Transcript No Slide Title

From Experimental to Commercial
Production - The Next Step
Presentation to
Unconventional Gas
Technical Forum
Victoria, BC
April 4, 2008
Ron Stefik, AScT
Sr Reservoir Engineering Technologist
Oil and Gas Commission
Unconventional Gas - Premise
Variance required from normal well spacing,
target areas and testing regulations!
>1 well / section for effective recovery
high well density + uniform reservoir quality =
reduced need for individual well data for
development decisions and reserves evaluation
Are existing Regulations adequate for
unconventional gas development ?
YES!
Existing statutes allow sub-surface issues to be addressed.

Petroleum and Natural Gas Act
Drilling and Production Regulation
 Petroleum and Natural Gas General Regulation

Available via OGC website, under “Regulations”
www.ogc.gov.bc.ca
Note: some changes are planned as a result of the
new Oil and Gas Activities Act (OGAA).
Flexibility Available
Uniform “play type” = reduction or exemption;

logging and sampling.

reservoir pressure testing.

well deliverability (AOF) testing.

well spacing and target restrictions
[Good Engineering Practice (GEP) approval].
Logging and Sample Waivers



High well density provides opportunity for
selective data acquisition.
OGC prefers to review area drilling program for
pre-approval of logging or sample waivers.
Drilling issue prevent logging?
Email or phone to request exemption.
Well Testing – Reservoir Pressure
Initial test requirement

surface data instead of bottom-hole, where appropriate

microfrac (DFIT), RFT, PID may be acceptable

exemptions may be appropriate
Annual pool testing

normally required for a % of wells each year

reduced expectation or exemption in unconventional
Well Testing – AOF Deliverability
minimize flaring!



inline deliverability testing OK, Regulation allows up to
6 months from date of initial production to test
OGC permits pipeline construction prior to well
completion in “resource play” areas
testing exemption available
Surface Position of a Well
Pad drilling is encouraged to minimize
surface impacts.
Inter-wellhead distance normally 25 m,
however, have allowed 10 m, so long as;
all potential issues are addressed, and
 a service plan documented.

Off-Target Production Penalty



Penalty factor (fraction < 1.00) applied to
well daily gas allowable
OGC is proactive in applying penalty,
request from competitor NOT required
Penalty applies even if no well on affected
off-setting land

If off-target to Crown, penalty does apply!

Penalized well may still be economic
Gas Well Off-Target Production Penalty
Gas spacing area =
250 m
1 section (DLS)
250 m
4 units (NTS)
target
Target area is 250 m
inside spacing area.
area
~ 928 m
300 m
200 m
OTF = 8 ( NS m) ( EW m)
Spacing Area m2
~ 698 – 820 m
Notes: 1. NS & EW distances measured to nearest corner of the spacing area
2. 1 ha = 100 m x 100 m = 104m2
Example:
OTF = 8 (200.0 m) (300.0 m) = 0.1778
270.0 104 m2
Therefore production limited to 17.78% of DGA
Off-Target Production Penalty (Example #1)
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Well located off-target in the corner is considered
to also affect spacing area in the diagonal direction
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E
gas target boundary
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4
3
F
off-target only
to the East
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F
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off-target to
the North,
West & NW
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Map Center on: B-35-E/94-B-10
File: CAPL example.MAP
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Datum: NAD 27
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Projection: Stereographic
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6
Created in AccuMap™, a product of IHS
Center: N56.60835 W122.93725
5
2
Off-Target Production Penalty (Example #2)
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9
8
7
6
5
For directional/horizontal well, coordinates of
“worst point of infringement” to calculate penalty
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Example #1
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95
Example #2
surface
F
90
89
gas target boundary
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87
78
77
surface
casing ends
outside of gas
target area,
penalty applies
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66
65
Created in AccuMap™, a product of IHS
F
can plug back or
not complete toe
to avoid penalty
bottom
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File: CAPL example.MAP
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Datum: NAD 27
Map Center on: B-87-E/94-B-10
68
Projection: Stereographic
67
Center: N56.65013 W122.96207
Daily Gas Allowable (DGA)
Application form

