CO2 ACTIVITY PICKS UP IN W. TEXAS, NEW MEXICO

Two major producers are stepping up carbon dioxide operations in Texas and New Mexico.

Shell Western E&P Inc. in late June began injecting CO2 in the first phase of an enhanced oil recovery program on the Bennett Ranch Unit (BRU) near Denver City in Yoakum County, West Texas (96633 bytes).

The CO2 program is the smallest conducted by Shell and its first new CO2 project in the Denver City area in nearly a decade,

Shell reckons the project will generate a profit with oil prices as low as $13/bbl. Many independent producers should be able to afford the costs of installing and starting up a CO2 flood of comparable size, Shell said.

BRU, which Shell formed in 1964 in the northeast part of Wasson field, also is the site of a Shell waterflood in a Permian San Andres zone at 5,000 ft. The company's CO2 project on the BRU targets the same zone.

Also in the area is the Denver City hub of the Permian basin CO2 pipeline system.

Meantime, Amoco Production Co.'s Permian basin business unit began a $17.8 million drilling program to develop more reserves on Northeast New Mexico's Bravo Dome CO2 unit. Growing demand for CO2 in EOR projects in Southeast New Mexico and West Texas prompted plans for the program.

Amoco's 31 well drilling campaign aims to increase Bravo Dome's CO2 flow by about 65 MMcfd to a total of 400 MMcfd. The project reflects Amoco's confidence that Permian basin producers can launch CO2 floods despite soft oil prices, said Jim Posey, vice-president of the Permian basin business unit.

BENNETT RANCH OVERVIEW

Shell expects its CO2 program on the BRU to triple production in affected areas and extend the lives of wells in the injection patterns by 30 years.

In the first phase of the project, Shell plans to install 32 injection patterns in three stages on a 540 acre area in the southern part of BRU. Each pattern is to include one in ector well and two to four production wells flanking each injection site.(40626 bytes)

Shell decided to stage the installations to minimize upfront investment.

The company estimates incremental recovery as a result of phase one work will amount to about 18 million bbl. Phase one capital spending will total about $13.8 million through 1997.

In stage one of the first phase, Shell plans to install eight injection patterns on a 140 acre tract at a cost of about $1.8 million. Production from wells affected by stage one CO2 flooding is to jump to 1,400 b/d from 400 b/d.(40626 bytes)

Shell will operate the stage one CO2 flood for 1 year to evaluate results. If its expectations are correct, the company in 1996 will add 13 injection patterns and in 1997 11 more.

The second and third stages will expand the CO2 flood area by 400 acres at a capital cost of $12 million.

The full effect of BRU's first phase CO2 program could boost production from flooded wells by 2,500 b/d. The 7,000 acre unit today delivers a total of about 3,000 b/d of oil from 160 producing wells.

RECOVERY COSTS

Development costs for each BRU phase one injection pattern are to be less than half that of Shell's first CO2 flood in the Denver City area.

Shell attributed the lower costs to a combination of:

Better reservoir characterization.
Advanced EOR technological capabilities.
Past waterflooding and other previous stimulation of the San Andres under the unit,
Improvements achieved through the company's best practices program.

The company began planning the BRU CO2 flood on 20 acre spacing last February, based on studies using simulated 3D seismic data.

Shell constructed the simulation model from a data base that included all available well logs, cores, and production histories from the BRU area. Shell also had data from wells in BRU's producing area from a waterflood in the Permian Clear Fork at 7,000 ft.

So Shell decided data density were adequate for planning without conducting 3D seismic surveys.

Shell also avoided some upfront costs by using injection and production wells operating in its San Andres waterflood. In many cases, the company pulled existing equipment from the field or inventory, refurbished it, and placed it into CO2 injection service.

Extensive formation fracturing caused by previous work on the BRU will allow Shell to recover oil faster from the oil column and a transition zone.

CO2 INJECTION PROGRAM

Shell's BRU flood is based on a tapered water-alternating-CO2 injection program.

The total hydrocarbon pore volume of material injected daily in the unit will remain the same throughout the life of the project. The size of injected CO2 Slugs will diminish over time, with water slugs increasing proportionally.

Shell is to inject CO2 slugs at the rate of 24 MMcfd and water slugs at the rate of 11,000 b/d. For the 32 injection patterns included in phase one of the BRU

flood, Shell expects to buy more than 120 bcf of CO2 during the life of the overall project.

The company intends to inject CO2 directly into the San Andres oil column and into the top 75 ft of the transition zone. Plans do not include deepening injection wells because Shell believes it has fractured well down into the transition zone.

However, when CO2 breakthrough occurs in producing wells, Shell plans to deepen the producers 75 ft. Waterflooding does not allow a producer to recover oil from the transition zone, but CO2 dissolves in the oil, making it lighter and improving its ability to flow to the well bore.

Shell estimates reservoir fluid above the oil-water interface contains about 70% oil and below in the transition zone 20-65%.

Shell improved design of injector skids used on the BRU. By replacing ball valves with gate valves, the company can alternately inject CO2 or water with the same skid unit, allowing more flexibility in managing production.

If BRU's CO2 flood economics pan out as expected, Shell could end up injecting CO2 into as many as 100 patterns across the unit.

BRAVO DOME EXPANSION

Amoco said its CO2 Supply drilling program in the Bravo Dome unit should be complete by November. Site is in the northeast part of the unit between Clapham and Stead, N.M.

The company confirmed the development potential of the unit last year while studying productive limits of the field.

Amoco also plans to improve the unit's compression inlet system and dehydration facility

Bravo Dome produces CO2 from more than 300 wells completed in reservoirs at about 2,200 ft. The unit covers more than 900,000 acres of private, state, and federal land in Union, Harding, and Quay counties, N.M.

Twenty-seven companies, including Shell, hold working interests in the unit.

Shell holds a contract to supply the added volume of CO2 needed for its BRU flood.

Most of the added supply is to come from McElmo Dome in Southwest Colorado. Amoco also will obtain an undisclosed portion through a swap with Shell, which is reducing CO2 deliveries to the ODC unit. ODC is an Amoco operated CO2 flood near Denver City in which Shell is the largest interest owner.