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e e Index Other Order 15 I. May 23, 2000 Ltr from AOGCC to GRI clarifying correspondence sent 5/12/2000 2. June 14, 2000 Ltr from DNR to GRI re: Houston #4 Well Abandonment 3. June 14,2000 Ltr from DNR to GRI re: Houston #3 Well Cessation of drilling 4. September 20, 2000 Ltr from DNR to GRI re: drilling operations not proceeding with due diligence lease expiration date set 5. October 2, 2000 Ltr from DNR to GRI re: lease expired 6. November 27,2000 ltr from atty for GRI re: appeal of 10/26/2000 decision (rejection of GRI lease surrender application) 7. December 15,2000 Ltr from AOGCC re: AOGCC guidelines 8. April 2, 2001 Certified ltr to GRI from DNR regarding the 3 leases (and their expiration dates) 9. September 6, 2001 Insurance Company of North America Notice of Cancellation 10. August 9, 2001 AOGCC ltr and enclosures to ACE USA that were requested II. July 18, 2001 AOGCC ltr to GRI re: no response of 4/2/200 1 ltr 12. July 30, 2001 ACE USA ltr acknowledging receipt of 7/18/2001 ltr 13. August 3, 2001 Ltr from PrestonlGateslEllis re: GRI well abandonment obligations (request for extension of time) 14. August 9, 2001 AOGCC granting extension of time to respond to 7/18/2001 notice 15. August 9, 2001 AOGCC ltr to AC USA enclosing documents you requested 16. October 12,2001 AOGCC ltr to GRI no response to 7/18/2001ltr 17. October 29,2001 DNR to GRI re: receipt of $50,000 check received to do the work 18. December 19,2001 DNR Decision on Appeal 19. March 12,2002 AOGCC Notice (certified mail to Vicki Moore and PrestonlGateslEllis 20. April 26, 2004 AOGCC ltr to surface owner Margaret Bryant (came back non-deliverable) 21. April 26, 2004 AOGCC ltr to surface owner Tom Baird 22. April 26, 2004 AOGCC ltr to surface owner Pam Mikkelson 23. April 26, 2004 AOGCC ltr to surface owner Margaret Bryant (different address) 24. April 28, 2004 DNR ltr to AOGCC re: Houston 1,2,3,4 and 22 site abandonment and restoration 25. April 30, 2004 AOGCC ltr to Debby Broneske of the Matanuska Susitna Borough re: scope of work 26. May 3,2004 Matanuska Susitna Borough ltr re: of 4/30/04 requiring written waiver of liability e - 27. May 11,2004 Matanuska Susitna Borough ltr re: Houston #22 well 28. May 12,2004 Request for Proposals 29. May 13,2004 AOGCC ltr to Margaret Bryant re: explaining scope of work 30. May 21,2004 e-mail from Margaret Bryant daughter 31. May 25, 2004 sign in sheet for GRI RFP pre-proposal meeting 32. June 3, 2003 and June 9, 2004 Fairweather's Proposal for abandonment in compliance with AOGCC regulations of 5 coalbed methane wells in the general vicinity of Houston, Alaska 33. June 28, 2004 e-mail 34. June 30, 2004 AOGCC standard Agreement for professional services between AOGCC and contractor Fairweather 35. August 17,2004 e-mail from Fairweather to AOGCC 36. October 21, 2004 News Release 37. December 2,2004 Dept of Law ltr to GRI lawyer Wallace Adams re: surety bond exceeding the $200,000 penal amount of surety bond Other Order 15 . . STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: ENFORCEMENT ACTION AGAINST ) GRI, INC. ) ) March 12, 2002 Other No. 15 NOTICE The Alaska Oil and Gas Conservation Commission issued an Enforcement Order in the above captioned matter March 8, 2002. This notice is to inform affected persons of certain rights regarding rehearing and appeal. AS 3I.05.080(a) provides that within 20 days after receipt of written notice of the entry of an order or such further time as the Commission grants for good cause shown, a person affected by it may file with the Commission an application for rehearing. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, either being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30 day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). DONE at Anchorage, Alaska, this 12Th day of March 2002. I certify that a copy of the above was mailed on March 13, 2002 to the following at their addresses of record: Jennifer Coughlin, Esq. Vicki Moore ~~ ~~--- Jo Col m ie, ial Staff Assistant . . STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: ENFORCEMENT ACTION AGAINST ) GRI, INC. ) ) March 8, 2002 Other No. 15 ENFORCEMENT ORDER IT APPEARING THAT: 1. Pursuant to 20 AAC 25.535, on July 18, 2001, the Alaska Oil and Gas Conservation Commission ("Commission") issued written notice to GRI, Inc. ("GRI"), and to its surety, Insurance Company of North America ("ICNA"), infonning them that the Commission proposed to take enforcement action, including requiring payment under GRI's surety bond filed with the Commission, due to GRI's failure to comply with 20 AAC 25.105(a), 20 AAC 25.112, and 20 AAC 25.170, by not plugging and clearing the 10cations of specified wells as required by those regulations. 2. The Commission's written notice infonned GRI and ICNA, inter alia, that if they failed to file a timely written response, the Commission would consider them to have accepted the proposed Commission action by default, as provided in 20 AAC 25.535(c). 3. At GRI's request, the Commission extended until September 15,2001, the time within which GRI or ICNA could respond to the July 18, 2001, written notice. 4. The Commission received no response from GRI or ICNA. 5. On October 12, 2001 the Commission wrote GRI and ICNA infonning them that the Commission would proceed to order payment under GRI's surety bond unless GRI or its surety showed good cause no later than October 24, 2001, why the Commission should not do so. 6. The Commission received no response from GRI or ICNA. . . FINDINGS: 1. GRI is the operator of the Houston #1, #2, #3, #4, and #22 wells in Alaska ("Houston wells"). 