president vice president sec. - treas. 105...
TRANSCRIPT
105 SOUTH FOURTH STREET S A N T A FE ARTESIA , N E W MEXICO 8 8 2 1 0
T E L E P H O N E ( 5 0 5 ) 748-1471
J O H N A . Y A T E S
V I C E P R E S I D E N T
B. W. H A R P E R S E C . - T R E A S .
S. P. Y A T E S
P R E S I D E N T
October 29, 1987
Mr. David Catanach New Mexico O i l Conservation Division P. 0. Box 2088 Santa Fe, New Mexico 87501
RE: Request for Administrative Approval for Downhole Commingling: Hoover "ADR" State #6, M-1-17S-33E, Lea County, NM
Dear Mr. Catanach:
Pursuant to Rule 303-C, Yates Petroleum Corporation requests administrative approval for downhole commingling of the Queen formation and the Grayburg-San Andres i n the subject w e l l . Application was made on September 21, 1987 and a hearing was requested due to exceptions to Rule 303-C. Since that date, condit i o n s i n the well have changed, and the requirements for administrative approval have been met.
Attached, please f i n d three copies of a revised application for downhole commingling. The differences between t h i s application and the September 21, 1987 application are highlighted below:
1. Productivity from the Grayburg-San Andres zone has f a l l e n o f f s i g n i f i c a n t l y .
2. The Queen formation has been completed and tested.
3. The economics have been revised.
4. The allocation procedure has been revised.
A l l o f f s e t operators were n o t i f i e d of the proposed commingling concurrent with the application f o r hearing. Please advise i f you would l i k e me to n o t i f y them of the changes.
Sincerely,
James S. Brown Engineer
XC: Chad Dickerson
JSB/cvg
APPLICATION FOR DOWNHOLE COMMINGLING
Yates Petroleum seeks a d m i n i s t r a t i v e approval f o r downhole commingling of production from the Queen and Grayburg-San Andres formations i n the Hoover "ADR" State #6, located 330' FSL & 990' FWL of Section 1-17S-33E, Lea County, New Mexico. See Attachment 1.
Yates Petroleum d r i l l e d the Hoover "ADR" State #1 (Unit I , Section 1-17S-33E) as a deep Wolfcamp t e s t i n 1986. The Wolfcamp was dry, but there was a porous Queen zone plus f a i r shows i n the San Andres. The w e l l was completed as a Queen producer from p e r f o r a t i o n s a t 3767-74 and Yates has subsequently d r i l l e d seven a d d i t i o n a l Queen producers i n what i s now c a l l e d the Sanmal Queen pool. The Hoover "ADR" State #6 was d r i l l e d w i t h i n the Sanmal Queen f i e l d t o a depth of 4750' t o t e s t the San Andres on the basis of the San Andres shows i n the discovery w e l l .
The Hoover "ADR" State #6 was completed i n the Grayburg and San Andres formations as described i n Attachment 2. The w e l l was produced f o r one month from J u l y 25, 1987 u n t i l August 24, 1987, a f t e r a c i d i z i n g the zones, but before hyd r a u l i c a l l y f r a c t u r i n g them. As shown i n Attachment 3, the f r a c t u r e treatment on August 26, 1987 was unsuccessful: the Grayburg-San Andres was produced u n t i l October 7, 1987, and averaged 8 BOPD f o r the f i n a l week.
On October 8, 1987, the Grayburg-San Andres zones were i s o l a t e d below a r e t r i e v a b l e b ridge-plug, and the Queen format i o n was p e r f o r a t e d , a c i d i z e d , and h y d r a u l i c a l l y f r a c t u r e d , as described i n Attachment 2. The Queen has been producing by i t s e l f since October 13, 1987, and has averaged 7 BOPD f o r the l a s t week, as shown i n Attachment 3. Attachments 4 and 5 are copies of the p o r o s i t y l o g , showing the Queen and Grayburg-San Andres zones, f o r your reference.
During the production t e s t s i n both zones, t u b i n g was run below the p e r f o r a t i o n s and the w e l l was produced w i t h a sucker-rod pump. I n both production t e s t s , the f l u i d l e v e l i n the wellbore was p u l l e d down t o the p e r f o r a t i o n s , or "pumped o f f . " Therefore, the producing bottom-hole pressure i s equal t o the surface casing pressure plus the gas column h y d r o s t a t i c pressure, or about 30 p s i g . Therefore, there i s no danger of cross-flow between formations.
As shown i n Attachment 3, the Grayburg-San Andres does not produce water, and t h e r e f o r e there w i l l be no p o t e n t i a l f o r i n c o m p a t i b i l i t y of f l u i d s .