Reserves based calculation formula

“Daily production limit”=125% of DGA

Form available www.ogc.gov.bc.ca

With off-target factor, can estimate
penalized allowable prior to drilling
Off-Target Well Production Penalty Waiver
A. Discovery Well
absolute
B. Common Ownership - same lease
waiver
C. Common Ownership - different lease conditional
D. Different Ownership - different lease
Note: for C & D, operator may apply for waiver
on proposed well before drilling
waiver
Off-Target Well Production Penalty Waiver
A. Discovery Well -
“sufficient information has
been obtained to determine that the well has
encountered a previously undiscovered pool”




not first well to produce; older well with DST may qualify
operator must apply to OGC Victoria office for
recognition; no specific application form
supply supporting data to build a “case”,
i.e. seismic, pressure, x-sections, etc.
for unconventional gas plays, OGC recognizes
regional pools, so discovery application likely
not successful!
Off-Target Well Production Penalty Waiver
B. Common Ownership - Same Lease
Two spacing areas
under one PNG Lease


Off-target waiver is automatic under
section 9.4 (oil) and 10.4 (gas) of the
Drilling and Production Regulation
No application required
Off-Target Well Production Penalty Waiver
C. Common Ownership - Different Lease
PNG#1




PNG#2
PNG#1 & #2 both registered
identical ownership
Application required (no specific OGC form)
Include cover letter stating request and attached
titles map with well location plotted
If title of affected lease (PNG #1 in example) expires or
changes ownership, penalty may be imposed
Affected title must be a P&NG Lease, not a Drilling
Licence
Off-Target Well Production Penalty Waiver
D. Different Ownership - Different Lease
PNG#1




PNG#2
PNG#1 & #2 registered
different ownership
Application required (no specific OGC form)
Include titles map with well location and letters of consent
from registered owner(s) of affected off-setting lease
(PNG #1 in example)
Approval is “conditional” upon ownership of PNG #1;
if changes, OT penalty may be applied
PNG #1 must be P&NG Lease, not a Drilling Licence
Good Engineering Practice (GEP)





Allow a pool (or portion) to be exploited without well
spacing & target restrictions, i.e. “super” target area.
Effective for “downspacing” or areas of horizontal drilling.
No inter-well minimum distance specified,
OGC expects economics and geology to dictate.
Usually no production restrictions, however individual
allowable(s) may be applied to lease-line wells.
Flexibility in locating wells to access resource and
minimize surface impact.
Good Engineering Practice (GEP)
R15
R14
C
G
G
G
R13W6
K
G
C
D
G
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23
24
G
M
D
G
19
L
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G
F
F
A
21
22
U FC
A
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F
D
24
C
16
15
14
F
F
13
T80
G F
10
9
F
GF
F
F13 G
14
U
G
FC
T80
F11
FF
G
F
F
F
12
8
7
9
G
10
11
12
F
F
F
4
3
2
1
6
A
5
4
C
33
F
C
34
36
F
27
FV
F
21
22
F
23
GL
G
L
G
15
13
9
11
AF
F
F
F
17
V
F
16
F
V
8 F
C
T79
G
15
14
13
10
11
12
G
C
A A
F4
5
6
3
G
34
G
35
F
A
1
2
G
36
31
32
G
33
C
34
C
V
27
26
36
35
A
G
G
F
A
28
OGC requires evidence that “downspacing”
will result in increased recovery, not just
recovery acceleration.
(production decline vs. volumetric)
F
A
33
F
9
U
32
24
A
A
FV
1
23
F
K
F
F
2
U
FC
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FC
K
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7
• HZ wells crossing multiple spacing areas
• increased density
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G
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K
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F
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4
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F
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V
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A
F
• off-target locations
A
F
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A10
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35
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34
FV
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FV
A
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L
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F
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19
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C
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L
A
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FV
G
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U
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F
1
2
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30
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G
FU
FV
FV
F25
G
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V
F
F
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F
31
F
3
F
G
G
F
F
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F
35
F
F
F
F
T79
Example gas pool under GEP approval
(contiguous full spacing areas)
G
F
G
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C
F
29
15
D
F C
G
D
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F
F
F
C
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G
25
30
29
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However, not an issue in recognized
unconventional resources.
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F
T78
T78
KC
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A
A19
20
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G
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G
R15
R14W6
Good Engineering Practice (GEP)
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R14W6
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F
A
G
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F
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G
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A
V
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FV
F
F
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F
F
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non-contiguous
area receives
separate approval
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U
F
F
30
F
F
FV
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29
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GEP #2
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U
U
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C
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F20
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K
F
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T79
A
FC T79
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K
F
contiguous lands
single approval
A
A
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F
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F
GEP #1
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10
F4
3
F
F
F
However both areas may be
included in a single application
if for the same pool.
1
5
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F
G
G
R15
File: CAPL example 2.MAP
G
G
R14W6
Datum: NAD 27
Projection: Stereographic
Center: N55.85031 W120.15762
Created in AccuMap™, a product of IHS
Good Engineering Practice (GEP)
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30
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Individual allowable(s) may be applied to lease-line locations,
based on objection(s)
received.
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2
1
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A
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F
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100
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72
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F
Production from each of
these gas spacing areas
may be limited to a daily
gas restriction
(example 60 103m3/d)
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90
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F
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A
F
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AF
G
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C
73
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FC
F
F
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70
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58
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72
F
G
F
F
FA
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63
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54
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66
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56
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C
F
F
F
F
53
52
F
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60
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F
A
FC
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K
J
F
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F33
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F
FA
FC
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40
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F
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14
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4
3
2
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92U
A
F31
F
F
G
F
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22
F
21
30
11
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U
F
FA
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28
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GK
C
F 13
12
F
FA
2
1
10
9
K
A
F
K
KF
F
FF
3
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8
F
FG
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F6
F
G
F
F
93
92
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F
100
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F
95
C
KC
A
G
F
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90
89
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F KC
A
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84
F
A
U
F
F
F
73
F
D U82
F
F
F
82
72
71
80
F
79
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76
75
C
E
74
73
72
Good Engineering Practice (GEP)

