BP and ExxonMobil, two of the three major Prudhoe Bay field owners, have applied to the Alaska Oil and Gas Conservation Commission for an increase in the allowable volume of natural gas that can be produced and sold from the North Slope field.
The AOGCC, a quasi-judicial state regulatory commission with oversight of oil and gas production practices, has set a public hearing date of Aug. 27.
In 1977, the commission set a limit on Prudhoe Bay gas offtake of 2.7 billion cubic feet of gas per day, but BP and ExxonMobil, citing new reservoir studies, have now asked for permission to increase the rate to 4.1 billion cubic feet per day to supply a planned gas pipeline and LNG export project.
By law the AOGCC is required to seek maximum recovery of hydrocarbon fluids and must ensure that too rapid a withdrawal of gas from the Prudhoe reservoir will not result in an unreasonable loss of long-term oil recovery.
Prudhoe Bay holds about 24 trillion cubic feet of natural gas in addition to about 12 billion barrels of remaining oil, although not all of the oil can be produced. Prudhoe has already produced about 12.2 billion barrels since operations began in 1977.
If the Alaska LNG Project is built, the field will supply the bulk of the gas, at least in the near term, while additional gas will come from the Point Thomson gas field 60 miles east of Prudhoe Bay. A separate application to the AOGCC for gas offtake from the Point Thomson field is expected later.
ConocoPhillips, which is also a major lease owner at Prudhoe Bay, was not included in the application made to the AOGCC by the two other companies. ConocoPhillips spokeswoman Natalie Lowman said her company has been working with BP and ExxonMobil on the offtake issue.
“We are not aware they intended to make a unilateral filing,” she said in a statement.
Lowman said ConocoPhillips will have more to say on the matter at the AOGCC hearing. BP spokeswoman Dawn Patience said her company could not comment on the matter and that there would be more discussion in the hearing in late August.
About 8 billion cubic feet of gas is now produced along with oil at Prudhoe but the majority of that is injected back underground to maintain pressure in the reservoir to aid oil production.
Natural gas liquids, or NGLs, produced with the gas are also mixed with crude oil and shipped to market in the Trans-Alaska Pipeline System, while other NGLs are used to make a miscible injectant fluid that is used in Enhanced Oil Recovery on the slope.
The AOGCC’s concern is that if some of the produced gas, in this case up to half, is shipped to markets via pipeline, there will be less gas injected and less support for pressure in the reservoir. That could result in loss of oil.
In their application to the commission, BP and ExxonMobil said the loss of oil recovery would be mitigated by steps including injection of carbon dioxide in an enhanced oil recovery project.
Prudhoe Bay gas contains about 12 percent CO2, which must be extracted from gas before it can be shipped by pipeline to an LNG plant planned to be built in southern Alaska. That process will make large quantities of CO2 available on the North Slope to aid oil recovery.
In the Aug. 27 hearing, the two producers will present evidence showing that the loss of oil recovery can be minimized.
“In accordance with good oil field engineering practices, at various stages of field development the Prudhoe Bay field owners have evaluated the potential effects of Prudhoe Bay major gas sales on oil production and hydrocarbon recovery. Gas production from Prudhoe Bay (to date) has been used for extraction of miscible injectant, manufacture of natural gas liquids, pressure maintenance and enhanced oil recovery,” wrote Dave Lachance, BP’s vice president for reservoir development, in the application.
About 75 percent of the 3.5 billion cubic feet/day of gas supply needed for the Alaska LNG Project, or about 2.7 billion cubic feet/day, is expected to come from Prudhoe Bay. About 25 percent of supply for Alaska LNG will from other sources, Lachance wrote in the application. This would be mainly from Point Thomson.
About 600 million cubic feet per day will be needed to fuel field operations on the North Slope and for local gas sales to contractors, raising the average daily offtake requirement, including the fuel needs, to 3.3 billion cubic feet per day.
However, a contingency must be built in to account for potential interruptions in gas supply from other fields. To include that contingency, BP and ExxonMobil have requested authorization for up to 4.1 billion cubic feet per day to cover shortfalls if they occur, according to BP’s application.
Overall, the Alaska LNG Project will result in the production of an additional 3.8 billion barrels of “oil equivalent,” from Prudhoe Bay, the application said. Oil equivalent is a measure of production that reflects crude oil and natural gas together with the gas covered to the equivalent of liquid barrels of the same energy content as oil. One barrel of oil is equal to about 6,000 cubic feet of natural gas.
The CO2 injection will play an important part in producing oil that remains in the reservoir, according to BP’s application.
In 1979, after it was discovered, Prudhoe Bay was estimated to be able to produce about 9.6 billion barrels of about 23 billion barrels of oil in place in the reservoir rock, but the oil recovery has improved substantially due to a variety of steps including use of the existing gas production for pressure maintenance and to make the miscible injectant for enhanced oil recovery, BP said in the application.
Tim Bradner can be reached at tim.bradner@alaskajournal.com.