The o i l i n both the Queen and the lower zones i s Texas/New Mexico Sour, and i s p r e s e n t l y being sold t o Unocal R e f i n i n g & Marketing, a D i v i s i o n of Unocal Corporation. Queen o i l
g r a v i t y i s 35 API, and Grayburg-San Andres o i l g r a v i t y i s 39 API. As shown on page 2 o f Attachment 6, Unocal's g r a v i t y adjustment i s $0,015 per 0.1 API. Since API g r a v i t y i s a vol u m e t r i c p r o p e r t y , the value of the commingled production w i l l be equal t o the sum of the values of the i n d i v i d u a l streams.
Yates Petroleum proposes t o a l l o c a t e 50 percent of the t o t a l o i l production t o the Queen formation, and 50 percent t o the Grayburg-San Andres, based on production t e s t s shown i n Attachment 3. To v e r i f y a l l o c a t i o n accuracy, the measured API g r a v i t y of the commingled o i l w i l l be monitored. Since the API g r a v i t i e s of the two zones t o be commingled are d i f f e r e n t , the r a t i o of production from the zones can be c a l c u l a t e d .
The mineral ownership f o r a l l of the zones i s i d e n t i c a l .
Economics
The i n c e n t i v e behind t h i s a p p l i c a t i o n i s economics: wi t h o u t approval t o commingle production, the Grayburg-San Andres r e s e r v o i r w i l l not be produced.
Attachment 7 summarizes the equipment and operating cost estimates and the r e s u l t s of the economic ev a l u a t i o n o f commingled production versus dual completion. The equipment cost estimates represent the incremental costs t o i n s t a l l p roduction f a c i l i t i e s t o produce the Grayburg-San Andres i n excess o f the cost t o i n s t a l l production f a c i l i t i e s t o produce the Queen. Likewise, "incremental operating costs" represent the incremental cost t o operate a w e l l completed i n the Queen-Grayburg-San Andres i n excess of the cost t o operate a w e l l completed i n the Queen only. The economic e v a l u a t i o n shows t h a t i f a dual completion i s r e q u i r e d , Yates Petroleum loses $92,000 due t o the incremental i n v e s t ment t o produce the Grayburg-San Andres reserves. I f commin g l i n g i s approved, an operating p r o f i t of $94,000 i s r e a l i z e d . I t should be noted, however, t h a t Yates Petroleum spent $120,000 incr e m e n t a l l y t o d r i l l , case, and complete the Grayburg-San Andres formations. Therefore, even i f comming l i n g i s approved, Yates w i l l lose $26,000 attempting t o develop the Grayburg-San Andres formation. Also noteworthy i s the f a c t t h a t i f commingling i s not approved, Yates w i l l not produce the Grayburg-San Andres formation at a l l .
ATTACHMENT 1
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Attachment ill
Hoover "ADR" #6
Completion History
Perforations
4470-74
4521-26
4596-4600
Formation (Zone)
Grayburg (Metex)
Grayburg (Premier)
San Andres (Vacuum)
Acid Treatment
1000 gal
1000 gal
1000 gal
Swabbing Report
ISDP 3000 p s i , swab 0 BO, 11 BW
ISDP 2450 p s i . swabbed with Metex
40 BO, 50 BW
ISDP 3300, Swab 32 BO, 106 BW
Fracture Treatment
10,000 gal ISDP 3190 p s i . Swab 139 BO, 304 BW
Frac'd Metex, Premier, and Vacuum together with 52000 gal.
cross-linked gal and 90,000 # 20/40 sand
4661-65 San Andres (Lovington
Sand)
1000 gal ISDP 3400 p s i Swab 0 BO, 46 BW Isolated by CIBP
at 4650.
3757-75 Queen 1500 gal N/A 40,000 gal gelled water with 60,000// sand
ATTACHMENT 3
HOOVER ADR STATE #6 WELL TEST*
GRAYBURG-SAN ANDRES ZONES
DATE OIL
(BBLS) WATER (BBLS) DATE
OIL (BBLS)
WATER (BBLS)
7/25/87 14 129 8/22/87 39 0
lllllll 23 0 8/23/87 30 0
7l2S/\il 87 0 8/24/87 25 0
7/29/87 57 0 8/25/87 0 0
7/30/87 57 0 8/26/87 Frac Job
7/31/87 58 0 8/27/87 0 245
8/01/87 49 0 8/28/87 0 42
8/02/87 51 0 8/29/87 0 6
8/03/87 56 0 8/30/87 0 0
8/04/87 37 0 8/31/87 0 0
8/05/87 43 0 9/01/87 0 110
8/06/87 43 0 9/02/87 0 96
8/07/87 31 0 9/03/87 0 85
8/08/87 39 0 9/04/87 0 92
8/09/87 11 0 9/05/87 0 76
8/10/87 66 0 9/06/87 0 85
8/11/87 42 0 9/07/87 0 80
8/12/87 31 0 9/08/87 0 81
8/13/87 44 0 9/09/87 0 76
8/14/87 39 0 9/10/87 0 83
8/15/87 41 0 9/11/87 1 80
8/16/87 38 0 9/12/87 5 70
8/17/87 41 0 9/13/87 10 50
8/18/87 32 0 9/14/87 20 30
8/19/87 45 0 9/15/87 19 20
8/20/87 35 0 9/16/87 20 20
8/21/87 28 0 9/17/87 20 20
*No gas measurement capability at test battery.