Approval does not have any affect on lease tenure
(conversion or continuation).




Pooling still required to produce incomplete gas spacing
areas.
GEP areas range in size from one gas spacing to hundreds.
May be approved for land held under a Drilling Licence,
provision that PNG Lease selection made prior to production.
Buffer area usually 250 m, opportunity to decrease
if both off-setting parties agree.
Note: see ogc.gov.bc.ca
“Good Engineering Practice – Background Article”
GEP Application Guideline
ogc.gov.bc.ca
GEP Application



Notice of application posted on OGC website;
3 week period for objections to be filed.
Not a requirement to notify off-setting lease owners of
application but suggested good practice if objection
expected – early resolution will speed final approval.
Decision if objection is valid at discretion of OGC,
no hearing process but applicant allowed to respond.

Approval subject to specified conditions.

Approval transfers to new operator.
Good Engineering Practice (GEP)
Fictitious Oil Company Limited

200, 300 – 4th Ave SW
Calgary, AB T2P 2T2
October 24, 2006
Oil and Gas Commission
Resource Conservation Branch
PO Box 9329
Stn Prov Gov’t
Victoria BC V8W 9N3
Attention Ron Stefik:

Usually applied for area
of common interest, but
not a requirement.
Consent letter(s) required
from all registered lease
owners, including brokers.
RE: Consent to Application for Good Engineering Practice
Please be advised the Fictitious Oil Company Limited, as a
registered tenure owner of:
Petroleum and Natural Gas Lease(s) # 1234, 2345 and 3456,
hereby consents to inclusion of those lands within the application
made by Serendipity Oil Company Limited, dated October 23,
2006, for Good Engineering Practice for the Lucky field Bluesky
“A” pool.
Sincerely,
Signed
Gus Gusher
Exploitation Engineer
example letter on website
Good Engineering Practice (GEP)
example Approval
pool specific
APPROVAL 06-06-060
THE PROVINCE OF BRITISH COLUMBIA
PETROLEUM AND NATURAL GAS ACT
DRILLING AND PRODUCTION REGULATION
OIL AND GAS COMMISSION
IN THE MATTER of a Good Engineering Practice (GEP) scheme of Northpoint Energy
Ltd. (Northpoint) for producing the Altares field Halfway “B” gas pool without well
spacing and target restrictions.
NOW, THEREFORE, the Commission, pursuant to Part 8, Division 6, Section 101 of the
Drilling and Production Regulation, hereby approves the GEP scheme of Northpoint for
drilling wells without spacing and target restrictions, as such scheme is described in
an Application from Northpoint to the Commission dated July 27, 2006 and
related submissions.
area description
This scheme is approved, subject to the conditions herein contained and, in particular:
1. The area of the project shall consist of:
94-A-5: Block D - units 20, 30, 40, 50, 60, 70, 80, 90
waiver of well spacing &
targets but 250 m buffer
94-B-8: Block A - units 11-13, 21-23, 31-33, 41-43, 51-53, 61-63, 71-73, 81-83, 92-95
Block H – units 2-5, 12-15, 22-25, 32-35, 42-45, 52-55 and 62-65.
2. The requirements of Section 10 of the Drilling and Production Regulation are hereby
waived, provided that gas wells within the project area are not completed nearer than
