Pool Delineation – Application
Bearspaw Petroleum Ltd. (“Bearspaw”) applied to the AER pursuant to section 33(1)(d) of the Oil and Gas Conservation Act (“OGCA”) requesting that the AER include Bearspaw’s well located at 102/11-24-24-28W4M (“102/11-24”) within the Crossfield Basal Quartz C pool. The 102/11-24 well is currently the only well in the Basal Quartz V pool.
Harvest Operations Corp., Nexen Crossfield Partnership, and ExxonMobil Canada Energy (the “Harvest Group”) are the working interest owners in the Basal Quartz C pool, which has a gathering and processing system servicing the wells in the Basal Quartz C pool. The Harvest Group opposed Bearspaw’s application.
Bearspaw submitted that its application was based largely on pressure data, showing that the Basal Quartz C and V pools were not separate. The Harvest Group submitted that the pressure data did not support the inclusion of the Basal Quartz V pool, arguing that the pools are actually separate, or that if there was communication between the pools, that the communication was not effective.
The AER framed the issue in dispute as whether the accumulation of gas in the Basal Quartz encountered by the 102/11-24 well is separate or appears to be separate from the accumulation of gas being produced by the C pool wells.
The AER noted that there are no prescribed factors that it must take into account when considering an application for a pool delineation under section 33(1) of the OGCA.
Geology
Bearspaw submitted that the Basal Quartz in the C and V pools was deposited into a braided fluvial system, whereas the Harvest Group submitted that the deposits occurred in a meandering system.
Bearspaw submitted that the Basal Quartz area was a large heterogeneous reservoir with highly variable porosity and permeability, which results in differences in the behaviour of the wells within the Basal Quartz.
Bearspaw also submitted that the well log data obtained showed that permeability and porosity within the C pool were within a reasonable range of values from those for the V pool.
The Harvest Group submitted that the Basal Quartz was comprised of up to four depositional cycles of deeply incised fluvial channel system sands, where several different mechanisms exist that could result in the separation of the pools. The Harvest Group also pointed to the presence of silica cement and clay in core samples taken from nearby wells as evidence of such separation within the reservoir.
The AER determined that the geology of the Basal Quartz was formed by a complex fluvial system, including both meandering and braided depositional facies, which could result in either the separation of reservoirs, or the establishment of larger heterogeneous pools.
Accordingly, the AER determined that the heterogeneity of the Basal Quartz did not establish on a balance of probabilities that the boundaries of the C pool should be redrawn to include the 102/11-24 well.
Gas Composition
Bearspaw submitted that the composition of the gas produced from two C pool wells and its own 102/11-24 well showed a marked similarity for nearly all components, except for iC5, nC5, C6 and C7, which yielded small but noticeable differences. Bearspaw explained that these differences arose largely from the sampling methods, with the C pool samples being taken at the separator, whereas the 102/11-24 sample was taken at the wellhead. Bearspaw submitted that the effect of these differences changed the values of the liquids components in the produced gas.
The Harvest Group provided no evidence with respect to gas composition.
The AER determined that while Bearspaw’s explanation was reasonable, the gas composition evidence (taken either alone, or together with the geological evidence) was not sufficient to establish on a balance of probabilities that the gas accumulation in the V pool was separate or appeared to be separate from the C pool.
Pressures and Reservoir Characteristics
Bearspaw submitted that the static gradient pressure data for the 102/11-24 well set it apart from static gradient pressure readings for well in the C pool, noting that C pool wells had stabilized pressures from 3,300 kPa to 3,900 kPa (with one exception at 6,800 kPa), whereas the 102/11-24 well had an observed pressure of 12,296 kPa.
While the AER noted that expected pressures of wells in the same pool should be much closer, the AER noted that because the Basal Quartz reservoir was heterogeneous, the initial static gradient pressure readings did not provide conclusive evidence of the wells being in the same or separate pools.
The Harvest Group submitted that plotting pressure against time in a graph showed that the 102/11-24 well did not behave like the wells in the C pool. However, Bearspaw replied submitting that even among wells within the C pool, they did not behave the same way, providing evidence of higher pressures among wells within the C pool as demonstrative of the highly heterogeneous nature of the reservoir.
The AER panel therefore found that the well pressure data supported a finding of a highly heterogeneous pool with observable differences in depletion and pressure characteristics trending toward the south and south-southeast towards the 102/11-24 well, which is the least depleted area of the pool.
Harvest submitted that differences in initial pressures, and the lower apparent drainage at the 102/11-24 well was due primarily to:
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The heterogeneity of the C pool with highly variable porosity and permeability; and
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That the 102/11-24 well was in an as yet un-depleted portion of the C pool.
Bearspaw also cited pressure data from a static gradient test at a well located at 100/11-23-24-28W4M, which is not a producing well. Bearspaw submitted that the data from this well was 11,695 kPa, reflecting an approximate 32% decline from initial reservoir pressure as a result of depletion from nearby wells.
Bearspaw took the position that the only reasonable explanation for the falling pressures was that the Basal Quartz penetrated by the 102/11-24 well is being depleted by production from the C pool wells, and hence not separate from the C pool itself.
The Harvest Group replied, stating that the initial pressure of the 102/11-24 well was so different from the values for the other C pool wells, that it would not be reasonable to include it with the C pool.
The AER determined that the 100/11-23-24-28W4M well was likely depleted as a result of production of C pool wells, and that the bottomhole location of the well appears to have penetrated an area of the Basal Quartz reservoir that is more like the 102/11-24 well, than the C pool wells to the north.
However, in the course of providing its findings on whether the Basal Quartz pools were connected, the AER held that the monetary value of any reserves that may have been drained from around the 102/11-24 well was not relevant to the application. The AER reiterated that the test wa
s whether the accumulation of gas in the Basal Quartz encountered by the 102/12-24 well was separate from the accumulation of gas in the Basal Quartz encountered by wells in the C pool. The AER held that the monetary value of any potential lost production was of no assistance in determining such a question.
The AER found that the 102/11-24 well had been experiencing drainage, noting that pressures over time reflected that the drainage was ongoing and sufficient to establish on a balance of probabilities that the accumulation of gas in the Basal Quartz encountered by the 102/12-24 well was not separate from that in the C pool.
Accordingly, the AER approved Bearspaw’s application, and re-designated the 102/11-24 well to the Basal Quartz C pool, and extending the C pool boundary to include the current Basal Quartz V pool.
