Long life seen for giant Wilmington oil field

Wells on Thums islands in Los Angeles Harbor tap Wilmington field oil. ARCO expects many more years of production and is involved in 3D seismic, gas processing, water treatment, cuttings reinjection, and reclaimed water projects and possibly a cogeneration plant.

The outlook for the offshore portion of giant Wilmington field is good, says James M. Davis, president of ARCO Long Beach Co., which since 1992 has played a key role in the field's future.

A wholly owned ARCO subsidiary, Thums Long Beach Co., is the contract operator. With 8 billion bbl of oil originally in place, Wilmington field is the third largest in the U.S., topped by Alaska's Prudhoe Bay field and East Texas field.

"As provided by the Optimized Waterflood Agreement, the field contractor's agreement has been extended," Davis told the American Association of Drilling Engineers West Coast Chapter. "ARCO is committed to the Long Beach Unit for the life of the operation. There is still a lot of work to do, and-I believe-many more opportunities to be uncovered."

A new agreement

The agreement took effect in 1992. Under its terms, ARCO, the City of Long Beach, and the state of California agreed to a forecast of base profits, i.e., what would have happened without an expanded waterflood.

ARCO agreed to provide access to technology needed to design an optimized waterflood and committed to support an investment of $100 million over and above what would have been spent without the program. In exchange, the state agreed to share half of any incremental profits with ARCO. The city for the first time would also have a profit incentive by receiving up to 8% of incremental profits.

In order to be more than just a passive investor, ARCO bought out the former Thums owners-Texaco, Humble, Union, Mobil, and Shell. This set the stage for another key aspect of the agreement-that if the waterflood program was still in effect in January 1995, Thums would remain the contractor for the economic life of the field.

How it has worked

The company accomplished this goal with the largest waterflood in California. In May 1996, Thums injected 681,000 b/d of water in 356 injection wells.

Since the start of the program, Thums has drilled more than 200 wells, targeting shrinking reserves, Davis said.

As a result of this work, as well as efforts to get the most out of 1,000 existing wells, production today is around 43,000 b/d. "That's 10,000 b/d higher than it would have been without the program," Davis said. "Technologies such as hydraulic fracturing and horizontal drilling have played a major role in this success."

From 1992 through 1995, incremental profits totaled $50 million, Davis added. "Incremental profits this year alone are expected to exceed $30 million, with ARCO receiving half and the remaining share going to the city and state."

"Although we hit our $100 million drilling commitment in June, we are still planning to drill over 100 more wells at a cost of around $50 million. One of the technologies we're counting on to help make this happen is 3D seismic. We conducted our survey in January of last year" (OGJ, Apr. 10, 1995, p. 23).

After months of processing the raw data, geologists and engineers are hard at work using the data to look for new places to drill.

Infrastructure improved

In addition to drilling investments, ARCO has been investing in the infrastructure to improve efficiency and ensure that all critical components of the operation will last the life of the field.

"A couple of the nondrilling projects that will have a major impact on our operation are our new gas processing facilities and a possible cogeneration plant," Davis said. Currently all gas produced by Thums is processed at the Lomita gas plant, a 60 year old facility. As a result of increasing costs and changing environmental regulations, the City of Long Beach, the state, and Thums have agreed to build new gas processing facilities and to use Lomita for backup only. "This project will cost Thums $5 milllion, but future cost savings will exceed $20 million. As a result of this investment, we will have a safer, more reliable, and more efficient means of processing our gas."

A major project under evaluation is cogeneration. Because most of its wells have downhole electrical pumps instead of beam pumps, Thums spends $25 million/year on electricity. "At 50 mw, we are Southern California Edison's second largest single point customer." Recently after failing to come to terms with Edison for reduced power costs, ARCO shifted its focus to generating its own power through cogeneration.

"Our base case design would require a $40 million investment, but at the same time we are anxiously watching developments in state government dealing with the electrical industry restructuring, which appears to be moving forward. So in a few years we should be able to either buy or produce electricity cheaper than we can get it today. The reduced electrical costs, however we get it, will extend the economic life of the field."

Safety, environment

Safety and environmental performance are top priorities, Davis said. "Thums has maintained and even improved upon an outstanding safety record. Our OSHA recordable rate of 0.75 incidents per 200,000 man-hr is among the industry's best in safety performance, and we are currently working hard to bring our contractors up to the same level."

"Thums has also maintained, and improved upon, an excellent record in environmental protection.

"Hundreds of visitors from all around the world visit our islands every year, many of whom come here specifically to learn about this model of oil field development in a sensitive, urban environment. I haven't met a person yet who doesn't come away impressed," Davis said of the four man-made islands in Los Angeles Harbor from which the offshore portion of the field has been developed.

Davis credited three projects in particular-water treatment, cuttings injection, and reclaimed water-with exemplifying the philosophy of protecting the environment and maximizing value of the resources.

"Until 1993, the final separation of produced oil and water was done in a series of gas-fired, heated vessels on Pier J, near the Queen Mary. Since then, we have discontinued the use of heat, opting instead for chemical treatment. This practice has reduced the costs, actually resulted in better removal of water from the oil, and reduced air emissions from our operation by 60%."

For over a year, the several thousand tons of sand and shale removed from the ground each year in the drilling of new wells have been put back where they came from by injecting them into a dedicated well on one of the Thums islands. Drill cuttings previously had been hauled to already crowded landfills. Re-injection of cuttings is not only good for operation, Davis said, but because Thums is the first operator to aply the technology in California, it is a model for other operators in the state.

As part of waterflood operations, Thums pumps 80,000 b/d of fresh water into the ground. While this is necessary to prevent subsidence, it puts pressure on the area's already tight supply of fresh water. It is also expensive.

"We now have a pilot project under way to test the viability of using "reclaimed water"-treated sewage effluent-as an alternative to fresh water. We're also working with the Long Beach Water Department to ensure that this project, if successful, provides benefits to the City of Long Beach as a municipality and to the owners of the Long Beach Unit," Davis said.