News Release April 3, 2000
FOR RELEASE AT 2:30 PM
EUB ISSUES DECISION ON GULF'S REQUEST TO SHUT IN SURMONT GAS
Calgary, Alberta (April 3, 2000) The Alberta Energy and Utilities Board today issued its decision on a request by Gulf Canada Resources Limited (Gulf) that the Board order the shut in of associated gas production from 183 wells in the Surmont area. Gulf's request was considered at an EUB hearing held from April to September 1999. The Board has concluded that continued production of associated gas at Surmont presents a significant risk to future bitumen recovery. Therefore, the Board approves Gulf's request in part, and will order the shut in of gas production from 146 wells specified in Decision Report 2000-22, effective May 1, 2000.
Accumulations of natural gas found in contact and/or pressure communication with bitumen are referred to as associated gas. In Alberta's oil sands areas, the petroleum and natural gas rights are leased separately from oil sands rights. This means that different companies can have the rights to different resources (gas or bitumen) in the same geologic zone.
Gulf submitted that the pressure depletion of the gas pools in association with the oil sands zones would adversely affect the recovery of bitumen to the extent that the bitumen might not be recoverable. Gulf is testing the steam-assisted gravity drainage* (SAGD) process at its Surmont location. An important aspect of the hearing was to determine if there would be negative impacts on Gulf's Surmont bitumen recovery (such as resource loss and/or less efficient operations) when associated gas production occurs in advance of SAGD operations. This determination required assessments of complex and highly technical resource management issues. The hearing sat for 47 days, referenced 459 exhibits, and resulted in about 7200 pages of transcript testimony.
In its decision, the Board carefully weighed the benefits and risks of allowing continued gas production to occur, versus the decision to order the gas production shut in. The Board concluded that the bitumen resources on Gulf's Surmont oil sands leases represent a significant energy resource for the province that should be protected for future development. Gas reserves in the requested shut in area are an important but far smaller energy resource. The Board recognized that as part of its conservation mandate, it would not serve the public interest to accept the possibility of jeopardizing a vast bitumen resource by allowing continued gas production to occur.
The Board's decision also deals with the following matters:
- The Board recognizes that there will be practical implications to its decision and that it may be necessary to put in place a number of follow-up processes to deal with these implications. These follow-up processes would deal with matters relating to well suspensions, well abandonments, pipeline issues, and other matters resulting from the Board's decision.
- The Board will require Gulf to submit annual reports on the management of the resources on its Surmont leases, including the continued assessment of the effect that the pressure of the overlying gas zone has on SAGD bitumen recovery. Also, if requested, the Board is prepared to work with interested parties to assist in the development and implementation of a pressure monitoring program in the Surmont area.
- Gulf requested that the Board order the shut in of 183 wells. The Board's decision will order the shut in of gas production from 146 of these wells. The Board will not shut in 22 gas wells in the three-section buffer area around Gulf's Surmont leases that Gulf requested to be shut in, because the Board does not believe that the gas being produced is associated with the bitumen on Gulf's Surmont leases. However, the Board believes that the gas being produced by these and other gas wells in the Surmont and geologically similar areas could be associated with and present a risk to underlying bitumen. Therefore, the Board intends to review the appropriateness of continued gas production from these wells and may require the licensees to submit reports to the Board that address this issue. The Board does not have a concern with the remaining 15 wells requested by Gulf to be shut in, because these wells are not producing associated gas.
- With respect to the concerns raised by the Metis and First Nations, the Board expects that energy operators will consult with stakeholders in a meaningful way. The Board intends to follow up on the concerns about impacts and opportunities from future development to determine if ongoing regional initiatives may be of assistance.
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* Steam-assisted gravity drainage (SAGD) is a process used to recover bitumen from oil sands. Typically, pairs of horizontal wells are drilled, one for steam injection and one for production. Under the ground, the horizontal wells run parallel to each other in the bitumen zone, with the production well located below the injection well. Steam is injected into the reservoir from the injection well and, as the steam permeates the oil sands, the bitumen is heated, allowing it to flow, and the bitumen is then pumped to the surface via the production well. |
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This news release and Decision Report 2000-22 are available on the EUB Website at http://www.ercb.ca
An executive summary of the decision is included in the report.
For more information, please contact:
Dave Morris, EUB Communications
Tel. 403-297-7470
Fax 403-297-3757
E-mail: david.morris@eub.gov.ab.ca
NR2000-17