2. GRI was owner of the oil and gas leases on which the Houston wells are located at the time they were drilled. 3. GRI's leases on which the Houston wells are located have expired. 4. The Houston wells have not been plugged. 5. The locations of the Houston wells have not been cleared. 6. GRI is the principal and ICNA is the surety on a blanket well surety bond, no. K05880877, in favor of the Commission, under which GRI and ICNA bound themselves to comply, inter alia, with the regulations and orders of the Commission. CONCLUSIONS: 1. Within the meaning of 20 AAC 25.105(a), the owner's rights in the properties on which the Houston wells are located have expired. 2. GRI's failure to plug the Houston wells constitutes non-compliance with 20 AAC 25.105 and 20 AAC 25.112. 3. GRI's failure to clear the locations of the Houston wells constitutes non-compliance with 20 AAC 25.120 and 20 AAC 25.170. 4. GRI and ICNA are liable to pay to the Commission the penal sum of $200,000 under their surety bond no. K05880877. 5. Pursuant to 20 AAC 25.535(c), GRI and ICNA have accepted by default the Commission's proposed action ordering payment under their surety bond no. K05880877. Enforcement Order March 8, 2002 Page 2 of3 . . NOW THEREFORE IT IS ORDERED: 1. No later than March 29,2002, Insurance Company of North America shall pay to the Commission the penal sum of $200,000 under surety bond no. K05880877. 2. The Commission reserves decision on ordering additional remedies or sanctions. DONE at Anchorage, Alaska, this 8th day of March 2002. Daniel T. Seamount, Jr Alaska Oil and Gas Conservation Commission ~ ;t-'\, H-e.u-w/ Julie M. Heusser, Commissioner Alaska Oil and Gas Conservation Commission I certify that a copy of the above was mailed certified delivery on March 8, 2002 to the following at their addresses of record: Jennifer Coughlin, Esq. Preston, Gates & Ellis, 420 L Street Ste 400 Anchorage AK 99501 Certified Mail No 7099 3220 0004 9024 3945 Vicki Moore ACE USA Route 1175 21860 Burbank Blvd., #200 Woodland Hills, CA 91367 Certified Mail No 7099 3220 0004 9024 3938 ~~C~ Jo . J, lomb'e, ecial Staff Assistant Enforcement Order March 8, 2002 Page 3 of3 - . Please find attached a corrected copy of the attached order. The word Enforcement was incorrectly spelled in the case caption. I apologize for any inconvenience. Jody Colombie Special Staff Assistant 4t-37 · DEPARTMENT OF LAW FRANK H. MURKOWSKI, GOVERNOR OFFICE OF THE ATTORNEY GENERAL 1031 WEST 4111 A VENUE, SUITE 200 ANCHORAGE, ALASKA 99501-5903 PHONE: (907)269-5100 FAX (907)276-3697 December 2,2004 Law Offices of Wallace B. Adams 111 Santa Rosa Avenue, Suite 405 Santa Rosa, California 95404 Re: GRI, Inc. surety bond Your file no. 15233 Our file no. 661-04-0178 Dear Mr. Adams: As I reported in my letter to you of July 20, 2004, the Alaska Oil and Gas Conservation Commission arranged for a contractor to plug the wells and clear the well locations covered by the GRI surety bond on which INA is surety. I can now report that the work was successfully completed. The contractor has been paid the agreed amount, and the Commission has compiled its administrative costs for the work in question. As shown on the enclosed spreadsheet, the contractual payment was $197,7000, the Commission's travel cost was $465, and the Commission's personnel services costs totaled $14,034.71, so that the total costs to perfonnthe work were $212,199.71. (Actually, this is somewhat understated, because the personnel service costs shown are only the Commission's direct costs in salaries and benefits and do not include any overhead component.) I hope that this infonnation is satisfactory for your needs. As you will note, since the costs of this project exceeded the $200,000 penal amount of the surety bond, the issue of the disposition of any excess bond payment has become moot. Sincerely, GREGG D. RENKES ATTORNEY GENERAL By: h~¡J-~1w- Robert E. Mintz Assistant Attorney General REM:tag Enclosure cc: Alaska Oil and Gas Conservation Commission GRI Expenditures Personnel Services (PP = pay period) FY2004 PP05 (Hrs/Cost) PP06 (Hrs/Cost) PP07 (Hrs/Cost) PP08 (Hrs/Cost) PP09 (Hrs/Cost) Norman 0.50 $ 45.01 $ 2.00 $ 148.43 0.50 $ 36.15 0.50 $ 41.15 Crandall 13.50 $ 1,124.47 5.00 $ 313.53 0.00 $ 8,00 $ 540.55 10.00 $ 832.95 Maunder 0,00 $ $ 0.00 $ 1.00 $ 67.15 0.00 $ Spaulding 0.00 $ $ 0.00 $ 0.00 $ 0,00 $ Berg 0.00 $ $ 0.00 $ 0.75 $ 25.79 0.00 $ Totals 14.00 $ 1 .169.48 5.00 $ 313.53 2,00 $ 148.43 10.25 $ 669.64 10.50 $ 874.10 e FY2005 PP14 (Hrs/Cost) PP15 (Hrs/Cost) PP16 (Hrs/Cost) PP17 (Hrs/Cost) PP18 (Hrs/Cost) Norman $ 0.50 $ 42.82 $ 1.00 $ 78.44 $ Crandall 3.00 $ 211.04 2.00 $ 571.24 6.00 $ 438.49 12.00 $ 863.24 4,00 $ 281.42 Maunder $ $ $ $ $ Spaulding $ $ $ 54,00 $2,717.14 $ Berg $ $ $ $ $ Totals 3.00 $ 211,04 2.50 $ 614.06 6,00 $ 438.49 67.00 $ 3.658,82 4.00 $ 281.42 Spaulding mileage Contractual e Fairweather E&P contract Total Co·sts $ 212,199.71 ~ PP10 (Hrs/Cost) PP11 (Hrs/Cost) PP12 (Hrs/Cost) PP13 (Hrs/Cost) FY2004 PS TOTALS $ 1.00 $ 80.86 $ $ 1.00 $ 81.31 5.50 $ 432.91 18.50 $ 1,366.69 14.00 $1,060.14 21.00 $ 1,033.05 20.00 $ 1,506.79 110.00 $ 7,778.17 0.00 $ 0.00 $ $ $ 0.00 $ 1.00 $ 67.15 0.00 $ 0.00 $ $ $ 0.00 $ $ 0.00 $ 0.00 $ $ $ 3.00 $ 129.98 3.75 $ 155.77 18.50 $ 1,366.69 15.00 $1,141,00 21.00 $ 1,033.05 24.00 $1,718.08 120.25 $ 8,434.00 - PP19 (Hrs/Cost) FY2005 PS TOTALS $ 1.50 $ 121 .26 5.00 $ 396.88 32.00 $ 2,762.31 $ $ $ 54.00 $2,717.14 $ $ 5.00 $ 396.88 87.50 $ 5,600.71 e , ~ .:t:F "3 Co « 4, It -- Frank H. Murkowski, Governor Ray Matiashowski, Com missioner P.O. Box 110200 Juneau, Alaska 99811-0200 Telephone: (907) 465-2200 Fax: (907) 465-2135 www.state.ak.us/admin Date: October 21, 2004 No: 05-14 For Immediate Release Media Contact: David Fremming, Special Assistant/Communications, 907.465.5034 AOGCC Announces Work is Completed on Pluaaina Methane Wells (Anchorage) The Alaska Oil and Gas conservation Commission (AOGCC) announced that work has been completed to plug and abandon five coal bed methane wells on state oil and gas leases in the Houston Alaska vicinity. The work was performed by Fairweather E&P Services under contract with the AOGCC. The wells were drilled between the years of 1998 and 2000 by GRI, Inc., a small coal bed methane exploration company that was the first company to attempt coal bed methane production in Alaska. The drilling, construction, operation and abandonment of these wells, and all oil and gas wells in the state, are regulated by the AOGCC. The delineation and protection of underground sources of drinking water is chief among the AOGCC management priorities. The distribution of drinking-quality water, coal seams and impermeable layers of rock in the subsurface controlled the well construction and operational requirements. The AOGCC requires all applicants for permits to drill oil and gas wells in Alaska to post a bond to insure wells are drilled, operated, maintained and abandoned in accordance with the requirements of Chapter 25 of the Alaska Administrative Code. Several years into operations GRI, Inc. became insolvent, ceased operations, and the Houston area oil and gas leases expired. The AOGCC used the GRI, Inc. bond to contract with Fairweather E&P Services, Inc. for plugging, abandonment and location clearance of all five wells. The Alaska Department of Natural Resources (DNR) collected a similar bond from GRI, Inc. to perform surface reclamation in the Houston project area. Both the AOGCC and the DNR coordinated closely with affected surface owners including the Matanuska-Susitnia Borough to insure the wells were properly plugged and abandoned. ****** ~3S- [Fwd: [Fwd: A?GCC GRI P&A Schedule]] e It (, .-l-1¿ cc: GRI file. -------- Original Message -------- Subject:[Fwd: AOGCC GRI P&A Schedule] Date:Mon, 16 Aug 2004 10:16:14 -0800 From:Robert Crandall <bob crandall@admin.state.ak.us> Organization:State of Alaska To:Robert Mintz <robert mintz@law.state.ak.us>, John Norman <john norman@admin.state.ak.us>, Winton GAubert <winton aubert@admin.state.ak.us>, dan_seamount <dan seamount@admin.state.ak.us> FYI -------- Original Message -------- Subject:AOGCC GRI P&A Schedule Date:Mon, 16 Aug 200408:58:39 -0800 From:J esse Mohrbacher <jesse@fairweather.com> To:Robert Crandall <bob crandall@admin.state.ak.us>, Jim Regg <jim regg@admin.state.ak.us> CC:Bruce Webb <bruce webb@dnr.state.ak.us>, Judd Peterson <Judd Peterson@dec.state.ak.us>, bob Blankenburg@dec.state.ak.us, Dave Sampert <dsampert@alaska.com>, James Nunley <james@fairweather.com>, Bill Penrose <bill@fairweather.com> Hi Bob, We have had to delay our P &A schedule by one week due to some equipment availability issues with the batch cementing unit that we were going to use. This will delay the P&A portion of our work but we may continue with the reserve pit work later this week pending any final agreement with the ADNR on potential scope of work changes. We have notified John Spaulding of the AOGCC who was planning to witness our cementing operations later today and this week. Please call or write with any questions. Regards, SCANNED AUG 2 32004 lof2 8/18/2004 10:46 AM [Fwd: [Fwd: AOGCC GRI P&A Schedule]] . e -- Jesse Mohrbacher John K. Norman <John Norman~admin.state.us> Commissioner Alaska Oil & Gas Cæservation Commission 20f2 8/18/2004 10:46 AM *"34- STANDARD Aït=EMENT FORM FOR PROFESSIIAL SERVICES 1. Agency Contract Number 2. ASPS Number 3. Financial Coding 4. Agency Assigned Encumbrance Number 0501 5. Vendor Number 6. Project/Case Number 7. Alaska Business License Number 220925 Division Alaska Oil and Gas Conservation Commission hereafter the State, and 9. Contractor Fairweather E&P Services, Inc. Mailing Address Mr. Willian 1. Penrose Street or P,O. Box 2000 East 88th Ave., Suite 200 City Anchorage State Ak. hereafter the Contractor ZIP+4 99507 10. ARTICLE 1. Appendices: Appendices referred to in this contract and attached to it are considered part of it. ARTICLE 2. 2.1 2.2 2.3 Peñormance of Service: Appendix A (General Provisions), Articles 1 through 14, govems the performance of services under this contract. Appendix B sets forth the liability and insurance provisions of this contract. Appendix C sets forth the services to be performed by the contractor (including Contractor's 6/9/04 proposal). ARTICLE 3. Period of Peñormance: The period of performance for this contract begins ends 9/15/04 6/30/04 , and ARTICLE 4. 