ATTACHMENT 3 (continued)
HOOVER ADR STATE #6 WELL TEST*
GRAYBURG-SAN ANDRES ZONES
OIL WATER OIL WATER
Date (BBLS) (BBLS) Date (BBLS) (BBLS)
09/18/87 10 10 Queen Formation: 09/19/87 4 4 10/08/87 Perforate Queen
09/20/87 5 8 10/09/87 Acidize and Frac. Queen
09/21/87 8 0 10/10/87 Swab 09/22/87 8 0 10/11/87 Swab, t r i p t u b i n g
09/23/87 7 0 10/12/87 Put on pump 09/24/87 8 0 10/13/87 0 27
09/25/87 7 0 10/14/87 0 50
09/26/87 8 0 10/15/87 0 41
09/27/87 7 0 10/16/87 0 33
09/28/87 9 0 10/17/87 0 63
09/29/87 7 0 10/18/87 8 12 09/30/87 6 0 10/19/87 7 6
10/01/87 7 0 10/20/87 7 6
10/02/87 8 0 10/21/87 9 8
10/03/87 11 0 10/22/87 7 7
10/04/87 6 0 10/23/87 7 6
10/05/87 9 0 10/24/87 6 5
10/06/87 7 0 10/25/87 7 3
10/07/87 11 0 10/26/87 7 6 10/27/87 6 2 10/28/87 6 1 10/29/87 7 3
*No gas measurement capability at test battery.
ATTACHMENT 4 Compensated Neutron-Litho Density Log
for HOOVER* "ADR" #6
ATTACHMENT 5 Compensated Neutron-Litho Density Log
for HOOVER "ADR" #6
i" . •• J ' ' J Unocal Refining & Marketing Division
• V. Scriaumburg0lm?ncfis 601*. J8 ATTACHMENT 6
Domestic Crude Supply
TJ
CRUDE OIL PRICE SCHEDULE NO. 87-12 il
; m QJiiai A-J3 2 3 1987
Effective 7:00 a.m., August 20, 1987, subject to change without notice, and subject to the terms and conditions of Its Division Orders and other contracts, Unocal will pay the following prices for each barrel of 42 U.S. gallons of merchantable crude oil and condensate purchased and delivered for Its account Into the faci l i t i e s of Its authorized receiving agent. All prices are shown for 40° API gravity and above, except as noted, and are subject to deductions for transportation and other charges where applicable.
AREA PRICE: FOR GRAVITY ADJUSTMENT $/BARREL SEE COLUMN
Alabama/F or Ida 19.50 » 1
Colorado 19.25 • 1
I l l i n o i s 19.00 • 2
Kansas 19.00 * 3
Lou 1s1 ana South Lou is iana Sweet (Onshore). . . 19.85 * 3
Montana 19.25 • 5
Nebraska 19.25 * 1
0k1ahoma 19.50 * 3
\ Tex as/New Mexico 19.50 * 1
19.50 5
Texas 19.50 * 1
19.50 * 1
Wyomlng Sweet (Carbon, L i n c o l n , S u b l e t t e , . .
Sweetwater & Uin ta Count ies)
20.25 1
19.25 * 1
19.00 • 4
19.00 < 4
Merchantable crude and condensate Is defined as virgin crude and/or condensate, produced from wells, which Is free of either Injected or outside foreign contamination, or added chemicals containing, but not limited to, halogenated organic compounds and/or oxygenated compounds which Is f i t for normal refinery processing and acceptable to the receiving agency designated by Unocal.
Prices are based upon the use of 100? tank tables or mutually acceptable automatic measuring equipment with customary adjustment of volume and gravity for temperature and fu l l deduction for basic sediment and water. The company reserves the right to reject any crude petroleum which does not meet Its standards of purity.
If any governmental authority causes the prices hereon to be amended, whether or not retroactive, causing any excess payment by Unocal, Unocal reserves the right to withhold an amount equal to the excess payment from future purchases or separately Invoice for such excess.
