From Experimental to Commercial

Production - The Next Step

Presentation to
Unconventional Gas
Technical Forum
Victoria, BC
April 4, 2008
Ron Stefik, AScT
Sr Reservoir Engineering Technologist
Oil and Gas Commission

Unconventional Gas - Premise

Variance required from normal well spacing,
target areas and testing regulations!
>1 well / section for effective recovery
high well density + uniform reservoir quality =
reduced need for individual well data for
development decisions and reserves evaluation

Are existing Regulations adequate for

unconventional gas development ?

YES!
Existing statutes allow sub-surface issues to be addressed.

Petroleum and Natural Gas Act

Drilling and Production Regulation

Petroleum and Natural Gas General Regulation

Available via OGC website, under Regulations
www.ogc.gov.bc.ca

Note: some changes are planned as a result of the

new Oil and Gas Activities Act (OGAA).

Flexibility Available
Uniform play type = reduction or exemption;

logging and sampling.

reservoir pressure testing.

well deliverability (AOF) testing.

well spacing and target restrictions

[Good Engineering Practice (GEP) approval].

Logging and Sample Waivers

High well density provides opportunity for

selective data acquisition.
OGC prefers to review area drilling program for
pre-approval of logging or sample waivers.
Drilling issue prevent logging?
Email or phone to request exemption.

Well Testing Reservoir Pressure

Initial test requirement

surface data instead of bottom-hole, where appropriate

microfrac (DFIT), RFT, PID may be acceptable

exemptions may be appropriate

Annual pool testing

normally required for a % of wells each year

reduced expectation or exemption in unconventional

Well Testing AOF Deliverability

minimize flaring!

inline deliverability testing OK, Regulation allows up to

6 months from date of initial production to test
OGC permits pipeline construction prior to well
completion in resource play areas
testing exemption available

Surface Position of a Well

Pad drilling is encouraged to minimize
surface impacts.
Inter-wellhead distance normally 25 m,
however, have allowed 10 m, so long as;
all potential issues are addressed, and
a service plan documented.

Off-Target Production Penalty

Penalty factor (fraction < 1.00) applied to

well daily gas allowable
OGC is proactive in applying penalty,
request from competitor NOT required
Penalty applies even if no well on affected
off-setting land

If off-target to Crown, penalty does apply!

Penalized well may still be economic

Gas Well Off-Target Production Penalty

Gas spacing area =

250 m

1 section (DLS)

250 m

4 units (NTS)

target

Target area is 250 m

inside spacing area.

area

~ 928 m

300 m
200 m

OTF = 8 ( NS m) ( EW m)
Spacing Area m2

~ 698 820 m

Notes: 1. NS & EW distances measured to nearest corner of the spacing area

2. 1 ha = 100 m x 100 m = 104m2

Example: OTF = 8 (200.0 m) (300.0 m)

= 0.1778

270.0 104 m2
Therefore production limited to 17.78% of DGA

Off-Target Production Penalty (Example #1)

69

68

67

66

64

65

63

62

Well located off-target in the corner is considered

to also affect spacing area in the diagonal direction
59

58

57

56

55

54

53

52

gas target boundary

49

48

47

46

45

44

43

42

35

34

33

32

25

24

23

22

14

13

12

F
off-target only
to the East
39

38

37

36

F
29

28

27

26

off-target to
the North,
West & NW
19

18

17

16

15

Map Center on: B-35-E/94-B-10

File: CAPL example.MAP

Datum: NAD 27

Projection: Stereographic

Center: N56.60835 W122.93725

Created in AccuMap, a product of IHS

Off-Target Production Penalty (Example #2)

10

For directional/horizontal well, coordinates of

worst point of infringement to calculate penalty
100

99

98

97

Example #1

96

95

Example #2
surface
gas target boundary

90

89

88

87

78

77

surface

casing ends
outside of gas
target area,
penalty applies

86

85

76

75

66

65
Created in AccuMap, a product of IHS

can plug back or

not complete toe
to avoid penalty
80

79

70
File: CAPL example.MAP

69
Datum: NAD 27

bottom

Map Center on: B-87-E/94-B-10

68
Projection: Stereographic

67
Center: N56.65013 W122.96207

Daily Gas Allowable (DGA)

Mailing Address:

Location:

Resource Conservation Branch

PO BOX 9329 STN PROV GOVT
VICTORIA BC V8W 9N3

1810 Blanshard St - 6th Fl

Victoria BC V8T 4J1
Phone: (250) 952-0302
FAX:
(250) 952-0291

APPLICATION FOR DAILY GAS ALLOWABLE (DGA)

Application form

Individual Well
Form must be submitted under the authority of the Petroleum and Natural Gas Act R.S.B.C. 1996, c. 361, Drilling and Production Regulation, s.88, to the Oil
and Gas Commission, at the address noted above. Information collected on this form will be used for public record in accordance with s.57 of the
Drilling and Production Regulation.