4.1 Considerations: In full consideration of the contractor's performance under this contract, the State shall pay the contractor a fixed price of $_197,700.00 in accordance with the provisions of Appendix C and Appendix D (including AOGCC RFP 0501 ). When billing the State, the contractor shall refer to the Authority Number or the Agency Contract Number and send the billing to: 4.2 11. Department of Administration Attention: Alaska Oil and Gas Conservation Commission Mailing Address 333 W. 7th. Ave., Anchorage, Ak. 99501 Attention: Robert Crandall Date 06/30/04 14. CERTIFICATION: I certify that the facts herein and on supporting documents are correct, that this voucher constitutes a legal charge against funds and appropriations cited, that sufficient funds are encumbered to pay this obligation, or that there is a sufficient balance in the appropriation cited to cover this obligation. I am aware that to knowingly make or allow false entries or alterations on a public record, or knowingly destroy, mutilate, suppress, conceal, remove or otherwise impair the verity, legibility or availability of a public record constitutes tampering with public records punishable under AS 11.56.815-.820. Other disciplinary action may be taken up to and including dismissal. Name of Firm ame of Authorized Representative William J. Penrose Title Vice PresidentlDrilling Manager Department/Division Alaska Oil and Gas Conservation Commission Date 06/30/04 Signature of Head of Contracting Agency or Designee Date 06130/04 Typed or Printed Name of Project Director Robert Crandall Title Procurement Officer Title Senior Petroleum Geologist NOTICE: This contract has no effect until signed by the head of contracting agency or designee. 02-093 (12/03/02) BACK 02-093 (04/01/03) SAF.DOC Cj c 2001· APPENDIX A It GENERAL PROVISIONS e Article 1. 1.1 Definitions. In this contract and appendices, "Project Director" or "Agency Head" or "Procurement Officer" means the person who signs this contract on behalf of the Requesting Agency and includes a successor or authorized representative. "State Contracting Agency" means the department for which this contract is to be petfonned and for which the Connnissioner or Authorized Designee acted in a signing this contract 1.2 Article 2. Inspection and Reports, 2. J The department may inspect, in the manner and at reasonable times it considers appropriate, all the contractor's facilities and activities IUlder this contract 2.2 The contractor shall make progress and other reports in the manner and at the times the department reasonably requires. Article 3. 3.] Article 4, 4.1 Disputes, Any dispute concerning a question of fact arising IUlder this contract which is not disposed of by mutual agreement shall be decided in accordance with AS 36.30.62Q..632. Equal Employment Opportunity. The contractor may not discriminate against any employee or applicant for employment because of race, reJigion, color, national origin, or because of age, disability, sex, marital status, changes in marital status, pregnancy or parenthood when the reasonable demands of the position(s) do not require distinction on the basis of age, disability, sex, marital status, changes in marital status, pregnancy, or parenthood. The contractor shall take affirmative action to insure that the applicants are considered for employment and that employees are treated during employment without unlawful regard to their race, color, religion, nationaJ origin, ancestry, disability, age, sex, marital status, changes in marital status, changes in marital status, pregnancy or parenthood. This action must include, but need not be limited to, the following: employmen~ upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of payor other fonns of compensation, and selection for training including apprenticeship. The contractor shall post in conspicuous places, available to employees and applicants for employmen~ notices setting out the provisions of this paragraph. 4.2 The contractor shall state, in all solicitations or advertisements for employees to work on State of Alaska contract jobs, that it is an equal opportunity employer and that all qualified applicants will receive consideration for employment without regard to race, religion, color, national origin, age, disability, sex, marital status, changes in marital status, pregnancy or parenthood. 4.3 The contractor shall send to each labor union or representative of workers with which the contractor has a collective bargaining agreement or other contract or IUlderstanding a notice advising the labor union or workers' compensation representative of the contractor's connnitments IUlder this article and post copies of the notice in conspicuous places available to all employees and applicants for employment. 4.4 The contractor shall include the provisions of this article in every contract, and shall require the inclusion of these provisions in every contract entered into by any of its subcontractors, so that those provisions will be binding upon each subcontractor. For the purpose of including those provisions in any contract or subcontract, as required by this contract, "contractor" and "subcontractor" may be changed to reflect appropriately the name or designation of the parties of the contract or subcontract 4.5 The contractor shall cooperate fully with State efforts which seek to deal with the problem of lUll awful discrinùnation, and with all other State efforts to gnarantee fair employment practices IUlder this contrac~ and promptly comply with all requests and directions ftom the State Connnission for HlU113n Rights or any of its officers or agents relating to prevention of discriminatory employment practices. 4.6 Full cooperation in paragraph 4.5 includes, but is not limited to, being a witoess in any proceeding involving questions of unlawful discrimination if that is requested by any official or agency of the State of Alaska; permitting employees of the contractor to be witnesses or complainants in any proceeding involving questions of unlawful discrimination, if that is requested by any official or agency of the State of Alaska; participating in meetings; submitting periodic reports on the equal employment aspects of present and future employment; assisting inspection of the contractor's facilities; and promptly complying with all State directives considered essential by any office or agency of the State of Alaska to insure compliance with all federal and State Jaws, regulations, and policies pertaining to the prevention of discriminatory employment practices. 