regulatory considerations for unconventional resource development ron stefik, asct resource...
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Regulatory Considerations for Unconventional Resource Development
Ron Stefik, AScTResource Conservation BranchApril 17 | 2009
Veteran of Government Service!
Horn River Regional Field – Devonian shale gas the play Experimental Schemes OGC Development Order water disposal
Heritage Regional Field – Triassic Montney tight gas the play OGC Development Order (proposed)
Unconventional Gas Regulatory Challenges
Overview
Horn River Basin – Simplified Cross-section
50 m
100 mMuskwa/Otter Park Shale
Klua/Evie Shale
Slave Point Carbonate
Keg River/ Pine Point Carbonate
Depth = 2500 m TVD
SouthEast
NorthWestT= 135 C (275 F)
Pi ~ 38 MPa (5500 psi)
T= 175 C (347 F)
Pi ~ 50 MPa (7250 psi)
k = 250 nD
Middle Devonian Carbonate
Carbonate platform (wet)
Bank edge
TOC ~ 5.7 %
OGIP > 500 Tcf (including Cordova Embayment)
~ 0 - 50 m
higher silica more calcareous
Horn River Basin
Horn River – Experimental Schemes
Experimental Scheme approval allows evaluation of production techniques.
“methods that are untried and unproven in the particular application”.
OGC will introduce a detailed guide for making application.
approval area limited in size to near-term activity.
Horn River – Experimental Schemes
3-year confidentiality for all well data, including production.
annual Progress Reports submitted.
a total of 64 Experimental approvals (many inactive);
21 Horn River formation - (Muskwa/Otter Park and/or Klua/Evie) shale.
8 Maxhamish Lake/Liard Basin area - Exshaw shale.
Unconventional Gas Resource Development
Premise:
Central pad locations - multiple horizontal wells.
High well density.
Reservoir quality variation is gradational over long distances.
Significant core sampling.
Horn River Basin Development Scheme Approval
The OGC has worked with the industry Horn River Producers Group – proposed order that covers multiple sub-surface issues.
minimum data gathering requirements.
area based on OGC field outline, updated quarterly.
applies to wells with objective of Muskwa/Otter Park and/or Klua/Evie.
normal Well Authorization application and approval process still applies.
Horn River Basin Development Scheme Approval
Drilling Samples
1st well on pad: 5 m intervals from 50 m above shallowest reservoir, usually Debolt - vertical well to TD, or - horizontal well to KOP. 10 m intervals in build and horizontal section.
Subsequent wells on a pad: sampling required on one well in each stratigraphic unit, in each dominant direction. exempt from sampling above KOP. from KOP to TD at 10 m intervals.
submit proposed program to OGC, contacted only if modification required.
Horn River Basin Development Scheme Approval
Logging
1st well on pad, full OH logs:
vertical well, to TD.
horizontal well, to “point of resistance” (~ 60 degrees).
neutron log to within 25 m of surface.
horizontal well, gamma ray log to TD.
Subsequent wells on a pad exempt, except for:
minimum of gamma ray log (MWD / OH / cased hole) from base of surface casing to TD.
submit proposed program to OGC, contacted only if modification required.
Horn River Basin Development Scheme Approval
Example pad – minimum data requirementsFirst well on pad: - samples 5 m intervals, 10 m in build &hz - full OH logs (point of resistance if hz)- neutron to 25m from surface- GR to TD
One well in opposite direction: - samples only below KOP- full gamma log (OH/cased/MWD)
All other wells on pad: - exempt from samples- full GR logs (OH/cased/MWD)
Horn River Basin Development Scheme Approval
Reservoir pressure tests:
Pi - minimum of 1 test per 4 km radius (measured from well head).
Exempt from annual pool testing.
Gas well deliverability tests:
Exempt from absolute open flow (AOF) potential testing.
Gas analysis:
samples from minimum of 2 wells/pad, during initial production year.
Note – any additional tests or analyses require report submission.
