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Home My WebLink AboutO 192Other Order 192 Docket Number: OTH-21-035 1. August 31, 2021 Hilcorp request to use alternate BOPE test fluids 2.September 1, 2021 First notice of public hearing, email and bulk mail distribution 3. January 7, 2022 Second notice of public hearing, email and bulk mail distribution 4. February 8, 2022 Hilcorp pre-filed testimony 5. February 17, 2022 AOGCC pre-hearing questions for Hilcorp 6. February 22, 2022 Hilcorp hearing testimony, answers to AOGCC questions, average ambient temperature plots 7. February 22, 2022 Hearing transcript 8. April 11, 2022 9. October 6, 2022 Hilcorp request for reconsideration Hilcorp request for extension to seasonal end date and AOGCC response. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Request by Hilcorp Alaska, LLC to reconsider the start date on the Thunderbird Rig #1. ) ) ) ) ) ) ) Docket Number: OTH-21-035 Other Order 192 Hilcorp Alaska, LLC Hilcorp North Slope, LLC April 12, 2022 ORDER ON RECONSIDERATION On April 7, 2022 the Alaska Oil and Gas Conservation Commission (AOGCC) issued Other Order 192 authorizing the use of 60/40 methanol/water or 9.8 pound per gallon brine as blowout prevention equipment (BOPE) test fluids for the Thunderbird Rig #1 (Thunderbird). AOGCC denied the seasonal work limits for Thunderbird proposed by Hilcorp 1, instead limiting work to May 1 until October 31. By email dated April 11, 2022, Hilcorp identified issues and concerns with the seasonal limit imposed by AOGCC on Thunderbird well work. Concerns identified by Hilcorp include having already mobilized rig crews and established work agreements with the rig contractor based on AOGCC approved well workover permits that identify intentions for an April 15 startup. Hilcorp notes that the reduced number of workovers that can be completed in the shortened season represents delayed repairs to wells necessary to restore production. As justification for work in the cold weather shoulder seasons, Hilcorp lists additions and modifications to Thunderbird’s rig winterization since the 2021 workover campaign. Hilcorp also notes it has made “system modifications” to address the blowout prevention equipment performance concerns identified by AOGCC in 2021. Hilcorp’s request to start work with Thunderbird on April 15, 2022 is APPROVED. Decisions about AOGCC’s seasonal limit imposed in Other Order 192 beyond the 2022 startup date will be based on Thunderbird rig equipment performance. DONE at Anchorage, Alaska and dated April 12, 2022. Jeremy M. Price Daniel T. Seamount, Jr. Jessie L. Chmielowski Commissioner, Chair Commissioner Commissioner 1 Hilcorp Alaska LLC operates the Milne Point, Endicott, and Northstar fields; Hilcorp North Slope LLC operates the Prudhoe Bay field. Both operators are collectively referred to in this document as Hilcorp. APPEAL NOTICE This order or decision and denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, this order and decision denying reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Jeremy Price Digitally signed by Jeremy Price Date: 2022.04.12 15:02:40 -08'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2022.04.12 15:05:36 -08'00' Dan Seamount Digitally signed by Dan Seamount Date: 2022.04.12 15:25:08 -08'00' From:Carlisle, Samantha J (OGC) To:AOGCC_Public_Notices Subject:Other Order 192 reconsideration Date:Tuesday, April 12, 2022 3:30:00 PM Attachments:Other 192 Reconsider.pdf Request by Hilcorp Alaska, LLC to reconsider the start date on the Thunderbird Rig #1. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 From:Carlisle, Samantha J (OGC) To:Aras Worthington Cc:John Barnes - Hilcorp Alaska, LLC (jbarnes@hilcorp.com); Bo York; David Bjork; Melvin Rixse; Regg, James B (OGC); McLellan, Bryan J (OGC) Subject:FW: Other Order 192 reconsideration Date:Tuesday, April 12, 2022 3:31:00 PM Attachments:Other 192 Reconsider.pdf From: Carlisle, Samantha J (OGC) Sent: Tuesday, April 12, 2022 3:30 PM To: AOGCC_Public_Notices <AOGCC_Public_Notices@list.state.ak.us> Subject: Other Order 192 reconsideration Request by Hilcorp Alaska, LLC to reconsider the start date on the Thunderbird Rig #1. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 Mailed 4/12/22 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Request by Hilcorp Alaska, LLC to utilize a 60/40 blend of methanol and water and/or a brine solution to test the blowout prevention equipment on the Thunderbird Rig #1. ) ) ) ) ) ) ) Docket Number: OTH-21-035 Other Order 192 Hilcorp Alaska, LLC BOPE Test Fluids Change Request April 7, 2022 DECISION AND ORDER On May 18, 2021, Hilcorp Alaska, LLC (Hilcorp) requested approval from the Alaska Oil and Gas Conservation Commission (AOGCC) to utilize 60/40 methanol/water or 9.8 ppg brine as blowout prevention equipment (BOPE) test fluids for the Thunderbird Rig #1 (Thunderbird). On May 25, 2021, the AOGCC denied Hilcorp’s request and stated that it would continue to require the use of water as the BOPE test fluid.On August 31, 2021, Hilcorp asked that a public hearing be scheduled to discuss the AOGCC’s denial of Hilcorp’s request. Pursuant to 20 AAC 25.540, the AOGCC scheduled a public hearing on October 13, 2021. Due to the COVID-19 virus, the October 2021 hearing was changed from in-person to virtual-only. Hil- corp opted to delay the date of the hearing until it could be held in person. The October 13, 2021 hearing was cancelled. Pursuant to 20 AAC 25.540, the AOGCC scheduled a public hearing on February 22, 2022. On January 7, 2022, the AOGCC published notice of that hearing on the State of Alaska’s Online Public Notice website and the AOGCC’s website, electronically transmitted the notice to all per- sons on the AOGCC’s email distribution list and mailed printed copies of the notice to all persons on the AOGCC’s mailing distribution list. On January 11, 2022 the notice was published in the Anchorage Daily News. Hilcorp provided written testimony in advance of the hearing on January 31, 2022. An updated copy of Hilcorp’s testimony was received by the AOGCC on February 8, 2022. After reviewing the advance testimony submitted by Hilcorp, the AOGCC provided a list of questions to Hilcorp to be prepared to discuss at the hearing. On February 22, 2022, the AOGCC held the hearing on Hilcorp’s request. FINDINGS: 1. AOGCC regulation 20 AAC 25.285(f)(1) requires that the BOPE for tubing workovers be tested with a non-compressible fluid. 2. AOGCC regulation 20 AAC 25.527(c) adopts by reference API Recommended Practice (RP) 53,Recommended Practices for Blowout Prevention Equipment Systems for Drilling Wells,3rd edition, March 1997, which states that well control equipment be tested with water. Other Order 192 April 7, 2022 Page 2 of 4 3. Hilcorp provided testimony that 9.8 ppg NaCl solution and 60/40 methanol/water blend have small compressibility factors and should be considered similarly non-compressible as pure water for BOPE testing purposes. 4. Hilcorp requests to follow API Standard (STD) 53,Well Control Equipment Systems for Drilling Wells, 5th edition, December 2018, which replaces AP RP 53. API STD 53 states that initial installation pressure tests of well control equipment be conducted with water or water with preservation, anti-freeze, and colorant additives. 5. Hilcorp discussed the meanings of the words “shall” and “should” as used in API RP 53 3rd edition and API STD 53 5th edition stating that use of the word “shall” is more prescriptive and use of the word “should” is less prescriptive. Hilcorp claims that use of the word “should” in API RP 53 3rd edition means that the use of water for pressure testing well control equipment is less prescriptive, and therefore, a comparable alternative may be used. 6. Hilcorp submitted three well service reports to indicate that 60/40 methanol/water has been used as an AOGCC-approved BOPE test fluid on the Klondike Work Platform. 7. The Klondike Work Platform is a well work platform designed to support service coil tubing, wireline and crane operations in wells. 8. Hilcorp submitted an affidavit from Arvell Bass stating that he remembers using 9.8 ppg brine as BOPE test fluid on All-American Rig 111 (AAO-111) on two occasions in 2019. 9. The Thunderbird rig book (February 2021) provided by Hilcorp to the AOGCC for review prior to rig acceptance stated that “the rig is intended for a seasonal use, around six months a year” and that Hilcorp planned to “start operating April 15 for a seasonal rig workover (RWO) campaign.” 10. On February 8, 2022, Hilcorp proposed an operating window for Thunderbird from April 15 until November 15 based on historical average temperatures at Prudhoe Bay. Hilcorp stated that it was not its intent to operate the rig year-round as it is not designed for operation in extreme cold weather and has structural limitations at -20° F. 11. In testimony, Hilcorp stated that it intends to operate Thunderbird seasonally for six to seven months per year, that it is not a fully enclosed and winterized rig, and that it is not intended for winter operations. 12. As Hilcorp pushed to extend the operating season into November, the lack of winterization became a focus. On November 4, 2021, the AOGCC issued a Notice of Violation to Hilcorp after discovering operations on Thunderbird continued with a failed BOPE performance test. The annular preventer close time of the October 25, 2021 BOPE test exceeded API RP 53 specifications, incorporated by reference in the AOGCC regulations. As witnessed by AOGCC Inspectors, subsequent accumulator performance tests at Thunderbird struggled to achieve passing annular closure times on its BOPE equipment during cold weather. 13. AOGCC Inspector field visits during 2021 identified the lack of winterization on the Thunderbird rig. 14. The BOPE accumulator on Thunderbird had slow close times during late 2021, and it passed after numerous adjustments and actions attempting to improve the accumulator performance. A Hilcorp email to AOGCC on November 2, 2021 acknowledged “being 1- Other Order 192 April 7, 2022 Page 3 of 4 2 seconds below (or obviously above) passing is not where we need to be for consistent operations.” 15. During 2021, Hilcorp operated Thunderbird until November 12 before shutting it down for the winter. Below zero temperatures and equipment performance were factors leading to shutting down operations for the winter. CONCLUSIONS: 1. Recommendations regarding updating the regulations to include API STD 53 are beyond the scope of this action and will be addressed separately. 2. Use of the words “shall” and “should” in API documents is not relevant. For at least as many years as API RP 53 3rd edition has been adopted by reference into AOGCC regulations, water has been the only approved fluid to test well control equipment in Alaska. 3. The Klondike Work Platform is not a sufficiently analogous rig for purposes of comparison to the Thunderbird rig. 4. During the hearing, the AOGCC asked Hilcorp whether it had any evidence that the 9.8 ppg brine used as BOPE test fluid on AAO-111 in 2019 on two occasions was approved by the AOGCC. Hilcorp did not have any evidence that the use of brine was approved by the AOGCC. 5. Because of the difficulties encountered in achieving a passing test in early November 2021, AOGCC does not approve Hilcorp’s proposed operating window of April 15 through November 15 for the Thunderbird rig. The purpose of the test is to assure the equipment will function properly under real world operating conditions. The effort required to obtain a passing test in November indicates a substantial likelihood that the equipment will not function properly if needed. Wind chill should be included in determining the appropriate operating window. Wind and temperature affect the ability to keep BOPE, supporting equipment, manifold equipment, and personnel reliably operating in typical North Slope spring, autumn and winter weather conditions. 6. AOGCC regulations 20 AAC 25.526 and 20 AAC 25.527(b) address conduct of operations and the reliable operation of equipment. Thunderbird’s lack of a winterization package makes it unsuitable to operate in the weather conditions encountered during winter months and some time periods of the spring and autumn shoulder seasons. 7. Although Hilcorp has performed BOPE tests in cold weather using water,as temperatures declined below freezing, and certainly below 0ၨF, testing became a significant challenge because of inadequate winterization. Other Order 192 April 7, 2022 Page 4 of 4 NOW THEREFORE IT IS ORDERED: Hilcorp’s request to utilize 60/40 methanol/water or 9.8 ppg brine as BOPE test fluids for the Thunderbird Rig #1 is GRANTED. Based upon issues encountered during the 2021 season, Thunderbird well operations shall be limitedtoMay 1 until October 31.1 Wellbore operations must be concluded no later than October 31. DONE at Anchorage, Alaska and dated April 7, 2022. Jeremy M. Price Daniel T. Seamount, Jr. Jessie L. Chmielowski Commissioner, Chair Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on recon- sideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. 1 AOGCC notes there are sundries approved for work estimated to start in April 2022. The “estimated” start dates in the sundry approvals do not authorize work outside the dates of operation set forth in this order. Jeremy Price Digitally signed by Jeremy Price Date: 2022.04.07 15:37:24 -08'00' Dan Seamount Digitally signed by Dan Seamount Date: 2022.04.07 15:51:39 -08'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2022.04.07 19:22:05 -05'00' From:Carlisle, Samantha J (OGC) To:AOGCC_Public_Notices Subject:Other Order 192 Date:Thursday, April 7, 2022 4:31:00 PM Attachments:other192.pdf Request by Hilcorp Alaska, LLC to utilize a 60/40 blend of methanol and water and/or a brine solution to test the blowout prevention equipment on the Thunderbird Rig #1. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 Mailed 4/7/22 9 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov October 6, 2022 Mr. Aras Worthington Senior Technical Advisor for Alaska Operations Hilcorp Alaska, LLC P.O. Box 244027 Anchorage, AK 99524-4027 Re: Docket No: OTH-21-035 Request by Hilcorp Alaska, LLC to reconsider the seasonal end date on the Thunderbird Rig #1. Dear Mr. Worthington: On April 7, 2022, the Alaska Oil and Gas Conservation Commission (AOGCC) issued Other Order 192 (OO192) authorizing the use of 60/40 methanol/water or 9.8 ppg brine as blowout prevention equipment (BOPE) test fluids and limiting well operations from May 1 until October 31 for the Thunderbird Rig #1 (Thunderbird). By email dated April 11, 2022, Hilcorp1, identified issues and concerns with the seasonal limit imposed by AOGCC on Thunderbird well work. On April 12, 2022, the AOGCC issued an Order on Reconsideration of OO192. Hilcorp’s request to start work with Thunderbird on April 15, 2022 was approved. By email dated September 16, 2022, Hilcorp requested that the AOGCC extend the operating window of Thunderbird from October 31, 2022 until November 15, 2022. After consideration of Hilcorp’s request, the AOGCC decision is that wellbore operations must be concluded no later than October 31, 2022 as stated in OO192. However, Hilcorp may approach the AOGCC in the spring of 2023 to request an earlier start date if the weather conditions are favorable. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner 1 Hilcorp Alaska LLC operates the Milne Point, Endicott, and Northstar fields; Hilcorp North Slope LLC operates the Prudhoe Bay field. Both operators are collectively referred to in this document as Hilcorp. Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2022.10.06 16:48:05 -08'00' Docket Number: OTH-21-035 October 6, 2022 Page 2 of 2 RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. 8 From: Aras Worthington <Aras.Worthington@hilcorp.com> Sent: Monday, April 11, 2022 11:47 AM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: John Barnes <jbarnes@hilcorp.com>; Bo York <byork@hilcorp.com>; David Bjork <David.Bjork@hilcorp.com> Subject: Thunderbird #1 Other Order 192 Mel, Pursuant to our conversation on the problematic content and timing of the Thunderbird #1 order (Other Order 192), here are our issues/concerns. We ask that you share these with the Commissioners: 1. We have made some additions to the rig’s equipment since last year’s workover season that include: a. Custom made insulated blankets and heat trace for exposed surface piping (this modification was based on a suggestion by Austin McLeod of AOGCC). b. A wind wall was fabricated for the derrick side of the floor. c. Roof panel fabricated for the operators station. d. Enclosed the kill manifold with a hooch to keep it warm and improve access. 2. Issues we experienced with BOP closure times at the end of the 2021 season were not weather related. System modifications made to the BOPE system, previously communicated to AOGCC, have addressed the issues and we are eager to demonstrate the effectiveness of the changes. 3. We planned to start up the rig this week on April 15th since the weather is favorable and within the hard limits we set out in the hearing, in which we testified that we would delay startup or initiate shut down if the weather is forecast to be below ‐10F. The temperature this morning is +10 deg F and the forecast is for the temperatures to stay above ‐10F after Friday the 15th. As noted in our testimony, this is an API 4F monogrammed rig designed to operate down to ‐20 deg F and does so in numerous other regions in the United States, Canada and Russia. 4. We have already mobilized crews for the rig and in fact started shop testing BOPs with those crews last Friday per plan. The order was issued Thursday afternoon of last week and caught us unaware that we would be delayed for an additional two weeks. 5. As you are aware, AOGCC had approved Sundries for Thunderbird #1 that indicated April as the start date, so we had every reason to assume that there would be no curtailment of the season since the Sundries were approved with no discussion of the start dates. 6. If the AOGCC had simply messaged to us that there would likely be a hard cut‐off date to the startup of the rig we would at least have been able to plan for it rather than derailing the current plan to start up on or around April 15th. 7. Two weeks of delay coupled with two weeks of curtailment to the end of our season may not seem like much but it is one month combined and 1/6 of our current operating season for the rig, so it is significant to us. 8. Planning rig‐workovers is a months‐long process. Tangibles are long‐lead items (up to a year) these days. Scheduling is complex, involving multiple service lines, rig crews, support crews, etc. It is complicated to plan for a startup on April 15th and scope all the rig workovers for a work season and has significant impacts when one month, or up to four rig‐workovers, are cut from the schedule in the 11th hour of planning for the work. CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. 9. There will be production impacts to the late startup and earlier shut‐down. The rig workovers that get cut from the schedule will not get repaired in 2022 and will wait until the 2023 season to complete them unless another rig can be scheduled to complete them. Our proposed plan forward is as follows: 1. Mobilize the rig to PBU N‐13 as planned on April 15th (weather and forecast provided as per above). a. Note that Hilcorp has a previous agreement with our rig contractor, Thunderbird, to start work on or around April 15th. We will make good on our agreement with Thunderbird and will be paying Thunderbird’s day rate regardless of whether or not we are working the rig or standing by waiting until May 1st. 2. Rig up the BOPE system to the well (as with last year’s program, the BOPs are nippled up before the rig arrives). 3. Test BOPE and request an AOGCC witness of the test to prove‐up that the BOPE system performs to the specifications required and under the weather conditions prevailing at that time. 4. If the BOPE system passes all tests to the Commission’s satisfaction, Hilcorp requests that we immediately be allowed to go to work on the well. Thanks and Best Regards, Aras Worthington Hilcorp Alaska LLC Senior Technical Advisor for Alaska Operations, PE Aras.worthington@hilcorp.com 907‐564‐4763 907‐440‐7692 mobile The information contained in this email message is confidential and may be legally privileged and is intended only for the use of the individual or entity named above. If you are not an intended recipient or if you have received this message in error, you are hereby notified that any dissemination, distribution, or copy of this email is strictly prohibited. If you have received this email in error, please immediately notify us by return email or telephone if the sender's phone number is listed above, then promptly and permanently delete this message. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient to ensure that the onward transmission, opening, or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by the company in this regard and the recipient should carry out such virus and other checks as it considers appropriate. CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Price, Jeremy M (OGC) To:Carlisle, Samantha J (OGC) Subject:Fwd: Thank You Date:Wednesday, April 13, 2022 9:57:23 AM Begin forwarded message: From: Luke Saugier <lsaugier@hilcorp.com> Date: April 13, 2022 at 8:32:38 AM AKDT To: "Chmielowski, Jessie L C (OGC)" <jessie.chmielowski@alaska.gov>, "Price, Jeremy M (OGC)" <jeremy.price@alaska.gov>, "Seamount, Dan T (OGC)" <dan.seamount@alaska.gov> Subject: Thank You Commissioners, I’m writing to express Hilcorp’s appreciation for the AOGCC reconsidering the start date for the Thunderbird rig. Thank you for listening and being responsive. The way this incident played out reflects favorably upon AOGCC and the working relationship with Hilcorp in particular and industry in general. We believe the Thunderbird rig is now a better tool than it was and we plan to demonstrate that over the next 6 months. Regards, Luke Luke Saugier Hilcorp Alaska The information contained in this email message is confidential and may be legally privileged and is intended only for the use of the individual or entity named above. If you are not an intended recipient or if you have received this message in error, you are hereby notified that any dissemination, distribution, or copy of this email is strictly prohibited. If you have received this email in error, please immediately notify us by return email or telephone if the sender's phone number is listed above, then promptly and permanently delete this message. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient toensure that the onward transmission, opening, or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by the company in this regard and the recipient should carry out such virus and other checks as it considers appropriate. 