4.7 Failure to petform IUlder this article constitutes a material breach of the contract Article 5. Termination. The Project Director, by written notice, may tenninate this contrac~ in whole or in part, when it is in the best interest of the State. The State is liable only for payment in accordance with the payment provisions of this contract for services rendered before the effective date of tennination. Article 6. No Assignment or Delegation. The contractor may not assign or delegate this contrac~ or any part ofi~ or any right to any of the money to be paid IUlder i~ except with the written consent of the Project Director and the Agency Head. Article 7. No Additional Work or Material. No claim for additional services, not specifically provided in this contract, petfonned or furnished by the contractor, will be allowed, nor may the contractor do any work or furnish any material not covered by the contract IUlless the work or material is ordered in writing by the Project Director and approved by the Agency Head. Article 8. Independent Contractor, The contractor and any agents and employees of the contractor act in an independent capacity and are not officers or employees or agents of the State in the petfonnance of this contract Article 9. Payment of Taxes. As a condition ofpetformance of this contract, the contractor shall pay all federal, State, and local taxes incurred by the contractor and shall require their payment by any Subcontractor or any other persons in the petformance of this contract. Satisfactory petformance of this paragraph is a condition precedent to payment by the State IUlder this contract. Article 10. Ownership of Documents, All designs, drawings, specifications, notes, artwork, and other work developed in the petformance of this agreement are produced for hire and remain the sole property of the State of Alaska and may be used by the State for any other purpose without additional compensation to the contractor. The contractor agrees not to assert any rights and not to establish any claim IUlder the design patent or copyright laws. The contractor, for a period of three years after final payment IUlder this contract, agrees to furnish and provide access to all retained materials at the request of the Project Director. Unless otherwise directed by the Project Director, the contractor may retain copies of all the materials. Article 11. Governing Law. This contract is governed by the laws of the State of Alaska. All actions conceming this contract shall be brought in the Superior Court of the State of Alaska. Article]2, C onßicting Provisions. Unless specifically amended and approved by the Department of Law the General Provisions of this contract supersede any provisions in other appendices. Article ]3. Officials Not to Benefit. Contractor must comply with all applicable federal or State laws regulating ethical conduct of public officers and employees. UN ~J i! ZOGl Article 14, Covenant Against Contingent Fees, The contractor warrants that no person or agency has been employed or retained to solicit or secure this contract upon an agreement or IUlderstanding for a connnission, percentage, brokerage or contingent fee except employees or agencies maintained by the contractor for the purpose of securing business. For the breach or violation of this warranty, the State my terminate this contract without liability or in its discretion deduct ftom the contract price or consideration the full amolUlt of the connnission, percentage, brokerage or contingent fee. _.......,'''''.....,.,''.;.~--- e e APPENDIX B INDEMNITY AND INSURANCE Article 1. Indemnification and Save Harmless The Contractor shall indemnify, save harmless, and defend the State of Alaska ("State") and the Matanuska-Susitna Borough, their agents and their employees from any and all claims, actions, or liabilities for bodily injuries, wrongful death, or property damage sustained by any person or property arising directly or indirectly out of any act, error, or omission by the Contractor, its subcontractors, agents, and employees connected with the Contractor's performance under this Contract; however, this provision has no effect if, but only if, the sole proximate cause ofthe injury or damage is either the State's or the Matanuska-Susitna Borough's negligence. Article 2. Insurance Without limiting Contractor's obligation to indemnify and save harmless, it is agreed that Contractor shall purchase at its own expense and maintain in force at all times during the performance of services under this Contract the following policies of insurance. Where specific limits are shown, it is understood that they shall be minimum acceptable limits. If the Contractor's policy contains higher limits, the state shall be entitled to coverage to the extent of such higher limits. Failure to furnish satisfactory evidence of insurance or lapse ofthe policy is a material breach of this contract and shall be grounds for termination of the Contractor's services. All insurance policies shall comply with, and be issued by insurers licensed to transact the business of insurance under AS 21. Evidence of