PROCESSING LOW BTU GAS FROM THE PERMIAN BASIN YATES FORMATION

摘要

Low BTU gas has played a relatively minor role in the development of the Permian Basin oil and gas production since the discovery of oil in the Permian Basin in 1924. The Yates Formation is well known in the basin to contain low BTU gas and has been logged in many of the existing Permian oil fields. Unfortunately, for the Permian producer, the gas contains excessive nitrogen and is generally over the pipeline specified limits for nitrogen. On average, gas analyses across the Permian indicate 20 to 30 percent nitrogen content where typical pipeline requirements are between 2 and 4 percent. The high nitrogen content coupled with the historically high cost of extraction has netted the producer with no other alternative but to bypass this gas reservoir in exchange for a more lucrative development opportunity. Current values of natural gas are significantly changing the economics for the exploitation of this West Texas and New Mexico based reservoir. The Yates gas formation present in Ector, Andrews, Gaines, Yoakum, Terry, and Midland Counties in Texas and Lea County, New Mexico is recognized as a relatively shallow, over-pressured reservoir with reserve estimates ranging from 2 to 10 TCF. Reserve estimates are based on additive information from independent producers operating in the Permian Basin currently producing gas from the Yates and extrapolation of those production histories over areas where the Yates formation is known to exist. The fact that the reservoir is over-pressured has caused significant problems through the years in creating blowouts and sometimes rig fires when drillers penetrate the reservoir. For many of the producers seeking to develop oil reserves, the shallow reservoir has been more of a problem than an asset. The average depth of the formation is between 3000 and 3500 feet and the estimated flow reduction for the first year is approximately 50 percent. An approximation of the decline rate experienced in the Yates is provided as well as a general indication of where the formation may exist within the Permian Basin. There are areas within the formation that are more prolific and where greater development has occurred. With the strong market for natural gas and current nitrogen removal technology, this gas reserve is destined to become a huge play in the Permian Basin. Additional supportive justification for the development of this reserve is due to an existing database that clearly identifies where the Yates formation exists, the existence of an extensive natural gas pipeline network, and new nitrogen removal technology that allows for economical extraction of the nitrogen contaminant. This paper examines the potential of the Yates formation, explores the challenges associated with producing Yates gas, and provides basic economics for development of the formation.