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Home My WebLink AboutCO 341 ICONSERVATION ORDER 341I Docket Number: CO -19-030A 1. December 12, 2019 BPXA's request for Administrative Approval to Commingle Production between Lisburne and Prudhoe Bay Oil Pool K-333 K Pad 2. December 18, 2020 Notice of hearing, affidavit of publication, email distribution, mailings 3. March 5, 2020 Admin Approval to tie report due dates to C0341I Rules 19 and 20 to the major gas sales project milestone: Financial Investment Decision (FID) 4. February 24, 2020 BPXA Request to amend CO 492 rule 3(a) and 6(a) (co341I.002) 5. May 21, 2020 Notice of Hearing and mailing 6. ----------------- Emails ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7t1 Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF BP ) Conservation Order No. 341I EXPLORATION (ALASKA) INC. ) Docket Number: CO -19-030A for an order to allow downhole ) commingling in Well PBU K-333 ) Prudhoe Bay Field between the Lisburne and Prudhoe ) Prudhoe Oil Pool Oil Pools ) March 2, 2020 IT APPEARING THAT: 1. By letter dated December 12, 2019, BP Exploration (Alaska), Inc. (BPXA), operator of the Prudhoe Bay Unit, applied for authorization for downhole commingling of production between the Prudhoe Oil Pool (POP) and the Lisburne Oil Pool (LOP) in the proposed PBU K-333 well (PTD 220-004). 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for January 30, 2020. On December 17, 2019, the AOGCC published notice of that hearing on the State of Alaska's Online Public Notice website, the AOGCC's website, electronically transmitted the notice to all persons 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 December 18, 2019, the notice was published in the Anchorage Daily News. 3. No comments or requests to hold the hearing were received by the AOGCC. 4. BPXA provided sufficient information in its application to make a decision, so the proposed hearing was vacated on January 23, 2020. FINDINGS: 1. Prudhoe Oil Pool The POP, in production since 1977, consists of an immense oil rim overlain by a massive gas cap. The POP has numerous enhanced recovery projects underway. POP wells are typically very productive due to the high-quality reservoir rocks within the pool. 2. Lisburne OR Pool The LOP, described in CO 207 and in production since 1982, is a complex carbonate reservoir that underlies the POP. Proposed Commingling Operation The PBU K-333 well is planned to be completed in the Wahoo interval of the LOP. It is also proposed to complete the well in the overlying POP to provide a source of in situ gas lift for the well. The POP completion would have a sliding sleeve with an interchangeable orifice to regulate the gas flow. Conservation Order 341I March 2, 2020 Page 3 of 10 4. Potential for Crossflow There is potential for crossflow between the POP and the LOP if the PBU K-333 well is shut in. For a short duration shut in period, crossflow is not expected to be significant as the POP and LOP have similar reservoir pressures within this portion of the Prudhoe Bay Field. In the event of a longer duration shut in period, the POP and LOP could be mechanically isolated downhole by closing the sliding sleeve at the POP completion to prevent crossflow. 5. Production Allocation Since the PBU K-333 well is completed in the oil rim of the LOP and the gas cap of the POP BPXA proposes allocating 100% of the oil and water production from the well to the LOP and 100% of the NGL production to the POP. Gas production will be allocated to the POP based on well tests and the calculated gas pass through rate through the orifice placed in the sliding sleeve. The LOP gas rate would be the difference between PBU K -333's total gas rate and the gas rate calculated for the POP. Prudhoe Formation Gas Rate = Orifice Gas Pass Through Rate Lisburne Formation Gas Rate = PBU K-333 Total Gas Rate — Orifice Gas Pass Through Rate Production logs could be run if necessary. CONCLUSIONS: 1. Downhole commingling of production between the POP and LOP will improve resource recovery from the Prudhoe Bay Unit by encouraging production of resources within the POP that would not be recoverable as a standalone development and by improving recovery from the LOP in the PBU K-333 well through in situ gas lift. 2. Crossflow between the POP and LOP is not expected to be significant due to similar reservoir pressures in this portion of the Prudhoe Bay Field. 3. BPXA's proposed allocation methodology will provide acceptable results. NOW, THEREFORE, IT IS ORDERED THAT: The following rules, in addition to the statewide requirements under 20 AAC 25 (to the extent not superseded by these rules), govern development in the affected area described below: Conservation Order 341I March 2, 2020 Page 4 of 10 Affected Area: Umiat Meridian Tower Ranw Section TION R12E 1, 2, 3, 4, 10, 11, 12 T10N R13E 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 24 T10N R14E 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 36 T10N _-TION. R15E All R16E 5, 6, 7, 8, 17, 18, 19, 20, 29, 30, 31 T11N R11E 1, 2, 3, 4, 9, 10, 11, 12, 13, 14, 15, 24, 25 T11N R12E All T11N R13E All T11N R14E All TUN R15E All T11N R16E 17, 18, 19, 30, 31, 32 T12N R10E 13, 24, T12N RIIE 15, 16, 17, 18, 19, 