7 AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Request by Hilcorp ) Alaska, LLC, to Discuss AOGCC's Denial ) of Hilcorp's Request to Utilize a 60/40 ) Blend of Methanal and Water and/or a ) Brine Solution to Test the BOP Equipment ) on the Thunderbird Rig Number 1. ) ) Docket No.: OTH-21-035 PUBLIC HEARING February 22, 2022 10:00 o'clock a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net 1 TABLE OF CONTENTS Page 2 2 Opening remarks by Chairman Price 03 3 Testimony by Aras Worthington 05 4 Testimony by Jifeng Peng 14 5 Testimony by Matt Ross 23 6 Testimony by Bo York 28 7 Testimony by Anthony Knowles 63 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 3 1 P R O C E E D I N G S 2 (On record - 10:03 a.m.) 3 CHAIRMAN PRICE: Good morning. We are now on 4 record. It is approximately 10:00 a.m. -- I'm sorry, 5 about 10:03 a.m., Tuesday, February 22, 2022. This is 6 Jeremy Price, Chairman and Commissioner. With me today 7 are Commissioners Dan Seamount and Jessie Chmielowski. 8 This is a public hearing on docket number OTH-21-035 to 9 consider the request by Hilcorp Alaska, LLC, to discuss 10 AOGCC's denial of Hilcorp's request to utilize a 60/40 11 blend of methanal and water and/or a brine solution to 12 test the BOPE equipment on the Thunderbird rig number 13 1. 14 This hearing is being held in accordance with 15 Alaska statute 44.62, 20 AAC 25.540 and 20 AAC 25.440 16 of the Alaska Administrative Code. 17 The notice of the hearing for docket OTH-21-035 18 was published on the State of Alaska online notices 19 website as well as the AOGCC's website and was sent 20 through the AOGCC email list serve on January 7th, 21 2022. The AOGCC also published the notice on the 22 Anchorage Daily News on January 11th, 2022. To date 23 the AOGCC has not received any public comment on the 24 matter. 25 Today's hearing is being held in person, AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 4 1 telephonically and via Microsoft Teams. Please be 2 mindful of any background noise and make sure you are 3 muted when you're not testifying or addressing the 4 Commission. 5 If you require any other special accommodation 6 please contact Samantha Carlisle, she can be reached at 7 793-1223 or send her a message through the Microsoft 8 Teams chat icon and she'll do her best to accommodate 9 you. 10 Computer Matrix today is recording the hearing 11 today. Upon completion and preparation of the 12 transcript please see Nickelle at Computer Matrix to 13 order a copy of the proceedings. Before asking 14 Hilcorp to provide their presentation, do any of the 15 Commissioners have any questions. 16 Commissioner Chmielowski. 17 COMMISSIONER CHMIELOWSKI: No, thank you. 18 CHAIRMAN PRICE: Commissioner Seamount. 19 COMMISSIONER SEAMOUNT: I have none. Thank 20 you. 21 CHAIRMAN PRICE: Okay. Guys, if you're ready 22 we'll swear you in and then have you give your 23 presentation. Does that work, we'll just do both at 24 the same time. If you can raise your right hand. 25 (Oath administered) AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 5 1 IN UNISON: I do. 2 CHAIRMAN PRICE: Thank you, guys. Now I think, 3 Aras, you're going to go first? 4 MR. WORTHINGTON: Yeah. Thanks. 5 CHAIRMAN PRICE: Okay. Go ahead and state your 6 name for the record before you start. 7 MR. WORTHINGTON: Yeah. Aras Worthington, 8 Hilcorp Alaska. 9 ARAS WORTHINGTON 10 called as a witness on behalf of Hilcorp Alaska, 11 testified as follows on: 12 DIRECT EXAMINATION 13 MR. WORTHINGTON: Good morning, Mr. Chairman, 14 Commissioners and AOGCC staff. My name is Aras 15 Worthington. I am senior technical advisor for Alaska 16 operations for Hilcorp, Alaska. I'm here with Bo York, 17 Prudhoe Bay East operations manager for Hilcorp North 18 Slope, Matthew Ross, Hilcorp wellsite supervisor for 19 Thunderbird number 1 and Anthony Knowles, also a 20 Hilcorp wellsite supervisor for Thunderbird number 1 on 21 the phone who is participating telephonically. Dr. 22 Jifeng Peng is also joining us from the University of 23 Alaska, he's on the phone as well. 24 We thank you for the opportunity today to 25 present testimony in support of Hilcorp's request to AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 6 1 test BOPs with low freezing point fluids on Thunderbird 2 rig number 1. We'd like to emphasize that the purpose 3 of requesting approval for a change in BOP test fluids 4 is not a cost saving measure for Hilcorp, but rather 5 comes from a safety concern that our rig field 6 supervision has elevated to us on numerous occasions. 7 While this hearing is not about the suitability 8 of the Thunderbird rig operating at Prudhoe Bay, 9 questions posed by AOGCC regarding the suitability of 10 the Thunderbird rig will be addressed at the end of our 11 testimony specific to the use of alternative BOPE test 12 fluids. 13 I'm a nearly lifelong Alaskan with a bachelor 14 of science in mechanical engineering from Purdue 15 University in West Lafayette, Indiana, I'm a licensed 16 petroleum engineer in the state of Alaska, I have 28 17 years of engineering oil field experience within a wide 18 variety of oil field companies in the fields of 19 interventions, rig workovers, drilling, coiled tubing 20 drilling, plug and abandonments and well integrity. I 21 respectfully request that the Commission recognize me 22 as an expert witness in this matter. 23 CHAIRMAN PRICE: Commissioners, any questions 24 on Mr. Aras' background and qualifications, any 25 concerns with recognizing him as a expert witness? AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 7 1 COMMISSIONER CHMIELOWSKI: I have no concerns. 2 COMMISSIONER SEAMOUNT: No concerns, no 3 objections. 4 CHAIRMAN PRICE: You're recognized as an expert 5 witness. 6 MR. WORTHINGTON: Thank you. This is 7 background. BOPs or blow out preventors are defined by 8 API standard 53 as a quote, sealing ram or annular type 9 device which is within the scope of API's 16(a) 10 installed on the wellhead or wellhead assemblies to 11 contain wellbore fluids either in the annular space 12 between casing and tubulars or in an open hole during 13 well drilling, completion and testing operations, 14 unquote. 15 BOPs on workover rigs like Thunderbird number 1 16 are used as a contingent barrier to reservoir pressure 17 and fluids. The first barrier being a mechanical plug 18 set deep in the well or kill weight fluid or both. 19 Because BOPs are a contingent barrier, they are 20 normally opened and closed only when pressure 21 containment around the tubing or work-string is needed. 22 The BOPs are function and pressure tested to a 23 pressure above the maximum anticipated surface pressure 24 on every new rig up on a well and every seven days 25 thereafter and whenever the BOP stack is modified or if AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 8 1 an event requires a retest per AOGCC regulations such 2 as closing the BOPs for well control. The test 3 pressures are dictated by the approved sundry 4 application from AOGCC. AOGCC inspectors are given 24 5 hours of notice to witness BOP tests and will then 6 either witness the test or waive witness depending on 7 inspector workload, AOGCC priorities, et cetera. 8 Operations overview and application. Hilcorp 9 is using the Thunderbird rig number 1 at Prudhoe Bay to 10 perform workover operations. This is a brand new rig 11 Hilcorp submitted -- and Hilcorp submitted the rig book 12 to AOGCC for review prior to rig acceptance. We have 13 worked through the acceptance and commissioning of the 14 rig with AOGCC field inspectors and Mr. James Regg. 15 The rig is a relatively lightweight, mobile and 16 is capable of most of the scope of the workovers we 17 plan to do in greater Prudhoe Bay. It requires a 10th 18 of the fuel when compared to its much larger and less 19 mobile predecessor rigs. The rig moves from pad to pad 20 with minimal infrastructure impact and does not require 21 rig matting the roads. It is a right sized tool for 22 the jobs we plant to execute with it. 23 We intend to seasonally operate the rig from 24 roughly 15th of April through the 15th of November so 25 about six to seven months, weather dependent. It is AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 9 1 not a fully enclosed and winterized rig and is not set 2 up nor intended to be used for full on winter 3 operations. Although this rig is unique to Prudhoe Bay 4 it is not unique to the industry, hundreds of these 5 rigs are in operation throughout the lower 48, Canada 6 and overseas to include arctic locations including 7 Russia. 8 We resolved many of the questions and concerns 9 specific to this type of workover rig through the 10 acceptance and commissioning process, however AOGCC has 11 denied one Hilcorp request that we would like to 12 present more information on. 13 Hilcorp respectfully requests the ability to 14 utilize 60/40 methanol/water or 9.8 pound per gallon 15 brine as BOP test fluids. We are bringing this request 16 forward at the urging of our field based wellsite 17 supervisors because they strongly believe using water 18 instead of the requested 60/40 methanol/water blend or 19 9.8 pound per gallon brine introduces unnecessary and 20 easily mitigable risk to our workover operations. 21 Because the rig choke and kill lines are 22 exposed to the elements by design using freshwater as a 23 test fluid exposes those lines to the risk of freezing 24 during the slow rate pumping operations of testing 25 BOPs. If any of these lines, valves, chokes or gauges AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 10 1 freeze we will lose functionality of a critical 2 component of the BOP and well control system. This is 3 an unnecessary operational safety risk. 4 The only direct requirement in the AOGCC 5 regulations for BOP test fluids is found in 20 AAC 6 25.285 which requires a noncompressible fluid to be 7 utilized for BOP testing. 8 Hilcorp Alaska contends that for the purpose of 9 BOP tests any of the proposed fluids are sufficiently 10 noncompressible though they are all compressible to an 11 extent. The compressibility for water, 9.8 pound per 12 gallon brine and a 60/40 blend of methanol and water is 13 negligible in all practical applications. For our 14 operations in Alaska 60/40 methanol is the most common 15 BOP test fluid for service unit work, service coil, 16 slickline and e-line, in exposed environments. The 17 60/40 blend of methanol and water is used to avoid 18 freeze up issues in the BOP system. In addition 9.8 19 pound per gallon NaCl brine could be an alternative to 20 -- alternate test fluid and has been used in workover 21 applications in the past. 22 CHAIRMAN PRICE: Mr. Worthington, before you go 23 on do you mind if I ask a question here. In your 24 testimony that was submitted on -- we got it February 25 8th, it states third paragraph we intend to seasonally AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 11 1 operate the rig from roughly April through October. I 2 think you just said November. Just to clarify is it 3 November or October and can you kind of walk through 4 the..... 5 MR. WORTHINGTON: Yeah. 6 CHAIRMAN PRICE: .....change in that? 7 MR. WORTHINGTON: So we sent an email on 8 February 8th I believe indicating that we -- our hard 9 cutoff dates, start up and shutdown, are going to be 10 April -- no earlier than April 15th for start up, no 11 later than November 15 for shutdown and that's based on 12 historical temperature trends and those are -- Bo is 13 going to cover that in more detail in his testimony, 14 but..... 15 CHAIRMAN PRICE: Okay. 16 MR. WORTHINGTON: .....those are the hard 17 lines, we won't go past that or before that. 18 CHAIRMAN PRICE: Thanks. 19 MR. WORTHINGTON: So at this point please 20 reference the Klondike service reports in Arvell Bass' 21 affidavit. These documents are submitted as evidence 22 that both 60/40 methanal/water and 9.8 pound per gallon 23 brine have been used as BOP test fluids successfully in 24 the past on the Klondike rig and the All American rig 25 111. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 12 1 I would like to before I hand over to Dr. Peng, 2 have you read the affidavit of Arvell Bass if that's 3 okay? 4 CHAIRMAN PRICE: Sure. 5 MR. WORTHINGTON: Okay. So affidavit of test 6 fluid used for BOP testing. My name is Arvell Bass, I 7 was a senior wellsite leader on the BP workover 8 campaign in 2019. I swear that the information in this 9 statement is truthful to the best of my knowledge. 10 The rig used for workovers in 2019 was the All 11 American oil field rig 111. The rig choke manifold did 12 not meet BP standards and a portable choke manifold was 13 used. The choke manifold was located outside the 14 confines of the rig and the choke lines between the rig 15 and the choke was subject to freezing in cold weather. 16 In subfreezing conditions I used 9.8 brine as a BOP 17 test fluid. I remember one occasion being asked by an 18 AOGCC inspector what the test fluid was. I replied 19 that it was 9.8 pound per gallon brine. He paused for 20 a moment and said well, I guess brine is not 21 compressible and there was no further discussion about 22 the topic. 23 I also distinctly remember using 9.8 brine in 24 the last well in 2019. GC3-D was added to the late 25 schedule and extra consideration was given to freezing AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 13 1 issues as this work would extend well into November and 2 it was possible that the temperature could be below the 3 freeze point of 9.8 pound per gallon brine. I looked 4 at the daily handover notes from that operation and the 5 temperature the day before the test was seven degrees 6 fahrenheit. On the day of the BOP test, November 11th, 7 2019, the temperature was recorded on the report as 24 8 degrees fahrenheit. 9 I Arvell Bass, once again swear that my 10 statements above are true and to the best of my 11 knowledge. You have a hard copy of this. Signed 12 Arvell Bass. 13 So at this point I'd like to turnover to Dr. 14 Jifeng Peng, he's on the phone. 15 COMMISSIONER CHMIELOWSKI: Mr. Worthington, I 16 had a quick question before you switch regarding this 17 affidavit. On these two incidents or these two cases 18 that he recalls was the brine the workover fluid in use 19 for both of those workovers? 20 MR. WORTHINGTON: I do not know that off the 21 top of my head, probably it was, but yeah, I don't 22 know. 23 COMMISSIONER CHMIELOWSKI: Okay. And do you 24 guys have a copy of a sundry or a permit that shows 25 AOGCC approval to use brine as the test fluid? AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 14 1 MR. WORTHINGTON: I don't have that on hand and 2 I personally doubt that that is explicitly approved, 3 but I don't know. 4 COMMISSIONER CHMIELOWSKI: Okay. Thanks. 5 MR. WORTHINGTON: So yes, now I'll handover to 6 Dr. Jifeng Peng, professor and chairperson of the 7 mechanical engineering department at the University of 8 Alaska, Anchorage for testimony on the compressibility 9 of fluids, but will remain open to questions at 10 anytime. 11 JIFENG PENG 12 previously sworn, called as a witness on behalf of 13 Hilcorp Alaska, testified as follows on: 14 DIRECT EXAMINATION 15 DR. PENG: Thank you, Mr. Worthington. Good 16 morning, Mr. Chairman and Commissioners and the AOGCC 17 staff. Can everybody hear me okay? 18 CHAIRMAN PRICE: We can hear you, Mr. Peng, 19 please proceed. 20 DR. PENG: Thank you. So I am a professor and 21 the chairperson of the mechanical engineering 22 department at the University of Alaska Anchorage. I'm 23 also a licensed professional engineer and a mechanical 24 engineer in the state of Alaska. 25 So today I would like to testify about the AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 15 1 compressibility of the three different types of fluid 2 in question, pure water, sodium chloride solution and 3 the methanol/water brine. I respectfully request that 4 the Commission recognize me as an expert witness. 5 CHAIRMAN PRICE: Commissioners, any..... 6 DR. PENG: Any questions before I start? 7 CHAIRMAN PRICE: Hold on a second, Dr. Peng. 8 Do we have any questions from..... 9 DR. PENG: Yeah. 10 CHAIRMAN PRICE: .....Commissioners regarding 11 the qualifications or background of Dr. Peng and his 12 request to be recognized as an expert witness? 13 COMMISSIONER CHMIELOWSKI: I'm just reading the 14 testimony here to make sure I understand what it was 15 here. 16 CHAIRMAN PRICE: So, Dr. Peng, you're the 17 professor and chairperson of the mechanical engineering 18 department at UAA; is that correct? 19 DR. PENG: That's correct. 20 COMMISSIONER CHMIELOWSKI: I've no concerns. 21 COMMISSIONER SEAMOUNT: I have no concerns. 22 Thank you. 23 CHAIRMAN PRICE: Okay. Dr. Peng, you'll be 24 recognized as an expert witness. Please proceed. 25 DR. PENG: Thank you. And also one quick AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 16 1 question before I proceed. So does anybody -- does 2 everyone have a copy of the testimony because on the 3 Team -- on Teams meeting it's not showing the 4 testimony. So I -- because I'm going to refer to some 5 tables from literature so I want to make sure everybody 6 has a copy of the testimony. 7 CHAIRMAN PRICE: Okay. Dr. Peng, we -- the 8 Commissioners all have a copy of it. You're correct, 9 it does not appear on the Teams, but we have a copy. 10 So I think you can proceed. 11 DR. PENG: Okay. Thank you, Mr. Chairman. So 12 first the -- for those of you who are not familiar with 13 the fluid compressibility, it's basically the nature of 14 the (indiscernible) volume change of fluid or, I mean, 15 either liquid or gas as the response to pressure 16 change. So the equation here is basically the 17 definition. You can see there's a minus sign in the 18 equation, in the definition equation is because when 19 you increase the pressure you decrease the volume of 20 fluid. Generally speaking decrease a very small 21 compressibility. For example for pure water as a 22 standard atmosphere condition we're talking about 25 23 degree C and one atm. The compressibility is 0.46 24 times 10 to the minus three per megapascal. So we're 25 talking about when you increase the pressure by one AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 17 1 megapascal the volume will decrease 0.46 2 (indiscernible). 3 So first I want to talk about the 4 compressibility of sodium chloride solution. So sodium 5 chloride solution has a smaller compressibility than 6 pure water. If you look at table 1 in the testimony, 7 this was from a reference, reference number 2 in the 8 bibliography. So in this table here -- let me first 9 explain this table here. So the -- basically this 10 table is the compressibility of the solution at 11 different temperature, different (indiscernible) of the 12 pressure and different solution concentration. So the 13 first column here is basically the temperature, the 14 second column here is the pressure and the block to the 15 right basically is the compressibility of the solution 16 at different concentration. The concentration here in 17 this reference was represented by molality of the 18 solution. So molality is defined as the number of the 19 moles of the solute per kilogram of solvent. So it's 20 basically proportion of the concentration. 21 So as you can see in this table if you take any 22 row basically shows the compressibility of the solution 23 at a given temperature and a given pressure and you can 24 see the changes with the concentration. And if you 25 look from the left to the right you can see the AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 18 1 compressibility deceases with the increased 2 concentration of the solution. 3 So that's basically for the sodium chloride 4 solution. 5 So let's move to table 2 in the testimony. So 6 basically for the solution, you know, Hilcorp intend to 7 use 9.8 pound per gallon solution. The molality is at 8 a 6.1. So because in this table, in this reference the 9 highest concentration is only with the molality of 5.0. 10 So basically we're just going to use a conservative 11 value which is highlighting in this red spot, .294, as 12 the -- as the compressibility. So for the 9.8 ppg 13 solution the compressibility is going to be even 14 smaller because the concentration is higher. 15 So now let me move to the compressibility of 16 methanol/water brine. So let's move to table number 3. 17 So this was from a -- another reference. So this table 18 was constructed a little bit different from the table 2 19 we just saw. So first the -- the first column is the 20 temperature where the values are measured. And so and 21 then the pressure was actually in the horizontal axis 22 you can see the top -- the numbers at the top row the 23 pressure from one atm which is 0.1 megapascal up to 60 24 megapascal. And the concentration here basically 25 represent in straight blocks, you can see. So this X AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 19 1 here is the mole fraction. So this mole fraction is 2 the -- defined as the ratio of the numbers of moles of 3 methanol to the total number moles of methanal in the 4 water. So basically it is (indiscernible) that the 5 higher the mole fraction, the higher concentration of 6 methanol in the solution. 7 So there are three blocks, the mole fraction 8 equals 0.25, 0.5 and 0.75. So the 60/40 methanol/water 9 brine is equivalent to the mole fraction of X equals to 10 0.4. So because there are only three concentrations 11 here and we don't know the exact correlations and we 12 don't want to do just do a simple linear 13 interpretation, we just choose the conservative value 14 of the compressibility at the concentration and mole 15 fraction of 0.5. So the value, the number highlighted 16 in this red box shows the compressibility of the 17 solution. And the -- I also want to mention that this 18 value here has a -- it's basically is the actual 19 compressibility multiplied by 1 million so that's why 20 you see -- you are not seeing 0.669 but 669. 21 So that's basically the compressibility of the 22 methanol/water solution. 23 So as a summary in table 4 we listed the 24 compressibility of the three fluid in question, pure 25 water, 9.8 ppg sodium chloride solution and 60/40 AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 20 1 methanol/water brine. So in table 4 you can see the 2 second column is the compressibility of the three 3 liquid at standard atmosphere condition and the third 4 column basically tabulated the percentage of volume 5 change when applied with 500 psi testing pressure of 6 the BOP test. As you can see as a baseline for pure 7 water at 570 psi the volume of the liquid reduced 1.59 8 percent for 9.8 ppg sodium chloride solution so the 9 percentage, the change of percent volume is smaller at 10 1.01 percent and for the methanol/water brine the 11 volume change of the fluid is slightly larger than the 12 baseline of 2.31 percent. I also want to emphasize 13 that because for the sodium chloride solution and the 14 methanol/water brine we use the conservative value so 15 basically in the real numbers of volume change would be 16 slightly less than the numbers shown in this table 4. 