Amendments and updates to this ID:
March 31, 1999 - Amendment released with correction for map for Wabiskaw
November 30, 1999 - Amendment released that adds Appendix A and map for Peace River
November 29, 2000 - 3rd Amendment released that replaces the six maps for the Athabasca oil sands
July 22, 2003 - 4th Amendment
Note: See related document GB 2003-16 for important information related to this ID
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Interim Directive ID 99-1
3 February 1999
To: All Oil, Gas, and Oil Sands Operators
GAS/BITUMEN PRODUCTION IN OIL SANDS AREAS
APPLICATION, NOTIFICATION, AND DRILLING REQUIREMENTS
The purpose of this interim directive is to outline the new Alberta Energy and Utilities Board (EUB) requirements regarding gas/bitumen production in Oil Sands Areas 1 . These requirements are largely based on the conclusions of the March 1998 EUB Inquiry Report on Gas/Bitumen Production in Oil Sands Areas 2 , the July 1998 Gas/Bitumen Committee's recommendations on Gas/Bitumen Issues 3 , and the November 1998 Industry/EUB Committee's recommendations on Gas Production Application Areas 4 .
1 The EUB has issued Oil Sands Area Orders for three oil sands areas: Athabasca, Cold Lake and Peace River.
2 EUB Inquiry, Gas/Bitumen Production in Oil Sands Areas, 25 March 1998. Available at the EUB's Information Services, 640-5 Avenue SW, Calgary, Alberta.
3 Recommendations on Gas/Bitumen Issues, 10 July 1998. Available at the EUB's Information Services.
4 Report of the Industry/EUB Committee, Gas Production Application Oil Sands Areas, 24 November 1998. Available at the EUB's Information Services.
For wells completed in the defined oil sands strata prior to 1 July 1998, an application for approval to produce gas will not be required. These wells will be allowed to continue to produce, subject to the resolution of any concerns that may be raised by oil sands leaseholders or by the Board on its own initiative.
For all wells drilled and/or completed in the defined oil sands strata after 1 July 1998, an operator must submit an application and obtain approval from the Board before any gas, other than solution gas, can be produced. Also, all wells drilled in the oil sands strata after 1 July 1998 must be drilled deep enough to be able to log over the base of the oil sands deposit containing the zone from which gas and/or bitumen is to be produced. These requirements do not apply to wells that are drilled for mining projects or for wells that are exempt by the Board.
The requirement for an application for approval to produce gas and the drilling requirement are being incorporated into the Oil and Gas Conservation Regulation and/or the Oil Sands Conservation Regulation, and compliance with the regulations is being made a condition of all well licenses. These requirements are discussed in more detail in the following sections.
Notification of applications for approval to produce gas and for in situ oil sands schemes is to be given by the applicants to potentially affected parties, as detailed in the following sections.
The Board will periodically review these requirements, as new information becomes available, and make revisions as necessary.
1 GAS PRODUCTION IN OIL SANDS AREAS
1.1 Application Process
An application for approval to produce gas from the oil sands strata shall show:
- that the gas is not associated with bitumen within the region of influence; or
- if the gas is associated with bitumen within the region of influence, why gas production should be allowed considering the potential effect on future bitumen recovery.
Associated gas refers to gas that is in pressure communication with bitumen within the region of influence either directly or through a connecting water zone. The region of influence is taken to be the extent of the gas pool in the case of gas directly overlying bitumen or the combined extent of the gas pool and water zone in the case of gas overlying water overlying bitumen.
In cases where an application is made for approval to produce gas from a well drilled into a pool with existing gas production, the Board will evaluate the application on a pool basis. Depending on the assessment of the impact of gas production on potential bitumen recovery, this could result in outcomes ranging from shut in of the entire pool to approval of the application and future applications being approved routinely once it is confirmed that the applied-for wells are in the same pool.