20, 21, 22, 25, 26, 27, 28, 29, 30, 32, 33, 34, 35, 36 T12N R12E 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36 T12N R13E 19, 20, 21, 22, 23, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36 T12N R14E 25, 26, 27, 28, 29, 31, 32, 33, 34, 35, 36 T12N R15E 25, 26, 27, 28, 29, 30,31 ,32, 33, 34, 35, 36 Rule 1 Pool Definition The Prudhoe Oil Pool is defined as (i) the accumulations of oil that are common to and that correlate with the accumulations found in the Atlantic Richfield - Humble Prudhoe Bay State No. 1 well between the depths of 8,110 feet and 8,680 feet, and (ii) the accumulation of oil that is common to and correlates with the interval from 9,638 to 9,719 measured feet on the Borehole Compensated Sonic Log, Run 2, Dated September 28, 1975, in the Atlantic Richfield -Exxon NGI No. 1 well, and that is in hydraulic communication with the gas cap of the former accumulations in the Sag River Formation. The latter accumulation is found within the following area: TI IN R14E: Sections: 1, 2, 11(N/2 and SE/4), 12, 13, 14(E/2), 23(NE/4), 24, 25(N/2) TI IN R15E: Sections: 6, 7, 8, 17, 18, 19, 20, 29(N/2), 30(N/2) T12N R14E: Sections 35, 36 Umiat Meridian. Rule 2 Well Spacing There shall be no restrictions as to well spacing except that no pay shall be opened in a well closer than 500 feet to the boundary of the affected area. Rule 3 Casing and Cementing Requirements (a) Conductor casing shall be set at least 75 feet below the surface and sufficient cement Conservation Order 341I March 2, 2020 Page 5 of 10 shall be used to fill the annulus behind the pipe to the surface. Rigid high-density polyurethane foam may be used as an alternative to cement, upon approval by the AOGCC. The AOGCC may also administratively approve other sealing materials upon application and presentation of data which show the alternate is appropriate based on accepted engineering principles. (b) Surface casing to provide proper anchorage for equipment, to prevent uncontrolled flow, to withstand anticipated internal pressure, and to protect the well from the effects of permafrost thaw -subsidence or freeze -back loading shall be set at least 500 feet, measured depth, below the base of the permafrost but not below 5000 feet true vertical depth. Sufficient cement shall be used to fill the annulus behind the casing to the surface. The surface casing shall have minimum axial strain properties of 0.5% in tension and 0.7% in compression. (c) Alternate casing programs may be administratively approved by the AOGCC upon application and presentation of data, which show the alternatives, are appropriate and based upon accepted engineering principles. Rule 4 Blowout Prevention Equipment and Practice (Revoked C.O.341D) Rule 5 Automatic Shut-in Equipment (Revoked Other Order 66) Rule 6 Pressure Surveys (Revised: CO 341F.002 and CO 341F.007) (a) An Annual Pressure Surveillance Plan shall be submitted to the AOGCC in conjunction with the Annual Prudhoe Pool Reservoir Surveillance Report by April 1 of each year. This plan will contain the number and approximate location of pressure surveys anticipated for the next calendar year, and it will be subject to approval by the AOGCC by May 1 of that year. A minimum of 5% of the total pressure surveys acquired each year shall be from each of the following development areas: Gas Cap, Gravity Drainage, Flow Station 2 Water/MI Flood (MWAG) Project, Eastern Peripheral Wedge Zone MWAG Project, Western Peripheral Wedge Zone MWAG Project, Eileen West End Waterflood Project, and the Northwest Fault Block MWAG Project. (b) Data from the surveys required in (a) of this rule shall be submitted with the Annual Prudhoe Oil Pool Reservoir Surveillance Report by April 1 of each year. Data submitted shall include rate, pressure, time depths, temperature, and any well condition necessary for the complete analysis of each survey. The datum for the pressure surveys is 8,800 true vertical feet subsea. Transient pressure surveys obtained by a shut-in buildup test, an injection well pressure fall-off test, a multi -rate test, or an interference test are acceptable. Calculation of bottom -hole pressures from surface data will be permitted for water injection wells. Other quantitative methods may be administratively approved by the AOGCC. (c) Results and data from any special reservoir pressure monitoring techniques, tests, or surveys shall also be submitted as prescribed in (b) of this rule. Rule 7 Gas -Oil Contact Monitorine (Revised: CO 341F.002 and CO 341F.007) (a) An Annual GOC Monitoring Surveillance Plan shall be submitted to the AOGCC in conjunction with the Annual Prudhoe Reservoir Surveillance Report by April 1 of each year. This plan will contain the number and approximate locations of neutron log surveys anticipated for the next calendar year and be subject to approval by the AOGCC by May 1 of that same year. The neutron logs obtained shall be distributed across Gas Cap, Conservation Order 341I March 2, 2020 Page 6 of 10 Gravity Drainage, Gravity Drainage Waterflood Interaction, and downdip areas affected by gas and conducted using good engineering practice. (b) The neutron logs run on any well shall be filed with the AOGCC by the last day of the month