Insurance, consisting of a certificate of insurance or the policy declaration page with required endorsements attached thereto - all of which have been executed by the insurer's representative and issued to the State of Alaska, Department of Administration, Oil and Gas Conservation Commission - shall denote the type, amount, class of operations covered, effective ( and retroactive) dates, and dates of expiration must be furnished to the Contracting Officer prior to beginning work and must provide for a 30-day prior notice of cancellation, nonrenewal or material change of conditions, including notice to the Matanuska-Susitna Borough. If a certificate of insurance is submitted as evidence it shall contain the following statement: "This is to certify that the policies described herein comply with all aspects of the insurance requirements of (Contract Name and Number, and Project Number)." 2.1 Workers' Compensation Insurance: The Contractor shall provide and maintain, for all employees engaged in work under this Contract, coverage as required by AS 23.30.045. The policy must waive subrogation against the State and the Matanuska-Susitna Borough, their agents and employees. 2.2 Commercial General Liability Insurance: on an occurrence policy form covering all operations by or on behalf of the Contractor with respect to this contract with combinedt (" single limits not less than: $1,000,000 each occurrence, $2,000,000 general aggregate with $1,000,000 for personal injury liability limits. The State and the Matanuska-Susitna Borough shall be named as additional insureds (except for contractual liability). This insurance shall contain a "cross liability" or "severability of interest" clause or endorsement and shall be considered to be primary and non-contributory to any other insurance carried by the State or the Matanuska-Susitna Borough through self insurance or otherwise. 2.3 Commercial Automobile Liability Insurance: covering all vehicles used by the Contractor in the performance of services under this agreement with minimum coverage limits not less than $1,000,000 combined single limit per occurrence. �` i e e STATE OF ALASKA DEPARTMENT OF ADMINISTRATION Oil & Gas ConseIVation Commission 333 W. 7tb. Avenue Suite 100 Anchorage, AK 99501-3539 Abandonment In Compliance With AOGCC Regulations Of Five Coalbed Methane Wells In The General Vicinity Of Houston, Alaska 0501 APPENDIX C - SCOPE & APPENDIX - D COMPENSATION APPENDIX C: The Contractor shall perform the services called for in RFP AOGCC - 0501 (including any negotiated changes) and the work described in the Contractor's proposal. RFP AOGCC - 0501 and The Contractor's Proposal, dated June 9, 2004, are now made part of this Contract. In the event of any inconsistency in this Contract, the inconsistency shall be resolved by giving precedence in the following order: 1. Standard Contract Form & General Provisions 2. Appendix B Indemnification and Insurance 3. RFP and all Associated Amendments 4. Contractor's Proposal dated June 9, 2004 APPENDIX D: Cost: This contract is a firm, fIXed price contract. The Contract Cost shall not exceed $197,700.00 without the prior, written approval of the AOGCC Procurement Officer. · The Contractor shall invoice the AOGCC upon the completion of work as described in Appendix C. · One payment of $197,700.00 will be made upon submittal and subsequent approval of the invoice. · No payment shall be made until deliverables and/or services have been received, reviewed and accepted by the Project Manager. Upon acceptance of deliverables and/ or services, payment will be made within 30-days of the receipt of an invoice. · Continuation of this contract is contingent upon lawfully appropriated funds for this purpose. Invoices must reference the CONTRACT NUMBER (Block 1 of the Standard Agreement Form), task being billed and billing period being invoiced. ~1 [,'. "finp t? , Z!)~,., Page 1 e e STATE OF ALASKA Department of Administration Oil and Gas C~nservation Commission 333 W. i Avenue Suite 100 Anchorage, AK 99501-3539 Request For Proposals RFP AOGCC - 0501 Date of Issue: May 12, 2004 Abandonment in compliance with AOGCC regulations of five coal bed methane wells in the general vicinity of Houston, Alaska Offerors Are Not Required To Return This Form. Important Notice: If you received this solicitation from the State of Alaska's "Online Public Notice" web site, you must register with the Procurement Officer listed in this document to receive subsequent amendments. Failure to contact the Procurement Officer may result in the rejection of your offer. Robert Crandall Procurement Officer Department of Administration, Alaska Oil and Gas Conservation Commission TABLE OF CONTENTS ~ {\ ?nnR (',' ,,) r....u~,;'".. Page 1 (Rev. 6/03) e e SECTION ONE Introduction and Instructions Page 1.01 Return Mailing Address, Contact Person, Telephone, Fax Numbers and Deadline for Receipt of Proposals ...............................,.....,......................................,.6 1.02 Contract Term and Work Schedule. ..., ,..... ....... '.............. ............., ................. ........ ...... .......... ............. .....6 1,03 Purpose of the RFP ....... ........, ...,. ........,. ....... ......... ... ......... .............. ..... '. .......'.....,. ..... ........... ...... ........ .....7 1 .04 Budget................,...,.................................".,..................,........................................... ..,......,'..........'.'....... 7 1.05 Location of Work....... .......... ........ ..................... ...."