Indi cates Change
G R A V I T Y A D J U S T M E N T D E D U C T I O N S
(DEDUCTION IN $/BARREL)
GRAVITY °API 1 2 3 4 5
Above 45.0 »# #» ** » • * *
40 t o 45.0 0.00 0.00 0.00 0.00 0.00
39 t o 39.9 0.02 0.02 0.02 0.02 /Below 40.0- _
38 t o 38.9 0.04 0.04 0.04 0.04 Deduct $0,015;
; per 0 . 1 ° API j 37 t o 37.9 0.06 0.07 0.06 0.06
Deduct $0,015;
; per 0 . 1 ° API j
36 t o 36.9 0.08 0.10 0.08 0.08 ;- -35 t o 35.9 0.10 0.13 0.10 0.12
34 t o 34.9 0.12 0.16 Below 35.0 0.16
33 t o 33-9 0.14 0.19 Deduct $0,015 Below 34 t o 20
32 t o . 3 2 . 9 0.16 0.22 per 0 .1 ° API Deduct $0.02
31 t o 31.9 0.18 0.25 per 0 .1 ° API
30 t o 30.9 0.20 0.28
29 t o 29.9 0.22 0.31
28 t o 28.9 0.24 0.34
27 t o 27.9 0.26 0.37
26 t o 26.9 0.28 0.40
25 t o 25.9 0.30 0.43
24 t o 24.9 0.32 0.46
23 t o 23.9 0.34 0.49
22 t o 22.9 0.36 0.52
21 to 21 .9 0.38 0.55
20 to 20.9 0.40 0.58
Below 20 0.42 0.61 Below 20.0
Deduct $0.04
per 0 .1 ° API
Examples:
27.6 0.26 0.37 1.21 1 .44 1.86
18.3 0.42 0.61 2.605 3.64 3.255
* * Above 4 5 . 0 ° , deduct JO.015 per 0 . 1° API
===================== ======================== ;=================== ==================== =================
FIELD OFFICE CONTACTS
Area Address Phone No.
Kansas, Oklahoma, East Texas,
North Texas
717 N. Harwood S t ree t , Su i t e 2630
DALLAS, TX 75201
214-969-1976
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the NW Quarter of New Mexico,
No. Dakota, So. Dakota, Utah & Wyoming
410 Seventeenth S t ree t
Su i t e 530
DENVER, CO 80202
303-623-1776
Gul f of Mexico 4 Texas Gul f Coast 4615 Southwest Freeway
620 Execut ive Plaza East
HOUSTON, TX 77027
71 3-62 1-7600
Alabama, Lou is iana (Onshore),
M i s s i s s i p p i , t. o ther S.E. s ta tes
315 S. Col lege Road
Su i te 180
LAFAYETTE, LA 70503
313-234-1804
New Mexico, Panhandle A West Texas 1004 N. B ig Spr ing , Su i t e 501 MIDLAND, TX 79702
915-684-8231
ATTACHMENT 7
ECONOMICS
DUAL COMMINGLED COMPLETION COMPLETION
EQUIPMENT COSTS
Incremental tank battery $ 44,000
Incremental pumping equip't 33,500 $ 4,000
Dual pkr., wellhead, tubing 19,500
Total Incremental Equipment Costs to develop the GB-SA $ 97,000 $ 4,000
OPERATING COSTS
Incremental operating cost,
$/well/month 2,500 500
ECONOMICS
I n i t i a l o i l rate, BOPD 7 7
Gas-oil r a t i o , SCF/STB 1,000 1,000
Decline rate, %/year 20 20
Oi l price, $/bbl 18 18
Gas price, $/MCF 1 1
Recoverable o i l , bbl 2,800 9,700
Gross revenue, $ 53,000 184,000
State royalty and severance taxes 10,000 36,000
Operating expenses, $ 38,000 50,000
Operating p r o f i t , $ 5,000 98,000
Operating p r o f i t a f t e r c a p i t a l cost, $ -(92,000) 94,000
Less incremental d r i l l i n g and completion cost r —110,000 120,000
P r o f i t developing GB-SA $(-Si^rOtrtrj $(26,000)
ATTACHMENT 8
OFFSET OPERATORS
Petrus O i l Co. 12201 Merit Dr. Suite 900 Dallas, TX 75251
Tenneco O i l Co. 7990 IH 10-W San Antonio, TX 78230
^ . . . " ' V /
GARREY CARRUTHERS GOVERNOR
i i i AIT DI NI w MI xinn
ENERGY AND MINERALS DEPARTMENT OIL CONSERVATION DIVISION
HOBBS DISTRICT OFFICE
\ f DECISIS? OIL )c.6NSERVATI^i®iaSl
SANTA FE, NE f MEXICO 87501
RE: Proposed: MC DHC y NSL NSP SWD WFX PMX
Gentlemen:
POST OFFICE BOX 1980 HOBBS, NEW MEXICO 88241-1980
(505I 393-6161
I have examined the application for the:
l,~JuL±<£*y>. * t i * 7 n ^ fa /-/7-33 9 Lease & Well " ' " erator » Lease & Well No. Unit
and my recommendations are as follows:
) <
S-T-R
Yours very truly, . s
Jerry Sextbrf Supervisor, D is t r ic t 1
/ed