following the month in which the logs were run. Rule 8 Productivity Profiles (Revised: CO 341F.007) A complete copy of any spinner flow meter or tracer surveys obtained on wells, together with the data and results from the surveys, shall be recorded and filed with the AOGCC by the last day of the month following the month in which a survey is finalized. Rule 9 Pool Off -Take Rates (Revised CO 341F) The maximum annual average oil offtake rate is 1.5 million barrels per day plus condensate production. The maximum annual average gas offtake rate is 3.6 billion standard cubic feet per day, which contemplates an annual average rate of 2.7 billion standard cubic feet per day shipped to the proposed AK LNG GTP and additional capacity to account for production upsets at other fields that feed the proposed AK LNG GTP. Daily offtake rates in excess of these amounts are permitted only as required to sustain these annual average rates. The annual average offtake rates as specified shall not be exceeded without the prior written approval of the AOGCC. The phrase "annual average offtake rates" means the daily average rate calculated by dividing the total volume produced in a calendar year by the number of days in that year. However, in the first calendar year that large gas offtake rates are initiated following the completion of a large gas sales pipeline, the annual average offtake rate for gas shall be determined by dividing the total volume of gas produced in the calendar year by the number of days remaining in the year following initial delivery to the large gas sales pipeline. Rule 10 Facility Gas Flaring (Revoked CO 341C) Rule 11 Annual Surveillance Reporting An annual Prudhoe Oil Pool surveillance report will be required by April 1 of each year. The report shall include but is not limited to the following: 1. Progress of enhanced recovery project(s) implementation and reservoir management summary including engineering and geotechnical parameters. 2. Voidage balance by month of produced fluids, oil, water and gas, and injected fluids, gas, water, low molecular weight hydrocarbons, and any other injected substances (which can be filed in lieu of monthly Forms 10-413 for each EOR project). 3. Analysis of reservoir pressure surveys within the field. 4. Results and where appropriate, analysis of production logging surveys, tracer surveys and observation well surveys. 5. Results of gas movement and gas -oil contact surveillance efforts including a summary of wells surveyed and analysis of gas movement within the reservoir. The analysis shall include map(s) and/or tables showing the locations of various documented gas movement mechanisms as appropriate. 6. Progress of the Gas Cap Water Injection project with surveillance observations including; (a) volume of water injected, (b) reservoir pressure results, maps, and analysis (in conjunction with (3.) of this rule), (c) water movement and zonal conformance maps derived from surveillance (such as Pulsed Conservation Order 341I March 2, 2020 Page 7 of 10 Neutron Logs and 4-D gravity surveys) (d) results of reservoir evaluations of performance (such as material balance and reservoir simulation studies), (e) surveillance plans for the upcoming year, and (f) any plans for change in project operation. Rule 12 Prudhoe Bay Miscible Gas Proiect (PBMGP) (a) Expansion of the PBMGP and infill expansion of miscible gas injection in the NWFB is approved for the 59,740 acre portion of the Prudhoe Oil Pool defined in the record. (b) An annual report must be submitted to the AOGCC detailing performance of the PBMGP and outlining compositional information for the current miscible injectant (MI) necessary to maintain miscibility under anticipated reservoir conditions. (c) The minimum miscibility pressure (MMP) of the Miscible Injectant must be maintained at least 100 psi below the average reservoir pressure in the Prudhoe Bay Miscible Project area. When the Operator demonstrates that the reservoir pressure is no longer declining within the Prudhoe Bay Miscible Project Area (as evidenced by reservoir pressure measurements), the MMP may be maintained at or below the average reservoir pressure in the Prudhoe Bay Miscible Project area. Rule 13 Waiver of GOR Limitation (Revised: CO 341F.007) (a) The AOGCC waives the requirements of 20 AAC 25.240(b) for all oil wells in the Prudhoe Oil Pool of the Prudhoe Bay Field so long as the gas from the wells is being returned to the pool, or so long as the additional recovery project is in operation. (b) For the Prudhoe Oil Pool "oil well" means a well that produces oil at a gas -oil ratio of 200,000 scf/stb or lower. Rule 14 Waiver of "Application for Sundry Approval" Requirement for Workover Operations The requirements of 20 AAC 25.280(a) are waived for development wells in the Prudhoe Oil Pool of the Prudhoe Bay Field. Sundry work application and reporting requirements shall be done in accordance with the "Well Work Operations and Sundry Notice/Reporting Requirements for Pools Subject to Sundry Waiver Rules" matrix maintained by the AOGCC. Rule 15 Waterfloodin¢ The AOGCC approves the December 1980 additional recovery application for water -flooding in the Prudhoe Oil Pool subject to the requirements