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HomeMy WebLinkAboutYukutat Appendix D Natural Gas-FS 1996NATURAL GAS --- POSSIBLE ALTERNATE FUEL SOURCE YAKUhAT POWER COMPANY E ARLIN LHM Geological Consultant NATURAL GAS -- POSSIBLE ALTERNATE FUEL SOURCE YAKUTAT POWER COMPANY EXECUTIVE SUMMARY Three test wells were drilled in the immediate Yakutat area nearly forty years ago by Colorado Oil and Gas Company as operators for themselves and several other participants. These wells encountered varying degrees of hole problems which caused the wells to be plugged and abandoned without reaching target depths. Gas shows were present in well No. 3 but poor hole conditions and almost continual hole problems prevented the successful testing and evaluation of these zones. Two zones revealed sufficient gas shows so as to warrant further examination of the available data for the present study. The purpose of this evaluation is to determine whether there are indications of sufficient quantities of gas may be present for use as an alternate fuel source by Yakutat Power Company and for residential heating by the village of Yakutat. All available data from all sources were acquired and analyzed for this evaluation for geologic and engineering considerations. This analysis has produced options both for the re-entering of the two possible gas -bearing zones in well No. 3 and for the drilling of new offsetting test wells. The deep zone, which is present below 10,267 feet in this well, is comprised of very tight fractured limestone with little or no reservoir quality. Cost estimates for redrilling this well to a depth of 12,000 feet range between $15,675,000 and $20,625,000. A rough cost estimate for re-entering this well to test the deep zone is $5,500,000. The shallow zone, present between 1,400 and 2,500 feet in this well, is comprised of sandstone with apparent reservoir quality. A rough cost estimate for redrilling this well to a depth of 3,000 feet is $5,862,000, but this is considered to be a maximum figure. Cost figures to re-enter the shallow zone have not been prepared. It may not be practical to re-enter this shallow zone due to mechanical factors. Recommendations for further consideration are present at the end of this report. These pertain to the probable exposure, both monetarily and operationally, that is inherent in the undertaking of an exploratory venture such as this. Further evaluation of this project can be accomplished without large monetary expenditures. 1 INTRODUCTION PURPOSE The purpose of this report is to provide the results of the first of possibly several studies undertaken on behalf of the Yakutat Power Company to determine if there are indications of sufficient gas reserves in the immediate Yakutat area to provide a less expensive source of fuel for the power plant and, possibly, for residential heating. It was recommended to Yakutat Power Company that any such studies be staged wherein additional studies and expenditures would occur only after the results of the previous stage indicted that such expenditures were warranted. The letter to Mr. Marvin Adams on April 2, 1996, stated, in part, that the writer would "gather all geologic and engineering data available, especially that of knowledgeable geologists who have explored this area previously. These first-hand interpretations will augment what little recorded data are on hand in the government files." That letter also stated that the writer would "compile results" which your company could use to "make a decision whether or not it is justified to proceed". Additional courses of action were also proposed in that letter. A subsequent letter following listing of stage I study". That written on April 8, "what you can expect listing is as follows: 1996, provided the to receive from this I. A written comprehensive report based on the following A. All of the printed information available at that time B. All of the information available from knowledgeable experts by oral communication C. An analysis of this information as is pertains to your project D. The observations and recommendations of these experts as to whether or not to proceed with your project E. My final observations, conclusions and recommendations II. Copies of pertinent supporting data An additional letter to Mr. Walter Johnson on July 15, 1996, included some preliminary findings as well as some preliminary conclusions as of that time. For the sake of the completeness of this report, all information given in that letter, which is now considered pertinent, will be repeated in this report. However, revisions have been made based on current data and conclusions. METHODOLOGY Attempts were made to acquire all available existing data from whatever source including government agencies, industry companies, individuals, consultants, and, primarily from the original operator of the Yakutat drilling and coring program. These data were analyzed from geologic and engineering perspectives to determine the best information that could be gleaned from them. The results of these analyses were utilized to prepare conclusions and to make recommendations of possible options for further consideration. Illustrations