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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
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
AOGCC and Future Cook Inlet
• 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
Presentation for Resources Committees, Kenai
Alaska Oil and Gas Conservation Commission (AOGCC)
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
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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
Photo by Lou Grimaldi
Presentation for Resources Committees, Kenai
• 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
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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
Photo by Lou Grimaldi
Platforms
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
AOGCC and Future Cook Inlet
• 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
Presentation for Resources Committees, Kenai
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?
Photo by Lou Grimaldi
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
Photo by Lou Grimaldi
Presentation for Resources Committees, Kenai
Alaska Oil and Gas Conservation Commission (AOGCC)
Contact Information
Phone: (907) 793-1221 Fax: (907) 276-7542
www.aogcc.alaska.govPhoto by Daniel T. Seamount Jr
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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.
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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
Presentation for Resources Committees, Kenai
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.