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
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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.
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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.
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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
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POSITIONS OF
ELLS AS SHOWN
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PREVIOUS MAP
COMPILED BY C
LORADO OIL AND
GAS CORP. SH
ULO NOT BE USED
FOR WELL
LOCATION. JulY
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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'