were prepared to show the basic interpretations made herein. In the search for accumulations of oil and gas, or hydrocarbons as they are referred to within the industry, certain geologic and engineering methods are usually employed. These methods have been developed over the years to improve the quality of the evaluations of the well data so as to reduce the possibility of missing the hydrocarbon accumulation. Modern technology is obviously an improvement over the older technology. However, the technology of the 1950's must be utilized in this analyses since that is what was used on these wells. In order for an oil or gas accumulation to exist, a minimum of three geologic elements must be present. These are reservoir rocks, a seal over these rocks and a trapping mechanism. A fourth element pertains to the generation and migration of hydrocarbons. However, since gas has already been observed to be present in unknown quantities in wells in the immediate area, this fourth element will not be discussed further. A reservoir rock is one which contains void spaces which can contain the trapped oil or gas. The presence of these pore spaces, often quite small, is known as porosity and is expressed as a percentage of the entire reservoir rock unit. While porosity preferred for oil accumulations is usually in the 20% range, gas accumulations can be producible with less porosity. In addition to pore space, the reservoir rock must have connections between these individual pore spaces so that the hydrocarbons may flow to the well bore and ultimately be produced. This capacity to allow flow is known as permeability. If the hydrocarbons are to be confined within the reservoir rock unit and not escape, there must be a seal over the reservoir rock. This seal is usually a shale or other very -fined grained rock or one without any porosity or permeability. The third important element is that of a trap which physically stops the upward migration of hydrocarbons and prevents their 3 escape. All hydrocarbons are lighter than the surrounding formation water within the reservoir rocks and therefore, if not obstructed, the hydrocarbons will migrate to the highest structural position that they can attain. These three basic elements must be present in all hydrocarbon exploration plays and in all producing fields. Geologic and reservoir engineering analyses are devoted almost exclusively to the determination of the presence of and the quality of these three described elements. Petroleum engineering, while of considerable importance, relates to the drilling, production, treatment and transportation of the hydrocarbons. HYDROCARBON DETECTION During the drilling of exploratory wells, it is not always known whether hydrocarbons are present and, if present, whether they are present in commercial quantities. It is usually necessary to evaluate for the presence of hydrocarbons through both indirect and direct means. Proper analyses during the drilling of the wells is the most valuable method but certain interpretations and conclusions can be made at a later time if the data are complete and of high quality. Direct means of evaluation includes the examination of the well cuttings while the well is being drilled. This examination, which also includes the evaluation for potential reservoir rocks, evaluates for the presence of hydrocarbons by the means of "shows". These shows may include visual observable oil stains, the presence of a hydrocarbon odor, fluorescence under an ultraviolet light, a "cut" when a solvent is added and the presence of a fluorescence on the cut under this light. The samples are also analyzed for the chemical composition of the gas. Methane is the primary constituent of natural gas and the other heavier hydrocarbon fractions indicate the presence of oil. In a similar manner the mud being circulated up from the bottom of the hole is constantly analyzed for the presence of and amount of total gas as well as for its chemical composition. The volume of mud in the entire mud system is constantly monitored to ascertain both a decrease or an increase in the total mud volume. This mud system includes the volume in the mud pits, or tanks, as well as the volume in the hole after allowing for the volume of the hole that is occupied by the drill string. A decrease in mud volume occurs when fluid is lost to a low pressure zone where the formation pressure is less than that pressure exerted by the weight of the entire column, or the hydrostatic pressure. If the formation pressure at depth is greater than the hydrostatic pressure being exerted on the formation, then the formation fluid may flow into the well bore and 4 move upward toward the surface. This will cause an increase in the total volume of the mud system. This fluid may be formation water, oil or gas. If it is gas, the mud returning to the surface will be gas -cut and lighter than the mud before being diluted by the gas. When full -hole cores or sidewall cores are taken, they are subjected to the same analyses as the samples as given above. In addition, these core materials can also be evaluated for their porosities and permeabilities. While this latter evaluation is