PROPOSED ENHANCED GAS RECOVERY OPERATIONS
(June 6, 2020)
Originally published in Michigan Oil & Gas News, April 24, 2020, Monthly Report Edition; article by Scott Bellinger, Managing Editor. Reproduced with permission.
LANSING, Mich. - A Supervisor of Wells pre-hearing conference (to be conducted by telephone conference call) is set for Monday, April 27 on Riverside Energy Michigan, LLC's petition for approval of an enhanced gas recovery (EGR) operation in which it would inject carbon dioxide (CO2) and/ or other approved substances into the Devonian Antrim Shale in parts of Chestonia (T30N-R6W) and Kearney (T30NR7W) townships in Antrim County.
If approved and implemented, Riverside's proposed Chestonia/ Kearney C CO2 project would become the company's first enhanced gas recovery (EGR) operation and the first enhanced recovery operation of any kind to be implemented in Michigan's Antrim Shale development - the state's original and only large-scale resource play- which has cumulative production to date of more than 3.7 trillion cubic feet (Tcf) of natural gas from a total of approximately 11,000 wells over the past 30 years.
CO2 enhanced oil recovery has been utilized since the 1990s in Niagaran reef reservoirs in Otsego County. Eleven. active CO2EOR projects currently operated by Traverse City, Michigan-based Core Energy have produced more than 2.5 million barrels.
Riverside Energy Michigan is state's largest natural gas producer Riverside Energy Michigan became an active player in the state's Antrim Shale development through its 2016 acquisition of assets from Chevron, which represented about 20% of Michigan Antrim Shale gas production at the time.
Subsequent acquisitions of smaller companies - including O.1.L. Energy and SRW - increased their share of overall gas production to approximately 27%.
Riverside enhanced its position as the state's leading gas producer with the July 2019 acquisition of assets formerly owned by Riviera Resources, adding some 1,650 operated wells and interests in another 450 wells operated by third parties.
This increased the company's operated Antrim well total to more than 4,300 and pushed their share of operated Antrim gas production increased to 46% of incremental oil due to the enhanced recovery operations through the end of 2019.
An added benefit of CO2 enhanced recovery projects - beyond the incremental oil produced by CO2 EOR projects that have been proven to be both economically and operationally feasible and additional natural gas that could be produced from Antrim Shale CO2 EGR projects - is the sequestration of millions of tons of CO2 that would otherwise be vented to the atmosphere.
Commenting on behalf of Riverside's management, Chestonia / Kearney CO2 project leader Phil Koro stated this week that the company, "Believes that this CO2 enhanced gas recovery project will have the dual benefit of reducing our carbon footprint by reinjecting our CO2 byproduct back into the Antrim, as well as maximizing the gas resource in the Chestonia area for the benefit of all parties, including the mineral owners and the state of Michigan."
Riverside's petition in Supervisor of Wells Cause No. 02-2020 seeks an order that would allow it to maximize the recovery of Antrim Shale gas from an approximately 3,860-acre area, located in Sections 5, 6, 7, 8, 17 and 18 of Chestonia Township, and Sections 1, 11 and 12 of Kearney Township.
Koro confirmed that Riverside had gained Supervisor of Wells approval in February for establishment, pursuant to Order No. 14-9-94, of a Uniform Spacing Plan (USP) to be known as the Chestonia 18 USP. with the lands described in the petition also referred to as the Chestonia / Kearney CO2 USP.
The petition notes that the Chestonia 18 USP is subject to an existing unitization agreement executed in 1994 by Riverside predecessor and original operator of record Lee's Petroleum L.L.C.
Injection of CO2 would initially be done using existing wellbores, with Riverside requesting authority from the Supervisor's to convert up to 6 of the 28 wells drilled within the boundaries of the Chestonia/ Kearney CO2 USP for use as injection wells.
Riverside has submitted applications to the Michigan Department of Environment, Great Lakes & Energy's (EGLE) Oil, Gas & Minerals Division (OGMD) seeking approval to convert 2 of the wells, located in Sections 18 and 7 of Chestonia Township, to CO2 injection. Riverside has also sought approval from the U.S. Environmental Protection Agency (EPA) to use those converted wells for underground injection in the Chestonia / Kearney CO2 USP.
The source of CO2 for the proposed project would be CO2 that is separated from Antrim Shale gas produced in the area and captured at the Riverside-owned CO2 plant, which is located adjacent to the Chestonia 18 central production facility, or CPF The first 2 proposed injection wells, the Burnett A3-18 (SL: NW NW NE, Sec 18-T30N-R6W, Chestonia Twp.) and the Green River D4-7 (SL: SE SE SE, Sec 7-T30NR6W, Chestonia Twp.), are the closest in proximity of the 6 currently considered by Riverside for injection to both the Chestonia 18 CPF and the Chestonia CO2 Plant, according to a diagram of the CO2 injection process contained in the petition.
The petition states that Riverside's analysis indicates that the Antrim Shale stores methane gas through adsorption, with the rock releasing both methane and CO2 as formation pressure is lowered.
"The methane desorbs from the rock at a higher rate than the CO2 as the shale matrix preferentially desorbs methane; according a description of the enhanced recovery mechanism included in the petition. "By injecting CO2, the partial pressure of CO2 is increased, which creates a driving force for the adsorption of CO2 and desorption additional methane to the fracture system and ultimately to the wellbore."
Through July 2019, wells in the Chestonia 18 Unit had produced a cumulative total of 8,372 MMcf (8.37 Bcf) of natural gas. Original Gas in Place (OGIP) is estimated to be in the range of 51,801 MMcf to 129,503 MMcf. Remaining primary production is estimated to be 3,143 MMcf, which when combined with actual production, results in an estimated recovery from primary production of 11,544 MMcf of gas.
Riverside's estimates for ultimate recovery from a CO2 EGR operation in the Chestonia 18 Unit are based on assumptions that 60% of the OGIP is absorbed to the rock and that an additional 10% recovery of absorbed gas could be achieved by CO2 injection/ absorption.
Those estimates and assumptions show that the potential additional gas recovered by the CO2 EGR operation could range from 3,108 MMcf (3.1 Bcf) of natural gas to 7,770 MMcf (7.7 Bcf) of natural gas.
Riverside's economic estimate shows that gross revenue of $6.993 million could be realized (based on the lower end EGR of 3.1 Bcf sold at a price of $2.25 per Mcf), with capital expenditure of $600,000 and lease operating expense (LOE) of $240,000 ($12,000 per year over a 20-year period), resulting in total net revenue of $6.153 million.