With respect to bitumen wells, an assessment must be made by the operator on a site specific basis to determine whether the wells are producing gas other than solution gas, in which case an application for approval to produce gas is required. The assessment should consider such factors as the magnitude of the producing gas-bitumen ratio compared to the solution gas-bitumen ratio, the presence of any associated gas zones as indicated by well logs, drill stem tests or other data, and the proximity of the well perforations to any associated gas zones. Applications for in situ oil sands schemes (including commercial, primary recovery, and experimental schemes) should address the potential for gas other than solution gas to be produced. Furthermore, operators should be aware that approvals for in situ oil sands schemes may include a requirement to monitor gas production and apply for approval to produce gas when there is evidence that gas other than solution gas is being produced.
Applications for approval to produce gas are not required to conduct short tests (e.g. 3-days) to obtain information on new wells. However, any tests must be conducted in accordance with section 11.135 of the Oil and Gas Conservation Regulation.
A separate application is not required for each well within a region of influence; however, each well must be individually addressed in the application.
1.2 Application Areas
Based on an assessment of bitumen resources, the Board has identified areas where applications for approval to produce gas are required. In addition, applications are also required for:
- Wells drilled outside the application areas that discover bitumen pay in excess of a specified thickness.
- Wells drilled outside the application areas but within existing or extensions to EUB G Orders 5 that overlap the application areas. Notwithstanding the above requirement, applications are not required for wells drilled outside the oil sands areas (unless the wells discover gas that is associated with a conventional oil pool, in which case an application is required for concurrent production in accordance with section 26(e) of the Oil and Gas Conservation Act). However, gas production from these wells is subject to the resolution of any concerns that may be raised by oil sands leaseholders or by the Board on its own initiative.
5 Maps which define EUB recognized gas pools, portrayed on a section basis.
Athabasca Oil Sands Area
The application areas and bitumen thickness criteria for the Athabasca Oil Sands Area, by deposit, are provided in the attached Appendix.
Cold Lake & Peace River Oil Sands Areas
The Board intends to specify application areas and bitumen thickness criteria for the Cold Lake and Peace River oil sands areas once it has received and reviewed recommendations from the Industry/EUB Committee. In the interim, applications for approval to produce gas, other than solution gas, are required for all wells drilled and/or completed in the oil sands strata in these oil sands areas after 1 July 1998.
1.3 Information Requirements
In accordance with section 28 of the EUB's Rules of Practice, the Board believes its decision on an application should be based on publicly available information and accordingly is not prepared to treat any information submitted in support of an application as confidential. An applicant must decide on the importance of the information and whether or not to include it in an application. Where information is considered too sensitive to be included, an applicant takes the risk that other submitted information will be sufficient to support the application. If the Board finds the information inadequate, the Board's decision may be delayed until substantive information is available.
The application shall include the following.
- A description of the scope of the gas project, including:
a) the number and location of new wells to be produced;
b) the location, current status and production plots (gas, bitumen, and water) for existing wells in the region of influence; and
c) the interval to be produced.
- A discussion of the presence, size, and lateral extent of the gas zone to be produced and of any associated bitumen and top water zones, including:
a) all well logs, core data, drill stem tests, and other relevant data used to support the geological interpretation;
b) net gas and bitumen pay maps (including the cutoffs used and their derivation), top water zone thickness maps, and structure maps;
c) estimates of the initial gas and bitumen volumes in place for the mapped zones;
d) cross-sections of the zones showing porosity tops and bases, fluid interfaces, test intervals and results, and perforated intervals;
e) pressure information (the atmospheric pressure used to convert gauge to absolute pressure should be specified);
f) hydrogeological data (such as pressure versus depth plots and potentiometric maps); and
g) other relevant information (such as reservoir fluid characterization and decline curve analysis).
- A discussion of whether the gas zone is associated or not associated with a bitumen zone within the region of influence, based on the geological, hydrogeological, pressure, and production evidence.
- If the gas zone is associated with a bitumen zone:
a) a discussion of whether the bitumen within the region of influence is exploitable with reasonably foreseeable technology and economic conditions;
b) a discussion of the state of depletion of the gas zone, including a comparison of the current pressure with the initial pressure and the cumulative gas production as a fraction of the initial volume in place;
c) an evaluation of the potential effect of gas production on bitumen recovery;
d) details of the applied-for wells and the reasonably foreseeable field development (such as plans for horizontal wells, open-hole completions, compression facilities, future drilling, etc.);
e) the projected gas production profile for individual wells and/or the expected aggregate production profiles for wells within common regions of influence (rate-time forecast) 6 ; and
6 Although the Board recognizes the uncertainty involved in predicting these profiles, it believes that they would provide some insight into the depletion rate from within a region of influence, and that this may be useful in determining the impact on reservoir pressure over time. The Board does not intend to tie approval requirements directly to the projected rates, although some rate restrictions may be applied if they are deemed to be necessary.
f) the proposed reservoir abandonment pressure (absolute).