Initial Application

Revision No. ____________

Well Name
Field

Pool
Owners
Factors

Units
mKb

Depth to bottom gas pay

mKb

Assigned area

hectares

Average net pay thickness

metres

Average net porosity

fraction

Average water saturation

Sw

fraction

Initial pool pressure at MPP

Pi

kPaa

Formation temperature

Initial supercompressibility
factor

Zi

Recovery factor

Values Used in This

Calculation

Signature

Company
Phone

FAX

Email

APPROVAL (for Commission use only)

Daily gas allowable

103m3

(minimum UDGA is 60.0 103m3 in accordance with Section 1 of the Drilling and Production Regulation)

Date Effective
Pool

Approval Date
OGC_038_DGA Rev.06/05

Daily production limit=125% of DGA

Form available www.ogc.gov.bc.ca

Branch Calculations

Ah (1- Sw)Pi R 1

35.16398TZi 3.650
Position

Field

Name

Off-target penalty factor

Reserves based calculation formula

COMMISSION USE ONLY

fraction

Unadjusted Daily Gas Allowable (103m3) =

Date

Calculations

Values Obtained
from

Depth to top gas pay

(Nominal 0.25)

Well Authorization No.

Authorized Commission Employee

59070-03/WA

With off-target factor, can estimate

penalized allowable prior to drilling

Off-Target Well Production Penalty Waiver

A. Discovery Well

absolute

B. Common Ownership - same lease

waiver

C. Common Ownership - different lease

conditional

D. Different Ownership - different lease

waiver

Note: for C & D, operator may apply for waiver

on proposed well before drilling

Off-Target Well Production Penalty Waiver

A. Discovery Well -

sufficient information has

been obtained to determine that the well has
encountered a previously undiscovered pool

not first well to produce; older well with DST may qualify
operator must apply to OGC Victoria office for
recognition; no specific application form
supply supporting data to build a case,
i.e. seismic, pressure, x-sections, etc.
for unconventional gas plays, OGC recognizes
regional pools, so discovery application likely
not successful!

Off-Target Well Production Penalty Waiver

B. Common Ownership - Same Lease
Two spacing areas
under one PNG Lease

Off-target waiver is automatic under

section 9.4 (oil) and 10.4 (gas) of the
Drilling and Production Regulation
No application required

Off-Target Well Production Penalty Waiver

C. Common Ownership - Different Lease

PNG#1

PNG#2

PNG#1 & #2 both registered

identical ownership

Application required (no specific OGC form)

Include cover letter stating request and attached
titles map with well location plotted
If title of affected lease (PNG #1 in example) expires or
changes ownership, penalty may be imposed
Affected title must be a P&NG Lease, not a Drilling
Licence

Off-Target Well Production Penalty Waiver

D. Different Ownership - Different Lease
PNG#1

PNG#2

PNG#1 & #2 registered

different ownership

Application required (no specific OGC form)

Include titles map with well location and letters of consent
from registered owner(s) of affected off-setting lease
(PNG #1 in example)
Approval is conditional upon ownership of PNG #1;
if changes, OT penalty may be applied
PNG #1 must be P&NG Lease, not a Drilling Licence

Good Engineering Practice (GEP)

Allow a pool (or portion) to be exploited without well

spacing & target restrictions, i.e. super target area.
Effective for downspacing or areas of horizontal drilling.
No inter-well minimum distance specified,
OGC expects economics and geology to dictate.
Usually no production restrictions, however individual
allowable(s) may be applied to lease-line wells.
Flexibility in locating wells to access resource and
minimize surface impact.