17 So basically in summary that's basically the 18 summary for sodium chloride solution, the volume change 19 of the liquid will be less than the pure water and for 20 methanol/water brine volume change would be slightly 21 higher, but not that much. 22 So that's the -- my testimony and I would 23 welcome any questions. 24 CHAIRMAN PRICE: Thank you for your testimony, 25 Dr. Peng. Let me pause for a moment to see if any of AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 21 1 the Commissioners have questions for Dr. Peng. 2 COMMISSIONER CHMIELOWSKI: Not at this time, 3 maybe later. 4 CHAIRMAN PRICE: Okay. If you could stay on 5 the phone, Dr. Peng. 6 DR. PENG: Sure. Thank you. 7 CHAIRMAN PRICE: Thanks for your testimony. 8 MR. WORTHINGTON: Before we turn over to Bo I 9 would like to take a moment to also -- I read our -- 10 sorry, Aras Worthington. Thank you. 11 So I read Arvell Bass' affidavit from the All 12 American rig, but also would like to direct your 13 attention to the WSRs we submitted, well service 14 reports for the Klondike well work platform which is 15 used in conjunction with coil for small workover 16 operations, but from 2019 there were two dates of the 17 13th of April, the 13th of December and then in 2020 18 the 25th of March where we used methanol/water as a 19 test fluid. The in and out micromotion densities are 20 listed as seven and a half to 7.2 pounds per gallon 21 which is indicative that it was methanol/water. But 22 also the fluid summary at the bottom which is 23 highlighted clearly shows 60/40 methanal was used 24 during those BOP tests which as I said is very typical 25 for coil tubing, but we also use it on that well work AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 22 1 platform routinely. 2 That's all I have before Bo gets on. 3 COMMISSIONER CHMIELOWSKI: Mr. Worthington, is 4 it Hilcorp's position that service coil in a well work 5 platform is apples to apples comparison to a workover 6 or drilling rig? 7 MR. WORTHINGTON: I'm not sure what you mean by 8 that because we certainly recognize that they're 9 different in many ways and they serve different 10 functions. But as the All American rig is definitely 11 apples to apples, it was a workover rig that pulled 12 tubing, did workovers for BOP just as the Thunderbird 13 did, used 9.8 brine in that -- on those tests. The 14 well work platform is not a workover rig, definitely 15 not, it doesn't pull tubing, we use it for smaller 16 interventions through tubing. 17 COMMISSIONER CHMIELOWSKI: I understand that 18 service coil has the ability to inject methanol 19 directly into the BOP stack, is that the case on 20 Thunderbird? 21 MR. WORTHINGTON: I don't know the answer to 22 that question. I don't believe so, but I would like to 23 turnover to Matt Ross possibly to answer that question. 24 CHAIRMAN PRICE: Can you go ahead and state 25 your name for the record. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 23 1 MR. ROSS: Yeah. Yes, good morning. My name 2 is Matthew Ross. 3 (Off record comments - volume) 4 MR. ROSS: Just let me know if you can't hear 5 me. 6 MATT ROSS 7 previously sworn, called as a witness on behalf of 8 Hilcorp Alaska, testified as follows on: 9 DIRECT EXAMINATION 10 MR. ROSS: Yeah, like I said, you know, Matthew 11 Ross, senior wellsite supervisor for Hilcorp in Alaska. 12 I currently reside, you know, in San Antonio, Texas. I 13 have an associate's degree with locktronics and a 14 bachelor of science in mechanical engineering. For 15 myself I started overseas in '96. 16 (Off record comments - volume) 17 MR. ROSS: So yes, I worked all seasons 18 throughout Canada, overseas, you know, of course here 19 in Alaska, the lower 48 as well. And then for myself 20 I'm in kind of the unique position here, I'm a 21 owner/operator and producer/gatherer in the state of 22 Texas as well so small, very small independent 23 producer. But the unique position, you know, that I do 24 own rigs and equipment and albeit they're very aged, 25 they're very similar to the Thunderbird rig. And again AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 24 1 over the course of my career, starting, you know, since 2 '96, worked 300 plus sidetracks, over a hundred 3 workovers in Alaska, not to include my own in Texas. 4 So, you know, I've tested countless BOPs. So just 5 wanted you to, you know, recognize that fact. 6 So if you could just -- what was your question 7 again do we have the ability to..... 8 COMMISSIONER CHMIELOWSKI: I'm just sort of 9 trying to understand why a service coil unit would be 10 considered equivalent to the Thunderbird rig. I 11 understand that on the North Slope service coil has the 12 ability to inject methanol directly into the BOP stack. 13 Is that the case on Thunderbird? 14 MR. ROSS: So you're correct on the service 15 coil. Yes, we can inject. Yeah, they're similar in 16 the fact that they both use BOPs, they're both in the 17 same working environment, you know, the seasons aren't 18 exactly apples to apples, but the temperature sure can 19 be. And that, you know, we operate during freezing 20 conditions. So far as trying to inject into the BOPs, 21 we never have. Basically we don't have methanol out 22 there for a test fluid so to answer your question no, 23 we never really have, but yes, we probably could if we 24 wanted to. 25 COMMISSIONER CHMIELOWSKI: But is it -- is it AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 25 1 standard procedure to inject fluids -- if you had 2 methanol out there would they be able to go directly 3 into the BOP stack to ensure that it's adequately 4 freeze protected? 5 MR. ROSS: You're -- somehow you're talking 6 during the job? 7 COMMISSIONER CHMIELOWSKI: Uh-huh. At any 8 point, yeah. 9 MR. ROSS: Basically we rely, you know, on our 10 operating principle would be to blow down lines before 11 any -- starting any operation. So once the BOPs are -- 12 have been tested before we do the well entry part of 13 it, fetching any plugs or what have you, we blow lines 14 down. And that again can augment, you know, the non- 15 use of methanol on the Thunderbird rig 1. So basically 16 we haven't really tried it is..... 17 COMMISSIONER CHMIELOWSKI: I'm just trying to 18 understand and sort of clarify the differences between 19 service coil and a workover rig, that they're set up 20 differently, correct? 21 MR. ROSS: Correct. Yes, but they -- the 22 equipment is virtually identical, you know, BOPs, well 23 control, especially on the well work platform using 24 kill weight fluid. 25 MR. YORK: Is the question could we if we AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 26 1 wanted to inject -- pump and inject methanol, circulate 2 it through the BOPs on the Thunderbird rig, is that the 3 question? 4 COMMISSIONER CHMIELOWSKI: Yeah. So maybe I 5 could just back up a little bit. You know, I 6 understand that you wanted to present information that 7 -- and the methanol has been used on service coil for 8 quite a while that's, you know, standard as I 9 understand it, in the -- so correct me if I'm wrong, 10 but my understanding is that on a service coil unit 11 fluids are -- that pass through the BOP are led by 12 methanol, they've chased by methanol and if at any 13 point there's a static condition methanol can be 14 injected directly into that BOP stack to ensure that it 15 never freezes and it's operational. That doesn't seem 16 to be the same operational scenario on a workover rig. 17 You could have freezable fluids in your BOP stack, 18 static conditions, that could freeze. So how do you 19 keep it from freezing, it's different from service 20 coil, right? 21 MR. ROSS: Yeah, this is Matthew Ross. You 22 know, no, you're correct, but during the workover 23 process to keep the hole full, we're doing continuous 24 hole full whether we're tripping in or tripping out. 25 So the hole is with regard to -- like I said earlier AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 27 1 we're going to blow down our return lines, but filling 2 the hole and taking fluid from the hole during the 3 trip, that's a different -- different set up. 4 COMMISSIONER CHMIELOWSKI: Okay. 5 MR. YORK: We might -- this is Bo York with 6 Hilcorp. We might get into your question maybe more 7 when we answer because I -- Commissioner, I believe 8 your question was posed to us and we have some answers 9 for them at the end of the testimony portion so I think 10 we'll probably get into more answers to it then as 11 well. 12 COMMISSIONER CHMIELOWSKI: Okay. 13 MR. YORK: I'm gathering this isn't a 14 satisfactory answer, you're not getting quite what 15 you're looking for here. 16 COMMISSIONER CHMIELOWSKI: I'm not. So maybe 17 we should save it for the end. I just brought it up 18 because of this evidence you've submitted about the 19 service coil. So I just wanted to get some 20 conversation on the record about whether they're 21 slightly different from a workover rig. And that's 22 really -- that was really my objective. 23 MR. YORK: I don't think we would argue that 24 point that yes, they are different operations, they are 25 set up differently, they do different work. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 28 1 COMMISSIONER CHMIELOWSKI: Uh-huh. 2 MR. YORK: And then service coil does work 3 24/7/365 and its equipment is very exposed to the 4 weather similar to the Thunderbird rig. But we might 5 address it and if we don't then if might be good to 6 bring up at that time. 7 COMMISSIONER CHMIELOWSKI: Sounds good. 8 Thanks. 9 MR. YORK: So good to continue? 10 CHAIRMAN PRICE: Please proceed. 11 MR. YORK. Okay. 12 BO YORK 13 previously sworn, called as a witness on behalf of 14 Hilcorp Alaska testified as follows on: 15 DIRECT EXAMINATION 16 MR. YORK: So good morning, Mr. Chairman, 17 Commissioners and AOGCC staff. My name is Bo York, I'm 18 the operations manager for the eastern half of Prudhoe 19 Bay and also the wells group for Hilcorp North Slope. 20 And thankfully there's no question on Dr. Peng's 21 testimony so far, I won't be able to answer any of 22 those, but we'll refer back to him as necessary. 23 I'm of graduate of Lathrup High School in 24 Fairbanks and obtained my engineering degree from the 25 United States Military Academy at West Point, New York. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 29 1 After serving in the military on active duty as an 2 engineer officer returned to Alaska and continued my 3 service in the reserves, then also started working in 4 the oil and gas industry in the late '90s. I have 25 5 years of engineering experience and I've worked with 6 all the major producers in Alaska including Hilcorp for 7 the last 10 years as -- first as our engineering 8 manager and then as operations manager for the North 9 Slope team, for the Kenai team and now on the Prudhoe 10 team. 11 I respectfully request the Commission recognize 12 me as an expert witness in this matter. 13 CHAIRMAN PRICE: Any questions on Mr. York's 14 qualifications to be recognized as an expert witness? 15 COMMISSIONER CHMIELOWSKI: No questions or 16 concerns. 17 COMMISSIONER SEAMOUNT: No questions or 18 concerns. 19 CHAIRMAN PRICE: You're recognized as an expert 20 witness. Please proceed. 21 MR. YORK: Thank you, Mr. Chairman. So the 22 first thing I will talk about a little bit is on API 53 23 so just go into discussion a little bit on the 24 different editions of the API and what it states in 25 there. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 30 1 So Alaska Administrative Code AAC 25.527 adopts 2 by reference American Petroleum Institute API 3 recommended practice 53, third edition, which is dated 4 March, 1997. Section 17.3.5 of the third edition, 5 March, 1997, states that water in quotes should in 6 quotes be used as the BOPE test fluid. Hilcorp 7 contends that API RP53, third edition, 1997, by 8 definition are recommended practices and does not 9 require or use the word shall or must in section 17.3.5 10 in regard to using water again in quotes, as a test 11 fluid. However the recommended practice does 12 incorporate the stronger or more prescriptive must in 13 quotes or shall in quotes, in numerous other sections. 14 Therefore Hilcorp contends that the use of 15 should is intentionally used for this specific 16 recommended practice to be less prescriptive. 17 API 53, third edition, discusses the use of 18 shall and should as many of API practices do and 19 denotes their differences very clearly. Specifically 20 and this is in quotes from the API, shall indicates 21 that the recommended practice has universal 22 applicability to the specific activity. Should again 23 in quotes denotes a recommended practice a), where a 24 safe comparable alternative practice denotes a 25 recommended practice; b) that may be impractical under AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 31 1 certain circumstances or denotes a recommended 2 practice; c) that may be unnecessary under certain 3 circumstances or application. 4 Hilcorp contends that a), b) and c) all apply 5 to section 7.3.5 and the use of water. A safe 6 alternative does exist, 60/40 methanol, brine or other 7 fluid using water for test fluid on a workover rig's 8 BOP system in freezing conditions is impractical and c) 9 using water instead of 60/40 methanol or 9.8 pound per 10 gallon brine is unnecessary in this circumstance or 11 application as it does not change the quality or 12 technical aspects of the test. 13 Hilcorp Alaska contends that API recommended 14 practice 53, third edition, March, 1997, has been 15 superseded by two other editions, the first is the 16 fourth edition that was -- came out in November of 2012 17 and then the second is the fifth edition which came out 18 in 2018. Both editions state in their introduction 19 this edition supersedes all previous editions of the 20 standard and specifically sites the March, 1997, third 21 edition. However we do recognize that AOGCC continues 22 to recognize the third edition as that is what's cited 23 in the Alaska Administrative Code, fully recognize 24 that. So really the API that we have to go off of per 25 the regulation, per the code, is the third edition from AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 32 1 1997. 2 However I would like to talk about the two more 3 recent editions because I do think it sheds light on 4 the use of water for BOP testing. 5 So along those lines API 53 standard number 4 6 or standard, it changed from a recommended practice to 7 a standard when it changed from the third edition to 8 the fourth edition. So the fourth edition dated 9 November, 2012, the section changed, but it's more or 10 less the same thing, section 6.5.3.5, test fluids, 11 states well control equipment shall be pressure tested 12 with water or water with additives. It goes on to 13 state in section 6.5.3.5.3, control systems in 14 hydraulic chamber shall be tested using clean control 15 system fluids with lubricity and corrosion additives 16 for the intended service and operation temperatures. 17 This fourth edition to note uses the 18 prescriptive shall instead of the should, but then it 19 also incorporates the alternative use water with 20 additives and further goes on to mention operating 21 temperatures in quotes. This fourth edition dictates 22 the use of water with additives to account for 23 operating temperatures for just the reasons Hilcorp is 24 making our request. 25 And then the fifth edition which is again dated AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 33 1 December, 2018 which is the most recent edition of API 2 standard 53, section 5.3.9, again the section reference 3 has changed, but it's still titled test fluid, states 4 in section 5.3.9.1, the initial installation pressure 5 test shall be conducted with water or water with 6 preservation, antifreeze and color additives. Again 7 the fifth edition uses the prescriptive shall in quotes 8 and notes even more clearly that water with 9 preservation, antifreeze and colorant shall be used. 10 Section 5.3.9.2 continues during operations the 11 drilling fluid in use is acceptable to perform 12 subsequent tests of the BOP stack. 13 In addition to this all three editions of API 14 53, whether it's the third edition from '97, the fourth 15 edition from '12 or the fifth edition, most recent one 16 from 2018, all contain similar language in either the 17 introduction, the special notes or in the foreword at 18 the beginning. In all of them these aren't in quotes, 19 but they're pretty close because again they changed a 20 little bit from edition to edition. This standard does 21 not present all of the operating practices that can be 22 employed to successfully install and operate blow out 23 preventor systems in drilling completions and well 24 testing operations. Practices set forth herein are 25 considered acceptable to accomplishing the job as AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 34 1 described. However equivalent alternative 2 installations and practices can be used to accomplish 3 the same objectives. These publications are not 4 intended to obviate the need for applying sound 5 engineering judgment regarding when and where these 6 publications should be utilized. 7 And I highlight those because I think they're 8 important to recognize whether it's a recommended 9 practice or as it changed into the standard, API still 10 recognizes that in some of their guidances it's not 11 meant to rule out kind of the common sense engineering 12 approach to using -- doing certain things. 13 Mr. Richard Cummings is the chairman of API 14 standard 53 since 2006 and he was the vice chair before 15 that from 2011 to 2016. So he has about a decade of 16 experience with API 53. I reached out to him and 17 talked to him about the changes in API 53 because I 18 wanted to know what the background was changing from 19 the third edition to the fourth to the fifth because 20 the language obviously changed. Mr. Cummings also 21 chairs a number of other committees which I won't read, 22 but it's in the testimony, he's very well versed in API 23 standards and how they've changed over the years, how 24 they've gotten better. 25 So in discussions with Mr. Cummings he stated AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 35 1 that he worked with the API 53 committee to develop and 2 implement the changes from the 1997, third edition to 3 the fourth edition and then also into the fifth 4 edition. He stated that there had been many changes to 5 the API and this is a quote, for the good, this being 6 one of them, where this in quotes refers to changing 7 the BOP test fluid language as detailed previously. 8 Mr. Cummings stated that because industry had issues 9 with water in quotes freezing the BOP systems the 10 language was specifically changed as noted in the 11 subsequent editions. While Mr. Cummings is not present 12 today he has offered to speak with AOGCC 13 representatives on the changes made to API 53 and the 14 rationale and intent behind those changes if that would 15 prove helpful. 16 CHAIRMAN PRICE: Mr. York, just a point of -- 17 quick clarification, I don't know if it really matters 18 that much. But when you described his bio and 19 submitted testimony in advance it says he's been -- 20 since 2016 he's been on the committee. I think you 21 just said since 2006. 22 MR. YORK: Then I correct myself. Yes, it's 23 since 2016..... 24 CHAIRMAN PRICE: Okay. 25 MR. YORK: .....he was -- he's the chair since AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 36 1 2016, from '11 to '16 he was the vice chair. 2 CHAIRMAN PRICE: Okay. Thanks for clarifying. 3 MR. YORK: So he was -- really the intent for 4 just the dates there is he was involved since he was on 5 the committee in 2011 as the vice chair he was involved 6 with that change in that third edition to the fourth 7 edition in 2012 and was able to shed light on why that 8 language changed. 9 CHAIRMAN PRICE: Thank you. 10 MR. YORK: I'm not sure the other committees 11 that he's on either as a chair or subchair, I'm not 12 sure his length of time on those different committees. 13 So API recommended practice 53, the third 14 edition, 1997, and AOGCC regulations do not preclude 15 the use of 60/40 methanol/water blend or the 9.8 pound 16 per gallon brine for BOP test fluid, in fact allow it. 17 Subsequent editions of API 53 standard explicitly allow 18 it as an antifreeze additive for the precise reason 19 we're requesting to utilize it today. 20 I'll now hand it back over to Aras who will 21 have conclusion remarks. 22 MR. WORTHINGTON: Are there any questions for 23 Bo? 24 (No comments) 25 MR. WORTHINGTON: Okay. Aras Worthington AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 37 1 again. AOGCC has dictated that we use water as our BOP 2 test fluid on Thunderbird number 1 rig. We 3 respectfully appeal this decision for a number of 4 reasons. 5 Number 1, using straight water for BOP test 6 fluids adds significant and unnecessary risk to our 7 operation by potentially compromising the integrity and 8 functionality of our well control equipment due to the 9 risk of freezing well control critical valves, lines, 10 chokes, sensor lines, et cetera, after the pumps are 11 shut down. 12 Number 2, the 60/40 mixture of methanal/water 13 and/or 9.8 pound per gallon brine that Hilcorp proposes 14 as alternate BOP test fluids are inherently 15 noncompressible as detailed by Dr. Peng. These fluids 16 meet the definition required by AOGCC as a quote, 17 unquote, noncompressible fluid. 18 Number 3, AOGCC cited API RP53 third edition, 19 March, 1997, section 17.3.5, allows flexibility in the 20 use of test fluids through the intentional use of the 21 word should versus the more prescriptive shall or must. 22 23 Number 4, using 60/40 methanol or 9.8 pound per 24 gallon brine as a BOP test fluid meets all three 25 criteria detailed in the API RP53, third edition, or a AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 38 1 should recommended practice. 2 Number 5, subsequent editions of API 53 switch 3 to the prescriptive word shall and include additional 4 language to require the use of additives and/or 5 antifreeze to account for operating temperatures. 6 Hilcorp respectfully requests AOGCC reconsider 7 its position on Hilcorp's ability to utilize 60/40 8 and/or 9.8 pound per gallon brine as a BOP test fluid 9 for the Thunderbird number 1 rig. This request is 10 based on safety concerns from our field leadership and 11 we believe it is allowed for in the API 53, third, 12 fourth and fifth editions and AOGCC regulations. 13 Thank you for your time and consideration. 14 After providing written testimony which we mostly read 15 here we received follow-up questions from AOGCC last 16 Thursday, February 17th. We have responses to those 17 questions which Mr. York will be happy to provide 18 and/or we are open to other questions. 19 Would you like us to proceed at this time with 20 answering your written questions? 21 CHAIRMAN PRICE: I think that would be great. 22 Maybe for folks on the phone I might just kind of 23 preface and state the questions in front of you -- in 24 front of them are on Teams. 