G. Alan Petzet
Exploration Editor
Devon Energy Corp., Oklahoma City, and its affiliate, Blackwood & Nichols Co., Durango, Colo., are completing development of Upper Cretaceous Fruitland coal seam gas in Northeast Blanco Unit (NEBU) in the San Juan basin.
NEBU, due to favorable reservoir characteristics, is expected to be one of the basin's best performing areas of Fruitland coal seam gas production, Devon said.
Blackwood & Nichols, which conducts field operations for Devon, is drilling and completing the last seven of 102 Fruitland wells on the 33,000 acre unit on federal land in Rio Arriba and San Juan counties, N.M.
Gas from all NEBU wells will qualify for a federal coal seam production tax credit, presently worth about 83cts/Mcf, through 2000.
Devon expects to be capable of selling a gross 275 MMcfd of gas-or about 2.7 MMcfd/well-from NEBU by mid-1992 after all gathering facilities are installed. Gathering systems to move 80% of that volume will be on line by Jan. 1, 1991.
Main working interest owners in addition to Devon in NEBU development-with a gross capital cost of about $100 million are Amoco Production Co., Meridian Oil Inc., Conoco Inc., and Phillips Petroleum Co.
Devon likens the project to an offshore venture because of the large advance requirement for capital and long lead time from conception to production.
NEBU DRILLING
The unit is transacted by a portion of the 15,610 acre Navajo Lake, where water level elevation is 6,150 ft above sea level.
The coal seam wells, part of the Basin-Fruitland coal gas pool, are drilled on 320 acre spacing through Fruitland coal at about 3,000 ft. Most wells are vertical, but four wells with S shaped directional wellbores will be drilled under the lake from shore pads. One of the "S" wells, the 404R, has been completed and tested at 21.7 MMcfd. Devon cements 9 5/8 in. surface casing to about 300 ft, 7 in. casing to the top of Fruitland coal, then drills a 6 1/4 in. hole to total depth to expose the coal. It then spends about $180,000/well creating cavities in the coal seams. The process usually takes 8-14 days.
This completion method, in which air is used to keep the drill string unloaded, creates a large cavity across the coal seams. Then Devon runs an uncemented, preperforated liner across the coal face. If coal particles build up behind the liner, then fresh water can be pumped in or the liner can be pulled to dislodge fines.
Eight wells were drilled, cased, and perforated conventionally in the first stage of the development program. Initial flow rates were 145 Mcfd-1 MMcfd of gas. Redrilled and completed with the uncemented liner technique, the same areas flowed 6.0-22.9 MMcfd. All eight original cased wells are being converted to Fruitland reservoir pressure monitoring wells. Drilling/completion cost is about $400,000/well, including wellhead, flow lines, separator, sales meter, and tank battery.
COAL RESERVOIR
An advantageous mix of coal thickness, coal rank, depth, and other factors have combined to indicate ultimate recovery from the unit will be large, said Curtis D. McKinney, district geologist.
The Fruitland coal aggregate thickness averages 50 55 ft in NEBU and reaches a maximum thickness of 81 ft.
The coal was at maximum depth of burial, about 8,800 ft, about 25 million years ago in Oligocene time when development of a southwestern Colorado volcanic field provided the subsurface heat that drove them to their present rank. The rank of the coal is high volatile bituminous, nearly optimum for coal gas production. The coal was uplifted to its present depth during the Laramide orogeny.
The Fruitland coal seam forms an aquifer in the northern San Juan basin, and the weight of that water has overpressured the formation. Initial Fruitland reservoir pressure was 1,700 psi.
Surface water from the Durango area is believed to have seeped over geologic time into Fruitland, which is much more permeable than surrounding outcropping formations. Fruitland outcrops near Durango and reaches a depth of about 3,000 ft in NEBU about 50 miles to the south.
Fruitland coal is about 30% above normal pressure in the unit area. The volume of gas adsorbed on the coal's inner surfaces is a function of pressure. The water enters the cleat system but is not entrained in the coal.
PRODUCTION, RESERVES
The cavitation completion process, at least in this area, has resulted in high gas flow rates fairly early in the dewatering process.
Average test rates are 3.9 MMcfd for the first 75 wells. A few NEBU wells are capable of flowing at much higher rates, said J. Michael Drennen, manager, reservoir engineering.
One well, 403R, in 9-30n-7w, flowed 10.932 MMcfd of gas and 605 b/d of water in August from 2,958-3,200 ft.
Another well, the 421R in 4-30n-7w, was completed in April 1990 flowing 22.932 MMcfd of gas through a 2 in. choke from Fruitland at 2,879-3,112 ft.
As of yearend 1989, Devon has booked about 110 bcf of net reserves out of about 590 bcf gross Fruitland reserves in NEBU, but this is considered conservative.
The reserves are based on average coal seam thickness of 50-55 ft, 4% cleat porosity, gas content of 425 scf/ton of coal, 320 acre spacing, 65% water content, and recovery of 40% of the gas in place by desorption and a further 60% by conventional Darcy flow.
Engineers estimated gas in place of about 13.7 bcf/320 acres.