not related to the presence of hydrocarbons, it is a valuable element of reservoir rock analyses. When sufficient direct or indirect indications are present, the decision may be made by the operator to test a prospective zone by means of a formation test. These are usually done after casing has been set through the prospective zone and cemented and the casing has been perforated at the desired intervals. This is called a production test and it is the safest way to test by assuring that the tested zone is entirely isolated. Testing through casing also assures that the testing tool will be retrieved when the test is complete. In some areas open hole tests are often run but this often leads to the two problems just discussed. Formation tests are usually called drill stem tests, or DST's. When performed properly and completely, the formation test is the most valuable of the direct means of formation evaluation. The results achieved by formation testing are quantitative and the most reliable type of data for determining production parameters. The primary method of indirect evaluation for the presence of hydrocarbons is the use of wireline logs run in the open hole. These are often known collectively as electric logs, but often include an entire array of measuring methods for various formation parameters. For the older electric log analyses to be valuable, several parameters must be known about hole, mud and formation conditions. These parameters are often not completely known. Current wireline technology provides a more direct qualitative method of evaluating for the presence of gas. However, no wireline logging method yet devised provides a quantitative manner of evaluation for gas. DATA COLLECTION In addition to the well information provided by the Bureau of Land Management at the beginning of this project, all other possible sources of data were tabulated. These included, Colorado Oil and Gas Company, the original operator of the nearby onshore wells and core holes, as well as the other participants in these exploratory operations. It is probable that the operator made an assessment of the data from their exploration program either alone or in conjunction with their partners who were participants in at least some of the Colorado Oil and Gas wells in the area. If such interpretive information exists today, and it may, then it would be of tremendous value in the present efforts to assess the potential of the wells. Additionally, it would be very valuable to talk to such individuals who were involved at that time and to discuss their program and its results. The successor to Colorado Oil and Gas Company is Coastal Oil and Gas Corporation. When they were contacted at their Denver office a referral was made to their Houston office. Letters and repeated phone calls to the Houston office went unanswered. A secretary finally advised that British Petroleum Exploration Company in Anchorage should be contacted for any further request. BPX had conducted the environmental clean up for the EPA in behalf of Coastal and all of the other partners. The environmental department at BPX was contacted and a list of all of the other original participants was obtained. Other original participants were contacted without results including Conoco and Phillips and the exploration department at BPX. Joseph E. Seagrams and Allied Signal no longer exist under those names, therefore contact was not made. It is very possible that such summary reports still exist in one or more of the offices of these companies, but that no one is willing or able to search for them. Other industry companies were contacted who had participated in other onshore exploratory programs over the years as well as those who had prepared for the offshore Gulf of Alaska lease sales in the late 1970's and 1980's. However, these contacts also produced negative results. Individual geologists who had worked in the area for industry companies were contacted as well as consultants. Additionally, all government agencies who had been involved with this exploration program or any other program or had conducted geologic or resource analyses in this area of the Gulf of Alaska were also contacted. John Larsen at the Minerals Management Service was quite helpful, although the MMS does not have very much information. They did provide all of the information that they had in their files relative to these wells and allowed it to be checked out. The BLM has been quite helpful and lengthy discussions have been held with Chris Gibson of that office. They also allowed the checking out all of the information that they had in their files. The U.S. Geological Survey conducted numerous geological and geophysical studies within the greater Gulf of Alaska area over the past several decades. After finally reaching George Plafker, the primary scientist involved, it was found that he had no useful information. Arrangements were made to review a confidential report prepared by a leading consulting firm on the entire Gulf of Alaska area, but it contained only meager data on the immediate area of interest. What rl useable information it did contain was incorporated with the other geologic analyses. Time