25 MR. WORTHINGTON: Yeah, Bo has them. You're AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 39 1 going to read the questions and then the..... 2 MR. YORK: Yes, I..... 3 CHAIRMAN PRICE: Okay. 4 MR. YORK: Yes, I'd be happy to read the actual 5 question as posed to us and then our response. 6 CHAIRMAN PRICE: Perfect. 7 MR. YORK: This is Bo York. Is there a time, 8 do we have 10 minutes left, are we cut -- is there a 9 hard stop on this? 10 COMMISSIONER CHMIELOWSKI: As much time as you 11 need and we can take a break and come back and..... 12 CHAIRMAN PRICE: Yeah, if you need to take a 13 break, get some water, whatever, we can take a break 14 and reconvene, whatever. 15 MR. YORK: Because I can try to read faster, 16 but it would be -- sound like a chipmunk I think. 17 Okay. So I'll just read the question and then 18 I'll read our response and then I'll pause and then if 19 I don't -- and again, I think, Commissioner, this might 20 be where we get into more of some of the detail 21 questions that you were asking previously. So I won't 22 do the preface -- well, I'll just read this. So this 23 is what was received by Hilcorp from AOGCC. Again this 24 is Bo York with Hilcorp. 25 After reviewing submitted testimony in advance AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 40 1 of the public hearing on February 22nd, 2022, Alaska 2 Oil and Gas Commission -- Conservation Commission 3 requests that Hilcorp be ready to respond to the 4 following questions and to ensure that AOGCC's concerns 5 are adequately addressed regarding the Thunderbird rig 6 and its suitability for reliable operations under the 7 range of weather conditions that may be encountered per 8 20 AAC 25.527 subpart (b). And I think these questions 9 are quite good so it allowed us to provide answers 10 which I think will kind of illustrate a little bit more 11 of some of the points that we've made maybe. 12 So the first question. Does Hilcorp ever 13 utilize fluids in circulating equipment and across the 14 BOPE stack that can freeze at ambient temperatures? 15 Please explain. 16 Hilcorp's answer. Yes. All rig pumped fluids 17 -- all rigs pump fluids that freeze at ambient 18 temperatures. For example freshwater is currently 19 pumped for testing. That's what we're discussing 20 today. 1 percent KCL as well as other brines and muds 21 that have various freeze points are also routinely 22 pumped during normal well work activities. However 23 BOPE testing and normal rig operations differ 24 significantly in regards to the volumes of circulated 25 fluid, the ability to heat the fluids and the amount of AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 41 1 time the fluids are static. And I'll address that a 2 little bit more in one of the other questions, it gets 3 into quite a bit more detail on that in answer or 4 question 6 -- 6(b). Due to these differences BOPE 5 testing introduces significantly more freeze up issues 6 if using a fluid that is prone to freezing versus 7 normal well operations. For that reason API 53, fourth 8 and fifth editions, state that test fluids with 9 antifreeze or additives shall be used to alleviate risk 10 during BOPE testing as previously discussed. 11 So I'll pause and that's our response. So I 12 can pause and -- at the end of each one and see if 13 there's additional follow-up. 14 CHAIRMAN PRICE: I have one. I guess could you 15 dig into that a little bit more. You're saying that 16 during BOP testing it's -- you're introducing I guess 17 more freshwater than you would during normal operations 18 and it's sitting there stagnate for a longer period of 19 time than during operations outside of testing -- BOP 20 testing; is that -- is that right? 21 MR. YORK: This is Bo York. That's half right. 22 I would say that we are introducing more fluids during 23 normal operations than in testing, we have continuous 24 hole fill going on, fluids are always moving in or out 25 of the hole so there's more fluids moving around the AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 42 1 system let's call it. However you're correct that 2 during BOP testing those fluids remain static where you 3 charge the system, you get up to a certain pressure, 4 you hold that pressure and during the testing process 5 those fluids are static in those test lines. Where 6 again in normal operations -- and we'll get into this 7 in more detail in question 6, in normal well operations 8 when you're tripping in or out of hole, whatever 9 operations you have going on, typically your fluids are 10 much more dynamic, you're circulating around the 11 system. And you're circulating from -- you know, we'll 12 get into it in more detail, but it's actually shown on 13 the diagram too, you're circulating from the pits which 14 are heated so you can have -- you're introducing warm 15 fluids. 16 CHAIRMAN PRICE: Thank you. 17 MR. YORK: So this is Bo York again with 18 Hilcorp. 19 Second question. Has Hilcorp ever had a 20 situation on a workover rig where it could not 21 circulate warm fluids through the circulating equipment 22 and BOP in a timely manner to keep fluids from 23 freezing? Please explain. 24 Our answer. Yes. During BOPE testing with 25 freshwater the test fluid, i.e., water, is static AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 43 1 during the test. Without heat blankets, trunk heaters, 2 electric heat trace or some other kind of external heat 3 the freshwater test fluid has the potential to freeze 4 in subfreezing weather. That's the issue. An 5 exception to this would be if performing a rolling test 6 where test fluids are continuously pumped. So outside 7 BOPE testing, during normal well operations, fluids are 8 continuously circulated and heat is added to the system 9 therefore freeze up is not an issue. 10 So again I think that answers the question that 11 was posed. 12 COMMISSIONER CHMIELOWSKI: Mr. York, is there 13 ever -- could there ever be an unexpected situation 14 where you cannot circulate fluids, is that ever a 15 possibility during normal workover operations, not 16 during the BOP test? You're saying it hasn't happened 17 yet or you're saying it can never happen? 18 MR. YORK: Well, I would not say it could never 19 happen. Yes, that could happen. There could be -- 20 during normal well operations you could have static 21 fluids, absolutely. I'm not saying that that wouldn't 22 happen. And again I think we'll -- this is kind of 23 piecemeal, I think we'll address that further on too 24 how we're set up to handle that in normal well 25 operations. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 44 1 Question 3. Describe the Thunderbird rig's 2 heating system, weatherization package and it's ability 3 to keep essential equipment and components, choke and 4 kill manifold system, control flow lines, BOP stack, 5 adequately protected in harsh winter environments? 6 And then our answer. Depending on the 7 definition of harsh in quotes, the intent is not to 8 operate the rig in sustained temperatures lower than 9 zero degrees fahrenheit. Seasonal cut off dates, and 10 this is a little bit of what Aras was talking about 11 earlier. Seasonal cut off dates have been established 12 around historical temperatures where the average 13 temperature is above zero degrees fahrenheit. These 14 temperatures are considered normal winter conditions 15 where the rig can operate and does operate throughout 16 the world on a consistent and sustained basis, not just 17 in Alaska. 18 The heating system consists of two jet style 19 heaters and anywhere from three to four Tioga style 20 heaters placed around the rig to heat up various 21 components, depending on the weather conditions. The 22 rig is then outfitted with scaffolding wrapped in 23 visqueen and other parachute style tarp. This hooch 24 covers the ground to the rig floor and extends out over 25 the kill manifold and covers the BOP components, the AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 45 1 choke, the kill lines -- the kill line and the 2 manifold. These areas are monitored with thermostats 3 placed at the BOPE as well as the drillers' station and 4 rig personnel record the temperatures within the heated 5 areas on the daily report and these temperatures have 6 not fallen below 40 degrees fahrenheit during this last 7 season and most are significantly above that to the 8 point where it's almost too warm in some of the areas 9 this last season. Keep in mind again last year was the 10 first year that we done it so we only have one year of 11 track record on doing this. 12 And that concludes that answer. 13 CHAIRMAN PRICE: So I can -- let me make sure I 14 understood your -- what you just said and I'll -- I may 15 have a follow-up question on the next one where we're 16 talking about the operating environment. But did you 17 just state that it is the intent not to operate below 18 zero degrees fahrenheit, did I catch that correctly? 19 MR. YORK: Yes. 20 CHAIRMAN PRICE: Okay. 21 MR. YORK: That is correct. 22 CHAIRMAN PRICE: Okay. 23 MR. YORK: So it is addressed a little bit more 24 in the next one, but the rig itself -- the limiting 25 factor on the rig, the design factor, is minus 20, AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 46 1 that's what it's designed to. And that's around the 2 structural steel components of the rig. Many rigs on 3 the Slope are designed to a -- all structural steel has 4 some temperature rating on it and typically a minus 40 5 rating is about as cold as you can get, where you can 6 get charpy tests to confirm that you're not going to 7 have fast fracture or brutal failure of that structural 8 steel at minus 40 where that steel is tested for that, 9 destructively tested for that and then used. The 10 Thunderbird rig, most of the driving rigs are designed 11 for a minus 20 degree cut off range where below that 12 there are concerns with brutal fatigue, fast fracture 13 failure of the structural steel components. This rig 14 is not specifically designed for arctic conditions year 15 round where you'd be operating in minus 40. This year 16 -- this year was a real winter on the Slope, we've had 17 pretty close to minus 60 degree weather we haven't seen 18 in a number of years, but this year we did. And it's 19 been pretty sustained this year, it's been pretty dang 20 cold up there. 21 So this rig again is not intended for that 22 operation from a structural steel componentry and also 23 just from being enclosed. You're all familiar with the 24 other rigs on the Slope, they're very much more 25 enclosed to handle that weather, more for the personnel AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 47 1 so they're not exposed to that harsh weather. This rig 2 is not set up for that, we don't intend it to be set up 3 for that. 4 CHAIRMAN PRICE: Okay. I guess maybe I have 5 follow-up questions since we're already talking about 6 it. This year -- I'm sorry, last year you operated the 7 rig into November if I remember correctly. Was the 8 temperature not below zero degrees fahrenheit? 9 MR. YORK: No, we did have some weather it got 10 below zero degrees, we did. So we're -- let me make 11 sure I'm saying this right, not to confuse you. We're 12 okay with operating below zero, our intent though, our 13 cut off window, when we look to establish our bookends 14 of our hard start which is April 15th and hard stop 15 which is November 15th, historically those temperatures 16 are and I'll address it here in a second, but, you 17 know, it -- five to eight degrees above freeze -- above 18 zero. So when we set those bookends the intent is to 19 not get below those zero degree weather. We can and 20 have in May operated if it drops down to minus five for 21 a day, for two days, for three days, minus 10 degrees 22 is what we put as our hard cut off where we don't want 23 to get close to that minus 20 degree hard -- like hard 24 stop of yeah, you will not operate this rig at those 25 temperatures. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 48 1 COMMISSIONER CHMIELOWSKI: Mr. York, I have a 2 question. I'll refer again to this email sent from 3 Hilcorp on February 8th from you, Mr. Worthington. But 4 when you proposed this operating window you based it on 5 the average daily temps; is that right? 6 MR. YORK: Yes. 7 COMMISSIONER CHMIELOWSKI: Did Hilcorp consider 8 using the average daily low temperature rather than the 9 average temperature with a -- given that you have a cut 10 off of zero and a hard stop at minus 10? 11 MR. YORK: No. We did not look at that. We 12 could look at that and provide that information. We 13 have a -- it's an interesting data base that we have. 14 Again this is Bo York with Hilcorp. It's an 15 interesting data base that we have that goes back to 16 the beginning of Prudhoe Bay so it's 40 years of 17 collected data of daily temperatures. And the chart is 18 what we provided in that email that we submitted to 19 you, but we have the spreadsheet that backs that chart 20 up. So we could look at the average low temperature as 21 well for those dates and see where that falls in the 22 range. We could do that and provide that absolutely. 23 COMMISSIONER CHMIELOWSKI: Okay. Great. 24 MR. YORK: Let me just make a quick note. So I 25 will skip to question 4 and then go -- or no, I'll AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 49 1 finish up question 3 because it had a 3(a) and then 4 2 goes into that email with more specifics. Again this 3 is Bo York with Hilcorp. 4 Question 3 alpha which is a follow-up to 3 that 5 I just addressed. The question as posed, describe 6 instances if any where Hilcorp had difficulty getting a 7 passing BOP test because of ambient temperature or wind 8 if any. How were these instances rectified to achieve 9 passing tests? 10 Our answer to question 3 alpha. The 11 Thunderbird rig has circulated methanol/water mixed 12 solution from the pits across the BOP stack and back to 13 the flowback tank and then swapped back to freshwater 14 to continue testing when extending testing times and 15 lower ambient temperatures were present. Wind doesn't 16 really affect the testing. So yes, we have had 17 instances and what we did is we circulated around 18 methanol if we had -- if we were worried about it 19 freezing up in static conditions and then started back 20 over again. So flush the system, started back over 21 again. 22 And then question 4 is again getting back to 23 the start and stop dates. So the question as posed. 24 How was the Thunderbird rig's operating window 25 determined. In parentheses, the rig book states six AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 50 1 months beginning mid April and why was it extended into 2 late November, 2021? 3 So the answer that we have. The Thunderbird 4 rig's operating window was determined as described in 5 correspondence to AOGCC on 8 February, 2022, the email 6 referenced earlier from Mr. Worthington. It was based 7 on a review of historical temperatures from April -- 8 from 15 April and 15 November being the respective 9 start/stop dates with average temperatures on those 10 dates being six -- with being six degrees fahrenheit. 11 Using a more recent dataset from 2010 to '21, it was 12 nine degrees average and then four degrees fahrenheit 13 using the complete dataset from 1990 to 2021 and then 14 eight degrees fahrenheit using the more recent dataset 15 from 2010 to 2021. 16 So I said it goes all the way back, I thought 17 it went back to the '70s, but I could be wrong on that. 18 Maybe it just does go back to 1990, but I think it goes 19 back -- I think we have the data back later. I think 20 the spreadsheet that we use -- we use this data not 21 just obviously to schedule our rig, but on -- to 22 optimize the field. So we look at -- we look at this 23 to determine all of our well sorts and when we should 24 be doing certain well work, when we should be 25 sheltering work. And I believe that the dataset that AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 51 1 we use and what's presented in that email is from 1990 2 forward. We have older data, but we've kind of culled 3 that out of the dataset using just really the last 31 4 years as kind of our accurate temperatures just to 5 clarify that. And I'll double check to make sure that 6 that's accurate. 7 A caveat to this would be if the temperature is 8 forecasted to dip to minus 10 degrees then Hilcorp 9 would come to a good stopping point and cease rig 10 operations early or delay the start. The forecasting 11 that we have for the Slope tends to be very accurate 12 and allows Hilcorp to plan our field operations 13 accordingly as I just discussed there. The minus 10 14 degree fahrenheit is a temperature cut off that Hilcorp 15 believes provides a safety buffer before reaching a 16 minus 20 degree fahrenheit cut off. Hilcorp commits to 17 these hard stop/stop bookend dates and will not operate 18 before or after them, regardless of the actual 19 temperatures. 20 Meaning -- just so there's no confusion, let's 21 say it's -- it continues on this warming trend, it's 30 22 degrees on the Slope right now, and let's say it stays 23 30 degrees from now until April 15th, we have no 24 intention and will not start before April 15th, that's 25 our commitment. April 15th is our -- and we need to do AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 52 1 this too just for planning, we have crews to mobilize, 2 we have -- we'll probably have about two weeks worth of 3 maintenance activities that we have to do on the rig so 4 all of that goes into planning. April 15th, regardless 5 of the weather, would be the earliest that we start. 6 If the weather's cold, if it's in the minus 10 degree 7 range, zero degree range and the forecast shows that 8 it's going to be like that for a week or two then we 9 would prolong our start date or delay our start date 10 until May 1st until that weather window looks 11 reasonable for us to start. 12 COMMISSIONER CHMIELOWSKI: So just to clarify 13 what you're saying, Hilcorp's proposing an operating 14 window of a maximum date range which could be shorter 15 if it was colder, but it wouldn't go longer? 16 MR. YORK: Yes. Thank you for making that..... 17 COMMISSIONER CHMIELOWSKI: Okay. 18 MR. YORK: .....much more succinct than what I 19 was. 20 COMMISSIONER CHMIELOWSKI: Yeah, just wanted to 21 make sure I heard right. 22 MR. YORK: Yes, that is 100 percent correct. 23 COMMISSIONER CHMIELOWSKI: Okay. 24 MR. YORK: Yes, the person that reviewed this 25 would have appreciated you if you had reviewed it and AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 53 1 given me that statement there, yes. It's the max that 2 we would potentially operate. 3 And then question 4(a), the follow-up. Should 4 the spring and fall shoulder seasons be restricted to 5 ensure reliable operation of the BOP? 6 The operating window -- and our answer is the 7 operating window is restricted as noted above. But not 8 really to ensure reliable operation of the BOP 9 necessarily, but more to adhere to the design 10 temperature of the rig and structural steel components. 11 That's really our driving factor. And I'll say also 12 honestly for comfort of the crew just to be out there 13 operating in exposed conditions. 14 Question 5. Why does the Thunderbird rig need 15 to use alternative fluids when no other rig in Alaska 16 does? 17 Our answer. The Thunderbird rig does not need 18 in quotes to use alternative fluids, last year we did 19 not. However as explained in Hilcorp's testimony using 20 alternate fluids one, greatly reduces risk of freeze up 21 of issues in the BOP system during and after testing; 22 two, is allowed per AOGCC requirements to use as a 23 noncompressible fluid; three, is allowed per API third 24 edition, it meets all three criteria in API 53, third 25 edition for a should recommended practice; and four, AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 54 1 adheres to updated and improved guidance in both 2 subsequent versions of API 53. 3 In addition Hilcorp's request to use fluid 4 other than freshwater should not be really limited just 5 to the Thunderbird rig, but all rigs as well as the 6 same logic applies. 7 And is there any downside to using the 8 alternative fluids is a question that we would pose. 9 And then the follow-up question to that, 10 AOGCC's question 5 alpha. Does that indicate that the 11 rig has insufficient winterization and is not suited to 12 an arctic environment? 13 Our answer. No. Per Gabriel Norris who is the 14 Dragon engineering manager, he -- we asked him to send 15 us something in writing. I can provide a letter that 16 he submitted to us, it's dated 18 February so here very 17 recently. And this is a quote from again from Gabriel 18 Norris, Dragon engineering manager. There are several 19 Cooper rigs of various models working in frigid 20 climates dating back 2010. These includes Alaska, 21 North Dakota, European Siberia, et cetera. Further -- 22 this is outside the quote, that was his only quote 23 there. Further Hilcorp would contend the issue is not 24 the suitability of the rig work -- of the rig working 25 April through November, but about using appropriate AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 55 1 fluids in cold ambient conditions to minimize potential 2 risk. 3 So pause on that one. Any further questions on 4 why we need to use the alternative fluids and no other 5 rig does? 6 (No comments) 7 MR. YORK: Okay. Question 6. Per API 53 does 8 Hilcorp interpret the operating temperatures in quotes 9 that a rig BOPE control system and/or fluids are 10 exposed to? So how does Hilcorp interpret the 11 operating temperatures that a rig BOP control system 12 and/or fluids are exposed to. 13 So our answer. It is not clear what specific 14 reference in API 53 AOGCC is referring to. I searched 15 the document, again assuming it's the third edition 16 that's being referenced, there are only two references 17 to operating temperatures. One is in section 17.3.5, 18 that was referenced earlier, the test fluid section for 19 surface BOP. And in section 18.3.5 which is the same 20 thing, but it's for subsea BOPs, and both sections 21 state the same thing. Control systems and hydraulic 22 changes should be tested using clean, control system 23 fluids with lubricity and corrosion additives for the 24 intended service and operating temperatures. That was 25 in quotes. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 56 1 Other sections do discuss and this is in 2 quotes, consideration should be given to the low 3 temperature properties of the materials used in 4 installations to be exposed to unusually low 5 temperatures and should be protected from freezing by 6 heating, draining, filling with appropriate fluid or 7 other appropriate means, end quote. 8 This really is at the heart of Hilcorp's 9 request. While we currently employ heating and 10 draining procedures to mitigate the risk of freeze up 11 issues, we are also attempting to gain approval to fill 12 with appropriate fluids in quotes as well during BOP 13 testing. 