NEBU is 20 miles east of Amoco Production Co.'s Cedar Hill Unit and is adjacent to and just northwest of Meridian Oil Inc.'s 30-6 Unit.
According to public records, the 30-6 Unit has produced 92.87 bcf of gas and 9.6 million bbl of water from December 1985 through June 1990, when 61 wells were producing.
Each of the 30-6 unit's wells has produced an average of 1.667 bcf of gas and 176,000 bbl of water during that time. June 1990 production averaged 3.788 MMcfd of gas and 343 b/d of water per well.
Cedar Hill Unit produced 17-17 bcf of gas and 737,000 bbl of water from 1976 through 1989. Cedar Hill has 20 wells.
GATHERING, TREATING
Devon's net gas sales have increased to 40 MMcfd from 19 wells on the Sims Mesa gathering system.
The first 10 wells went on stream in first quarter 1990 in the Middle Mesa area.
To accommodate water and gas, the Pump Mesa, Sims Mesa, and Middle Mesa gathering systems will have 161 miles of pipe buried in 80.5 miles of ditch.
The La Jara system is still to be designed. Gathering lines are 4, 6, 8, 10, and 12 in. pipe.
B&N plans to ultimately operate the gas gathering systems at about 150 psi, because the greater the pressure drawdown and less pressure on the wellhead the more gas can be expected to produce. Maximum allowed operating pressure of 800 psi exceeds contractual limit of 475 psi.
The company considers many of its estimates conservative and in September began studying feasibility of expanding its gathering capacity at NEBU.
The company said its business plan is not predicated on increases in the price of gas at the wellhead.
Devon estimates coal seam gas lifting costs at 20 25cts/Mcf.
Early production is coming from wells in the Middle Mesa and Sims Mesa areas. Ditching is nearly complete and pipelaying started in October on the Pump Mesa system.
WATER SYSTEM
The project is designed to collect and dispose of large volumes of produced water.
Leases have heated tanks and manifolds, buried flow lines, and screens to filter out coal fines. Some produced gas is burned to heat exposed water storage tanks and separators. Settling tanks are used to help separate coal particles prior to water being put into the water gathering system.
Devon drilled three wells to dispose of the nearly fresh produced water at a combined cost of more than $6 million for the three wells and related plants and facilities.
Disposal zone is about 1,000 ft of Jurassic Morrison Entrada at 8,000-9,000 ft. The water passes through 25 micron and 1 micron filters before being injected.
The disposal wells, equipped with 7 in. casing and 3 1/2 in. plastic lined tubing, are expected to pump 8,000-9,000 b/d/well at a maximum pressure of 1,600 psi.
GAS MARKETING
Devon sought adequate gathering capacity, low cost transmission and treatment facilities, and access to a high demand market for its NEBU gas.
Structuring gas gathering, treating, and marketing arrangements was a big part of preparation for the unit's development, said Darryl G. Smette, vice-president, marketing and administration.
CO2 content of the Fruitland gas ranged from 5% in the northern part of the unit to 12-13% in the south.
Sims Mesa system has been flowing since August, Pump Mesa will start up Dec. 15, and Middle Mesa system is to start up in January 1991.
Two years of negotiation led to signing in May 1990 of two contracts, one with Meridian Oil Gathering Inc. and one with Meridian Oil Trading Inc.
The gathering, dehydration, and treating agreement calls for Meridian to lay pipe to take gas from central delivery points in or near NEBU at Meridian's Val Verde treatment plant north of Bloomfield, N.M. There, the CO2 is removed and treated gas delivered to the mainline of El Paso Natural Gas Co. The agreement is for 10 years.
Devon has a separate gas contract to sell certain volumes of treated gas to Meridian Oil Trading at market sensitive prices.
Prices for coal seam gas sales have varied widely. Had the contract been in place last December, Devon would have received a net-back wellhead price of $1.523/Mcf, making allowance for gathering, dehydration, and treating costs plus the volume reduction caused by CO2 removal.
DELIVERY ALTERNATIVES
Devon potentially will be able to move NEBU gas through other systems in the area (see map, p. 29).
In addition to the Meridian system, Williams Field Services is constructing the Manzanares gas gathering system in the area (see story, p. 30, and map, OGJ, Oct. 8, p. 108).
Further, Northwest Pipeline Corp.-an affiliate of Williams Field Services and a NEBU working interest owner-has an existing gathering and treating system. Beyond access to El Paso, volumes could be delivered to the Northwest mainline. El Paso and Northwest also have interconnects with other systems that serve California, the Northwest, Gulf Coast and Midwest.
The company believes the spate of construction in the early 1990s of new gas pipeline capacity to serve California will result in excess capacity.
That, Devon holds, should boost competition and afford producers higher netback prices in years to come.
During 1987 through mid-1990, the price of gas delivered to El Paso mainline has averaged about 50 more than Gulf Coast spot prices.
Until completion of construction of pipelines serving NEBU, Devon's coal seam gas sales typically are split about 50-50 to California and the Gulf Coast.
About 50% of the gas consumed in California is used in December, January, and February, and the other half the rest of the year.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