- Maps showing the Petroleum and Natural Gas (P&NG) and oil sands lessors and lessees in the region of influence and the adjoining sections.
- Confirmation that the notification requirements have been satisfied, and that there has been an adequate exchange of information with potentially affected parties and an attempt to resolve any differences of opinion on the potential effect of gas production on future bitumen recovery.
1.4 Notification Requirements
The notification requirements for applications for approval to produce gas are the following.
- Notice is to be given to the oil sands leaseholders and the freehold mineral owners of any unleased lands within the region of influence and the off-setting sections.
- To expedite the application process, notice is to be provided by the applicant; failure to do so could result in subsequent delays in processing the application. If no objections or concerns are received by the applicant or the Board within 15 working days of the date of notification, the Board may process the application without further notice being given. The Board encourages applicants to carry out the notification and any resulting discussions prior to the submission of the application. The Board would prefer that a copy of the application be provided as part of the notice.
It should be noted that the Board may require and provide additional notice, as it considers necessary, in accordance with section 29 of the Energy Resources Conservation Act.
2 ADDITIONAL NOTIFICATION REQUIREMENTS FOR IN SITU OIL SANDS APPLICATIONS
The notification requirements are the following.
- Notice of applications for in situ oil sands schemes (including commercial, primary recovery, and experimental schemes) is to be given to the P&NG leaseholders and the freehold mineral owners of any unleased lands in the area of application and the off-setting sections. This is in addition to the current requirement to provide notice to oil sands leaseholders in the off-setting quarter sections.
- To expedite the application process, notice is to be provided by the applicant; failure to do so could result in subsequent delays in processing the application. If no objections or concerns are received by the applicant or the Board within 15 working days of the date of notification, the Board may process the application without further notice being given. This requirement supercedes the 10-day notice period specified in EUB Informational Letter 97-2 7 . The Board encourages applicants to carry out the notification and any resulting discussions prior to the submission of the application. The Board would prefer that a copy of the application be provided as part of the notice.
7 Informational Letter 97-2, Well Spacing/Lease Boundary Setback - Oil Sands Area Development, 2 October 1997.
3 DRILLING REQUIREMENT
The Board requires all wells to be drilled deep enough to be able to log over the base of the oil sands deposit containing the zone from which gas and/or bitumen is to be produced unless this would result in trespass. In the event of trespass, the wells must be drilled deep enough to be able to log over the base of the oil sands zone from which gas and/or bitumen is to be produced. The log information is needed to assess the potential impact of gas production on bitumen recovery. This includes information on the thickness and quality of any gas, bitumen, and water zones and how they are inter-related. Logging over the base of the deposit is needed because of the difficulty in identifying the base of the zone when overlying zones channel into underlying zones.
Logging requirements remain in accordance with section 11.140 of the Oil and Gas Conservation Regulation.
The Board believes it is necessary to clarify the terminology that it uses in describing oil sands intervals. As illustrated in Attachment 1, the Board uses three terms in this regard: oil sands strata , oil sands deposits , and oil sands zones . Oil sands strata, which refer to the entire oil sands interval, are defined in the EUB's Oil Sands Area Orders for the three oil sands areas. Oil sands deposits, which are subdivisions of oil sands strata, and oil sands zones, which are subdivisions of oil sands deposits, are defined in the type logs for reference wells contained in the EUB's Crude Bitumen Reserves Atlas (Statistical Series 96-38). An example is provided in Attachment 2.
