Legislature(2013 - 2014)SENATE FINANCE 532
03/28/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB266 || HB267 | |
| SB168 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 168 | TELECONFERENCED | |
| + | HB 266 | TELECONFERENCED | |
| + | HB 267 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 168
"An Act establishing the petroleum engineering
research for hydrocarbon optimization grant program
and fund in the University of Alaska."
2:42:25 PM
JOHN CHESHIRE, UNDERGRADUATE RESEARCH ASSISTANT, PETROLEUM
DEVOLOPMENT LABORATORY, UNIVERSITY OF ALASKA FAIRBANKS,
(UAF) discussed the PowerPoint, "Alaska North Slope (ANS)
Conventional and Unconventional Oil and Gas (Resource
Characterization and Development" (copy on file).
Mr. Cheshire highlighted slide 23, "Alaska's Heavy Oil
Resources."
What is heavy oil?
•Flows like syrup
•More dense than conventional oil
Where is it found in Alaska?
•On North Slope near conventional deposits
•Shallower depth than conventional oil
How much is there?
•24 - 33 billion barrels
What's the challenge?
•High viscosity makes the oil difficult to
produce economically
Mr. Cheshire discussed slide 24, "Enhanced Recover of Heavy
Oil."
Methods:
•Water Flood
•Low cost
•Implemented on the Alaska North Slope (ANS)
•Poor recovery efficiency
•Thermal
•Injection of steam heats oil, helping it flow
more easily
•Arctic environment makes steam injection on ANS
difficult
•Solvents
•Mix with oil causing it to flow more easily
•Carbon dioxide and light hydrocarbons are
typical solvents
•Could be available on ANS with gas sales
•Research ongoing
Mr. Cheshire highlighted slide 25, "Carbon Dioxide Content
of ANS Gas." He stated that the slide represented the
structure of typical ANS gas. He stated that 12 percent of
the gas was carbon dioxide, which must be removed from the
gas before it could be sold.
Mr. Cheshire looked at slide 26, "Research Background."
Co-Chair Kelly asked for a description of the slide. Mr.
Cheshire replied that the slide was related to the phased
behavior. When carbon dioxide was injected into the gas it
could form a second liquid phase. The oil reservoir mostly
held oil, water, and gas. If carbon dioxide was injected
the heavy crude oil would be pushed to the bottom. He
stressed that the research was intended to showcase actual
experiments rather than simulators to determine how the oil
behaved underground.
Mr. Cheshire highlighted slide 27, "Conclusions." He
stressed that it was an ongoing research project, but the
process was moving the state closer to putting a different
kind of oil in the Trans Alaska Pipeline System (TAPS), and
recovering other types of gas from ANS.
Mr. Cheshire displayed slide 28, "Future Research." He
shared that the continuation of the research would move the
state closer to properly characterize and understand the
oil in order to economically produce the oil
2:47:01 PM
Co-Chair Kelly understood that there was 12 to 13 percent
carbon dioxide in ANS gas. He shared that there would be a
gas treatment plant to remove the carbon dioxide. He
wondered if the use of the carbon dioxide produced value to
the state. Mr. Cheshire responded that producers must be
near a carbon dioxide source. He felt that there may be
synergy among the products.
Senator Bishop wondered if the carbon dioxide was
considered a carbon. Mr. Cheshire replied that it was
carbon dioxide.
Senator Bishop wondered if Alaska would be available for
carbon credits from the federal government. Mr. Cheshire
replied that he did not know the details of that program.
Senator Dunleavy wondered if carbon credits for taking
carbon out of the atmosphere. Senator Bishop indicated in
the affirmative.
Co-Chair Kelly stated that he did not think the program
would qualify for carbon credits, because there was no
removal of carbon from the atmosphere.
2:50:25 PM
THOMAS POLASEK, UNDERGRADUATE RESEARCH ASSISTANT, PETROLEUM
DEVOLOPMENT LABORATORY, UNIVERSITY OF ALASKA FAIRBANKS,
discussed slide 29, "Alaska Heavy Oil Resource."
