What's new in production

Aug. 2002 Vol. 223 No. 8  What's New in Production

Perry A. Fischer,  Editor

Injecting water into gas. By the time this arrives at your door, BP should be starting a remarkable, first-of-its-kind project to inject seawater into the gas cap of Prudhoe Bay field to maintain reservoir pressure. More than 25 years of oil production has dropped reservoir pressure within the gravity drainage area to under 3,500 psi, down from 4,340 psi when production began in 1977. The pressure drop is averaging 25 to 35 psi/yr. The project comprises five to seven injection wells, 3.6 mi of new pipeline for transport of treated seawater to the injectors and modifications to the existing seawater treatment and injector plants. The $71 million project will recover an additional 150 to 200 million bbl.

Although waterflood is a common method for enhancing oil recovery, injecting it into a gas cap to maintain pressure is new. Previous gas-cap injections were done to separate oil and gas for prevention of gas channeling. Initially, there were concerns that high-permeability thief zones could cause channeling and early breakthrough of the seawater, but extensive computer modeling showed that this breakthrough should not occur, due to the very low mobility of water relative to gas.

A second innovation is a method to monitor the fluid movement by using surface-acquired 4-D (time-lapse) gravity surveys to measure small changes in gravity as gas is displaced by water. The gravity data will be verified and supplemented by traditional logging measurements taken in various wells throughout the field.

Buzzard keeps growing. Since its discovery in June 2001, Buzzard field reserves have continued to grow. EnCana and its partners are moving to development planning following a successful appraisal program, which saw eight wells (including sidetracks) drilled into the Buzzard structure. The field lies in 320-ft waters in license areas P986 and P928 South, about 65 mi northeast of Aberdeen.

Last year, discovery Well 20/6-3 tested 6,547 bpd of light oil and 1 MMcfgd, but these rates were constrained by a 36/64th-in. choke due to testing equipment limitations. A subsequent appraisal tested (aggregated rates) 11,100 bopd and 2.2 MMcfd of gas from two zones, but that test was also constrained. The gross oil column is in 24%-porosity sandstone that ranges up to 750-ft thick, with permeability up to 3 darcies.

It’s being billed as the largest North Sea oil find in more than a decade. Initial in situ estimates ranged from 200 to 300 million bbl, but these have soared during the past year, now ranging from 800 million to 1.1 billion bbl. Although final proved reserves figures are not yet available, recoverable reserves are estimated at 400 million bbl.

The field is operated by EnCana (merged from PanCanadian), which holds a majority stake in both leases. Its partners are Intrepid Energy North Sea Ltd., BG Group, and Edinburgh Oil & Gas PLC. EnCana and its partners are acquiring a 3-D seismic survey for well planning over the field area. Field development work is underway on several fronts. A contract for Concept Definition and Project Specification, subject to stakeholder approval, will soon be awarded, and a Field Development Plan will be submitted to the U.K. Department of Trade and Industry in late 2002. Current target date for first oil is 2005.

Heavy output. Venezuela is OPEC’s third largest oil exporter after Saudi Arabia and Iran. In July, the International Energy Agency (IEA) reclassified Venezuelan synthetic oil as "natural gas liquids and other," which does not apply to OPEC production quotas. The new accounting method means that Venezuelan output in May magically dropped from well above its 2.5-million bpd OPEC quota to well below, at 2.36 million bpd. By June, IEA estimated Venezuelan output even further below its quota, at 2.28 million bpd.

Why this reclassification is occurring now is unclear; perhaps it is the dramatic increase in synthetic crude production. Extra-heavy crude projects in Venezuela’s Orinoco belt now produce at least 450,000 bpd and are continuing to ramp up. As expected, some Venezuelan officials favor the reclassification, as it would have the effect of increasing the country’s production quota sharply, some 320,000 to 450,000 bpd. However, the government has said publicly that the new oil is still counted as part of its quota, although OPEC has yet to formally rule on the issue.

Of course, the reclassification doesn’t alter the actual volume of oil entering world markets, but it has the appearance of being a silly attempt to mislead markets. Not so! says Klaus Rehaag, Editor of IEA’s Oil Market Report, who stated that any other approach would be inconsistent with the way it treats Canadian heavy oil (Canadian syncrude production is 425,000 bpd and is increasing). According to a report by Reuters, Rehaag said that it is not IEA’s job to decide how reclassification affects OPEC quotas. He then somewhat contradicted this by saying, "[Regarding the] upgraded portion, our understanding of the contractual agreements on the joint ventures is that they are excluded [from OPEC production constraints]." This is a reference to contractual guarantees with Venezuela that JV partners / operators would be allowed to pump the synthetic oil at full capacity under 40-year contracts, regardless of OPEC restrictions. In fairness to IEA, it previously did not count Venezuela’s Orimulsion, a boiler-fuel comprising a slurry of bitumen and water.

Someday, it will come. A proposed joint venture between Indonesia’s Pertamina and U.S.-based Rentech Inc. will proceed with the next phase of planning for a 16,500-bpd gas-to-liquids plant in Indonesia. It now needs to prepare a business plan for the project, including final definition of the products to be produced. These could include sulfur-free diesel, naphtha and special waxes. The next steps include structuring the JV and developing a project implementation plan. These tasks should be submitted for approval to Pertamina during fourth quarter 2002. The proposed GTL project is being designed as a central part of an integrated natural gas complex that could involve power production and ammonia as byproducts, with further expansion for production of urea and/or methanol.  

Comments? Write: fischerp@gulfpub.com