14 And then a follow-up question, question 6(a). 15 Does Hilcorp consider this as a possible worse case 16 condition where Thunderbird BOP equipment could be 17 needed in a well control situation? 18 And I wasn't clear on that question, I wasn't 19 sure what this was referring to. Again the question 20 was does Hilcorp consider this as a possible worst case 21 condition where Thunderbird BOP equipment could be 22 needed in a well control situation. 23 And I don't know if, Commissioner Chmielowski, 24 if that gets back to your question you had earlier 25 about freezing up of static fluids or if the rig had AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 57 1 static fluids, if that was the issue. 2 COMMISSIONER CHMIELOWSKI: Yeah, it all -- it 3 all sort of revolves around that same question. 4 MR. YORK: Okay. Well, I think the next 5 question really gets into the heart of it so maybe 6 it'll answer it there. 7 Question 6(b), the follow-up, the AOGCC posed 8 question. If the BOP system cannot be protected 9 sufficiently from the cold when tested with water and 10 the workover fluid being used for the operations is 11 water or fluid with a similar freezing point, 1 percent 12 KCL, how can the BOP be expected to function reliably 13 when needed during workover operations? 14 That's an excellent question and I believe that 15 was the question that you were proposing earlier. 16 So our answer to that. The Thunderbird BOP 17 system can be protected sufficiently from the cold when 18 testing with water. It was done in the 2021 season. 19 We struggled with it, but we did it. However using 20 water introduces unnecessary and easily mitigable risk 21 as discussed in our above testimony and is exactly why 22 API 53 was modified in 2012 and again in 2018 to 23 include more specific language requiring the use of 24 test fluids with antifreeze or additives. BOP system 25 testing and rig operations are two significantly AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 58 1 different and distinct operations so I'll discuss those 2 too. 3 And the graphics, Samantha, would -- kind of 4 shows these two that we have, that we can show on the 5 screen. 6 So during normal well operations the 7 Thunderbird rig is continuously moving well kill fluids 8 between the pits and the well as -- known as continuous 9 hole fill which Mr. Ross was explaining a little bit 10 earlier, and the fluids are not static. Heat can be 11 added to the pits so in the diagram the pit's in kind 12 of the right-hand side there, and the area around the 13 BOP stack. The rig floor is enclosed in visqueen and 14 heated with a jet heater. So both methods add heat to 15 the circulated kill fluids and ensure fluids within the 16 lines are not frozen during well operations. 17 The simple flow diagram on the screen below 18 demonstrates simple fluid paths during pulling or 19 running operations. The red lines which are kind of 20 hard to see on the screen there, but the red arrows 21 kind of trace those lines. The red lines illustrate 22 the circulation path again with heat being applied at 23 the pits and the BOP rig floor locations. The blue 24 lines illustrate lines which do not circulate during 25 normal well operations and those lines are blown down AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 59 1 again as Mr. Ross explained a little bit earlier, and 2 evacuated of fluids during normal operations, during 3 well operations. This ensures the static lines do not 4 freeze up. 5 And then during testing operations, during BOP 6 testing operations, the fluid lines are filled with a 7 test fluid as currently approved which is freshwater 8 and these lines remain static during testing for a 9 prolonged period of time, can be up to several hours. 10 These lines do not benefit from heat sources located 11 within the pits and around the BOP stack floor except 12 for of course the fluids that are within that BOP stack 13 and the unit heater within the choke manifold skid. 14 Following a successful test the lines are drained and 15 blown down in an attempt to purge all lines, check 16 valves, control valves, sensors, et cetera, of water. 17 In subfreezing temps this fluid in the associated lines 18 are at risk of freezing and forming ice plugs. 19 While Hilcorp has taken action this last year 20 and added insulating blankets, heated blankets, heat 21 tracing to these lines, so that's how we managed 2021, 22 we did heat trace, we did insulate, we did all that 23 work on those lines to make sure we didn't have freeze 24 up issues. None of those actions are as effective as 25 simply using and following API 53 requirements to use a AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 60 1 test fluid with antifreeze which greatly mitigates the 2 risk of freeze up with no apparent downside or added 3 risk to the operation. 4 To note again and we talked about this, service 5 coil units employ alternative fluids for BOP testing 6 for this very reason because they're exposed -- their 7 equipment is exposed, the coil tubing itself is exposed 8 so they use the methanol for that reason. 9 So again the two operations are different, our 10 normal well operations and our testing are just 11 inherently different operations. And because of that 12 -- again I think that's why API changed the standard, 13 the API 53 standard, to address the issue where for 14 testing, specifically for testing, use a fluid with 15 antifreeze or other additives to mitigate this risk in 16 freezing ambient temperatures. 17 CHAIRMAN PRICE: Mr. York, is there a situation 18 where you can get water across the BOP stack outside of 19 BOP testing under normal operations and if that answer 20 is yes are you saying that concern is mitigated because 21 of the heat from the pits, the space heaters on the rig 22 floor, et cetera? 23 MR. YORK: Yes, correct. And so the hootch 24 area, the cellar area, that's structured up with 25 scaffolding and then tented in and has jet heat applied AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 61 1 to that. I'd have to go back and look at the 2 temperatures, but again they didn't fall below 40 and 3 oftentimes they were essentially depending on the 4 ambience, depending on the wind, what it was doing. 5 But that area is heated so if you have fluids, whatever 6 it might be, across your BOP stack within that area, 7 that is a warmed, heated area whether it's static or 8 usually again those fluids are fairly dynamic moving 9 through there in normal operations. 10 But back to the question, could they be static. 11 They could absolutely be static in that area. But 12 again from our pits to the BOP stack those lines are 13 insulated to prevent freeze up issues. It's our test 14 lines and our test tank, our test skid, those aren't. 15 Now last year again we did go through a rather 16 elaborate process to get all that blanketed up and 17 traced up, but again at the heart of the whole question 18 is we can mitigate this much easier and simpler by 19 using methanol, much easier and simpler and mitigate 20 that risk and not have to rely on other means during 21 the testing process. 22 COMMISSIONER CHMIELOWSKI: Mr. York, you say 23 that the temperature at the BOP stack is not lower than 24 40 degrees. Do you have any data measurements, any 25 temperature measurements to show that's true? AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 62 1 MR. YORK: Absolutely. 2 COMMISSIONER CHMIELOWSKI: And..... 3 MR. YORK: Daily reports. Every single daily 4 report, AOGCC I believe has access to those, we submit 5 on a daily basis..... 6 COMMISSIONER CHMIELOWSKI: And..... 7 MR. YORK: .....has those temperatures on it. 8 And we can supply those again. 9 COMMISSIONER CHMIELOWSKI: Right. When you 10 talk about this BOP area being tented it's -- what I've 11 seen is wrapped in visqueen and when it gets windy I 12 don't -- it would be hard for a blower to keep heat in 13 that area, right, blows right out? 14 MR. YORK: It does. 15 COMMISSIONER CHMIELOWSKI: So how..... 16 MR. YORK: You'd be surprised how those jet 17 heaters crank. 18 COMMISSIONER CHMIELOWSKI: So where is the 19 temperature taken? 20 MR. YORK: I am not going to say something that 21 I'm not knowledgeable on, but Mr. Ross could probably 22 answer that question on specifically where -- we have I 23 believe we have three areas or Mr. Knowles might be 24 able to answer that. 25 Matt. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 63 1 MR. ROSS: Mr. Knowles. 2 MR. YORK: Anthony, are you on the phone 3 on..... 4 COMMISSIONER CHMIELOWSKI: Like for example is 5 it taken right in front of the blower? 6 MR. YORK: Oh. 7 COMMISSIONER CHMIELOWSKI: No. So..... 8 MR. YORK: I would -- it would be a hundred and 9 something degrees. I would hope not. 10 Anthony, can you address that knowledgeably? 11 CHAIRMAN PRICE: Can you -- what's Anthony's 12 last name? 13 MR. YORK: Mr. Anthony Knowles with Hilcorp. 14 He's a wellsite supervisor and he's on the Teams call. 15 CHAIRMAN PRICE: If you on, Mr. Knowles, can 16 you state your name for the record and then provide the 17 answer. 18 MR. KNOWLES: Yes. Anthony Knowles, senior 19 wellsite supervisor at Hilcorp Alaska. 20 ANTHONY KNOWLES 21 previously sworn, called as a witness on behalf of 22 Hilcorp Alaska, testified as follows on: 23 DIRECT EXAMINATION 24 MR. KNOWLES: So the answer to that is we have 25 the thermostats located at the BOP, right at the base, AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 64 1 on the BOP actually itself, and then one above it at 2 the driller station supplying and then monitored twice 3 a day by both crews and then noted on the daily report. 4 MR. YORK: I would say it's noted on the -- 5 it's actually recorded twice daily, but monitored 6 throughout the day. 7 Is that correct, Anthony? 8 CHAIRMAN PRICE: Mr. Knowles, did you get that 9 last question? 10 MR. KNOWLES: In the trunk lat line. I'm 11 sorry. The trunk is not blowing directly on the 12 thermostat where -- it's an average temperature, yes. 13 MR. YORK: We could get more specifics too on 14 that. I believe they -- so this was an issue that was 15 brought up in one of the modifications we made last 16 year. And again I think it was an improvement for 17 sure. And the rig crew I think thanks AOGCC for this, 18 for having that heat applied there. But we went 19 through the process with the rig inspectors out there 20 of how the heat was being addressed, where it was being 21 applied and also where we were monitoring that and then 22 supplying that information on the daily report. And we 23 started that up, it wasn't initially and then through 24 the summertime we didn't really use it of course. But 25 I would say August on we probably have that data. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 65 1 COMMISSIONER CHMIELOWSKI: Okay. 2 MR. YORK: And then the follow-up 6 charlie 3 question. The question as posed, describe the risk 4 assessment if any that addresses the potential for 5 icing to occur in BOP components or the circulating 6 system when actions must be taken to maintain well 7 control. 8 And I think the responses above it have 9 addressed that one where we have heat applied, we have 10 blankets applied to again our circulating system for 11 well control during rig operations. Again different 12 from our testing set up. 13 And then question 7 is -- and second to last 14 question. Is the Thunderbird capable -- start over. 15 Question 7. Is the Thunderbird rig able to change out 16 any failed BOP equipment without laying down the mast. 17 Answer. Yes. And we did last year. 18 Question 8. Explain why Hilcorp thinks the 19 Thunderbird is compliant with 20 AAC 25.527 section (b) 20 for the transition months of March through April and 21 October through November? 22 Our response. See previous responses. I think 23 we've addressed it. But per the API certified 24 manufacturer, the rig is designed to operate to minus 25 20 degree fahrenheit. Ancillary components are AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 66 1 protected from the cold weather with insulated 2 blankets, heat trace, unit heaters, jet heaters, Tioga 3 heaters, et cetera, to ensure operability. Similar 4 rigs have operated throughout the world in similar if 5 not much more extreme conditions since 2010 per Gabriel 6 Norris, Dragon engineering manager. And that was 7 written correspondence dated 18 February, 2022. 8 In 2021 the Thunderbird rig successfully 9 completed 21 workovers and increased oil production by 10 6,500 barrels at Prudhoe Bay. It operated for 189 days 11 at a half to a third of the cost of any of the other 12 previous North Slope rigs. It was able to move from 13 well to well with no issues throughout the summer. 14 This is testimony that Mr. Worthington supplied earlier 15 so just reiterating that. This tool enabled Prudhoe 16 Bay to have the first year of annual year on year 17 production incline since Prudhoe Bay went on the 18 decline in the late 1980s. This rig was a part of 19 that, of making that happen. Without substantial 20 drilling activity we had an incline year on year. 21 While a new and different tool to the Slope, this is 22 not a new or different tool in the oil fields of the 23 world. 24 In order to maximize our state's resources new 25 and different tools should be considered as part of our AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 67 1 strategy. This is part of our strategy at Prudhoe Bay 2 to utilize this tool. And again just to reiterate our 3 request to use methanol we believe will easily mitigate 4 risk that we have due to ambient temperatures with this 5 rig. There are other ways to mitigate it and we used 6 those other ways this last year. Using methanol is the 7 easiest and most straightforward way to mitigate that 8 risk. 9 And that concludes the questions that were 10 posed and our responses. 11 CHAIRMAN PRICE: Appreciate you taking the time 12 to get those ready for our responses today, and it was 13 a short window so thank you. 14 Concerns or questions at this point, 15 Commissioners? 16 COMMISSIONER CHMIELOWSKI: No. Can we take a 17 recess? 18 CHAIRMAN PRICE: Before we take a 15 minute 19 break I'd like to ask anyone on the phone if there's 20 anyone who'd like to provide public testimony at this 21 time so you don't have to wait through our break and 22 come back let's just provide that opportunity now. 23 Is there anyone from the public who would wish 24 to testify please make yourself known, unmute your 25 phone and speak now. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 68 1 (No comments) 2 CHAIRMAN PRICE: I'm not hearing anything. 3 Commissioners, do we expect to ask any questions of Dr. 4 Peng, I don't if he -- I'm wondering if he's still 5 waiting on the phone from UAA. 6 COMMISSIONER CHMIELOWSKI: I'll just glance out 7 into the audience and see if anybody -- no. 8 CHAIRMAN PRICE: Okay. So, Dr. Peng, you can 9 sign off if you've got things to do, I don't want to 10 hold you up. I don't think we'll have any questions 11 for you. 12 Go ahead. 13 DR. PENG: Yes, thank you, Mr. Chair. Thank 14 you. 15 CHAIRMAN PRICE: Okay. Then in that case it's 16 25 after, how about we come back at -- we'll aim for 17 11:40. I can see how much -- if we're going to take 18 any longer. 19 Thanks, guys. 20 (Off record) 21 (On record) 22 CHAIRMAN PRICE: We're back in session. The 23 time is 12:10. That break took a little longer than 24 expected. Apologies for folks waiting on the line. 25 Mr. York, I guess you -- this probably should AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 69 1 be directed to you since you provided most of the 2 responses to those questions that we submitted last 3 week. A little follow-up. 4 What would Hilcorp do differently if anything 5 if methanol were approved for use in testing the BOP 6 equipment and as a kind of subset of that question how 7 are the hydraulic lines, choke and kill lines, manifold 8 lines, how are all those lines currently protected and 9 will that kind of protection, you know, wraps and 10 whatnot, would that change if methanol were approved 11 for use for testing? 12 MR. YORK: That's a good question. I don't 13 foresee any changes based on what we did over the 14 wintertime here. I'd have to get back with the rig 15 crew to discuss this more in depth, however I can say 16 with pretty good confidence what we did over the 17 wintertime is last year we wrapped the well lines with 18 visqueen, it wasn't -- literally it was not pretty, 19 didn't look great, it was effective, it managed to keep 20 things warm. But we did this last year we had blankets 21 manufactured so much easier to apply to the lines. 22 So to answer your question succinctly, I would 23 say we wouldn't change anything. Having heat to those 24 lines, whether you use methanol or water or anything is 25 not a bad thing. The one thing we would change AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 70 1 actually we talked about this, although we said we 2 probably wouldn't change it, is right now after we do 3 our test, we blow the lines down, we can't leave the 4 fluid in there static. If we use methanol maybe we 5 wouldn't blow those lines down, but as a matter of 6 course in talking with Anthony and Matt, that is kind 7 of the standard practice, the best practice, we do blow 8 those lines down so you don't have static fluid, 9 whether it's methanol or something else. So I suspect 10 we would continue with the blow down process and not 11 leave -- there's no reason to leave that fluid in 12 there. If anything it's a point that could leak so 13 just go ahead and blow that down. But I don't see that 14 we would change how we operate, it would just give us a 15 added protection layer, an added comfort. 16 And again that's why we brought this up. It's 17 the wellsite lead saying hey, we have water, we have 18 these lines that we're trying to keep warm, you know, 19 we could just alleviate this by using methanol. Having 20 all the other precautions that we have in place I don't 21 see us dialing back. It doesn't -- we would prefer not 22 to continue wrapping with visqueen, but with the 23 blankets that we've had manufactured. 24 Matt, am I speaking correctly in that, where 25 that's relatively easy to put on and we'd continue that AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 71 1 practice? 2 MR. ROSS: Correct. 3 MR. YORK: Yeah. One of the improvements we 4 made over the winter months. 5 COMMISSIONER CHMIELOWSKI: So the blankets go 6 on what specifically? 7 MR. YORK: Matt, you want to answer that 8 specifically because I'm going to -- I'll get to a 9 point where..... 10 MR. ROSS: Yeah, you bet. Yeah, it's Matthew 11 Ross again from Hilcorp. Yeah, I mean, they're 12 designed to go over all of the hard line that we have, 13 you know, pump line, return line, exclusive -- you 14 know, we don't wrap up the line going to our flowback 15 tank, you know, that we would take gassy returns to. 16 COMMISSIONER CHMIELOWSKI: So the choke line, 17 the kill line, are those wrapped? 18 MR. ROSS: Yes, ma'am. 19 COMMISSIONER CHMIELOWSKI: And the manifold, 20 how is that kept warm, same thing, it has a blanket 21 or..... 22 MR. ROSS: No, that was with the visqueen and a 23 little hootch. 24 MR. YORK: The manifold's enclosed in our 25 heated area. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 72 1 MR. ROSS: Yes. Correct. 2 COMMISSIONER CHMIELOWSKI: So you don't need 3 anything additional to keep that above freezing. And 4 the hydraulic system, what temperature is that kept at, 5 I know the hydraulic oil can get pretty viscous. So 6 how is that -- is that kept warm? 7 MR. ROSS: So the -- that -- that's a good 8 question. The cume unit is heated and it's kept at a 9 -- you know, it has a thermostatic control, but the 10 lines no, they are typically not wrapped. And none of 11 our, you know, service coil or Klondike, they were not 12 wrapped either. So we're just using arctic grade 13 hydraulic oil for that. So it is completed rated for 14 it. 15 COMMISSIONER CHMIELOWSKI: Uh-huh. Okay. 16 MR. YORK: We typically don't have issues 17 whether it's a loader or a grader or a rig or anything 18 that's using hydraulics with hydraulic fluid if you're 19 using an appropriate grade fluid where you're not going 20 to gel up or get where it's not going to flow well. 21 CHAIRMAN PRICE: On your dataset on average 22 daily temps, if you use average low temps instead of 23 the average daily would that change your operating 24 window? 25 MR. YORK: I can definitely say no because we AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 73 1 checked. So I have that. We have a couple of follow- 2 ups from some of your questions that we can -- we can 3 answer. But specific to that Marcus Charles who's on 4 our board today, I just called him during the break 5 here and had him look up those average low temps and 6 again I can provide that dataset and it is from 1990 7 forward. But the average low temp for April 15th is 8 plus two degrees, the average low temp is plus two 9 degrees fahrenheit compared to the average of nine 10 degrees. And then the average low temp for November 11 15th is plus one degree with the average temp of eight 12 degrees. So it varies six or seven -- whatever the 13 math is there, six, seven, eight degrees from average 14 to average low. But I think it's still within the 15 window that we would be comfortable with. 16 And again those are bookends, I don't want to 17 -- I don't get too worked up about those dates. Those 18 are the absolute extremes on either end that we would 19 operate. Like this year it got cold in November, 20 uncharacteristically cold and this winder's been 21 uncharacteristically cold compared to the last number 22 of years now. Where we didn't operate to the 15th, I 23 can't remember the exact date, but we were in the 24 middle of a well, we got to a good stopping point, we 25 called it off and we weren't going to keep operating. AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 74 1 We were also having all kinds of issues with our tests 2 which the state inspectors are acutely aware of, 3 painfully aware of as we are. 4 But if there is that cold weather that's coming 5 in, if that window's coming in, again the intent is not 6 to keep operating with temperatures that are 7 consistently dropping below that zero degree level. 8 Now if it drops below -- at night if it drops down to 9 negative four and back up to 10 degrees during the day, 10 yeah, we'll keep operating. I think we can safely 11 operate in those temperatures. This rig does it all 12 over the world, it's designed for it, it's capable of 13 it, there's no reason why not to. But if those 14 temperatures in the daytime or if it's consistent day 15 after day after day or if it's just barely getting 16 above zero, yeah, we'd make the call to stop where 17 we're at or get to a good stopping point and stop. 18 And I think with the weather forecasts we have 19 a pretty good line of sight where we can look ahead and 20 say yeah, no, it's going to get cold, let's finish up 21 this well, it's a good stopping point and let's call it 22 off for the season. 