Good Engineering Practice (GEP)

R15

R14

22

16

15

24

14

FC

G F
10

19

13

F11

FF
G

GF

15

UC
F

A23

24

F13 G

14

C
F

T80
D

12

10

11

12

F
F

F
4

33

36

27

26

25

21

22

G
L
G
L
A

CF

23

15

14

A F

VF

17

16

24

T79
G

15

14

13

10

11

12

OGC requires evidence that downspacing

will result in increased recovery, not just
recovery acceleration.
(production decline vs. volumetric)

F4

F
G
34

35

A
28

23

A A

F
V

33

U
C
F

HZ wells crossing multiple spacing areas

increased density

U
32

F
F

K
F
V

off-target locations

25

C
K
F

F
7

26

22

36

35

F
4

F
K
F

21

12

11

34

VF

G
A10

27

28

F20

18

FV

13

F
29

F
9

19

FV
V

24

F
F

V
F
G

16

F
U

30

33

32

V
F
F
V

V
F

31

G
VF

F
28

35

34

T79

Example gas pool under GEP approval

(contiguous full spacing areas)

G
G
C
F

29

G
F

22

16

G
M

F
A

21

17

20

18

23

T80
G

R13W6

G
C
K

21

27

26

36

A
V
25

31

32

33

34

35

30

29

28

27

26

36

G
G

However, not an issue in recognized

unconventional resources.

25

T78

T78
C
K
20

17

21

16

22

15

23

14

24

13

A19

20

18

17

21

16

22

15

23

24

14

13

R15

R14W6

Good Engineering Practice (GEP)

R15

R14W6
F
F

36

31

34

V
F

FV

25

non-contiguous
area receives
separate approval

33

32

30

FV
28

29

27

GEP #2
F
U

U
F

F
F

24

19

F20

K
F

21

22

F
F

T79

C
K
F T79

F
F
F
13

18

17

16

15

K
F

contiguous lands
single approval

A
F

12

GEP #1
8

10

F4

F
F

However both areas may be

included in a single application
if for the same pool.

G
G

R15
File: CAPL example 2.MAP

R14W6
Datum: NAD 27

Projection: Stereographic

Center: N55.85031 W120.15762

Created in AccuMap, a product of IHS

Good Engineering Practice (GEP)

23

22

21

30

29

28

27

26

25

24

22

23

Individual allowable(s) may be applied to lease-line locations,

based on objection(s)
received.

13

12

11

20

19

18

17

10

15

14

13

12

97

96

95

94

U
G
93

92

84

83

82

93

92

100

82

81

72

71

99

98

90

89

88

87

86

85

80

79

78

77

76

75

F
73

91

AG
F

83

Production from each of

these gas spacing areas
may be limited to a daily
gas restriction
(example 60 103m3/d)

16

74

73

C
F

F
63

62

61

70

69

68

72

A
F

64

63

55

54

53

52

45

44

43

42

35

34

33

32

25

24

23

22

15

14

13

12

94

93

92U

67

66

65

57

56

62

C
F
F

F
53

52

51

60

59

58

C
F

J
43

42

F33

32

A
F

C
F

41

50

49

40

39

48

47

46

38

37

36

A
F31

G
F
23

22

21

30

11

20
U

A
F

29

28

27

19

18

17

26

F
GK

F13

12

A
F

10

A
F

K
FF

FF
3

16

F
G

F
6

93

92

91

F
100

99

98

97

96

95

C
K
A

G
F
83

82

81

90

88

FC
K
A

87

86

85

83

84

F
A
UF

F
F
73

F
D U 82

F
89

72

71

80

79

78

77

76

75

E
74

73

72

Good Engineering Practice (GEP)

Approval does not have any affect on lease tenure

(conversion or continuation).

Pooling still required to produce incomplete gas spacing

areas.
GEP areas range in size from one gas spacing to hundreds.
May be approved for land held under a Drilling Licence,
provision that PNG Lease selection made prior to production.
Buffer area usually 250 m, opportunity to decrease
if both off-setting parties agree.
Note: see ogc.gov.bc.ca
Good Engineering Practice Background Article

GEP Application Guideline

ogc.gov.bc.ca

GEP Application

Notice of application posted on OGC website;

3 week period for objections to be filed.
Not a requirement to notify off-setting lease owners of
application but suggested good practice if objection
expected early resolution will speed final approval.
Decision if objection is valid at discretion of OGC,
no hearing process but applicant allowed to respond.

Approval subject to specified conditions.

Approval transfers to new operator.