listed in Rule 11 above. Any proposed changes must be submitted to the AOGCC for approval. Rule 16 Orders Revoked (Revised this Order) The following Conservation Orders and associated Administrative Approvals and letter approvals are hereby superseded. Conservation orders 78, 83B, 85, 87, 88, 96, 97, 98B, 117, 117A, 118, 130, 137, 138, 139, 140, 141, 143, 145, 145A, 148, 155, 160, 164, 165, 166, 167, 169, 174, 178, 180, 181, 183, 184, 185, 186, 188, 189, 192, 194, 195, 195.1, 195.2, 195.4, 197, 199, 200, 204, 208, 213, 214, 219, 220, 223, 224, 238, 258, 259, 279, 290 and 333, and March 20, 1981 and August 22, 1986 letter approvals. Additionally, conservation orders 341, 341A, 341B, 341C, 341D, 341E, 341F, 341G, and 341H and all associated administrative approvals (except CO 341D.001 and CO 341E.003, which remain in effect) are hereby superseded. Conservation Order 341I March 2, 2020 Page 8 of 10 The hearing records of these orders are made part of the record for this order. Rule 17 Gas Cap Water Iniections The Gas Cap Water Injection Project as described in the operator's application and testimony is approved. Ongoing reservoir surveillance is required to determine that water movement within the reservoir is confined as intended and does not negatively impact overall hydrocarbon recovery, and to determine that the project has resulted in stabilization of reservoir pressure. Rule 18 Comminalin¢ of Production in the Same Wellbore (Revised: CO 341F.001, CO 341G, CO 341H, C0341H.002, and this order) (a) Commingling production from the Aurora Oil Pool in Well S-26 or the affected area of the Put River Oil Pool, as that pool was defined CO 559A on December 13, 2018, (hereinafter referred to as the Put River Sands) with the Prudhoe Oil Pool is approved on the condition that BPXA allocates production to the separate pools using the geochemical test, production log, differential well tests and regular well test results outlined below: i. Prior to commingling production, a bottom -hole static reservoir pressure and production test must be obtained and geochemical sampling and analysis must be performed on oil from the Aurora or Put River Sands (in isolation from the Prudhoe Oil Pool). ii. For the first six months after commingled production starts, geochemical sampling and analyses must occur monthly at the time stabilized production tests are performed. Thereafter, geochemical sampling and analysis must occur at least twice per year and not less frequently than once every seven months. iii. A production log or differential well test must be obtained and compared to the geochemical and regular well test results within the first six months after commingled production starts. Thereafter, production logs or differential well tests of each pool must be obtained when major changes in production characteristics occur which could result in less accuracy in allocation of gas or water to the separate pools. iv. The operator shall submit a review of pool production allocation factors and issues over the prior year with the annual reservoir surveillance report and retain electronic file(s) containing daily allocation data and daily test data for a minimum of five years. V. The volumes reported on Form 10-405—i.e., in accordance with 20 AAC 25.230(b)—must identify commingled production allocated to the Aurora Oil Pool or Put River Sands and the Prudhoe Oil Pool. vi. A summary report documenting the results and effectiveness of the commingled production allocation must be provided to the AOGCC within 9 months after the start of commingled production and shall include the results of the production allocated to the Aurora Oil Pool or Put River Sands and the Prudhoe Oil Pool, along with the analyses of the geochemical tests, production logs, and regular well tests. (b) A commingled well that is shut in for more than six months shall have the Put River Sands and Prudhoe Oil Pool mechanically isolated to prevent crossflow between the pools. (c) Downhole commingling of production between the POP and LOP in the PBU L5-21 well is approved subject to the following allocation methodology; Conservation Order 3411 March 2, 2020 Page 9 of 10 All oil and water allocated to the well shall be allocated to the LOP, All NGLs allocated to the well shall be allocated to the POP, Gas shall be allocated to the POP and LOP based on the following formulas; 1. Prudhoe Formation Gas Rate = Total Gas Rate — Lisburne Formation ii. Gas Rate 2. Lisburne Formation Gas Rate = allocated oil rate x Lisburne Oil Pool Solution Gas Oil Ratio 3. Lisburne Oil Pool Solution Gas Oil Ratio = 863 scflstbo (d) Downhole commingling of production between the POP and LOP in the PBU K-333 well is approved subject to the following allocation methodology; i. All oil and water allocated to the well shall be allocated to the LOP, ii. All NGLs allocated to the well shall be allocated to the POP, iii. Gas shall be allocated to the POP and LOP based on the following formulas; 1. Prudhoe Formation Gas Rate = Orifice Gas Pass Through Rate 2. Lisburne Formation Gas Rate = PBU K-333 Total Gas Rate — Orifice Gas Pass Through Rate Rule 19 CO2 Utilization Study By December 31, 2020, the WIOs shall complete a study and submit a report