23 One thing we did too which is not part of this 24 testimony, it's ancillary to all this, is we kept our 25 rig crew -- last year we had problems, covid related AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 75 1 largely, we had problems with crews across the board, 2 but with the rig crew especially with new people coming 3 in and out. We probably swapped that crew out three 4 times throughout the year and it was painful, it was a 5 learning curve every time. We made a decision to keep 6 that crew whole this wintertime. So every member of 7 the crew, I want to say it was 100 percent of them..... 8 MR. ROSS: They were given the option, yes. 9 MR. YORK: .....but I think 100 percent of them 10 stayed? 11 MR. ROSS: Correct. 12 MR. YORK: They were given the option to stay 13 and we would find them a home this wintertime, 14 somewhere in our operation, we'd absorb them at Prudhoe 15 Bay and keep them employed so they could keep feeding 16 their families. All of them signed up for that so 17 we've kept them in various shops, the (indiscernible) 18 shop, the wells crew out in operations and the plants. 19 They were somewhere in Prudhoe Bay, 22 of them I want 20 to say. And we funded that, spent the money for it, it 21 wasn't cheap, but we did that so we'd get the same crew 22 back. 23 So the start and stop, you know, the shoulder 24 season's always about getting the crew back together, 25 we don't have that issue because we're keeping the AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 76 1 crew. So if we delay the start up it's really not that 2 big of a deal because the crew's working elsewhere. 3 Where as before you always had to kind of plan ahead, 4 get the crew lined up, they're here, we're pregnant 5 with the crew being here, let's get to work. We don't 6 have that pressure right now because we've absorbed the 7 crew into the rest of our operation. The same thing in 8 the fall, we'll absorb them back up again, we don't 9 have that pressure of keeping the crew to a certain 10 date because they're expecting a paycheck. We've kind 11 of eliminated that from the equation. 12 Not really related, but added info. 13 CHAIRMAN PRICE: Appreciate the comments, yeah. 14 MR. WORTHINGTON: Aras Worthington. We had a 15 few questions particularly from Commissioner 16 Chmielowski from the first session. We'd like to 17 answer those if I could because we needed to huddle up, 18 I didn't want to give erroneous or half answers or 19 complete answers. The ones I jotted down here, we were 20 talking about CG3-D from Arvell Bass' affidavit and the 21 9.8 pound per gallon brine we used as test fluid. Your 22 question was was it the workover fluid on that well. 23 Yes, it was. 24 And then also I believe you were asking is that 25 -- was that explicitly approved per the sundry as a AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 77 1 test fluid. We have talked among ourselves, but we're 2 unaware of sundries that testify the test fluid, they 3 specify the test pressure for sure. We talked about 4 kill weight fluid in a sundry, but not the actual test 5 fluid. That may have been a condition of approval on 6 some sundries, but it's not familiar to us if that 7 would have been specified one way or the other. 8 Can we inject methanol into the workover BOP. 9 The answer's yes. We can inject anything we want into 10 the choke and kill lines or through the flow nipple 11 above. And the analogy was brought up that with coil 12 we have, you know, half inch plumbing going into the 13 BOP to inject methanol, yes. But with coiled that is 14 absolutely necessary because the BOPs are above the 15 circulating point, you're pumping down coil and taking 16 returns through a campaign if you're a pumping sub 17 which is below. Your BOPs are up in the weather and 18 the wind and any fluid that's usually water, water 19 based or sometimes hydrocarbons, is dragged up by the 20 coil into the BOPs is stagnate. So we have to inject 21 methanol now and again to keep the BOPs and the packoff 22 thawed. Where with our workover BOPs, they're below 23 even the uppermost injection and return point that -- 24 the flow nipple, so they're getting warmed by all the 25 fluids that are being injected into the well or AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 78 1 returned from the well. 2 So we don't think we would commonly want to or 3 need to inject methanol, but could we, yes. We 4 absolutely could. 5 I hope that answers that question. And that 6 was everything other than the average daily low temps 7 which Bo covered. 8 CHAIRMAN PRICE: What about in the situations 9 where you're doing a workover and you've got a downhole 10 plug in place so you're not -- you don't have the kill 11 weight fluid that you're circulating through, would you 12 have a condition at that point where you could have 13 icing or any conditions that would threaten the BOP if 14 you're not circulating fluids? 15 MR. WORTHINGTON: Yes. I mean, well, I think 16 you said that we wouldn't have kill weight. We would 17 still have kill weight fluid above the plug, but do we 18 need to be feeding the well continuously. Obviously 19 not, it's got a hard bottom. We can circulate at will 20 when we're going those kinds of workovers and we do to 21 keep things warmed up. If we got into a situation were 22 we wanted to leave fluids static for some reason and I 23 can't think of what that would be, we could certainly 24 circulate methanol across the top or through the BOPs. 25 CHAIRMAN PRICE: Okay. Any other questions AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 79 1 from Commissioners? 2 COMMISSIONER CHMIELOWSKI: No. 3 CHAIRMAN PRICE: Anything else you guys wanted 4 to provide before we close it up? 5 (No comments) 6 CHAIRMAN PRICE: I think we can close it, 7 right, I don't think there's any reason to extend it? 8 (No comments) 9 CHAIRMAN PRICE: Okay. All right. We're going 10 to adjourn. The time is 12:23. 11 (Hearing adjourned - 12:23 p.m.) 12 (END OF PROCEEDINGS) 13 14 15 16 17 18 19 20 21 22 23 24 25 AOGCC 2/22/2022 IMTO: REQUEST BY HILCORP Docket No. OTH-21-035 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 02 through 80 are a true, 4 accurate, and complete transcript of proceedings in 5 Docket No.: OTH-21-035, transcribed under my direction 6 from a copy of an electronic sound recording to the 7 best of our knowledge and ability. 8 9 10 DATE SALENA A. HILE, (Transcriber) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 KLONDIKE SERVICE REPORTS 13 Dec 2019 13 April 2019 25 March 2020 By Samantha Carlisle at 12:09 pm, Feb 22, 2022 Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 MR. ARVELL BASS AFFIDAVIT RE: ALL AMERICAN RIG 111 Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 RESUME FOR DR. JIFENG PENG, Professor and the Chairperson of the Mechanical Engineering Department at University of Alaska Anchorage Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Additional Questions Posed by AOGCC on 17 February 2022 After reviewing submitted testimony in advance of the public hearing on February 22, 2022 (OTH 21-035), the Alaska Oil and Gas Conservation Commission (AOGCC) requests that Hilcorp be ready to respond to the following questions to ensure AOGCC’s concerns are adequately addressed regarding the Thunderbird rig and its suitability for reliable operations under the range of weather conditions that may be encountered (20 AAC 25.527(b)). Q1: Does Hilcorp ever utilize fluids in circulating equipment and across the BOPE stack that can freeze at ambient temperatures? Please explain. A1: Yes. All rigs pump fluids that freeze at ambient temperatures. For example, fresh water is currently pumped for testing. 1% KCL as well as other brines and muds that have various freeze points are also routinely pumped during normal well work activities. However, BOPE testing and normal rig operations differ significantly in regards to the volumes of circulated fluid, the ability to heat the fluids, and the amount of time the fluids are static (see Answer A6b for more detail). Due to these differences, BOPE testing introduces significantly more freeze up issues if using a fluid that is prone to freezing versus normal well operations. For that reason, API 53 (4th and 5th Editions) state that test fluids with “anti- freeze” or “additives” “shall” be used to alleviate risk during BOPE testing as discussed in the previous testimony. Q2: Has Hilcorp ever had a situation on a workover rig where it could not circulate warm fluids through the circulating equipment and BOPE in a timely manner to keep fluids from freezing? Please explain. A2: Yes, during BOPE testing with fresh water the test fluid (i.e., water) is static during the test. Without heat blankets, trunk heaters, electric heat trace, or some other kind of external heat the fresh water test fluid has the potential to freeze in sub-freezing weather. An exception to this would be if performing a rolling test where test fluids are continuously pumped. Outside BOPE testing, during normal well operations, fluids are continuously circulated and heat is added to the system; therefore, freeze up is not an issue. Q3: Describe the Thunderbird rig’s heating system, weatherization package, and its ability to keep essential equipment and components (choke and kill manifold system, control flow lines, BOP stack) adequately protected in harsh winter environments. A3: Depending on the definition of “harsh”, the intent is not to operate the rig in sustained temperatures lower than 0 deg F. Seasonal cut-off dates have been established around historical temperatures where the average temperature is above 0 deg F. These temperatures are considered normal winter conditions where the rig can operate, and does operate, throughout the world on a consistent and sustained basis. The heating system consists of two jet style heaters and anywhere from 3 to 4 Tioga heaters placed around the rig (dependent on weather conditions). The Rig is then outfitted with scaffolding wrapped in visqueen and or parachute style tarps. This “hooch” covers from the ground to the Rig floor and extends out over the kill manifold and covers the BOPE components, choke and kill lines & manifold. These areas are monitored with thermostats placed at the BOPE as well as the drillers station. Rig personnel record temperatures within the heated areas on the daily report and these temperatures have not fallen below 40 deg F. Q3a:Describe instances, if any, where Hilcorp had difficulty getting a passing BOPE test because of ambient temperature or wind. If any, how were these instances rectified to achieve passing tests? A3a: The Thunderbird Rig has circulated MEOH/water mixed solution from the pits across the BOP stack and back to the flowback tank and then swapped back to fresh water to continue testing when extended testing times and lower ambient temperatures were present. Wind does not affect testing. Q4: How was the Thunderbird rig’s operating window determined (rig book states 6 months beginning mid-April), and why was it extended into late November 2021? A4: The Thunderbird Rig’s operating window was determined as described in correspondence to AOGCC on 8 February 2022. It was based on a review of historical temperatures with 15 April and 15 November being the respective start/stop dates with average temperatures on those dates being 6 Deg F (using a more recent data set of just 2010 to 2021 it is 9 deg F average) and 4 deg F (1990-2021 dataset) and 8 deg F (2010-221 dataset), respectively. A caveat to this would be if the temperature is forecasted to dip to -10 deg F then Hilcorp would come to a good stopping point and cease rig operations early or delay the start. The forecasting Hilcorp has for the slope tends to be very accurate and allows Hilcorp to plan our field operations accordingly. The -10 deg F is a temperature cut off that Hilcorp believes provides a safety buffer before reaching the -20 deg F hard cut off. Hilcorp commits to these hard start/stop bookend dates and will not operate before or after them, regardless of actual temperatures. Q4a: Should the spring and fall shoulder seasons be restricted to ensure reliable operation of the BOPE? A4a: The operating window is restricted as noted above, not to ensure reliable operation of the BOPE, but to adhere to the design temperatures of the rig and structural steel components. Q5: Why does the Thunderbird rig need to use alternate fluids when no other rig in Alaska does? A5: The Thunderbird Rig does not “need” to use alternate fluids. However, as explained in Hilcorp’s testimony, using alternate fluids: x Greatly reduces risk of freeze up issues in the BOPE system during and after testing x Is allowed per AOGCC requirements to use a “non-compressible fluid” x Is allowed per API 53 3rd Edition and meets all three criteria in API 53 3rd Edition for a “should” recommended practice x Adheres to updated and improved guidance in both subsequent versions for API 53 In addition, Hilcorp’s request to use fluids other than fresh water should not be limited to just the Thunderbird Rig but all rigs as well as the same logic applies. Is there any downside to using alternate fluids? Q5a: Does that indicate that the rig has insufficient winterization and is not suited to an arctic environment? A5a: No. Per Gabriel Norris, Dragon Engineering Manager, (written correspondence date 18 February 2022): “There are several Cooper rigs of various models working in frigid climates dating back to 2010. These areas include Alaska, North Dakota, European Siberia, etc.” Further, Hilcorp would contend the issue is not the suitability of the rig work April thru November, but about using appropriate fluids in cold ambient conditions to minimize potential risk. Q6: Per API 53, how does Hilcorp interpret the ‘operating temperatures’ that a rig, BOPE, control system and/or fluids are exposed to? A6: It is not clear what specific reference in API 53 AOGCC is referring to. Assuming it is the 1997, 3rd Edition, the only two references to “operating temperatures” are Section 17.3.5 Test Fluids for Surface BOPE and Section 18.3.5 Test Fluids for Subsea BOPE where both sections state: “Control systems and hydraulic chambers should be tested using clean control system fluids with lubricity and corrosion additives for the intended service and operating temperatures” Other sections discuss: “Consideration should be given to the low temperature properties of the materials used in installations to be exposed to unusually low temperatures and should be protected from freezing by heating, draining, filling with appropriate fluid, or other appropriate means.” This is at the heart of Hilcorp’s request. While we currently employ heating and draining procedures to mitigate the risk of freeze up issues, we are also attempting to gain approval to fill with “appropriate fluid” as well during BOPE testing. Q6A: Does Hilcorp consider this as a possible worst-case condition where Thunderbird BOPE equipment could be needed in a well control situation? A6a: Question is not clear? What is “this”? Q6b: If the BOPE system cannot be protected sufficiently from the cold when tested with water, and the workover fluid being used for operations is water (or fluid with similar freezing point 1%KCl), how can the BOPE be expected to function reliably when needed during workover operations? A6b: The Thunderbird BOPE system can be protected sufficiently from the cold when testing with water. It was done in the 2021 season. However, using water introduces unnecessary and easily mitigatable risk as discussed in our above testimony and is exactly why API 53 was modified in 2012 and again in 2018 to include more specific language requiring the use of test fluids with “anti-freeze” or “additives”. BOPE system testing and Rig operations are two significantly different and distinct operations. Normal Well Operations During normal well operations, the Thunderbird #1 is continuously moving well kill fluids between the pits and the well (i.e., continuous hole fill) and the fluids are not static. Heat can be added to the pits and the area around the BOPE stack/rig floor is enclosed in visqueen and heated with a jet heater. Both methods add heat to the circulated kill fluids and ensure fluids within the lines are not frozen during well operations. The simple flow diagram below demonstrates typical fluids paths during pulling or running operations. The red lines illustrate the circulation paths, again with heat being applied at the pits and the BOPE/rig floor locations. The blue lines illustrate lines which do not circulate during normal well operations and those lines are blown down and evacuated of fluids during well operations. This ensures the static lines do not freeze up. BOPE Testing Operations During BOPE testing, the fluid lines are filled with the test fluid (as currently approved fresh water) and these lines remain static during testing for a prolonged period of time (up to several hours). These lines do not benefit from the heat sources located within in the pits, around the BOPE stack/rig floor (except for the fluids within the BOPE stack), and the unit heater within the choke manifold skid. Following a successful test, the lines are drained and blown down in an attempt to purge all lines, check valves, control valves, sensors, etc of water. In sub-freezing temps, this fluid and the associated lines are at risk of freezing and forming ice plugs. While Hilcorp has taken actions and added insulating blankets, heated blankets, and/or heat tracing to the lines, none of these actions are as effective as simply following API 53 requirements to use a test fluid with “anti-freeze” which greatly mitigates the risk of freeze-up with no apparent downside or added risk to the operation. To note, Service Coil Tubing Units employ alternative fluids for BOPE testing for this very reason. Q6c: Describe the risk assessment, if any, that addresses the potential for icing to occur in BOP components or the circulating system when actions must be taken to maintain well control. A6c: See responses above. Q7: Is the Thunderbird rig able to change out any failed BOP equipment without laying down the mast? A7: Yes. Q8: Explain why Hilcorp thinks Thunderbird is compliant with 20 AAC 25.527(b) for the transition months of March-April, October-November A8: See previous responses. Per the API certified manufacturer the rig is designed to operate to -20 deg F. Ancillary components are protected from the cold weather with insulated blankets, heat trace, unit heaters, jet heaters, Tioga heaters etc…to ensure operability. Similar rigs have operated throughout the world in similar, if not more extreme, conditions since 2010 per Gabriel Norris, Dragon Engineering Manager (written correspondence date 18 February 2022). In 2021 the Thunderbird rig successfully completed 21 work overs and increased oil production by ~6,500 bopd. It operated for 189 days at half to a third of the cost of North Slope rigs. It was able to move from well to well with no issues throughout the summer. This tool enabled Prudhoe Bay to have the first year of annual year on year production incline since Prudhoe Bay went on a decline in the late 1980s. While a new and different tool to the slope, this is not a new or different tool in the oil fields of the world. In order to maximize our State’s resources, new and different tools should be considered as part of our strategy. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Normal Well Operations BOPE Testing Operations 12 F11 F11 F17 F13 F15 F14 F14 F20 F11 F13 F13 F16 F15 F14 F15 F17 F16 F15 F16 F17 F16 F15 F17 F19 F18 F22 F21 F20 F23 F17 F18 F-15 F-20.00-15.00-10.00-5.000.005.0010.0015.0020.0025.000501001502002501990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122013201420152016201720182019202020212022Average Yearly Ambient(F)Days per Year30 Years of PBU's Ambient Histograms Days Below -15º FDays between -15º F to 30º FDays Above 30º FYearly AverageDays per year -15º F or below have gone from 102 in 1990 to 13 in 2018. -60-40-20020406080100Dec 31 Jan 30 Mar 01 Mar 31 Apr 30 May 30 Jun 29 Jul 29 Aug 28 Sep 27 Oct 27 Nov 26 Dec 2630 YEAR AVERAGE AMBIENT1990-2020 & 2021 Averages 1990-2020 TEMP RANGE1990-2021 Avg2022 AvgHistorical Annual Average Temperature (1990‐2021) = 16 deg F 5 1 Carlisle, Samantha J (OGC) From:Carlisle, Samantha J (OGC) Sent:Thursday, February 17, 2022 5:49 PM To:Bo York Subject:Questions for OTH-21-035 hearing Attachments:Thunderbird hearing questions.pdf Bo – Please see the attached questions in preparation for the hearing on Tuesday. We’re not requesting responses before the hearing, we’re just providing them in advance so Hilcorp can be prepared to speak to them at the hearing. Thank you, Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 After reviewing submitted testimony in advance of the public hearing on February 22, 2022 (OTH- 21-035), the Alaska Oil and Gas Conservation Commission (AOGCC) requests that Hilcorp be ready to respond to the following questions to ensure AOGCC’s concerns are adequately addressed regarding the Thunderbird rig and its suitability for reliable operations under the range of weather conditions that may be encountered (20 AAC 25.527(b)). x Does Hilcorp ever utilize fluids in circulating equipment and across the BOPE stack that can freeze at ambient temperatures? Please explain. x Has Hilcorp ever had a situation on a workover rig where it could not circulate warm fluids through the circulating equipment and BOPE in a timely manner to keep fluids from freezing? Please explain. x Describe the Thunderbird rig’s heating system, weatherization package, and its ability to keep essential equipment and components (choke and kill manifold system, control flow lines, BOP stack) adequately protected in harsh winter environments. o Describe instances, if any, where Hilcorp had difficulty getting a passing BOPE test because of ambient temperature or wind. If any, how were these instances rectified to achieve passing tests? x How was the Thunderbird rig’s operating window determined (rig book states 6 months beginning mid-April), and why was it extended into late November 2021? o Should the spring and fall shoulder seasons be restricted to ensure reliable operation of the BOPE? x Why does the Thunderbird rig need to use alternate fluids when no other rig in Alaska does? o Does that indicate that the rig has insufficient winterization and is not suited to an arctic environment? x Per API 53, how does Hilcorp interpret the ‘operating temperatures’ that a rig, BOPE, control system and/or fluids are exposed to? o Does Hilcorp consider this as a possible worst-case condition where Thunderbird BOPE equipment could be needed in a well control situation? o If the BOPE system cannot be protected sufficiently from the cold when tested with water, and the workover fluid being used for operations is water (or fluid with similar freezing point 1%KCl), how can the BOPE be expected to function reliably when needed during workover operations? o Describe the risk assessment, if any, that addresses the potential for icing to occur in BOP components or the circulating system when actions must be taken to maintain well control. x Is the Thunderbird rig able to change out any failed BOP equipment without laying down the mast? x Explain why Hilcorp thinks Thunderbird is compliant with 20 AAC 25.527(b) for the transition months of March-April, October-November. 