Good Engineering Practice (GEP)

Usually applied for area

of common interest, but
not a requirement.
Consent letter(s) required
from all registered lease
owners, including brokers.

example letter on website

Good Engineering Practice (GEP)

example Approval
pool specific

APPROVAL 06-06-060
THE PROVINCE OF BRITISH COLUMBIA
PETROLEUM AND NATURAL GAS ACT
DRILLING AND PRODUCTION REGULATION
OIL AND GAS COMMISSION

IN THE MATTER of a Good Engineering Practice (GEP) scheme of Northpoint Energy

Ltd. (Northpoint) for producing the Altares field Halfway B gas pool without well
spacing and target restrictions.
NOW, THEREFORE, the Commission, pursuant to Part 8, Division 6, Section 101 of the
Drilling and Production Regulation, hereby approves the GEP scheme of Northpoint for
drilling wells without spacing and target restrictions, as such scheme is described in
an Application from Northpoint to the Commission dated July 27, 2006 and
related submissions.

area description

This scheme is approved, subject to the conditions herein contained and, in particular:
1. The area of the project shall consist of:
94-A-5: Block D - units 20, 30, 40, 50, 60, 70, 80, 90

waiver of well spacing &

targets but 250 m buffer

94-B-8: Block A - units 11-13, 21-23, 31-33, 41-43, 51-53, 61-63, 71-73, 81-83, 92-95
Block H units 2-5, 12-15, 22-25, 32-35, 42-45, 52-55 and 62-65.
2. The requirements of Section 10 of the Drilling and Production Regulation are hereby
waived, provided that gas wells within the project area are not completed nearer than
250 m to the sides of the approved project area.
3. The gas wells within the project area may be produced without individual well
allowable restrictions.

no production restriction

4. This approval may be modified or rescinded at a later date if deemed appropriate.

_____________________
Doug McKenzie
Director
Resource Conservation Branch
DATED AT the City of Victoria, in the Province of British Columbia, this 10th day of October 2006.

Horn River Basin - Jean Marie GEP areas comparison

Montney Play - existing GEP approval areas

Water Disposal Well - considerations

depleted or wet reservoir preferred

if hydrocarbon reservoir, injection below water contact

below shallow / near surface aquifers

injection pressure must be below 90% of formation

fracture gradient
must control P & NG rights to section (1 unit)

Water Disposal

Application notice posted to OGC website, for possible

objections.

Limited test injection volume may be approved

before / during formal application process.

May dispose of both produced water or recovered fluids

from a well completion or workover (includes fracture
treatment fluids ie slick water fracs).
Challenge to industry recycle frac water, use saline
zones (Debolt) as water storage.

Acid Gas Disposal Well - considerations

proximity to source facility (shorter the pipeline the better)

confinement of the injected gas

competent cap rock, effect on rock matrix

lateral plume migration

protection of hydrocarbon, mineral and groundwater resources

potential to effect nearby wells and future production / drilling in area

equity interests

wellbore integrity cement, casing, packer, tubing, safety valve

public and environmental safety air monitoring

must control P & NG rights to full gas spacing area

Acid Gas Disposal

12 wells approved for acid gas disposal
WA#

Disposal Zone

Approval Date

464

WGSI BUBBLES b-19-A/94-G-08

Baldonnel

June 27, 1997

7908

BURLINGTON BURNT a-94-A/93-O-08

Baldonnel

October 21, 2004

7961

ANADARKO CARIBOU c-04-G/94-G-07

Halfway

10585

ANADARKO CARIBOU a-A30-G/94-G-07

Debolt

9637

PC ET AL JEDNEY a-79-J/94-G-01

Baldonnel

October 31, 1996

427

PC ET AL JEDNEY b-88-J/94-G-01

Baldonnel

October 31, 1996

7979

PC ET AL PARKLAND 15-17-81-15 W6M

Basal Kiskatinaw

10503

BRC HTR ET AL RING d-49-B/94-H-16

Debolt

April 6, 2000

5787

CNRL SIKANNI a-32-I/94-G-03

Debolt

January 31, 2005

9887

CNRL W STODDART 01-33-87-21 W6M

Halfway

June 14, 2001

11398

CNRL W STODDART 07-34-87-21 W6M

Halfway

September 18, 1998

1517

TALISMAN SUKUNKA a-43-B/93-P-05

Pardonet-Baldonnel

September 20, 2000

March 30, 1998

February 22, 2001

March 21, 2002

Commingled Production

OGC avoids mapping sub-units,

removing commingling as an issue.

single Montney, not Upper and Lower

individual well, pool or area based approvals.

Project Data

Reservoir projects (including GEP) data file at;

www.ogc.gov.bc.ca
Drilling Data for all wells in B.C. Excel file
For past Project applications or approvals, contact;
Steven Glover (250) 952-0293
Steven.Glover@gov.bc.ca
OGC has digital shape files for GIS systems, also
digitizing pool net pay maps and pool designation areas
Lori Miller (250) 261-5713
Lori.Miller@gov.bc.ca