250 m to the sides of the approved project area.
3. The gas wells within the project area may be produced without individual well
allowable restrictions.
no production restriction
4. This approval may be modified or rescinded at a later date if deemed appropriate.
_____________________
Doug McKenzie
Director
Resource Conservation Branch
DATED AT the City of Victoria, in the Province of British Columbia, this 10th day of October 2006.
Horn River Basin - Jean Marie GEP areas comparison
Montney Play - existing GEP approval areas
Water Disposal Well - considerations

depleted or wet reservoir preferred

if hydrocarbon reservoir, injection below water contact

below shallow / near surface aquifers


injection pressure must be below 90% of formation
fracture gradient
must control P & NG rights to ¼ section (1 unit)
Water Disposal




Application notice posted to OGC website, for possible
objections.
Limited “test” injection volume may be approved
before / during formal application process.
May dispose of both produced water or recovered fluids
from a well completion or workover (includes fracture
treatment fluids ie “slick water fracs”).
Challenge to industry – recycle frac water, use saline
zones (Debolt) as “water storage”.
Acid Gas Disposal Well - considerations

proximity to source facility (shorter the pipeline the better)

confinement of the injected gas



competent cap rock, effect on rock matrix
lateral plume migration
protection of hydrocarbon, mineral and groundwater resources

potential to effect nearby wells and future production / drilling in area

equity interests

wellbore integrity – cement, casing, packer, tubing, safety valve

public and environmental safety – air monitoring

must control P & NG rights to full gas spacing area
Acid Gas Disposal
12 wells approved for acid gas disposal
WA#
Disposal Zone
Approval Date
464
WGSI BUBBLES b-19-A/94-G-08
Baldonnel
June 27, 1997
7908
BURLINGTON BURNT a-94-A/93-O-08
Baldonnel
October 21, 2004
7961
ANADARKO CARIBOU c-04-G/94-G-07
Halfway
10585
ANADARKO CARIBOU a-A30-G/94-G-07
Debolt
9637
PC ET AL JEDNEY a-79-J/94-G-01
Baldonnel
October 31, 1996
427
PC ET AL JEDNEY b-88-J/94-G-01
Baldonnel
October 31, 1996
7979
PC ET AL PARKLAND 15-17-81-15 W6M
Basal Kiskatinaw
10503
BRC HTR ET AL RING d-49-B/94-H-16
Debolt
April 6, 2000
5787
CNRL SIKANNI a-32-I/94-G-03
Debolt
January 31, 2005
9887
CNRL W STODDART 01-33-87-21 W6M
Halfway
June 14, 2001
11398
CNRL W STODDART 07-34-87-21 W6M
Halfway
September 18, 1998
1517
TALISMAN SUKUNKA a-43-B/93-P-05
Pardonet-Baldonnel
September 20, 2000
March 30, 1998
February 22, 2001
March 21, 2002
Commingled Production


OGC avoids mapping sub-units,
removing commingling as an issue.
 single Montney, not Upper and Lower
individual well, pool or area based approvals.
Project Data



Reservoir projects (including GEP) data file at;
www.ogc.gov.bc.ca
“Drilling Data for all wells in B.C.” – Excel file
For past Project applications or approvals, contact;
Steven Glover (250) 952-0293
[email protected]
OGC has digital shape files for GIS systems, also
digitizing pool net pay maps and pool designation areas
Lori Miller (250) 261-5713
[email protected]