GAS STORAGE ENHANCES OIL PRODUCTION

Rudolph W. Weibel
Southern California Gas Co.
Newhall, California

Converting the 20 year old Honor Rancho oil field to gas storage has given new life to oil production operations. The facilities and the reservoir maintenance technique needed for the gas storage operation have been combined to enhance oil production.

Gas storage in Southern California began in 1941. Gas storage in depleted Southern California oil fields began in 1942. That first venture into an oil field was at the Playa del Rey field near Los Angeles International Airport. The project was under the direction of the War Department to meet urgent needs of the war effort.

Later, two other significant oil fields were developed for storage: Montebello in 1954 and Aliso Canyon in 1973. In both cases, however, oil reserves were owned by others.

Honor Rancho field was developed in 1975, and here the gas company owned the oil reserves. This ownership gave Southern California Gas Co. (SoCal Gas Co.) an opportunity to not only manage the reservoir as it saw fit, but also to provide oil revenues to help offset operating costs.

FIELD HISTORY

Honor Rancho was discovered in 1956 and, as mentioned, converted to storage in 1975. The field is a steeply dipping homocline (Fig. 1) with the top of the storage zone ranging from 9,000 to 11,000 ft. Geologically described as a turbidite channel, the field has 6-10% porosity and 14-20 md permeability.

Typical of a Southern California reservoir, faulting affects Honor Rancho. Its north closure is caused by 500 ft of displacement at the San Gabriel thrust fault. The east and west flanks are both sealed by permeability pinch outs, and the southern boundary is an aquifer of limited extent and activity.

The storage zone, Wayside 13, originally contained oil to the top of structure at 7,300 ft subsea. Development of the gas cap and storage operations now has the top of the oil zone varying from 8,200 to 8,500 ft subsea, depending on storage inventory. Prior to converting the field to gas storage, 15 million bbl of 30 API were produced. Analysis of the liquid production and the development of the secondary gas cap were performed prior to converting the field to storage.

STORAGE OPERATIONS

Designed as a gas storage field, Honor Rancho was expected to have a working capacity of 22.5 bcf and provide up to 5 days of consecutive withdrawal at 1 bcfd. While initial design considered minimum acceptable deliverability to be 60 MMcfd, later experience showed that 100 MMcfd was required for the field to meet the system requirements.

Meeting this higher daily rate without the addition of facilities required 5 bcf to be transferred from working gas to cushion gas.

Liquid production facilities were designed to handle 1,500 bo/d and peak loads of 2,000 b/d of brine. The gas dehydration system, principally responsible for gas quality, also acts as an oil production facility.

Because the average gas/oil ratio (GOR) runs at about 360 Mcf/bbl, high withdrawal rates, approximately 1 bcfd, can still tax the liquid production facilities.

Fig. 2 depicts the gas dehydration and oil production systems.

In both cases, there are two identical trains, one of which is represented on the schematic.

The dehydration system relies on two separators in series, two parallel glycol contactors, and a condensate separator following the final pressure cut. From the field, gas enters the primary separator at 90 F. and then is cooled to 70 F. before entry into the secondary separator.

The cooling aids in the separation process in the secondary unit. The glycol contactors bring the water content down below 11.5 lb/Mmcf.

The dumps from the condensate separators and all prior separation dumps are transferred to the oil stabilization facility.

Final separation of oil from entrained gas and breaking the oil-water emulsion are the functions of the oil stabilization facility. The primary separator receives oil directly from the producing wells and also from the liquid discharges of the gas dehydration system.

Oil from the primary separator passes through the crude oil exchanger unit where it is heated to 175 F. prior to reaching the secondary separator. The heat effectively breaks the emulsion to increase the effectiveness of the secondary unit.

With the emulsion broken, final cleanup of the oil is done by gravity in two 5,000 bbl storage tanks. Typical of oil purchase contracts, the product is limited to 3% bs&w. SoCal Gas Co.'s shipping contract, however, limits bs&w to 1%.

The system in place routinely produces oil of this quality. The final transfer of oil is performed by the lease automated custody transfer (LACT) facility.