Horn River Basin Development Scheme Approval
Example pad – minimum data requirements
Initial reservoir pressure: - 1 test per 4 km radius, each formation
Gas analysis: - 2 wells/pad, each formation
AOF test: - all wells exempt
4 km
Annual reservoir pressure: - all wells exempt
Horn River Basin Development Scheme Approval
Production:
Muskwa/Otter Park & Klua/Evie formations may be commingled.
written notification to OGC;
intervals (separate UWIs for each formation).
production allocation factors (may base on “h” value).
BC-11 form for each UWI, when commence production.
Horn River Basin Development Scheme Approval
Good Engineering Practice (GEP)
As development expands beyond Experimental Schemes, operators are expected to apply for GEP approvals.
removes well spacing and target area restrictions for a specific area.
“streamlined” application requirements - ownership or consent from registered owner of petroleum and natural gas rights essential.
gas target buffer distance of 100 m (normal is 250 m).
notice of application posted OGC website for 3-week period, allow possible objections to be filed.
Horn River Field – Water Disposal
Application required for Produced Water Disposal to an underground formation.
Normally for by-product salt water disposal (SWD).
Approvals issued under Section 94 of the Drilling and Production Regulation include by definition ”…produced water or recovered fluids from a well completion or workover…”.
Slick water fracs, significant volumes of flow-back water. OGC encourages re-use of this water where possible.
Horn River Field - Water
Debolt formation (water saturated) 20,000 PPM TDS~ 400 m depth
Horn River shale~ 2500 m depth
ground level
Deep formation water
30,000 – 100,000 PPM TDS
(seawater 35,000 PPM)
Fresh water <1,000 PPM TDS
water disposal (& source?) wellproduction well
Possible Quaternary gravel channel sources?
Current water source = surface lakes
Horn River Field – Water Disposal
Application required for initial injection test, OGC guideline.
Conditional Injection Test approval (if zone favourable);
specify test injection volume.
production test, verify no hydrocarbon potential.
OGC posts public notice (web site) to begin objection period.
if injection test successful, and 3 week objection period concluded without valid concern, final approval.
Heritage Regional Field – Montney “A” Simplified Cross-section
170m
130 mUpper Montney
Lower Montney
Avg Depth ~ 2400 m TVD
Doig ss & Doig Phosphate shale
Belloy carbonate
West (Groundbirc
h)(variable presence and prouctivequality)
East (Swan Lake)
~36 miles
(overpressured)
generally poorer quality to west
OGIP = 87 Tcf ( ~250 Tcf in fairway?)
Pi= 21 MPaPi= 38 MPa increasing pressure gradient to west
fine silt / shale fine sand / silt
Heritage – Montney “A”
875 miles2
OGIP ~ 87 Tcf
Good Engineering Practice (GEP) approvals. - No inter-well spacing or horizontal drilling restrictions.
Heritage Montney Production
Time (years)1998 201000 02 04 06 08
030
030
6090
120
150
180
210
240
270
Cal-Day Avg GAS MMcf/day
020
020
4060
8010
012
014
016
018
0
Cumulative GAS Bcf
035
035
7010
514
017
521
024
528
031
5
Well Count count
055
0055
011
0016
5022
0027
5033
0038
5044
0049
50
Prd-Day Avg/Well GAS Mcf/day
09
12
33
45
67
8
Ratio: WTR/GAS Bbl/MMcfCum GAS 185.9 BcfCum CND 158,300.2 BblCum WTR 902,266.2 Bbl
Data As Of:WellCount:
2009-01 (BC)341/341
Unconventional Montney Trend Production 1998-122009-01
From:To:
Heritage Montney Development Scheme Approval
OGC has drafted an area based order, similar to Horn River sub-surface issues.
minimum data gathering requirements.
defined area – Heritage regional field, updated quarterly.
wells with objective of, or completion within, Triassic Montney formation.
normal Well Authorization application and approval process still applies.