is not on the side of any search for data, files or for individuals where the original program is almost forty years old. Some of the personnel have moved on to other positions, some now have diminished memories of details and some have expired. DATA ANALYSES GENERAL The geologic and reservoir engineering analyses are totally interrelated insofar as concerns the drilling and evaluation of the previously drilled wells. For example, poor borehole conditions at the time of drilling often prevents the full evaluation of what appears to be a potential hydrocarbon -bearing zone based on the geologic data. In other cases, drilling conditions often mask indications of a potentially productive zone. Some formations inherently provide drilling or evaluation problems for the drilling engineers or the geologists and reservoir engineers. These are only three examples of such crucial interrelationships. However, the geologic and engineering analyses were approached jointly in this study in order to determine where any results of one discipline might have obscured the results of the other. These combined analyses have carried through even to the size of drilling equipment and expense of new drilling, re-entry and testing operations. YAKUTAT WELL DATA The data analyzed within this study consisted almost exclusively of that provided by the drilling of the three wells within the immediate Yakutat area (Figure 1), and, primarily, from the Colorado Oil and Gas Yakutat No. 3 well. The data from these three wells were reviewed based on their geologic and geographic relationship to existing available geologic reports. Because of structural complexities present throughout the Gulf of Alaska area and because of apparent lateral stratigraphic variations, it is imperative that the data examined be representative of the area of intended use. Because additional sources of data were not forthcoming to this study, these geological and engineering analyses were devoted to the chronological drilling reports, well logs, full -hole core and sidewall core data, and test data from these three wells. It was necessary to analyze these data in light of the then -current geologic and engineering technologies and procedures which existed between 1957 and 1959, when these wells were drilled . Plate 1 displays a northwest -southeast trending structural cross section through the three Yakutat wells. Also shown on this section is a map of the line of section and the portions of well No. 3 which are depicted on Figures 2-4. From this cross section alone, it can be inferred that all three zones containing gas shows in well No. 3 could be reached at shallower depths in well No. 2. The Upper Yakataga Formation, the formation containing the shallower gas show zone in well No. 3, was the only one of the three potential gas -bearing zones penetrated in well No. 1. A time/depth plot of the drilling of the Yakutat No. 3 well is shown on Plate 2. Well depth is on the vertical axis and time is on the horizontal axis. Also shown on the horizontal axis is the time devoted to each of the various operations undertaken between the time drilling began and when the well was finally plugged back to surface. Figures 2-4 are plots where gas detection results from cuttings and mud have been plotted opposite electric log intervals in Yakutat No. 3. These figures represent the zones of greatest gas potential in this well. YAKUTAT NO. 1, 2 & 3 WELLS The stratigraphic relationships between these three wells are shown on Plate 1 where Yakutat No. 1 is on the left, No. 3 in the center and No. 2 is on the right. There is no vertical exaggeration in this section as the horizontal scale equals the vertical scale. It can be seen from this cross section that the deeper strata dip quite steeply to the left, or northwest. This is only apparent dip in the line of section as the dip is even steeper in the direction of the dip, which is to the southwest. Bedding dips of as much as 59' have been measured by dipmeter from the Poul Creek, Kulthieth and Yakutat Formations in the Yakutat No. 3 well. Erosional events created unconformities between some of the formations as represented by the wavy lines. Unconformities are created when previously deposited strata are uplifted and erosion removes some or all of the strata. The presence of unconformities can play a very major role in the geologic setting of an area by influencing or controlling the distribution of the reservoir rocks, the distribution of the sealing rocks, breaching the trap so that the hydrocarbons migrate to a higher trap, etc. A major erosional event marks the boundary between the Yakutat Formation and the overlying Kulthieth Formation. The dips in the bedding within the Yakutat Formation are nearly the same as those of the bedding within the overlying formation. Therefore it could be assumed that the limestones present in well No. 3 below 10,267 feet would be present at a comparable distance below the top of the Yakutat Formation in well No. 2. However, this is not the case as no limestones were logged at all in the No. 2 well. P9 A second major erosional event is present between the Lower Yakataga Formation and the underlying