to the AOGCC detailing the best use of the effluent gas stream projected to come from the AK LNG GTP to maximize total hydrocarbon recovery. The study and report shall evaluate the suitability of using CO2 for enhanced recovery purposes in the oil pools on the North Slope in which any of the four main WIOs (BPXA, ExxonMobil, CPAI, or Chevron) have an ownership interest. The study and report shall look at the benefits to using CO2, and mixtures containing CO2, for enhanced recovery purposes (including miscible injection, viscosity reducing, and pressure maintenance type projects as appropriate) and include estimates of additional recovery that would be attributable to CO2 injection. The report shall also evaluate challenges to implementing CO2 injection in these pools. Rule 20 Liquid Hydrocarbon Recovery Maximization Report By June 30, 2021, the WIOs shall submit a report to the AOGCC that provides detailed information about the results of projects and operations undertaken from the effective date of this order through December 31, 2020, as well as information about projects underway or planned at that time to accelerate liquid hydrocarbon production to maximize recovery in advance of the proposed major gas sales associated with the AK LNG project. Rule 21 Administrative Relief Upon proper application, or its own motion, and unless notice and public hearing are otherwise required, the AOGCC may administratively waive the requirements of any rule stated herein or administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. DONE at Anchorage, Alaska March 2, 2020. JejgM. rice C issioner Daniel T. ount, Jr. Commissioner Conservation Order 341I March 2, 2020 Page 10 of 10 AND APPEAL 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. THE STATF °ALASKA GOVERNOR MICHAEL 1. DUNLEAVY ADMINISTRATIVE APPROVAL CONSERVATION ORDER NO. 3411.001 Ms. Katrina Gamer PBU Area Manager BP Exploration (Alaska) Inc. P.O. Box 196612 Anchorage, AK 99519-6612 Re: Docket Number: CO -20-005 Alaska Oil and Gas Conservation Commission 333 west Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.ataska.gov Request for administrative approval to tie report due dates in Conservation Order No. 3411 (CO 3411) Rules 19 and 20 to the major gas sales project milestone: Financial Investment Decision (FID) Prudhoe Bay Unit Prudhoe Oil Pool Dear Ms. Garner: On March 5, 2020, BP Exploration (Alaska) Inc. (BPXA) requested administrative approval to tie the report due dates for the reports required in Rules 19 and 20 of CO 3411 to the FID. In accordance with Rule 21 of CO 341I, the Alaska Oil and Gas Conservation Commission (AOGCC) hereby GRANTS BPXA's request. On October 15, 2015, the AOGCC issued CO 341F which increased the maximum allowable gas offtake from the Prudhoe Oil Pool and required the operator to prepare two reports. Rule 19 required the preparation of a CO2 Utilization Study by December 31, 2020, and Rule 20 required the preparation of a Liquid Hydrocarbon Recovery Maximization Report by June 30, 2021 (collectively MGS studies). The due dates for the MGS studies were tied to what was the anticipated start date for the Alaska LNG Project. Since CO 341F was issued, the Alaska LNG project schedule has changed and 2025 is no longer considered the projected start date for sales under the project. The new potential start date of the project is currently unknown. Since the purpose of the MGS studies is to support the Alaska LNG project, the timing of the studies depends on the timing of the project. Tying the MGS studies' due dates to the FID date is appropriate to ensure the reports are not prepared prematurely and to ensure that the information contained in them will be timely and relevant to the Alaska LNG project. CO 3411.001 June 1, 2020 Page 2 of 2 Now therefore it is ordered that Rules 19 and 20 of CO 3411 shall be modified as such: Rule 19 CO2 Utilization Study (Revised CO 341I.001) No later than the Financial Investment Decision (FID) of the MGS Project (the operator shall provide written notification to the AOGCC when the FID is made), the WIOs shall complete a study and submit a report to the AOGCC detailing the best use of the effluent gas stream projected to come from the AK LNG GTP to maximize total hydrocarbon recovery. The study and report shall evaluate the suitability of using CO2 for enhanced recovery purposes in the oil pools on the North Slope in which any of the four main WIOs (BPXA, ExxonMobil, CPAI, or Chevron) have an ownership interest. The study and report shall look at the benefits of using CO2, and mixtures containing CO2, for enhanced recovery purposes (including miscible injection, viscosity reducing, and pressure maintenance type projects as appropriate) and include estimates of additional recovery that would be attributable to CO2 injection. The report shall also evaluate challenges to implementing CO2 injection in these pools. Rule 20 Liauid Hydrocarbon Recovery Maximization Report (Revised CO 3411.001) By 6 months after the FID of the MGS Project, the WIOs shall submit a report to the AOGCC that provides detailed information about the results of projects and operations undertaken from the effective date of this order through the FID, as well as