OIL PRODUCTION

SoCal Gas Co. is a utility regulated by the California Public Utilities Commission (CPUC). The CPUC determined that enhanced oil production would result from the previously described facilities.

These facilities are included in the utility rate base, that is they are financed by the rate payers. The conclusion then is that the revenue should be returned to the rate payer.

The economics of oil production then becomes a nonissue because all revenue is applied against the cost of gas adjusting the rate paid by our customers. To SoCal Gas Co., the annual production of 100,000 bbl of 32 API oil, a premium product in California, is a revenue-neutral proposition.

Why produce oil? Obviously, there is no economic incentive to the company. In fact, at the operational level, oil production is a nuisance. However, it is impossible to segregate gas and liquid production from the reservoir, and it is critical to the effectiveness of the gas storage reservoir to manage liquid production.

The hysteresis plot (Fig. 3) of Pressure/Z vs. inventory for Honor Rancho shows this field to be of very constant volume. Maximum reservoir pressure during storage is regulated to less than discovery pressure and, in fact, is 200 psi less than discovery pressure.

The 2 million bbl of oil produced since storage commenced and the pore space that oil represents appears to have maintained a volumetric equilibrium. As mentioned earlier, Honor Rancho does have an aquifer as a down structure boundary.

Limited to operating below discovery pressure, liquid production, either water or oil, is essential to maintain reservoir capacity and avoid the relative permeability problem inherent to liquid influx.

MECHANICS

My experience with oil production as a part of gas storage is that the most optimistic forecasts are too low. Honor Rancho has followed this pattern. One of the company's senior engineers produced a range of production estimates for the 10 years following storage development. His optimistic projection of 2.0 million bbl was only about 80,000 bbl below the actual (Table 1). A 4% error on a 10 year projection is more than acceptable.

Production at Honor Rancho relies on two techniques, gas lift of the low structure liquid producing wells and removal of the oil entrained in the withdrawal gas. Production estimates are based on withdrawal gas having a 360 GOR (Fig. 4) and the three primary gas lift wells producing a combined 200 b/d.

After accounting for field shut-ins and other system limitations, the current annual production of 90,000 bbl is split evenly between the two modes.

Establishing a decline curve (Fig. 5) on this field is really more of an operational plan than a technical projection. Obviously, changes in storage utilization would affect the mechanism that provides half of the oil production.

A planned change in available storage pore space can be effected by curtailing or increasing the gas lift operations. As mentioned, gas lift accounts for 200 b/d of production, but well and surface system capacity can easily produce 1,000 b/d.

The operation of Honor Rancho over the last 15 years has demonstrated SoCal Gas Co.'s ability to control the effects of liquid influx. The attached hysteresis plot demonstrates the constant pressure and volume relationship that has been established after initial storage development.

Because of this control, we can increase or decrease the effective storage reservoir to meet strategic market needs. Simulation efforts in progress are designed to predict optimum production rates and ultimate field capacity.

ECONOMICS

Production economics, like decline curves, are dominated by the concerns for gas storage. The twin trains of the oil stabilization facility easily double the capacity required for effective oil production, but are still used to design capacity in certain withdrawal operations.

The utility accounting system provides us with more than adequate details to accumulate accurate production costs. Based on purpose of facility design and proration of facility use between oil and gas production, the costs are allocated for the wells, compression, oil plant, gas plant, and shipping facility.

A typical year would see 20% of compressor output prorated to recycle gas associated with oil production and, of course, 100% of the shipping facility prorated to oil production.

Following this approach for all the facilities and the personnel involved, yields production costs ranging from $3 to $4/bbl.

Despite, or because of, the fact that SoCal Gas Co. has no financial incentive to produce oil at Honor Rancho, oil production here has provided every engineer that has been involved with this operation a great deal of technical freedom.

Adjustments to oil producing strategies are made as an effort to affect the GOR or the oil-gas interface and enhance the gas-storage operation. The high-pressure, large-scale facilities, the opportunity to annually recharge the reservoir, and the effects of a dynamic three-phase system have provided real opportunities to practice reservoir engineering.