Poul Creek Formation. Although the dips of the bedding planes are similar across this unconformity, a gap in the deposition sequence is present. A third major erosional event is present between the Upper Yakataga Formation and the Lower Yakataga Formation where a significant difference in bedding plane dips is noted. In general, the Upper Yakataga Formation displays rather low bedding plane dips. This cross section is probably too simplistic to display the true structural configuration within the Yakutat Formation between these two wells. It is probable that a fault exists between these two wells below the unconformity that separates the Yakutat and Kulthieth Formations. If this were the case, the limestone unit would have been offset upward in the block under well No. 2 and removed entirely. This structural interpretation would be in agreement with the structural setting of this portion of the Gulf of Alaska. Yakutat No. 1 was plugged back and abandoned after leaving two pieces of drilling equipment (fish) in the hole. Because of the steep structural dips, this well was still in the Upper Yakataga Formation at the time that it was abandoned. No shows were reported in this well and it was not considered for further analysis in this study. The operator apparently attempted to drill and evaluate these wells according to the technology available at that time. Mud logging operations were conducted on all three of these wells, a full suite of electric logs were run and the chronological drilling reports indicate that drilling operations were constantly monitored. However, the only formation tests that were run were open hole drill stem tests and the results were universally inconclusive. It should be noted that all three of these wells experienced seemingly constant drilling problems of some type which curtailed the obtaining of high quality data for analyses. Hole problems seemed to plague the operator constantly, especially with well No. 3. These poor hole conditions certainly deterred from, if not prevented completely, the conducting of successful formation tests. Mechanical problems with the drilling rig allowed for resulting drilling problems on occasion, but the lost time in this regard is probably normal. Since well No. 3 had the only shows of significance in these three tests, it was analyzed in detail to determine whether there are indications of accumulations of gas that might be worth considering as a source of fuel for Yakutat Power Company and for residential heating for the village of Yakutat. These analyses included geological, engineering and financial aspects. 9 YAKUTAT NO. 3 WELL This well had the best shows of gas from three separate intervals between the depths of 1,400 and 10,848 feet (Figures 2-4). The total depth for the well because of drilling problems although three redrills at shallower depths followed. The three zones of interest are based on differing types of shows, all from the mud logging operations. Analyses of full -hole cores and sidewall cores did not confirm these mud log shows. Each type of show will be discussed later and its significance will be made clear. The shallow zone of shows, 1,400 to 2,500 feet (Figure 2), is based on mud logs where as much as 60 units of gas, all methane, were recorded from analysis of the drilling mud. Over this same interval, as much as 15 units of gas, all methane, were recorded from analysis of the cuttings. The lithologic log compiled by the mud loggers and the electric logs indicate that these shows were coming from sandstones. These sandstones appear to be good reservoirs, however, the formation pressures would be low at these shallow depths and any produced gas may need to be compressed to raise the pressure. Porosities and permeabilities would be rather high which would indicate a good reservoir for the gas. The next deeper zone of shows, 6,600 to 7,600 feet (Figure 3), is based on mud logs where as much as 15 units of gas, all methane, were recorded from the analysis of the cuttings. There was no corresponding gas show from the drilling mud. The electric log through this interval shows that the gas was contained in siltstones and not sandstones. These very tight rocks did not release the enclosed gas until the cuttings were brought to the surface and ground up for gas analysis. These siltstones are not reservoir rocks and this interval will not be considered further. The deepest zone of shows, 10,150 to 10,848 feet (Figure 4), is based on mug logs where as much as 1,000 units of gas, all methane, were recorded from the analysis of the drilling mud during the drilling of the original hole. Over this same interval, no shows were recorded from analysis of the cuttings. At a depth of 10,848 feet, the well began to flow due to an influx of fluid into the wellbore. The operator considered this fluid to be water rather than gas. He immediately increased the mud weight to attempt to control the flow. Plate 2 records the problems that the operator then had over the next several months. During the three redrills over all or portions of this same interval, the mud weight was higher than when the zone was originally encountered. This would inhibit the flow of gas into the wellbore and the results would be lower than was recorded in the original hole. However, in the original hole as in the redrills, shows were not recorded from an analysis of the cuttings. Possible explanations 10 9. The shows from the Yakutat Formation at a depth of 10,150 to 10,848 feet in Yakutat No. 3 are probably not from a reservoir, but from a fracture system. 