information about projects underway or planned at that time to accelerate liquid hydrocarbon production to maximize recovery in advance of the proposed major gas sales associated with the AK LNG project. DONE at Anchorage, Alaska and dated June 1, 2020. Jeremy Digi a11"Oedby Jeremy M. Price Date:202DA641 M. Price17,M29.08'00' Jeremy M. Price Chair, Commissioner Daniel T. DgttaOy"ne by DanWT.Sea `,L. Seamount,Jr. D.: 20200M1 15913248'OP Daniel T. Seamount, Jr. Commissioner Jessie L. Digitally signed by Jessie L Chmiel.Ai Chmielowski °ate:zozo.0so, 14,45:59-09'00' Jessie L. Chmielowski Commissioner 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. Bernie Karl Gordon Severson Richard Wagner K&K Recycling Inc. 3201 Westmar Cir. P.O. Box 60868 P.O. Box 58055 Anchorage, AK 99508-4336 Fairbanks, AK 99706 Fairbanks, AK 99711 George Vaught, Jr. Darwin Waldsmith P.O. Box 13557 P.O. Box 39309 Denver, CO 80201-3557 Ninilchik, AK 99639 INDEXES March 5, 2020 Via USPS and Electronic Delivery Jeremy Price Commission Chair Alaska Oil and Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 BP Exploration (Alaska) Inc 900 East Benson Boulevard P.O Box 196612 Anchorage, Alaska 99519-6612 (907)561-5111 RECEIVED MAR 10 2020 AOGCC Re: Application for Administrative Approval to tie report due dates in Conservation Order 341I Rules 19 and 20 to the major gas sales project milestone: Financial Investment Decision (FID) Dear Chair Price, BP Exploration (Alaska) Inc. (BPXA), as operator of the Prudhoe Bay Unit (PBU) and at the request of the PBU working interest owners, respectfully submits this application to the Alaska Oil and Gas Conservation Commission ("Commission") to administratively approve modifying the due dates of the CO2 Utilization Study (Rule 19 CO 341I) and the Liquid Hydrocarbon Recovery Maximization Report (Rule 20). The Commission has authority to do so under Rule 21 of CO 341. Background On October 15, 2015, the Commission concluded a hearing regarding the allowable gas offtake limit in Rule 9 of CO 341E. During the hearing, a timeline for Major Gas Sales (MGS) indicated that "first gas sales" would occur in 2025. Accordingly, the Commission found that the AK LNG project was "currently envisioned to commence in or about 2025' (Finding No 6, CO 3421F). The Commission also concluded that "monitoring of development operations within the Prudhoe Bay Oil Pool prior to commencement of major gas sales is vital to ensure that liquids recovery is maximized" (Conclusion #2, CO 341F). Finally, the Commission found that "CO2 within the AK LNG GTP effluent stream may prove to be a very valuable resource for enhanced recovery projects on the North Slope" (Conclusion #3, CO 341F). Based on its findings and conclusions, the Commission revised CO 341 Rule 9 and added Rules 19 and 20. Rule 19 currently reads as follows: By December 31, 2020, the WIOs shall complete a study and submit a report to the AOGCC detailing the best use of the effluent gas stream projected to come from the AK LNG GTP to maximize total hydrocarbon recovery. The study and report shall evaluate the suitability of using CO2 for enhanced recovery purposes in the oil pools on the North Slope in which any of the four main WIOs (BPXA, ExxonMobil, CPAI, or Chevron) have an ownership interest. The study and report shall look at the benefits to using CO2, and mixtures containing CO2, for enhanced recovery purposes (including miscible injection, viscosity reducing, and pressure maintenance type projects as appropriate) and include estimates of additional recovery that would be attributable to CO2 injection. The report shall also evaluate challenges to implementing CO2 injection in these pools. Rule 20 currently reads as follows: By June 30, 2021, the WIOs shall submit a report to the AOGCC that provides detailed information about the results of projects and operations undertaken from the effective date of this order through December 31, 2020, as well as information about projects underway or planned at the at that time to accelerate liquid hydrocarbon production to maximize recovery in advance of the proposed major gas sales associated with the AK LNG project. Basis of Request to Modify Due Dates for the Reports Modifying the due dates for the reports required under the above -referenced rules will provide more meaningful and relevant information that will be of greater use to the State. First, it is preliminary to provide the Rule 19 and Rule 20 reports by the end of 2020 and the middle of 2021, respectively, because the start date of MGS has slipped by approximately 3 years from 2025 to 2028. However, the 2028 date is an estimate and could foreseeably be amended. Therefore, as operator of the Prudhoe Bay Unit and on behalf of the other working interest owners (WIOs), BPXA requests that the due dates for these reports be based on a milestone associated with actual MGS. The project milestone that makes the most sense for optimizing information to be included in the reports is FID, which is the commitment date for project capital. At that time, the scope of the Gas Treatment Plant (GTP) will be fully decided and the CO2 stream better understood. Postponing the due dates will also provide additional time to