4 Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Introduction Good morning Mr. Chairman, Commissioners and AOGCC staff. My name is Aras Worthington. I am Senior Technical Advisor for Alaska Operations for Hilcorp Alaska. We thank you for the opportunity today to present testimony in support of Hilcorp’s request to test BOPs with low freezing point fluids on Thunderbird Rig #1. We would like to emphasize that the purpose of requesting approval for a change in BOP test fluids is not a cost-saving measure for Hilcorp, but rather comes from a safety concern that our rig field supervision has elevated to us on numerous occasions. I am a nearly lifelong Alaskan with a Bachelor of Science in Mechanical Engineering from Purdue University in West Lafayette, Indiana. I am a licensed Petroleum Engineer in the State of Alaska. I have 28 years of engineering oilfield experience within a wide variety of oilfield companies in the fields of Interventions, Rig Workovers, Drilling, Coiled Tubing Drilling, Plug and Abandonments, and Well Integrity. I respectfully request that the commission recognize me as an expert witness in this matter. Background BOPs, or Blow-Out-Preventers are defined by API Standard 53 as a: “Sealing ram or annular type device, which is within the scope of API 16A, installed on the wellhead or wellhead assemblies to contain wellbore fluids either in the annular space between the casing and the tubulars or in an open hole during well drilling, completion, and testing operations.” BOPs on workover rigs like Thunderbird #1 are used as a contingent barrier to reservoir pressure and fluids. The first barrier being a mechanical plug set deep in the well or kill weight fluid,or both. Because the BOPs are a contingent barrier, they are normally open and closed only when pressure containment around the tubing or work-string is needed. The BOPs are function and pressure-tested to a pressure above the Maximum Anticipated Surface Pressure on every new rig up on a well, and every seven days thereafter, and whenever the BOP stack is modified or if an event requires a retest per AOGCC regulations, such as closing the BOPs for well control. The test pressures are dictated by the approved Sundry application from AOGCC. AOGCC Inspectors are given 24 hours of notice to witness BOP tests and will then either witness the test or waive witness depending on Inspector workload, AOGCC priorities, etc. By Samantha Carlisle at 7:15 am, Feb 08, 2022 Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Operations Overview and Application Hilcorp is using the Thunderbird Rig #1 at Prudhoe Bay to perform work over operations. This is a brand-new rig and Hilcorp submitted the rig book to AOGCC for review prior to rig acceptance. We have worked through the acceptance and commissioning of the rig with AOGCC field inspectors and Mr. James Regg. The rig is relatively lightweight, mobile, and is capable of most of the scope of the workovers we plan to do in Greater Prudhoe Bay. It requires a tenth of the fuel when compared to its much larger and less-mobile predecessor rigs. The rig moves from pad to pad with minimal infrastructure impact and does not require rig-matting the roads. It is a right-sized tool for the jobs we plan and execute with it. We intend to seasonally operate the rig from roughly April through October so about six to seven months, weather dependent. It is not a fully enclosed and winterized rig and is not set up nor intended to be used for full-on winter operations. Although this rig is unique to Prudhoe Bay it is not unique to industry. Hundreds of these rigs are in operation throughout the Lower-48, Canada, and overseas to include arctic locations in Russia. We resolved many questions and concerns specific to this type of workover rig through the acceptance and commissioning process; however, AOGCC has denied one Hilcorp request that we would like to present more information on. Hilcorp respectfully requests the ability to utilize 60/40 methanol/water or 9.8 pound-per-gallon brine as BOP test fluids. We are bringing this request forward at the urging of our field-based Wellsite Supervisors because they strongly believe using water instead of the requested 60/40 methanol/water blend or 9.8 pound-per-gallon brine introduces unnecessary and easily mitigatable risk to our workover operations. Because the rig choke and kill lines are exposed to the elements by design, using freshwater as a test fluid exposes these lines to the risk of freezing during the slow-rate pumping operations of testing BOPs. If any of these lines, valves, chokes, or gauges freeze we will lose functionality of a critical component of the BOP and Well Control system. This is an unnecessary operational safety risk. The only direct requirement in the AOGCC regulations for BOP test fluids is found in 20 AAC 25.285 which requires a “non-compressible” fluid be utilized for BOP testing. Hilcorp Alaska contends that for the purpose of BOP tests any of the proposed fluids are sufficiently non-compressible, though they are all compressible to an extent. The compressibility for water, 9.8 pound-per-gallon brine, and a 60/40 blend of methanol and water is negligible in all practical applications. For our operations in Alaska, 60/40 methanol is the most common BOP test fluid for service unit work (service coil, slickline, and e-line) in exposed environments. The 60/40 blend of methanol and water is used to avoid freeze up issues in the BOP system. In addition, 9.8 pound-per- gallon NaCl brine could be an alternate test fluid and has been used in workover applications in the past. Please reference Klondike Service Reports and Arvell Bass affidavit.These documents are submitted as evidence that both 60/40 methanol-water and 9.8 pound-per-gallon brined have been used as BOP test fluids successfully in the past on the Klondike Rig and the All-American Rig 111. I will now hand over to Dr. Jifeng Peng, Professor and the Chairperson of the Mechanical Engineering Department at University of Alaska Anchorage for testimony on the compressibility of fluids but will remain open to questions at any time. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Introduction and Qualifications Good morning, Mr. Chairman, Commissioners and AOGCC staff. I am Dr. Jifeng Peng, Professor and the Chairperson of the Mechanical Engineering Department at University of Alaska Anchorage. I am here to testify on the compressibility of fluids as it relates to the topic of BOP test fluids. My research and expertise include fluid mechanics, structure mechanics, and other topics. I am a licensed Professional Engineer in Mechanical Engineering in the State of Alaska. I respectfully request that the commission recognize me as an expert witness in this matter. Fluid compressibility Compressibility (k) is a measure of the relative volume change of a fluid (liquid or gas) as a response to a pressure change 𝑘=−1 𝑉 𝜕𝑉 𝜕𝑝, where V is the volume of the fluid and p is the pressure. An increase in pressure generally causes a decrease in the fluid volume. Liquids generally have very small compressibility. For example, the compressibility of pure water is k = 0.460 x10-3/MPa at the standard atmospheric condition (25 oC and 1 atm) [1]. Comparison of compressibility of water, NaCl solution, and methanol/water blend Hilcorp Alaska proposes to use 9.8 ppg NaCl solution or 60/40 (volume/volume) methanol/water blend as alternatives for pure water in the blowout preventer (BOP) pressure test, up to 5,000 psi. The compressibility and volume change at 5,000 psi for these 3 liquids are negligible. NaCl solution NaCl solution has a smaller compressibility than pure water. Table 1 lists the compressibility of NaCl solutions at various molarity [2]. For a given temperature and pressure, the compressibility decreases with more NaCl in the solution. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Table 1: Compressibility (unit: x10-3/MPa) of NaCl solution at various molarity [2]. The compressibility at 25 oC and 1 atm for molality 5.0 is highlighted for calculation. Please note that the concentration of NaCl solution in Table 1 is represented by the molality (i.e. the number of moles of solute per kilogram of solvent). The correlations between concentration and molality are listed in Table 2 for standard seawater and 9.8 ppg NaCl solution. Table 2: Concentration and molality for standard seawater and 9.8 ppg NaCl solution. Liquid Concentration Molality Standard seawater 3.5%0.6 9.8 ppg NaCl solution 26.3%6.1 Since there is no data available for compressibility of 9.8 ppg NaCl solution (6.1 molality), the compressibility at a lower-molality 5.0,k = 0.294 x10-3/MPa, is used for calculation. The 9.8 ppg NaCl solution has an even lower value than k = 0.294 x10-3/MPa. Methanol/water blend Methanol/water blend has a larger compressibility than pure water because the compressibility of pure methanol (k = 1.266 x10-3/MPa at 25 oC and 1 atm) is higher than that of pure water. Table 3 lists the compressibility of methanol/water blends at 3 concentrations [3]. Please note that the concentration of methanol/water blend in Table 3 is represented by mole fraction x (i.e., the ratio of the number of moles of methanol to the tot al number of moles of methanol and water). A 60/40 (volume/volume) methanol/water blend translates to a mole fraction of x = 0.4. Because compressibility increases with a larger mole fraction x, the compressibility of the 60/40 (volume/volume) methanol/water blend (x = 0.4) is lower than k = 0.669 x10-3/MPa (at x = 0.5), which Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 is used for calculation. Table 3: Compressibility (unit: x10-6/MPa) of methanol/water blend at mole fraction x = 0.25, 0.5, 0.75 [3]. The compressibility at 25 oC and 1 atm for x = 0.5 is highlighted for calculation. Comparison of volume change Table 4 lists the volume change of pure water, 9.8 ppg NaCl solution, and 60/40 (volume/volume) methanol/water blend applied with a pressure of 5,000 psi (34.5 MPa), using the abovementioned compressibility values. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Table 4: Comparison of compressibility of water, NaCl solution, and water/methanol blend. Liquid Compressibility at 25 oC and 0.1 MPa (x10-3/MPa) Percentage of volume change at 5000 psi (34.5 MPa) Pure water 0.460 1.59% 9.8 ppg NaCl solution 0.294 1.01% 60/40 methanol/water blend 0.669 2.31% Summary of Fluid Compressibility The compressibility’s of three fluids, i.e., pure water, 9.8 ppg NaCl solution and 60/40 (volume/volume) methanol/water blend, are compared based on lit erature. Hilcorp Alaska estimates up to 5,000 psi applied to about 80 gallon of fluid in its BOP pressure testing and the volume changes for the fluids at 5,000 psi are calculated. The change in volume of the 9.8 ppg NaCl solution (1.01%) is less than that of pure water (1.59%). Therefore, the NaCl solution would perform the same as, if not better than, pure water in achieving and holding a steady pressure in the BOP testing. The change in volume of the 60/40 (volume/volume) methanol/water blend (2.31%) is only slightly larger than that of the pure water. Given its small compressibility, however, the 60/40 methanol/water blend would also be able to achieve and to hold a steady pressure after the initial pressurization. References for Fluid Compressibility 1. J. Safarov et al. Thermodynamic properties of standard seawater. 2009. Ocean Science 5:235-246. 2. P. S. Z. Rogers and K. S. Pitzer. Volumetric Properties of Aqueous Sodium Chloride Solutions. 1982. Journal of Physical and Chemical Reference Data 11: 15. 3. J. Safarov et al. Excess molar volumes, isothermal compressibility, and thermal expansivities of {(1− x)H 2O+ xCH3OH}. 2004. The Journal of Chemical Thermodynamics 36: 541-547. I will now hand over to Bo York, Operations Manager for Prudhoe Bay East and the Greater Prudhoe Bay Wells Group. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 Good morning Mr. Chairman, Commissioners and AOGCC staff. My name is Bo York. I am the Operations Manager for the eastern half of Prudhoe Bay and also the Wells Group for Hilcorp North Slope. I am a graduate of Lathrop High School in Fairbanks and obtained my engineering degree from the United States Military Academy at West Point, NY. After serving in the military on active duty as an Engineer Officer, I returned to Alaska and continued my service as a US Army Reserve officer and started working in the oil and gas industry. I have 25 years of industry experience and have worked with all the major producers in Alaska, including Hilcorp for ten years as our engineering manager and operations manager for our North Slope Team, Kenai Team, and now the Prudhoe Team. I respectfully request that the commission recognize me as an expert witness in this matter. API 53 Discussion  20 AAC 25.527 adopts by reference American Petroleum Institute (API) Recommended Practice (RP) 53 3rd edition (March 1997). Section 17.3.5 of the March 1997 edition states that “water” “should” be used as a BOPE test fluid. o Hilcorp contends that API RP 53 3 rd edition (March 1997) by definition are recommended practices and does not “require” or use the word “shall” or “must” in section 17.3.5 in regard to using “water” as a test fluid. However, the RP does incorporate the stronger or more prescriptive “must” or “shall” in numerous other sections; therefore, Hilcorp contends the use of “should” is intentionally used for this specific recommended practice to be less prescriptive. o Per API 53 3rd Edition discusses the use of “shall” and “should” and denotes their differences very clearly. Specifically:  “Shall: indicates that the recommend practice(s) has universal applicability to the specific activity”  “Should: Denotes a recommended practice(s) a) where a safe comparable alternative practice(s) is available; b) that may be impractical under certain circumstances; or c) that me be unnecessary under certain circumstances or applications.”  Hilcorp contends that a), b), and c) all apply to Section 17.3.5.  a) a safe alternate exists (e.g., 60/40 methanol blend or 9.8 ppg brine)  b) using water for test fluid on a workover rig’s BOPE system in freezing conditions is impractical  c) using water instead of 60/40 methanol or 9.8 ppg brine is unnecessary in this circumstance or application as it does not change the quality or technical aspects of the test o Hilcorp Alaska contends that API RP 53 3rd edition (March 1997) has been superseded by API 53 STD 4th edition (Nov 2012) and API 53 STD 5th edition (Dec 2018). Both editions state in their introduction “This edition supersedes all previous editions of this standard” and specifically cites the March 1997 3rd Edition.  API 53 STD 4 th Edition Nov 2012 Section 6.5.3.5 Test Fluids states: “6.5.3.5.1 Well control equipment shall be pressure tested with water or water with additives.” It goes on to state: “6.5.3.5.3 Control systems and hydraulic chambers shall be tested using clean control system fluids with lubricity and corrosion additives for the intended service and operating temperatures.” This 4th Edition uses the prescriptive “shall” but then also incorporates the alternate to use “water with additives” and further goes on to mention Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 “operating temperatures”. This 4th Edition dictates the use of water with additives to account for operating temperatures for just the reasons Hilcorp is making our request.  API 53 STD 5th edition Dec 2018) Section 5.3.9 Test Fluids states: “5.3.9.1 The initial installation pressure tests shall be conducted with water or water with preservation, anti-freeze, and colorant additives.” Again, the 5th Edition uses the prescriptive “shall” and notes even more clearly that water with “preservation, anti-freeze and colorant” shall be used. Section 5.3.9.2 continues: “During operations, the drilling fluid in use is acceptable to perform subsequent tests of the BOP stack.” o All three editions of API 53 contain the same or similar language in their Introduction, Special Notes, and/or Foreword:  This standard does not present all of the operating practices that can be employed to successfully install and operate blowout preventer systems in drilling, completions, and well testing operations.  Practices set forth herein are considered acceptable for accomplishing the job as described; however, equivalent alternative installations and practices can be used to accomplish the same objectives.  These publications are not intended to obviate the need for applying sound engineering judgment regarding when and where these publications should be utilized.  Mr. Richard Cummings is the Chairman for the API Standard 53 (since 2016 and was the Vice-Chair from 2011-2016) and Chairman for various other API committees and groups to include: o API Subcommittee 16 (Well Control Equipment and Supporting Systems for Drilling and Intervention Operations), o API 16SP (BOP Shear Ram Performance Test Protocol) o API 16I (Resource Term Document) o BOP Shear Ram Joint Industry Project (JIP) – Shear Test Database for Operators In discussions with Mr. Cummings, he stated that he worked with the API 53 committee to develop and implement the changes from the 1997 3rd Edition to the 2012 4th Edition and to the 2018 5th Edition. He stated there have been many changes to the API 53 “for the good – this being one of them.” Where “this” refers to changing the BOPE test fluid language as detailed previously. Mr. Cummings stated that because industry had issues with “water” freezing in BOPE systems, the language was specifically changed as noted in the subsequent editions. While Mr. Cummings is not present today, he has offered to speak with AOGCC representatives on the changes made to API 53 and the rationale and intent behind those changes if that would prove helpful. API RP 53 3 rd Edition (1997) and AOGCC regulations do not preclude the use of a 60/40 methanol/water blend or 9.8 ppg brine for a BOP test fluid, and in fact allow for it. Subsequent editions of API 53 STD explicitly allow it as an anti-freeze additive for the precise reason we are requesting to be able to utilize it. I will now hand over to Aras Worthington for conclusory remarks. Conclusion AOGCC has dictated that we use water as our BOP test fluid on Thunderbird #1 Rig. We respectfully appeal this decision for a number of reasons: 1. Using straight water for BOP test fluid adds significant and unnecessary risk to our operation by potentially compromising the integrity and functionality of our well control equipment due to the risk of freezing Well Control critical valves, lines, chokes, sensor lines, etc. after the pumps are shutdown. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 2. The 60/40 mixture of methanol and water or 9.8 pound-per-gallon brine that Hilcorp proposes as alternate BOP test fluids are inherently non-compressible as detailed by Dr. Peng. These fluids meet the definition required by AOGCC as a “non-compressible fluid”. 3. AOGCC’s cited API RP 53 3rd Edition (March 1997) section 17.3.5 allows flexibility in the use of test fluids through the intentional use of “should” versus a more prescriptive “shall” or “must”. 4. Using 60/40 methanol or 9.8 pound-per-gallon brine as a BOP test fluid meets all three criteria detailed in API RP 53 3rd Edition for a “should” recommended practice. 5. Subsequent Editions of API 53 switch to the prescriptive word “shall” and include additional language to require the use of additives and/or antifreeze to account for operating temperatures. Hilcorp respectfully requests AOGCC reconsider its position on Hilcorp’s ability to utilize 60/40 and/or 9.8 pound-per-gallon brine as a BOP test fluid for the Thunderbird #1 Rig. This request is based on safety concerns from our field leadership and we believe it is allowed for in the API 53 3rd, 4th, and 5th Editions and AOGCC regulations. Thank you for your time and consideration. We are open to any questions or concerns from the Commission on this topic. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 KLONDIKE SERVICE REPORTS 13 Dec 2019 13 April 2019 25 March 2020 Klondike Work Over Rig, Recent Sampling of Well Service Reports Documenting the Use of 60/40 Methanol for AOGCC approved BOPE Tests Continued on next page. Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 MR. ARVELL BASS AFFIDAVIT RE: ALL AMERICAN RIG 111 Hilcorp North Slope Testimony 22 February 2022 AOGCC public hearing docket number OTH-21-035 The request by Hilcorp Alaska, LLC(Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1 RESUME FOR DR. JIFENG PENG, Professor and the Chairperson of the Mechanical Engineering Department at University of Alaska Anchorage 1 Resume Jifeng Peng, Ph.D. P.E. Professor and Chair Department of Mechanical Engineering University of Alaska Anchorage Anchorage, AK 99508 Phone: 907-786-6193 Email: jpeng@alaska.edu Professional Experience Professor (07/2020 ~ present) in Mechanical Engineering, University of Alaska Associate Professor (07/2016 ~ 06/2020) in Mechanical Engineering, University of Alaska Assistant Professor (08/2009 ~ 06/2016) in Mechanical Engineering, University of Alaska Research fields Fluid dynamics, structure mechanics, fluid-structure interactions on marine infrastructures, aquatic propulsion, mixing and transport in atmospheric and oceanic flows, combustion, renewable energies. Grants awarded 1. PI, ‘Arctic ice condition index’, Department of Homeland Security, $375,000, 2019-2021. 2. PI, ‘A framework to analyze infrastructure subsidence on thawing permafrost’, ConocoPhillips Arctic Science and Engineering Award, $52,477, 2020-2021. 3. PI, ‘Analysis of drill string stick-slip vibration,’ ConocoPhillips Arctic Science and Engineering Award, $37,195, 2019-2020. 4. PI, ‘A combustion and dispersion model of particulate matter from in situ oil burning ,’ ConocoPhillips Arctic Science and Engineering Award, $27,591, 2018-2019. 5. Co-PI, ‘Arctic oil spill model’, Department of Homeland Security, Co -PI portion, $100,000, (grant total: $200,000, PI: Texas A&M University), 2018-2019. 6. Co-PI, ‘Wind farm in Igiugig Alaska: integration of wind farm into microgrid,’ Gordon and Betty Moore Foundation, Co-PI portion: $1,317,058 (grant total: $1,759,700, PI: Stanford University), 2016-2019. 7. Co-PI, ‘Village grid integration strategy,’ Alaska Energy Authority, Co -PI portion: $103,750 (grant total: $421,500, PI: ORPC), 2017-2018. 8. PI, ‘Vortex induced vibration in marine pipelines with application to AKLNG,’ ConocoPhillips Arctic Science and Engineering Award, $71,299, 2016-2017. 