Heavy oil resource overlies existing fields
Oil is present in multiple reservoir zones
Total: 24 - 33 Bbbls oil in place
Mr. Polasek highlighted slide 30, "Permafrost Thaw and
Subsidence." As hot fluids or steam are put through the
wells, it would increase the rate of thaw. Normal oil wells
produce oil at approximately 150 degrees Fahrenheit. The
heat that would be applied would be at 600 Fahrenheit.
Mr. Polasek discussed slide 31, "Permafrost Thaw and
Subsidence." Depending on the soil, the soil would be
greatly disrupted by the thawing. The friction of the soil
on the well could cause the wells to bend a small amount.
The uneven settling could also destroy the infrastructure
at the surface.
Mr. Polasek looked at slide 32, "Ice Content and Upper
Permafrost Soils." The picture on the left showed the dark
areas as ice, so there would be great shifting. The right
hand side showed ice pout, so there may not be shifting in
that area.
Mr. Polasek discussed slide 33, "Ice Content Upper
Permafrost Soils." The pictures showed how the strength and
integrity of the soil could degrade if melted.
Mr. Polasek highlighted slide 34, "Experimental Equipment."
The focus of his research was to determine how to keep the
heat inside the wells. The slide outlined their work.
Mr. Polasek discussed slide 35, "Project Objectives."
•Collect data to analyze how best to protect current
and future wells
•Acquire empirical data for tuning permafrost thaw
computer simulations
•Gain lessons learned for future research using frost
cell equipment
2:55:05 PM
Mr. Polasek looked at slide 36, "Project's Current
Progress." He stated that the slide showed the frost cell
inside of a refrigerated room; the students collecting silt
from the Army's Cold Regions Research Lab permafrost
tunnel; and installing the miniature casings into the cell,
which demonstrates the size of the block of soil for the
research.
Mr. Polasek highlighted slide 37, "Project's Current
Progress." The slide shows photos of the process of loading
the cell. The wires were the different heat sensors that
were inserted in the soil with another layer of silt on top
of the wires. The miniaturized tubing represented the rings
in the oil wells. Each one of the tubes was now sitting
inside the casing, so the fluids would be flooded between
the two tubes. The wires were intended to accurately
monitor the heat traveling through the wells. The two wells
on the right were vacuum-insulated tubes, to mimic the
vacuum-insulating tubing that could be put inside the
wells.
Mr. Polasek discussed slide 38, "Impacts on Future Alaska
North Slope Oil Production."
1. Estimated 24 - 33 billion barrels of heavy oil,
much of it is inaccessible without thermal EOR
2. One step closer to unlocking access to heavy oil on
Alaska's North Slope
Co-Chair Kelly wondered surmised that the 24 to 33 billion
barrels of oil was under current infrastructure. Mr.
Polasek agreed.
Mr. Polasek looked at slide 39, "Future Work."
1. More complex/multilayered models. UAF is the first
to do this type of physical modeling.
2. Further research into geomechanical forces on
scaled down wells
3. Collaboration with Alaska's energy industry
Co-Chair Kelly shared that there were hundreds of thousands
of trillions of cubic feet of natural gas in the earth. He
asked that Mr. Patil discuss the existing potential
resource on ANS, and the resource that would be underneath
existing infrastructure.
SHIRISH PATIL, DIRECTOR, PETROLEUM DEVELOPMENT LABORATORY,
UNIVERSITY OF ALASKA FAIRBANKS, looked at slide 3, "ANS
Heavy Oil and Gas Hydrate Resources." He testified in
support of SB 168. He stated that the slide showed a cross-
section of the ANS measured oil fields. The two blue areas
were the methane hydrate resource that sits under or near
the existing infrastructure. The red color was the free
conventional gas, which was where the potential pipeline
would bring the gas to market.