monitor development operations within the Prudhoe Bay Oil Pool to ensure that liquids recovery is maximized. Second, delay is warranted based on the following additional considerations: • There are discussions underway at the federal level regarding carbon capture legislation, the results of which could affect the economics of the GTP portion of the AKLNG project, with potential knock-on effects to the producers who wish to take and use CO2 in North Slope fields. • There are in-PBU projects in the conceptual stage which may materially add to the Unit's oil and gas resources, including Sea Water Optimization Plan (SWOP). The results of Joe Dubler with the Alaska Gasline Development Corporation (AGDC) informed the Alaska State Legislature on January 22, 2020 that the estimated date for "first cargo" is not until 2028. 2 these projects will be more mature after additional time and may impact conclusions of both studies. • There are recent North Slope discoveries that could make use of Prudhoe owner CO2 for enhanced oil recovery. Postponing the due dates for the reports would provide additional time to understand such possibilities. In summary, the estimated three-year slippage in the timing of MGS means that if the reports are submitted as currently scheduled, the Commission will lack critical, detailed information about CO2 volumes, availability, and potential uses for enhanced recovery on the North Slope as well as additional information about liquid hydrocarbon recovery maximation. The reports will be a much more valuable resource to the Commission and use of PBU WIO resources if they are prepared at a later date aligning with MGS. Proposal Based on the above, BPXA respectfully requests that the Commission amend the due dates as follows, using the convention of brackets for deletions of words and underlining new text: Rule 19: [By December 31, 2020], No later than the Financial Investment Decision (FID) of the MGS Proiect, the WIOs shall complete a study and submit a report to the AOGCC detailing the best use of the effluent gas stream projected to come from the AK LNG GTP to maximize total hydrocarbon recovery. The study and report shall evaluate the suitability of using CO2 for enhanced recovery purposes in the oil pools on the North Slope in which any of the four main WIOs (BPXA, ExxonMobil, CPAI, or Chevron) have an ownership interest. The study and report shall look at the benefits to using CO2, and mixtures containing CO2, for enhanced recovery purposes (including miscible injection, viscosity reducing, and pressure maintenance type projects as appropriate) and include estimates of additional recovery that would be attributable to CO2 injection. The report shall also evaluate challenges to implementing CO2 injection in these pools. Rule 20: [By June 30, 2021,] By 6 months after the FID of the MGS Project, the WIOs shall submit a report to the AOGCC that provides detailed information about the results of projects and operations undertaken from the effective date of this order through [December 31, 2020] FID, as well as information about projects underway or planned at the time to accelerate liquid hydrocarbon production to maximize recovery in advance of the proposed major gas sales associated with the AK LNG project. If you have any questions regarding this request, please contact Bill Bredar at 564-5348 or through email at William.bredar@bp.com. 3 Sincerely, �J x.C/iGwn-eh Katrina Gamer PBU Area Manager Cc: J. Schultz, CPAI J. Farr, ExxonMobil Alaska, Production Inc. D. White, Chevron USA D. Sturgis, ExxonMobil Alaska, Production Inc. E. Reinbold, CPAI D. Roby, AOGCC 4 STATE OF ALASKA ADVERTISING ORDER SUBMITINNOCTROO I TO PUB ORSHERNG CERTIFIED AFFIDAVITOF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER A O 1 p AO-08-20-018 FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 1121/2019 907 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: W LEGAL i DISPLAY F_ CLASSIFIED f- OTHER (Specify below) DESCRIPTION PRICE CO-19-030 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITHATTACIiED COPY OF ADVERTISMENT TO: AOGCC 333 West 7th Avenue ABeh Ora e, Alaska 99501 Pae I of I Total of All Pa es S REF Type I Number Amount Date Comments I PVN I VCO21795 2 AD AO-08-20-018 3 4 FIN AMOUNT SY Act Tem late PGA1 LCR Ob'ect FY DIST LIQ I 20 AOGCC 3046 20 2 3 4 5 Purchasing At lsority Name: Title: Purchasing Authority's Signature Telephone Number . A.O. and 'Ing 2. The st to st eg r d r not forr le. D I Divi s' n is V cy name most appe f on all invoices and documents relating to this purchase, wBeetransactio under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and C ies: Publisher (faxed), Division Fiscal, Receiving Formy02-901 v \ Revised: 12/17/2019 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO -19-030 Prudhoe Bay Unit, Prudhoe and Lisburne Oil Pools The application of BP Exploration (Alaska) Inc (BPXA) for an order in accordance with 20 AAC 25.215 authorizing the downhole commingling of production in the wellbore of the proposed Prudhoe Bay Unit K-333 (PBU K-333) well. BPXA, by letter dated December 12, 2019, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order in accordance with 20 AAC 25.215 to authorize the downhole commingling of production from the Prudhoe and Lisburne Oil Pools in the proposed PBU K-333 well. The AOGCC has tentatively scheduled a public hearing on this application for January 30, 2020, at 10:00 a.m. at 333 West 7`h Avenue, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on January 3, 2020. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after January 7, 2020. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7a' Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on January 21, 2020, except that, if a hearing is held, comments must be received no later than the conclusion of the January 30, 2020 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than JanuaaPrice 25, �f!?�0. 42, Chair, Commissioner Bernie Karl K&K Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 by 00% BP Exploration (Alaska) Inc 900 East Benson Boulevard P.O Box 196612 Anchorage. Alaska 99519-6612 (907) 561-5111 December 12, 2019 Mr. Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7h Ave, Suite 100 Anchorage, AK 99501 RE: Prudhoe Bay Unit Lisburne Oil Pool & Prudhoe Oil Pool Commingling Application Request to Commingle Production from Lisburne Oil Pool and Prudhoe Oil Pool in Well K-333 Dear Chair Price: BP Exploration (Alaska) Inc. (BPXA), Operator of the Lisburne Participating Area (LPA), requests authorization to commingle production from the Lisburne Oil Pool and Prudhoe Oil Pool in proposed well K-333 at K -Pad and Gathering Center 1. K-333 will be drilled from K -Pad, and it will target the Lisburne Wahoo formation. The planned bottomhole location of well K-333 is depicted in Exhibit A. Lisburne Oil Pool fluids will be commingled with Prudhoe Oil Pool fluids in K -333's tubing. K-333 will use a cement and perforate completion to target produced fluids in the Lisburne Oil Pool. K-333 will also be perforated in the Prudhoe Oil Pool to allow Prudhoe gas to serve as in- situ artificial lift. A sliding sleeve with an interchangeable orifice will regulate a fixed amount of Prudhoe gas into the K-333 wellbore. The proposed completion for K-333 is shown in Exhibit B. In the event that in-situ gas lift does not work, the well will also be set up to utilize conventional gas lift (available from source well K-14, which is completed in the Prudhoe Oil Pool). According to the current drilling schedule, K-333 should be ready to commence production by mid -2020. For royalty and tax purposes, BPXA proposes that all K-333 NGL production be reported as Prudhoe Oil Pool fluids, as Lisburne NGLs will be small due to the low Lisburne formation gas rates expected from K-333. BPXA proposes that K-333 produced gas be allocated to the Lisburne and Prudhoe Oil Pools based on the following methodology: K- 333 Prudhoe Oil Pool gas will be allocated based on well tests and the calculated gas pass through rate through the orifice placed in the sliding sleeve. K-333 Lisburne gas will be allocated using the difference between the total K-333 gas rate and the orifice gas pass through rate (see Exhibit Q. y.ij ORIGINAL DEC 16 2619 AOGCC Mr. Jeremy Price, Cha,. K-333 Production Commingling Application December 12, 2019 This requested commingling does not promote waste or jeopardize correlative rights, promotes greater ultimate recovery, and is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater aquifers. If you have any questions regarding this request, please contact Bill Bredar at 564-5348 or through email at William.bredar@bp.com. Respectfully, Katrina Garner Area Manager Alaska Reservoir Development, BPXA Attachment: Exhibit A - Map Exhibit B - K-333 Wellbore Schematic Exhibit C- K-333 Gas Allocation Equation Cc: Jon Schultz, ConocoPhillips Alaska, Inc Jeff Farr, ExxonMobil Alaska, Production Inc Dave White, Chevron USA Dave Roby, AOGCC Mr. Jeremy Price, Chu K-333 Production Commingling Application December 12, 2019 Exhibit A: K-333 Planned Bodonahole Location Mr. Jeremy Price, Cha._ K-333 Production Commingling Application December 12, 2019 A OR PROPOSED K-333 °LEV= _• EV = 11b` _'®_ 2fY COND, -12T MD = 133 e' CSG, eBA,IdOeTq D=12.H5' M392' FSMATED TOP OF CEMENT 9792' I? BLAST JOINT. 12 t, /3CR48. VAM TOP, �20'N6IMKISAGMVERGASPERFS — TCP OF I-12' LNR 11072' 412' TSG 12.88, 13CR45 VAM TOP, 1107T 0152 bof.D =3.958' 07'38L3NR. 10 2 bi8,=83]8'OC1122 FEW(MTIONSLPAWRY FEF LOG ANGLEATTOP FHS: We: fifer tD RoMcbm DB for Nstoricat pert data SIZE SPF INTERVAL Opnegz, SH)T SOZ PeIO 1998' . 412' LNR 138/, 139RJfe VAN TOP, 1913{' . .0152"",=3.958' 511fi=TY MOTES: WELL ANGLE> 29' B MAX DLS: _' • _'. —CN WME T801 LNR" l aIQ- HES X NF.. D= 3813- 21 I000 NNG DATE REV BY COMMENTS DATE REV BY COMMENTS i i ORKONAL COMPLETION 12A2R9 JM0 BULTPROPOSAL —.942'YBXNF.D-3.813' —�-12'18 XA SLDPK'SLEEVE —4IWESXM.D=3.813' I —4-12'TESXW.D=3813' I T X S WFD LTP "!TIEBACK SLEEVE L6 WPW W3R.0 - L1 11i PRUDHOE SAYLRBT WELL: K -3W3 PERMff W: APTNb: 50029 00 SEC. T NR E 'FW& 'FM BP ExpbnBon (ANMD) Exhibit B: Proposed K-333 Wellbore Schematic Mr. Jeremy Price, Ch, - K -333 Production Commingling Application December 12, 2019 Exhibit C. K-333 Gas Allocation Equation K-333 Prudhoe Formation Gas Rate = Orifice Gas Pass Through Rate K-333 Lisburne Formation Gas Rate = K-333 Total Gas Rate — Orifice Gas Pass Through Rate