9. Co-PI, ‘Arctic coastal erosion forecasting,’ ConocoPhillips Arctic Science and Engineering Award, Co-PI portion: $16,331 (grant total: $141,511), 2016 ~2017. 10. Co-PI, ‘Wind farm in Igiugig Alaska: demonstration of vertical-axis wind turbines,’ Gordon and Betty Moore Foundation, Co-PI portion: $121,686 (grant total: $679,997, PI: Stanford University), 2013-2016. 11. PI, ‘BRIGE: Optimal formation of consecutive vortex rings for propulsion systems,’ National Science Foundation CBET-1228121, $174,957, 2012-2015. 12. PI, ‘Feasibility study of vertical-axis wind turbine farm in rural communities in Alaska’s wild salmon systems,’ Gordon and Betty Moore Foundation, $47,991, 2012 -2013. 13. PI, ‘Ocean plankton distribution patterns in the Alaska region from a coupled population dynamics-physical mixing model,’ Alaska EPSCoR, $19,950, 2012. Curriculum Vitae of Jifeng Peng 2 14. PI, ‘A novel method to predict hazard zones of airborne volcanic ash from eruptions,’ Alaska Space Grant Program, $25,568, 2011-2012. Instructor Aerodynamics, Design of Mechanical Engineering Systems, Engineering Practice, Renewable Energy Systems, Advanced Fluid Mechanics, Intro to Engineering, Intro to Thermodynamics, Propulsion Introduction to Astrodynamics, Theory of Flight, Engineering Analysis. Graduate advisor and committee chair 1. Penrod T. M.S. thesis: “Aerodynamic interaction of multi rotors,” 2017 ~ 2020; 2. Garcia, Z. M.S. thesis: “Vortex ring formation from a pulsed jet,” 2014 ~ 2016; 3. Milke, S. M.S. thesis: “Experiments on the interactions between a rigid plate and vortices,” 2012 ~ 2015; 4. Nash, M. M.S. thesis: “Analysis of an oscillating plate coupled with fluid,” 20 10 ~ 2013; 5. Satti, J. M.S. thesis: “An experimental study on the interaction of co -axial and co-rotating vortex rings,” 2009 ~ 2011. Academic journal reviewer Atmospheric Environment; Bioinspiration & Biomimetics; Chaos; Experiments in Fluids; International Journal of Heat and Fluid Flow; International Journal of Non-linear Mechanics; Journal of Experimental Biology; Journal of Fluid Mechanics; Journal of the Japanese Society for Experimental Mechanics; Journal of Physics: Condensed Matter; Marine Technology Society Journal; Physica D: Nonlinear Phenomena; Physics of Fluid; Theoretical and Computational Fluid Dynamics. Education Ph.D. Bioengineering (specialty in fluid mechanics) (07/2009) California Institute of Technology, Pasadena, CA M.S. Mechanical Engineering (06/2004) Stony Brook University, Stony Brook, NY B.S. Mechanical Engineering (06/2002) University of Science & Technology of China, Hefei, China 3 1RWLFHRI3XEOLF+HDULQJ 67$7(2)$/$6.$ $/$6.$2,/$1'*$6&216(59$7,21&200,66,21 5( 'RFNHW1XPEHU27+ 7KHUHTXHVW E\ +LOFRUS$ODVND//&+LOFRUS WRGLVFXVV$2*&&¶VGHQLDORI+LOFRUS¶V UHTXHVWWRXWLOL]HDEOHQGRIPHWKDQRODQGZDWHUDQGRUDEULQHVROXWLRQWRWHVWWKH %23(HTXLSPHQWRQWKH7KXQGHUELUG5LJ +LOFRUS E\HPDLO UHFHLYHG $XJXVWUHTXHVWVWKH$ODVND2LODQG*DV&RQVHUYDWLRQ &RPPLVVLRQ$2*&& KROGDSXEOLFKHDULQJWRGLVFXVV$2*&&¶VGHQLDORI+LOFRUS¶VUHTXHVWWR XWLOL]HDEOHQGRIPHWKDQRODQGZDWHUDQGRUDEULQHVROXWLRQWRWHVWWKH%23(HTXLSPHQWRQ WKH7KXQGHUELUG5LJ 7KLVQRWLFHGRHVQRWFRQWDLQDOOWKHLQIRUPDWLRQILOHGE\+LOFRUS<RXPD\REWDLQPRUHLQIRUPDWLRQ DERXWWKLVILOLQJE\FRQWDFWLQJWKH$2*&&¶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eremy Price Digitally signed by Jeremy Price Date: 2022.01.07 14:33:41 -09'00' 1 Carlisle, Samantha J (OGC) From:Carlisle, Samantha J (OGC) Sent:Friday, January 7, 2022 3:17 PM To:AOGCC_Public_Notices Subject:OTH-21-035 Public Hearing Notice, Hilcorp Attachments:OTH-21-035 Public Hearing Notice .pdf RE: Docket Number: OTH-21-035 The request by Hilcorp Alaska, LLC (Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 1/7/22 mailed 2 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket Number: OTH-21-035 The request by Hilcorp Alaska, LLC (Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1. Hilcorp, by email received August 31, 2021, requests the Alaska Oil and Gas Conservation Commission (AOGCC) hold a public hearing to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1. This notice does not contain all the information filed by Hilcorp. You may obtain more information about this filing by contacting the AOGCC’s Executive Secretary, Samantha Carlisle, at (907) 793-1223 or samantha.carlisle@alaska.gov The AOGCC has scheduled a public hearing on this matter for October 13, 2021, at 10:00 a.m. in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501. Although the hearing will be held in person, the public has the option of participating in the hearing remotely via MS Teams. Anyone who wishes to participate remotely should contact Samantha Carlisle at samantha.carlisle@alaska.gov at least two business days before the scheduled hearing. In addition, written comments regarding this application may be submitted to the AOGCC at 333 West 7th Avenue, Anchorage, AK 99501. Comments must be received no later than the conclusion of the October 13, 2021, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC’s Executive Secretary, Samantha Carlisle, at (907) 793-1223, no later than October 4, 2021. Jeremy M. Price Chair, Commissioner 1 Carlisle, Samantha J (CED) From:Carlisle, Samantha J (CED) Sent:Wednesday, September 1, 2021 2:57 PM To:Bo York Subject:OTH-21-035 Notice of Public Hearing Attachments:OTH-21-035 Public Hearing Notice .pdf Docket Number: OTH-21-035 The request by Hilcorp Alaska, LLC (Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 1 Carlisle, Samantha J (CED) From:Carlisle, Samantha J (CED) Sent:Wednesday, September 1, 2021 2:59 PM To:AOGCC_Public_Notices Subject:Public Hearing Notice, Hilcorp, Docket Number: OTH-21-035 Attachments:OTH-21-035 Public Hearing Notice .pdf The request by Hilcorp Alaska, LLC (Hilcorp) to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on the Thunderbird Rig 1. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 Mailed 9/1/21 1 From:Bo York To:Salazar, Grace (CED) Subject:FW: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Date:Tuesday, August 31, 2021 10:12:31 AM Attachments:Klondike Work Over Rig Well Service Reports - MEOH.pdf Grace- Long email chain below but I would like to request a public hearing to discuss AOGCC’s denial of Hilcorp’s request to utilize a 60/40 blend of methanol and water and/or a brine solution to test the BOPE equipment on workover rigs. Attached are some documents that demonstrate 60/40 methanol blend has been historically used on other work over rigs under AOGCC’s jurisdiction. I am gathering more documentation for other rigs as well and expect to submit additional info by the end of next week. Jessie asked we submit this documentation at least 10 days before the hearing. So would the week of 27 Sept work for the Public hearing? Is that far enough out for announcing it? Please let me know what other info you need for this request. Thank you. Bo York Hilcorp Alaska LLC PBE Operations Manager byork@Hilcorp.com 907.777.8345 Anchorage office 907.659.5149 PBOC office 907.727.9247 cell From: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Sent: Friday, August 27, 2021 9:58 AM To: Bo York <byork@hilcorp.com> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Bo, Thanks for the second voicemail. I cannot discuss these issues with you in advance of the hearing. Grace is aware that Hilcorp desires a hearing on this matter and will work with you next week to set the date. Jessie Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907-793-1223 or jessie.chmielowski@alaska.gov. From: Bo York <byork@hilcorp.com> Sent: Thursday, August 26, 2021 2:50 PM To: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Jessie- I left a VM but understand your ability to discuss matters verbally that may be part of a public hearing is limited so I thought I would try and be concise and put my thoughts in email too….bear with me…. Based on your note below, it appears there is a larger issue at play here that we (industry) have run into before with you (AOGCC). The issue is the regulations reference specific editions of API Standards and/or Recommended Practices that are outdated/superseded by current API Stds/RPs. AGOCC utilizes the outdated Stds/RPs and not the current ones because the regulation references the specific edition. This can be problematic for both sides (industry and AOGCC) for a wide variety of reasons and does not seem to adhere to the intent of having an entity like API that strives to improve and modernize industry standards that both governments and industry can utilize for safe and efficient operations. Should I use this opportunity to address that larger issue in the public hearing and use our specific example as a case in point? Would this be a worthwhile conversation? And if so, is the public hearing process the right forum or would a discussion with you and others on your team be better? And in this case, we were fully aware of the language in the 1997 edition of API 53 but also were aware of the change in the latest version (2018) and understood why API made the change. Bo York Hilcorp Alaska LLC PBE Operations Manager byork@Hilcorp.com 907.777.8345 Anchorage office 907.659.5149 PBOC office 907.727.9247 cell From: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Sent: Thursday, August 26, 2021 11:51 AM To: Bo York <byork@hilcorp.com> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Bo, All Hilcorp needs to do is ask for a hearing regarding AOGCC's denial of its request to use 60/40 MeOH/water or 9.8 ppg brine as BOPE test fluid for the Thunderbird #1 workover rig. As to the remainder of your voicemail, to my knowledge, AOGCC has never approved a fluid other than water for BOPE testing on workover or drilling rigs. Because part of Hilcorp's request is grounded in its claims that AOGCC has approved the use of alternate fluids for workover and drilling rigs operating in the State, that information needs to be provided to the AOGCC at least 10 days in advance of the hearing. Prior to the hearing, you may also want to familiarize yourself with 20 AAC 25.527 which adopts by reference API RP 53 3rd edition and requires that water be used as a BOPE test fluid. Jessie Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907-793-1223 or jessie.chmielowski@alaska.gov. From: Bo York <byork@hilcorp.com> Sent: Thursday, August 26, 2021 10:21 AM To: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Jessie, just checking back in. Not meaning to be a pain or pushy on this topic, just looking for some guidance on how/what to request for the public hearing and wanting to move forward with the process as the weather is getting colder and using straight water in our BOPE testing procedure will soon be an issue again. I want to ensure I understand from your/AOGCC perspective what the hearing will be about so I can get my request correct. I don’t believe I am requesting a variance from state regs or API standards and am not requesting a new order or change to an existing order so am not sure how best to phrase my request to Grace. Thanks Jessie. Bo York Hilcorp Alaska LLC PBE Operations Manager byork@Hilcorp.com 907.777.8345 Anchorage office 907.659.5149 PBOC office 907.727.9247 cell From: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Sent: Friday, August 20, 2021 10:08 AM To: Bo York <byork@hilcorp.com> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Bo, I received your voicemail and will respond to it next week. Jessie Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907-793-1223 or jessie.chmielowski@alaska.gov. From: Chmielowski, Jessie L C (CED) Sent: Thursday, August 19, 2021 10:59 AM To: Bo York <byork@hilcorp.com> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Mr. York, Thank you for your email. As previously communicated, if Hilcorp desires a hearing on this matter, AOGCC will scheduled one. To schedule a hearing, please contact Grace Salazar at (907) 793-1221 or grace.salazar@alaska.gov. Should Hilcorp desire a hearing, AOGCC requests specific evidence to support Hilcorp's claims that workover rigs operating in other areas of the State utilize 60/40 MEOH in sub-freezing temperatures and that the All American Oilfield’s Rig #111 utilized 9.8 ppg brine on the slope. This would include documents, the names of rigs where this has occurred, BOPE test dates, names and contact information for witnesses, etc. The information needs to be provided at least 10 days in advance of the hearing. Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907-793-1223 or jessie.chmielowski@alaska.gov. From: Bo York <byork@hilcorp.com> Sent: Monday, August 9, 2021 12:03 PM To: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Commissioner Chmielowski- As we get closer to fall operations, I would like to follow up on Hilcorp’s request to utilize 60/40 MEOH/water or 9.8 ppg brine as BOPE test fluid for the Thunderbird #1 workover rig. In the email correspondence below, AOGCC denied Hilcorp’s initial request to utilize 60/40 or 9.8 ppg brine in lieu of fresh water for the Thunderbird’s BOPE tests. In a short verbal discussion, it was relayed by AOGCC that if Hilcorp is worried about water freezing during BOPE operations we should also be worried about water freezing during normal well ops and therefore should have sufficient winterization/heat set up to facilitate BOPE testing with water and also normal operations. I will address the difference between BOPE testing and normal operations in this email and reiterate Hilcorp’s request to utilize 60/40 MEOH or 9.8 ppg brine as test fluid. Normal Well Operations During normal well operations, the Thunderbird #1 is continuously moving well kill fluids between the pits and the well. Heat can be added to the pits and the area around the BOPE stack/rig floor is enclosed in visqueen and heated with a jet heater. Both methods add heat to the circulated kill fluids and ensure fluids within the lines are not frozen during well operations. The simple flow diagram below demonstrates typical fluids paths during pulling or running operations. The red lines illustrate the circulation paths, again with heat being applied at the pits and the BOPE/rig floor locations. The blue lines illustrate lines which do not circulate during normal well operations and those lines are blown down and evacuated of fluids during well operations. This ensures the static lines do not freeze up. BOPE Testing Operations During BOPE testing, the fluid lines are filled with the test fluid (as currently approved fresh water) and these lines remain static during testing. This lines do not benefit from the heat sources located within in the pits, around the BOPE stack/rig floor (except for the fluids within the BOPE stack), and the unit heater within the choke manifold skid. In sub-freezing temps, this fluid and the associated lines are at risk of freezing and forming ice plugs. Conclusion Hilcorp believes that BOPE testing and normal rig operations differ significantly in regards to the volumes of circulated fluid and the ability to heat the fluids. Allowing the Thunderbird Rig #1 to utilize 60/40 MEOH and/or 9.8 ppg brine for BOPE testing will alleviate significant operational risk when operating at sub-freezing temps while having no impact on the functionality of the BOPE test. This request is not a unique or special request for the Thunderbird Rig #1: Currently coil tubing units on the slope use 60/40 MEOH for BOPE test fluids. All service units on the slope (wireline and electric line) use 60/40 MEOH for lubricator test fluids. Workover rigs operating in other areas of the State utilize 60/40 MEOH in sub-freezing temperatures. Previously, the All American Oilfield’s Rig #111 utilized 9.8 ppg brine on the slope This is due to the same reason we are requesting 60/40 MEOH for the Thunderbird Rig #1: Their BOPE equipment and lines are not fully enclosed inside a heated structure and all the lines are not, and can’t practically be, insulated and heat traced. As noted in the initial request, using 60/40 MEOH does not significantly or substantially affect the compressibility of the fluid and API 53 STD explicitly allows an anti-freeze additive for the precise reason we are requesting to be able to utilize it. Because utilizing a test fluid that does not freeze greatly minimizes risk to our operations, Hilcorp respectfully requests AOGCC again consider allowing the Thunderbird Rig #1 to use 60/40 MEOH and/or 9.8 ppg brine as a BOPE test fluid. Please let me know if you or others on your team would like to discuss further. Respectfully, Bo York Hilcorp Alaska LLC PBE Operations Manager byork@Hilcorp.com 907.777.8345 Anchorage office 907.659.5149 PBOC office 907.727.9247 cell From: Bo York Sent: Wednesday, May 26, 2021 8:24 AM To: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: RE: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Commissioner Chmielowski- Thank you for the brief conversation yesterday on Hilcorp’s request to utilize 60/40 MEOH or 9.8ppg brine as BOPE test fluid for the TBird #1. I understand your hesitancy to verbally discussing the matter. At this time Hilcorp does not request a public hearing on this matter as I believe there are additional AOGCC concerns we can attempt to address before taking that step. Hilcorp would like to respond in writing to AOGCC’s concern about the differences in BOPE test fluid versus normal operations fluid. The concern being that if Hilcorp is worried about water freezing during BOPE operations we should also be worried about water freezing during normal well ops and therefore should have sufficient winterization/heat set up to facilitate BOPE testing with water and also normal operations. I believe we can address this concern and then would request AOGCC re- evaluate the decision for the reasons stated in the original request. Thank you again for your prompt response to my original request. The timing of this is favorable as we don’t expect to see sustained sub-freezing temps for a number of months now so I expect to send additional info your way in the coming weeks. I think break-up is finally arriving at Deadhorse! Bo York Hilcorp Alaska LLC PBE Operations Manager byork@Hilcorp.com 907.777.8345 Anchorage office 907.659.5149 PBOC office 907.727.9247 cell From: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Sent: Tuesday, May 25, 2021 2:51 PM To: Bo York <byork@hilcorp.com> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov> Subject: [EXTERNAL] RE: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay Mr. York, Thank you for your email. Hilcorp’s request to utilize 60/40 methanol/water or 9.8 ppg brine as BOPE test fluids for the Thunderbird Rig #1 is denied. The AOGCC will continue to require water as the test fluid for the BOPE on Thunderbird Rig #1. If Hilcorp desires a hearing on this matter, AOGCC will scheduled one. Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907-793-1223 or jessie.chmielowski@alaska.gov. From: Bo York <byork@hilcorp.com> Sent: Tuesday, May 18, 2021 1:46 PM To: Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <jeremy.price@alaska.gov>; Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Cc: Regg, James B (CED) <jim.regg@alaska.gov>; Rixse, Melvin G (CED) <melvin.rixse@alaska.gov> Subject: Hilcorp Request to use 60/40 Methanol and/or 9.8 ppg Brine as BOPE Test Fluid for the Thunderbird Rig #1 at Prudhoe Bay AOGCC Commissioners- Hilcorp is now utilizing the Thunderbird Rig #1 at Prudhoe Bay to perform work over operations after working through the acceptance/commissioning of the rig with your field inspectors and Mr. Regg. This is a brand new rig and AOGCC has the rig book. We intend to seasonally operate the rig from ~April thru ~October (6-7 months, weather dependent). It is not a fully enclosed/winterized rig and is not set up, nor intended to be utilized, for full on winter operations. Although this rig is unique to Prudhoe Bay, it is not unique to industry. Hundreds of these rigs are in operation throughout the L48, Canada, and overseas to include Russia. We resolved many questions and concerns through the acceptance and commissioning process; however, AOGCC has denied one Hilcorp request that I would like to bring up to the Commissioner level for more discussion. Hilcorp requests the ability to utilize 60/40 methanol/water or 9.8 ppg brine as BOPE test fluids per API 53 STD due to its anti-freeze properties and per 25.285 as a non-compressible fluid. API 53 STD (2018) Section 5.3.9 Test Fluids states under 5.3.9.1 “The initial installation pressure tests shall be conducted with water or water with preservation, anti-freeze, and colorant additives.” Section 5.3.9.2 continues: “During operations, the drilling fluid in use is acceptable to perform subsequent tests of the BOP stack.” 20 AAC 25.285 requires a “non-compressible” fluid be utilized for BOPE testing. Both citations are attached for your reference. Any fluid is generally considered non-compressible, though they are all compressible to an extent. The difference in coefficient of compressibility for water (0.000115 bbl/bbl/psi )and 60/40 blend of methanol and water (0.000526 bbl/bbl/psi) is negligible in all practical applications. For our operations in Alaska, 60/40 methanol is the most common BOPE test fluid for service unit work (service coil, slickline, e-line) in exposed environments. The 60/40 methanol is used to avoid freeze up issues in the BOPE system. We checked with other operations in L48, Canada, and overseas and 60/40 MEOH is commonly used for test fluids in drilling operations in exposed environments as well. In addition, 9.8ppg NaCl brine could also be an alternate test fluid. AOGCC has stated we must use “water” as our test fluid. We contest this request as it adds unnecessary risk to our operation and potentially compromises the integrity/functionality of our well control equipment. We acknowledge the Thunderbird workover Rig is a different kind of rig that is more open to atmospheric conditions. It is not designed, nor intended, to operate at lower than -20 deg F temperatures. However, at temperatures above that but below freezing, if we introduce a freeze-able fluid (water) into our test system when pumping at low rates via our test pump, it could lead to ice plugs and ice accumulation in valves, lines, chokes, sensor lines, etc after the pumps are shutdown. API 53 STD and AOGCC regulations do not preclude the use of a 60/40 methanol/water blend or 9.8 ppg brine for a BOP test fluid, and API 53 STD explicitly allows it as an anti-freeze additive for the precise reason we are requesting to be able to utilize it. Hilcorp respectfully requests AOGCC reconsider its position on our ability to utilize 60/40 and/or 9.8 ppg brine as a BOP test fluid for the Thunderbird #1 Rig. This request is grounded in the API 53 Standard and AOGCC regulations. Please let me know if you would like to discuss further or if there are additional actions I should take to progress the discussion. Thank you for your review. Klondike Work Over Rig, Recent Sampling of Well Service Reports Documenting the Use of 60/40 Methanol for AOGCC approved BOPE Tests Continued on next page.