10. Re-entry of the Yakutat No. 3 to test this lowest zone of shows may be considered an option to drilling a new well. 11. Alternately, the drilling of a deep test to evaluate this lowest zone of shows may be considered. 12. Drilling to this greater depth may encounter hole problems. 13. This deep test should be located near the Yakutat No. 3. 14. All formation tests should be conducted through casing in order to insure proper testing. 15. A reservoir analysis should be concluded to determine the economic chance factor of gas being available in quantities sufficient for study purposes. OPERATING CONSIDERATIONS YAKUTAT NO. 1, 2 & 3 PROBLEMS As stated earlier, the operator experienced a considerable amount of problems during the drilling of the three wells which served to negatively impact, if not defeat entirely, the purposes for which the wells were drilled. That is, the continuing problems caused the wells to be abandoned without achieving the intended goals of discovering hydrocarbons or adequately evaluating the wells for their hydrocarbon potential. While these problems might be avoided by using the drilling technology of today, there is always the possibility that the problems could recur. It is not unusual to have greater than anticipated drilling problems where the geological structure is complex as it is in the Gulf of Alaska area. It is also not unusual to have problems of this type when drilling through fractured limestones. If a new well is drilled to similar depths of 12,000 feet, then similar problems might be anticipated, but on a lesser scale. Plate 2 reveals a case where hindsight would have dictated plugging at the first. The operator showed an inability to avoid sticking the drill pipe while attempting to create a slightly overbalanced mud system. This continued inability to create and maintain good hole and mud conditions was evidenced in all three wells, but was worst in well No. 3. The time for drilling this well to its original maximum depth of 10,848 feet was 99 days, or 36% of the time between onset and completion of operations. Thereafter 177 days, or 64% of the time, were devoted to problems and attempts to continue drilling. It is probable that 80% of the cost of this well was due to hole problems when the cost of the extra drilling mud and extra air freight are factored in. 12 When this study was first planned, it was considered that reservoir analyses and appraisals would be available from the operator, from some other industry company, or from a government agency. None were located at any of the possible sources. It is imperative, therefore, that reservoir analyses be conducted on the two zones of interest to determine the economic chance factor of gas being present in sufficient quantities for the stated purposes. RE-ENTRY AND TESTING OF YAKUTAT NO. 3 AT 12,000 FEET It is always a risk to re-enter a previously drilled hole regardless of its age. In this case, the risk is enhanced due to several factors which will be addressed briefly here. The biggest risk concerns the integrity of the plugs that the operator placed in the hole while abandoning the well. Although the plugging operations are covered in the chronological drilling report, there was apparently no inspection agency at that time that witnessed the tests and approved them as is the practice today. It should be noted that the operator had difficulty in placing cement plugs while attempting to plug back and redrill. The operator's ability to plug back completely must be questioned. If the plugs failed, this could allow for the gas at depth to leak into the wellbore, travel up to a higher plug that did seal and accumulate the same pressure at this new depth as at the formation depth. If this occurred at a very shallow depth, there would not be enough mud column during re-entry operations to create sufficient hydrostatic pressure to offset the formation pressure. One possible offsetting factor, however, could be that the gas would continue to bleed very slowly past the leaking plug or plugs. However, this can not be relied upon. A second risk concerns the integrity of the casing that is in the hole and the adequate cementing of the liner at 10,351 feet. Even with a good cement job, all of the attempts at washing over, fishing and getting the drill string free could have caused damage. Now, nearly forty years later, it is impossible to determine what the condition of the casing might be. If the first two risks are to be assumed and the hole is re- entered, then a third risk is present. A liner has been set from a depth of 8,373 to 10,350 feet which places the bottom nearly 500 feet above the zone of water invasion at 10,848 feet. However, this is only 80 feet above the top of zone with the gas show at 10,430 feet. The top of