Innovative Use of the Oil and Gas Regulations
Authors: Swanson R.L. 
Published: March 2010

Applications to amend existing schemes for enhanced recovery of oil by water injection to allow for the intermittent reinjection of raw sour solution gas into the Bashaw D-2G and D-2L pools during times of shutdown was a low cost solution that would allow continuous production while conserving the sour gas. The applications were approved, and the operator is now able to produce oil and gas continuously despite disruptions, planned or unplanned, of the downstream processing or transportation facilities.

Introduction

Due to third party failures or scheduled and unscheduled maintenance of downstream operations, Key West Resources Ltd. were forced to completely shut-in their oil and gas production in the Bashaw D-2G and D-2L pools (Figures 1 and 2) for a significant number of days each year. This represented a loss in revenue of approximately $81,000 per day (gross 2002 dollars based on Cdn$40/barrel oil and Cdn$4/MSCF gas). Key West was anxious to find a solution that would work within the existing regulatory framework and that would eliminate the pool shut-ins due to third party failures. Key West also required that the solution result in little or no capital expenditure. The application would have to address the EUB's three main concerns: conservation (of the oil), equity and economics.

Applications submitted to the EUB, pursuant to the requirements laid out in Guide 65: Resources Applications for Conventional Oil and Gas Reservoirs, June 2000(1), Sections 2.1 and 4.1, requested the following:Amend Approvals 7609 and 7274 for the injection of water to enhance oil recovery from the Bashaw D-2L and D-2G pools, respectively, pursuant to Section 26 (1,a) of the Oil and Gas Conservation Act and Guide G-51, by the intermittent reinjection of raw sour solution gas produced from the pool; and toRe-classify the wells approved for Class II water injection in Approvals 7609 and 7274 to Class III injection (sour gas) wells.

The EUB reviewed the initial submission and compiled a list of concerns relating to the suitability and capability of the existing water injection pipeline network to handle the sour gas and the effect of the proposed reinjection on overall oil recovery in the Bashaw D-2L and D-2G pools.

The initial and supplemental submissions met all the requirements of Guide 65, while meeting Key West's requirement to maintain production during times of shut-in. Key West was required to compromise on the annual volume they would reinject. The volume approved was a volume that reflected current gas production rates for three consecutive months, rather than a rate based on future development and a catastrophic six month shut-in. Approval to reinject sour gas intermittently into the Bashaw D-2L and D-2G pools, during times when the pools would be shut-in due to third party failures, were granted March 28, 2003 and December 23, 2003, respectively.

Discussion

Applications #1287609 and #1287472 were submitted to the Alberta Energy and Utilities Board by Fekete Associates, Inc. on behalf of Key West Energy Corporation in December 2002. The purpose of the applications was solely to avoid the loss of production due to plant or pipeline failures, routine maintenance or scheduled turnarounds.