March 2001 Vol. 222 No. 3  Production

Perry A. Fischer,  Engineering Editor

California’s deep production begins; helpful bugs

It began with a disagreement: that deep formations in California’s East Lost Hills area in the San Joaquin Valley were too tight to support production, or maybe not. That question was settled when Berkley Bellevue 1 blew out in late 1998, with estimated flowrates of 100 MMcfgd. Since then, many companies have been drilling in the area – especially Canadian firms.

Most of the wells are in the 17,000 to 20,000-ft range and target the Deep Temblor play. Many of the wells have been problematic to complete due to extreme bottomhole pressures – as high as 18,000 psi. The area is ideal with respect to both accessible gas-gathering and water-disposal systems. There is, of course, significant local demand for natural gas. One operator reported receiving $12.60/Mcf for produced gas.

Berkley Petroleum, as part of a 10-company consortium, put the Berkley East Lost Hills-1 well onstream in early February. Initial production (at 13,300 psi FTP) was 475 bpd of liquids and 13 MMcfgd, which will eventually be ramped up to 20 MMcfgd.

Berkley ELH 2 is located along the same geologic trend and is nearing completion. A production test should be performed in March. Meanwhile, the Berkley ELH 3R exploration well is targeting a separate structure and currently nearing 20,000 ft, while the Berkley ELH 4 development well is drilling ahead at 13,200 ft and is aiming for the same trend as the Berkley 1 & 2 wells.

Just when things couldn’t get any better for Berkley shareholders, Hunt Oil made a buyout offer, which it later increased. However, Anadarko subsequently trumped Hunt’s second offer by 9%. The Anadarko bid should be mailed in late February and remain open for three weeks thereafter. Berkley has agreed not to seek nor consider strategic alternatives or other proposals, to close its data rooms, and to provide Anadarko with a right to match competing offers.

MTBE-cleanup bugs. You may recall that MTBE, the gasoline additive that is used as a replacement for lead to boost octane and reduce air pollution, has received a lot of bad press since it was discovered in ground water. MTBE is highly soluble, and, unlike many of the hydrocarbons in gasoline, it resists attaching itself to soil and moves quickly through ground water, thus making cleanup more difficult.

As the federal EPA and California consider a permanent ban on MTBE, Shell Oil has been researching the use of aerobic bacteria to metabolize MTBE – with good success. A small item in the American Methanol Institute’s Insider Report gave an account of one experiment: The tiny rod-shaped bugs were placed in an aqueous solution of 5 mg/l of MTBE; within 27 hr, MTBE degradation was about 95%.

Anadarko delivers. More than two years after discovery, Anadarko began producing from two subsalt fields.

Tanzanite, which lies about 75 mi offshore Louisiana in 314-ft water at Eugene Island Block 346, is 100% owned by the company. Tanzanite produces 23 MMcfgd and 10,000 bopd from a single well. An additional well is planned at Tanzanite; its platform has a production capacity of 200 MMcfgd.

Hickory, which lies in 320-ft water in Grand Isle Blocks 110,111 and 116, is 50% owned by Anadarko; partners Shell E&P Co. (37.5%) and Ocean Energy (12.5%) own the remainder. Through a single well, Hickory is producing 62 MMcfgd and 4,100 bpd of condensate. Three additional wells will be completed and tied in during the next few months. A fifth well was recently drilled to 21,269 TD and encountered 87 ft of pay; it is currently being evaluated.

The company has a 7/13 strike ratio for subsalt plays in the GOM. Four of these are now on production. Anadarko plans to drill 46 wells in this year, vs. 27 in 2000.

China/Canada connect. Two memorandums of understanding (MOUs) between PetroChina Company Ltd. and Sunwing Energy Ltd. (a subsidiary of Ivanhoe Energy) were recently signed as part of the Team Canada Trade Mission to China. The MOUs give Sunwing exclusive rights to negotiate petroleum contracts with PetroChina for development of oil and gas reserves in three key blocks that contain highly productive gas discoveries. The blocks, Zitongxi, Zitongdong and Yudong, are in Sichuan basin, China’s largest gas-producing region. They cover more than 2.2 million acres and are located about 1,000 mi southwest of Beijing.

Before finalizing production-sharing contracts (PSCs), Sunwing will conduct detailed feasibility studies using independent engineers to establish gas reserves on the three blocks. China estimates that the blocks contain about 20 Tcf of proven and probable gas reserves. Total reserves of the basin are estimated at 245 Tcf of gas equivalent.

PetroChina’s subsidiary, Southwest Oil and Gasfield Co., drilled 39 wells on the three blocks, 26 of which have been classified as gas producers. However, 30 of the 38 prospects that have been identified so far on the three blocks have yet to be tested. Existing well depths range between 9,800 and 13,100 ft, and absolute open-flow rates are between 7 and 49 MMcfgd. Combined gas production within the Sichuan basin is about 740 MMcfgd.

Ivanhoe plans to introduce advanced gas-to-liquids technology with its license from Syntroleum Corp. This can make China a leading player in the emerging energy sector.

Sunwing’s first PSC with PetroChina was in 1996 for development of an 8,000-acre portion of Daqing Zhaozhou oil field. Daqing was China’s first onshore oil-development project awarded to a foreign company. Sunwing obtained encouraging results from five wells drilled in a pilot test in 1997 – 98, and expects to begin development this year.

Sunwing also signed a PSC in 1997 to develop the Kongnan project, covering a total of 22,400 acres in Dagang field, about 125 mi southeast of Beijing. The long-term Kongnan development calls for drilling more than 100 wells and reworking 50 existing wells.

Comments? Write: fischerp@gulfpub.com