corp., and Chevron Corp.

Other Prudhoe Bay working interest owners are Marathon Oil Co., Amerada Hess Corp., Louisiana Land & Exploration Co., Texaco Inc., and Shell Oil Co.

NEW DEVELOPMENT PLAN

The new Prudhoe Bay development plan results from an agreement resolving all reserve issues related to the field's gas cap, original oil rim gas, and original gas cap gas.

It establishes field gas supply payments and major gas sales dates.

Although interest owners did not disclose details of those payments and dates, all owners will retain their current working interests in the Prudhoe Bay oil rim and its gas cap.

The new development plan is to be in place by yearend 1990 or early 1991 and fully implemented by late 1991.

The new plan gives a green light to a four rig drilling program in the field for 1991, installation of more water flood patterns to enable expansion of the miscible gas EOR project, and an increase in supply of miscible injectant.

OTHER PROGRAMS

The new plan also will provide the basis for these other programs, as yet unapproved, that Prudhoe Bay unit owners will pursue:

Three 40 acre spacing pilot drilling projects to assess feasibility of more widespread 40 acre development in the gravity drainage areas of the field.
A further 40 acre pilot to test enhancing the high viscosity to gravity ratio in one of the existing EOR areas.
Expansion of the current EOR project to the Hurl State area of the reservoir, in addition to the currently planned Hurl State waterflood. BP earlier this year resumed work on Hurl State development in the western edge of Prudhoe Bay field, delayed in 1989 after changes in Alaska's severance tax formula added $85 million to the company's tax bite (OGJ, June 18, p. 18)
Enhancements to existing waterfloods to improve vertical sweep efficiency, cut pattern size through added drilling, and extend waterflood development into downdip and thinner portions of the reservoir.
Modifications to the mid field pilot waterflood to improve and speed data acquisition.