Heritage Montney Development Scheme Approval – Sneak Preview
Heritage Montney Development Scheme Approval
Drilling Samples 1st well on pad:
5 m intervals from 50 m above shallowest anticipated reservoir - vertical well to TD, or - horizontal well to KOP. 10 m intervals in build and horizontal section.
Subsequent wells on a pad: sampling required on one well in each stratigraphic unit, in each dominant direction. exempt from sampling above KOP. below KOP at 10 m intervals.
submit proposed program to OGC, contacted only if modification required.
Heritage Montney Development Scheme Approval
Logging
1st well on pad, full OH logs:
vertical well, to TD.
horizontal well, to “point of resistance” (~ 60 degrees).
** this may be waived where adequate logged wells within 250 m!
neutron log to within 25 m of surface.
horizontal well, gamma ray log to TD.
Subsequent wells on a pad exempt, except for:
minimum of gamma ray log (MWD / OH / cased hole) from base of surface casing to TD.
submit proposed program to OGC, contacted only if modification required.
Heritage Montney Development Scheme Approval
Reservoir pressure tests:
Pi - minimum of 1 test per 4 km radius (measured from well head).
Exempt from annual pool testing.
Gas well deliverability tests:
Exempt from absolute open flow (AOF) potential testing.
Gas analysis:
sample from minimum of 2 wells/pad, during initial production year.
Note – any additional tests or analyses performed require report submission.
Heritage Montney Development Scheme Approval
Production
Montney is treated as a single formation for the purpose of production reporting.
commingling approval/notification not required for Upper/Middle/Lower Montney zones.
not separate UWIs for each completion event.
single BC-11 form when commence production.
Heritage Montney Development Scheme Approval
Good Engineering Practice (GEP)
Numerous GEP approvals have been granted, to multiple operators.
removes well spacing and target area restrictions for a specific area.
“streamlined” application requirements - ownership or consent from registered owner of petroleum and natural gas rights essential.
Heritage Montney Development Scheme Approval
Good Engineering Practice (GEP)
gas target buffer distance of 150 m (normal is 250 m).
buffer distance may be reduced < 150 m where consent from off-setting rights owners submitted.
where GEP has not yet been approved, 150 m target area buffer applies to individual gas spacing areas.
Notice of application posted OGC website for 3-week period, to allow possible objections to be filed.
Regulatory Challenges – Optimal Well Spacing
Impact of well spacing and sequence of stimulation/production on ultimate recovery.
Ideal distance (lateral and vertical) between horizontal well bores for drainage?
“In-fill” drilling and stimulation possible if intersect fractures from off-setting producing well?
Regulator to require specific density and order of operations?
Regulatory Challenges – Acid Gas Disposal
Horn River gas C02 ~ 10+ %
Montney gas H2S ~ 0.0 - 0.3%
Large production volumes = large disposal requirements!
Acid gas disposal wells:
Heritage Montney > Belloy aquifer 1 approved:
max rate of 62 103m3/d. observation well required.
2 other applications received.
Horn River > Devonian aquifer?
Regulatory Challenges - Trespass
Fracture stimulation consideration? Regulation currently addresses horizontal trespass of a wellbore (spacing areas).
Large frac treatments, possible to connect to formations above or below title interest.
Regulator to limit horizontal well placement?
X # meters from top or base of zone?
formula limiting frac size, based on distance from top or base of zone?
Off-target production penalty formula is based on interpretation of “pay” section. In unconventional gas, what is pay?
Regulatory Challenges – Microseismic Data
Seismic data, or enhanced completion data?
Not seismic data/reports for land tenure purposes.
If completion data, must submit to regulator, released 3 months to 3 years from rig release date, depending on well classification.
File data with the well being observed/fraced, not the well in which signals are received.
Summary
Two proposed Development Approvals for unconventional resources;
• capture the “right amount” of data for evaluation and development
• streamlining for industry and the regulator
• challenges/opportunities remain
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