The drilling requirement does not apply to wells that do not penetrate the defined oil sands strata. Furthermore, the Board will consider exemptions from the drilling requirement in certain circumstances, such as:
- where drilling into a carbonate formation is problematic (e.g. due to lost circulation);
- where horizontal wells are drilled (in these situations, the Board expects operators to drill a suitable number of vertical evaluation wells logged over the base of the oil sands deposit or zone, as appropriate); and
- where high density drilling is part of an in situ oil sands scheme and a suitable number of wells have been logged over the base of the oil sands deposit or zone, as appropriate.
Exemptions must be obtained from the Board prior to drilling the wells by submitting a written request to the Board's Reservoir Development Group. The request should include a discussion, with supporting data, of the reasons why an exemption is required and the adequacy of the existing well information to characterize the zone to be produced. Where well control is adequate to provide clear definition of the zone to be produced, the Board will likely provide an exemption.
Questions regarding this interim directive should be directed to the Reservoir Development Group at (403) 297-3561.
[Original signed by]
Frank J. Mink, P.Eng
Board Member
Attachments
APPENDIX
APPLICATION AREAS & BITUMEN THICKNESS CRITERIA
ATHABASCA OIL SANDS AREA
This appendix specifies the application areas and bitumen thickness criteria, by deposit, for which applications for approval to produce gas are required in the Athabasca Oil Sands Area.
Viking Deposit
Applications for approval to produce gas are required for wells that discover 10 metres or more of sand with bitumen saturation equal to or greater than 50 per cent pore volume.
Grand Rapids Deposit
Applications for approval to produce gas are required for wells drilled within the Upper Grand Rapids, Middle Grand Rapids, and Lower Grand Rapids application areas shown on Maps 1, 2, and 3, and for wells drilled outside these areas that:
- discover 10 metres or more of sand with bitumen saturation equal to or greater than 50 per cent pore volume; or
- are within or extend a Grand Rapids G Order 1 that overlaps with the corresponding Grand Rapids application area.
1 G Orders for the Grand Rapids are not identified as Upper, Middle, and Lower. A type log is included in each G Order. Comparison of this log to the type log in the EUB's Crude Bitumen Reserves Atlas will allow an operator to determine the specific Grand Rapids deposit applicable to that G Order.
Clearwater Deposit
Applications for approval to produce gas are required for wells drilled in Township 70 and south, and for wells drilled outside this area that:
- discover 3 metres or more of sand with bitumen saturation equal to or greater than 50 per cent pore volume; or
- are within or extend a Clearwater G Order that overlaps with Township 70 and south.
Wabiskaw Deposit
Applications for approval to produce gas are required for wells drilled within the Wabiskaw application area shown on Map 4, and for wells drilled outside this area that:
- discover 3 metres or more of sand with bitumen saturation equal to or greater than 50 per cent pore volume, in Township 86 and south;
- discover 10 metres or more of sand with bitumen saturation equal to or greater than 50 per cent pore volume, in Township 87 and north; or
- are within or extend a Wabiskaw G Order that overlaps with the Wabiskaw application area.
McMurray Deposit
Applications for approval to produce gas are required for wells drilled within the McMurray application area shown on Map 5, and for wells drilled outside this area that:
- discover 10 metres or more of sand with bitumen saturation equal to or greater than 50 per cent pore volume; or
- are within or extend a McMurrary G Order that overlaps with the McMurray application area.
Wabamun Deposit
Applications for approval to produce gas are required for wells that discover 24 metres or more of Wabamun deposit with bitumen saturation equal to or greater than 50 per cent pore volume.
Nisku Deposit
Applications for approval to produce gas are required for wells that discover 24 metres or more of Nisku deposit with bitumen saturation equal to or greater than 50 per cent pore volume, and for wells that are drilled within or extend the G Order for the Liege Nisku-Upper Ireton-Grosmont A Pool.
Grosmont Deposit
Applications for approval to produce gas are required for wells drilled within the Grosmont application area shown on Map 6, and for wells drilled outside this area that:
- discover 24 metres or more of Grosmont deposit with bitumen saturation equal to or greater than 50 per cent pore volume; or
- are within or extend a Grosmont G Order that overlaps with the Grosmont application area.
[Note: The six maps that were released with this ID have been superseded by ID 99-01 Third Amendment dated November 28, 2000]