the bottom plug set when abandoning the hole is at 10,425 feet which is only 5 feet above the gas show and 75 feet below the liner. The next higher plug is at 7,643 feet which is considerably higher. This leaves much of the bottom of this hole at risk for sealing off the formation. A plug should have been placed at the bottom of the liner, also. 13 In order to adequately test a new section that might not have been contaminated by the efforts of nearly 40 years ago, sidetracking operations should begin some distance higher in the wellbore. With the relationships between gas zones, water zones, liner and plugs given above, it would be necessary to place a good cement plug inside the liner near the liner bottom before sidetrack operations commence. If the present well is re-entered, a fourth risk is present in the form of potential environmental liability. BPX provided for the environmental inspection and remedial work for the EPA on behalf of the original participants. If that containment is disturbed and additional problems are found, then the finder of the problems is charged with completion of and funding of any additional remedial operations. Should any contaminated soil need to be removed, it might be necessary to ship it to an approved site in Oregon. Obviously, this is very expensive. Following are rough cost estimates for re-entering and testing the Yakutat No. 3. These costs do not include any gas conditioning equipment, pipelines or distribution systems. Cost $2,500,000 1,000,000 2,000,000 $5,500,000 Margin of Error Item +20% to -5% Mobilize/demobilize from Anchorage or Kenai +20% to -20% Load/unload & rigup/rigdown Testing for 20 days +25% to -%5 TOTAL These cost estimates indicate that such a test could ultimately cost between $5,225,000 and $6,875,000 to re-enter and test. Based on a current power plant usage of 500,000 gallons of diesel fuel annually at an assumed constant cost of $1.50 per gallon, the re- entry cost would be equivalent to 7-9 years of fuel costs. These are undiscounted re-entry costs. After committing to these expenditures, there is no assurance at all that gas will be encountered in sufficient quantities for power plant operations and residential heating. Gas conditioning equipment, pipelines, and distribution systems must be factored in as well. DRILLING OF A NEW TEST WELL TO 12,000 FEET The drilling of a new well would allow for the control of many facets of the operation in the areas of safety, costs, engineering, and geology. However, the drilling of such a new well comes with a high price tag. 14 Cost Margin of Error Item $ 2,500,000 1,000,000 11,000,000 2,000,000 $16,500,000 +20% to -5% Mobilize/demobilize from Anchorage or Kenai +20% to -20% Load/unload & rigup/rigdown +30% to -10% Drilling to 12,000, Testing for 20 days +25% to -5% TOTAL These cost estimates indicate that such a test could ultimately cost between $15,675,000 and $20,625,000 to drill and test. The diesel fuel equivalent costs are for 21-28 years. The same cautions apply here as for the re-entry of the well. DRILLING OF A TEST WELL TO 3,000 FEET The drilling of a test well to a depth of 3,000 feet would have advantages and disadvantages over one drilled to 12,000 feet. New drilling costs estimates could be developed for an operation using a much scaled down type of operation once it has been determined that this shallow zone is a potentially viable source of gas. On the down side, it is most likely that more than one well would be required because of low reservoir pressures at these shallower depths. Because of the low reservoir pressures, compressors may be required which would add to the cost. While the low reservoir pressure may require more wells, each well would be much less expensive to drill and complete than a well to 12,000 feet. Multiple wells would probably develop more gas reserves than one well than in the tight fractured limestone at 10,267 feet. If a well was down for an operational problem, other wells could continue to supply the demand. The greatest advantage over the deeper test would be that the money risked for the initial test would be much less than for the deeper test. Costs estimates have not been made for the drilling of these shallow wells with scaled down equipment. However, the costs of all aspects of the operation should be reduced. This includes freight, mobilization and demobilization, drilling mud, fuel, casing, cement, day rates for the rig and mudlogging equipment, electric logs, personnel, meals and lodging, etc. The rig used by Colorado Oil and Gas drilled to 3,000 feet in eleven days. It is likely that a smaller rig could do so in no more than fifteen days. If the assumption is made that all of the costs will be no more than 75% of those of the big rig, then a maximum rough cost cost estimate could be made. 15 Cost Item $1,875,000 Mobilize/demobilize from Anchorage or Kenai 750,000 Load/unload & rigup/rigdown 1,237,500 Drilling to 3,000' 2,000,000 Testing for 20 days $5,862,000 TOTAL It should be noted that these are only very rough estimates and the final estimates would depend upon rig availability, costs, etc. The diesel fuel equivalent costs are for 8 years. The same cautions apply here as for the above two cases. RE-ENTRY AND TESTING OF YAKUTAT NO. 3 AT 3,000 FEET It is possible that the re-entry of this well to test the shallow zones should only be made by a big rig for the sake of safety. Should a blowout occur from the deeper zone, it would require a big rig to control it. Such re-entry at the shallow level should only be considered after proper engineering analysis to determine the safety of the operation. If a big rig were to be used, the costs would be out of proportion to the costs of using a smaller rig. If the big rig were used and more tests were warranted, the costs of drilling the additional tests would also be excessive. 