Co-Chair Kelly asked for information regarding timing of
the project, because Alaska was currently only producing
light oil. Mr. Patil replied that there was research
regarding throughput for TAPS at roughly 550,000 barrels
per day, and was rapidly declining. While other methods
were considered for extracting more oil from ANS, the light
oil production was declining. He felt that the heavy oil
production would not go as quickly as desired. If the
carbon dioxide from measure gas sales was not available,
the gas must be sequestered. The development of heavy oil
was critical to move the oil through TAPS. Heavy oil, light
oil, and natural gas development was an optimization issue
that one must see as timing crucial.
3:02:50 PM
Co-Chair Kelly stated that this was the first time he had
heard that gas production must occur to assist in the
development of heavy oil. Mr. Patil stated that, though
there will be gas sales, the gas must be used to inject
into Prudhoe Bay to maintain the reservoir pressure to
extract more oil.
Senator Bishop wondered if the bottom right picture was
from BP's heavy oil project. Mr. Patil replied in the
affirmative.
Senator Bishop asked if BP had stopped their heavy oil
project. Mr. Patil responded that there was still some
production from that project. He stressed that there were
some limitations in how much production could be from the
heavy oil.
Mr. Patil looked at slide 18, "The Gas Hydrate Resource
Pyramid." He noted the different, important layers that
must be permeated in order to reach the resource including
arctic sandstones, deep-water sandstones, non-sandstone
marine reservoirs with permeability, massive surficial
nodular hydrate, and marine reservoirs with limited
permeability.
Mr. Patil spoke to slide 19, "Gas Hydrate Production
Modeling." He stated that the research used many tools that
represented the different aspects of ANS.
Mr. discusses slide 20, "Barrow Gas Hydrates
(Opportunity?)"
Research Objective
- To simulate natural gas production from gas
hydrate reservoir accounting for gas hydrate
dissociation phenomena.
- To forecast and optimize natural gas production
with precise reservoir management
Goals
- Perform a study on production variance
depending on different wellbore designs.
- Predict production behavior in planned wells.
3:08:54 PM
Mr. Patil highlighted slide 21, "GTL: The Gel Strength
Problem." The slide showed a simulation that related to gas
to liquids transportation, but also applied to the
throughput in TAPS. He stressed that the flow would stop,
if the outside temperature drops.
Mr. Patil discussed slide 40, "Oil & Gas Related R&D at UAF
Synergies, Partnerships (University, State Govt., Federal
Govt., and Industry)."
•Phase Behavior, Asphaltene Precipitation- Viscous/
Heavy Oil
•Chemical Flooding and Conventional EOR
•Wettability and Improved Oil Recovery
•Chemical & Microbial Characterization- Viscous Oil
•Methane Hydrates
•CBM- Rural Energy Applications- Ft. Yukon
•Novel Ceramicrete Technology for the Arctic
•Carbon Sequestration
•GTL Transportation
Workforce Development
New Reserves to Declining Production
Economic Development
Mr. Patil highlighted slide 44, "Partnership for Economic
Development." He stressed that all of the graduates had 100
percent placement success.
Mr. Patil looked at slide 55, "PDL-Established Research
Partnerships." The chart showed the placement success in
the various partners in the industry.
Mr. Patil displayed slide 56, "Recent NETL-DOE Funded Oil &
Gas Related R&D at UAF Synergies, Partnerships (University-
Federal Govt., State Govt., Industry, Non Profits)." He
stated that the federal funding for oil and gas research
was recently zeroed out, so the state needed to invest in
research in the universities. He restated his support for
SB 168.
3:13:31 PM
ROBERT HALL, SELF, WASILLA (via teleconference), testified
in support of SB 168. He stated that creating a targeted
department was beneficial to Alaska's economy. He felt that
recent oil and gas legislation had created benefits to oil
and gas development. He remarked that the challenges for
oil and gas development on the North Slope were very
unique, and unlike other oil and gas fields.
3:15:54 PM
AT EASE
3:16:04 PM
RECONVENED
SB 168 was HEARD and HELD in committee for further
consideration.