1. Determine the amount of expenditure that can be risked. 2. Consider only those options presented in this study that fall within this expenditure cap. 3. If any of the options can be pursued monetarily, evaluate the risks of doing so. 4. Obtain reservoir analyses for the prospective zones to determine the economic chance factor of gas being present in sufficient quantities. 5. Develop rough cost estimates for gas conditioning equipment, pipelines, conversion of the power plant to gas and a residential distribution system. 6. Make final decision based of the above results. 16 can be offered for this lack of cuttings shows. If the formation were a very good reservoir rock, then the cuttings would bleed off all of the gas while the pressure decreased as they rose in the hole. The cuttings would then contain no gas at the surface. Analyses of the cored intervals in cores number 3 and 4, however, indicate that the formation was not a good reservoir at all and was, in fact, very tight with little or no measurable porosity or permeability. Another explanation would be where the limestone contained very large vugs, or openings, which were filled with the gas and it bled off immediately after the drill bit penetrated the vugs. This is also discounted since the cores contained no vugs. The most likely explanation is that the formation is very tight and is not a reservoir, but that the gas is present in fractures. These fractures would bleed off the gas into the hole immediately after penetration by the bit. Fractured reservoirs are not desired since the fractures have very little volume and the gas supply is depleted immediately. As stated earlier, these three wells were plagued with drilling problems, primarily with the sticking of the bit or other downhole equipment. This is consistent with the problems inherent with drilling through highly fractured rocks. This is also consistent with the inability of the operator to obtain a packer seat in open hole testing as was encountered repeatedly in these three wells. The conclusion is made in this study that this deep show of gas is not from a reservoir at all, but, rather, from a fracture zone with normal to high pressure and low volume. Although this zone does not appear to be overpressured, it would most likely not provide the volumes of gas necessary for the intended purposes. GEOLOGIC AND RESERVOIR ENGINEERING CONCLUSIONS 1. Gas in unknown quantities has been encountered in the drilling of three Yakutat area wells. 2. None of the gas shows were adequately tested. 3. Hole conditions have created problems for formation testing. 4. The Yakutat No. 3 recorded the most significant gas shows. 5. A show from shallow depths of 1,400 to 2,500 feet in Yakutat No. 3 may be from a true reservoir, but pressures will be low. 6. A series of shallow tests may evaluate this shallow zone of gas shows. 7. These shallow tests should be located near the Yakutat No. 3. and expand outward. 8. A minor gas show between 6,600 and 7,600 in Yakutat No. 3 should be disregarded since a reservoir is not present. 11 R34E CRM 77 025085 T 32 33 34 35 36 27 S zoo' TD 93141 024885 0 02489 „ NO. 3 0 TO 1088N 1 28 5 4 3 _1ze 2 I_ goo, 5 I NO. 2 I 01 °o TD 11765 +YAKUTAT AIRPORT C POSITIONS OF ELLS AS SHOWN N THIS MAP G CONFORM TO HE ALASKAN PROT ACTION SYSTEM. < PREVIOUS MAP COMPILED BY C LORADO OIL AND GAS CORP. SH ULO NOT BE USED FOR WELL LOCATION. JulY ]. 1"1 . O T q S q_ CCLOFApC 011 1N0 GAi GCQOOP.IIp" . ClNVCa Cpt pQ.pp YAKUTAT I-2-3 ICY RAY -CAPE FAIRWEATHER ALASKA n_ 1 FIGURE 1 LOCATION MAP 1,400' 1 1,600' 1 :11 r 111 2,200' 2,400' ELECTRIC LOG MUD 1 OG SHOWS GOOD SHOWS c m ......................� ... I ... I u 10 50 IS 12 v .......................................................... FIGURE 2 MUD LOG SHOWS 1,400' - 2,500' 60 35 40 40 25 20 20 15 20 25 35 45 20 15 25 25 20 20 20 LEGEND 20 c shows in cuttings m shows in mud 30 20 u units of gas ELECTRIC LOG MUD LOG SHOWS 7,000' 7,200' 7,400' 7,600' MINOR SHOWS c m 15 10 5 10 5 FIGURE 3 MUD LOG SHOWS 6,600' - 7,600' LEGEND c shows in cuttings m shows in mud u units of gas ELECTR LOG JD LOG SHOWS 10,200' ORIGINAL HOLE m 10,600 0(HOLE LOST AND N m NOT LOGGED BELOW 10,507') 1 :11 GOOD MINOR OR SHOWS NO SHOWS c m c m c m c m u ......................................................... 40 I3 s= 400 I4 000 25 20 3D 40 30 30 ORIGINAL HOLE U 10 15 e- I15 RD NO. 1 RD NO. 3 RD NO. 2 LEGEND c shows in cuttings m shows in mud u units of gas I cores FIGURE 4 MUD LOG SHOWS 10,150' - 10,848'