...................... ........ ...., .... .......................... .......... ........ 7 1.06 Assistance to Offerors with a Disability .... ....., ................. ....... .'........ .... ........ ...... ..... ......... ............ .... ......... 7 1.07 Required Review,. .,..,.. ...................... ..... ......... .............................................. ........., ....................... ........... 7 1.08 Questions Received Prior to Opening of Proposals .................................................................................8 1.09 Amendments........... .... ........ ............................ ....... ...'...... ........... ............. ......... ...... .................. ............ ....8 1.10 Alternate Proposals.......,.. ..... .................... ...................... ................. ..... ....................... ........ ,....... .............8 1.11 Right of Rejection............ ............... ........ ..... ........... .... ....... ..... ........... ..... ..... ........ ....... ..... .......................... 8 1.12 State Not Responsible for Preparation Costs ..........................................................................................9 1.13 Disclosure of Proposal Contents ............................................................................................................. 9 1 .14 Su bcontractors . ........... .. ..... ... ... . ....." .,'.. ..,... . ........... . ... ... .,. '.. ...." .... ...... ...... ......... ... .,... ....',. .,., ....... . ,., ,... .... 9 1.15 Joint Ventures ...................... .......... ..... .......... ....... ......... .............. ............ .... ..... ................ ...... ....... ..........10 1.16 Offeror's Certification............ ...... ........ ...... ............................. ...... ................................... ...... .................. 10 1.17 Conflict of Interest .......... ......... .......... ........ ...... ........ ....... ................... ....................... ...... ....... ......... .......... 10 1,18 Right to Inspect Place of Business ........................................................................................................ 11 1.19 Solicitation Advertising .............. ........................ ..................... ....................................... ...... ............. ....... 11 1.20 News Releases ............ ............. ................ ......................................,. ......................... ........ ................. ....11 1 .21 Assignment............................................................................................................................................. 11 1 .22 Disputes.................................................................................,................................................................ 11 1.23 Severability.......... .....,.. ............. ................................ ..... .........................,..,.. ........................................... 11 1 .24 Federal Requirements ................ ...... .................,.......................,........................................ .............. ...... 11 3 ( 2000 SECTION TWO Page 2 e e Standard Proposal Information 2.01 Authorized Signature .....,...... .., ........ ......,....... ,........ .,.,. ......... ............. ........... .......,..... ............ .'............... 12 2.02 Pre-proposal Conference.....,........,...................,....,.........,........"."....,........,..,.............................,...... .... 12 2.03 Site Inspection ........ ..... .,.........,.,........... ......... .... ......,. ......... .... ............, .... .....,. ...... ...' .............................12 2.04 Amendments to Proposals.......... .... ....,... ,......... ....,................. ........." ....... .... ......... ............ ................ .....12 2.05 Supplemental Terms and Conditions.. .... ......... ....... '........ ......... ......................, ....... ...,...... .... ..... ...... .....,.12 2.06 Clarification of Offers ..............................,.................,............................................................................ 13 2,07 Discussions with Offerors . ......,..... ....... .... ...... ........ ............. .... ..... ........".... ...... .,. ..... ............. .........,.' ...... 13 2.08 Prior Experience..............., ..... .....,.,... .... .........., ..... ..... ........... ....... ..... ........,.. .., ........... ....... ....,.. ...... ........ 13 2.09 Evaluation of Proposals......................,................................................................................................... 14 2.10 Vendor Tax ID............".......,.......................,......,............,.,........................................................ ............. 14 2.11 Alaska Business License and Other Required Licenses ......,..............,..............,................................... 14 2.12 Application of Preferences... ..... .... ......,....... .... ......... ...'........ ...... ... .... ........ .......... ..... .......... ..... ...... .......... 15 2.13 5 Percent Alaskan Bidder Preference ...... .................... ....... ......... ............. .... ............. ........ ......,........ .....15 2.14 Formula Used to Convert Costs to Points .,..................,.....................................................'.................. 16 2.15 Alaskan Offeror's Preference ,......... ........... ....... ...... ....... .... .............. ........... ....... ..... ....... ...... ............ ..... 17 2,16 Contract Negotiation... .,. ............ .......... .,.. ....... ,.. ...... ..... ............ ..........,... ....... .....' .,....... .................. ........ 18 2,17 Failure to Negotiate......... ......... ................. ...... .............. ...... .... ,. ............'............ ..,.. ........................, ,. ..... 18 2.18 Notice of Intent to Award (NIA) ........................................,.............................,...........................,.......... 18 2.19 Protest .................,..........,..,....................,.......,.........,.,...........,.............,.........,.".,............ . ... . .... ......... ... 18 SECTION THREE Standard Contract Information 3,01 Contract Type...,....... .,...........".......... ......... '" .......,...........,.............. ,............. .,. ............ ...., ..... ....., ,. .... ,.. 20 3.02 Contract Approval.... .................. .........,........,.. ..................................,..;...... ........ ..... ..... ......... .......,.. ...... 20 3.03 Standard Contract Provisions ..... ...... ....,............ ... ................. ........,..... ............... ... ....... ...... .,...... ........... 20 3.04 Proposal as a Part of the Contract...,....................................,.,.............,.................,.... ............,.............20 3.05 Additional Terms and Conditions..... ...., ......... .,............ ........,.. ................ ....... .... ....... .., ........ .... .............. 20 3.06 Insurance Requirements...........,.. ........".. ,........................., .,..... ,.... ....... ,......... .., ..... ..... ......... .,.............. 20 3.07 Bid Bond - Performance Bond - Surety Deposit ..........,...........,...........,..............,.................. .,...........,.. 21 3.08 Contract Funding............,........,., ............... ......,........,..,. ....,..., .............., .... ......' ..... ..... .................... .,..... 22 3.09 Proposed Payment Procedures ..... ,.. ......... ....... ......... ..,.......... ...... ........ ................ . ........... ...... ........ ...,... 23 3.10 Contract Payment .....,.. ......... ,.. ". ...., ....................,.. .....,. .,........, ...........,...., ,............ .,.,........'.... ........ ....,. 22 3,11 Informal Debriefing ....... ......... ,..... ................. ..... .............,..... ......,." ,....,......... .......... ...,.......,. ..... .............22 Page 3 ., f' ')1l0'~ f':/j \> (,,.,\J."v 3.12 Inspection & Modification - Reimbursement for Unacceptable Deliverables ......................................... 22 3.13 Termination for Default.......................................................................................................................... 23 3.14 Contract Changes - Unanticipated Amendments................................................................................. 23 3.15 Contract Invalidation..............................................................................................................................23 SECTION FOUR Scope and Schedule 4.01 Scope of Work........................................................................................................................................24 SECTION FIVE Proposal Format and Content 5.01 Proposal Format and Content.......................................................... 5.02 Introduction...................................................................................... 5.03 Methodology and Timeline Used for the Project .............................. 5.04 Management Plan for the Project .................................................... 5.05 Experience and Qualifications......................................................... 5.06 Cost Proposal.................................................................................. 5.07 Evaluation Criteria............................................................................ SECTION SIX Evaluation Criteria and Contractor Selection ................................................... 32 ................................................... 32 ................................................... 32 ................................................... 32 ................................................... 32 ................................................... 33 ................................................... 33 6.01 Methodology and Timeline Used for the Project.....................................................................................34 6.02 Management Plan for the Project........................................................................................................... 34 6.03 Experience and Qualifications................................................................................................................35 6.04 Contract Cost..........................................................................................................................................35 6.05 Alaskan Offeror's Preference 10 Percent............................................................................................. 35 Page 4 SECTION SEVEN Attachments 7.01 Attachments .............................................. Attachments 1. Proposal Evaluation Form 2. Standard Agreement Form 3. Appendix A 4. Appendix B 5. Notice of Intent to Award 6. Appendix C Map and Site Pictures ................................................................................ ..36 Page 5 e e SECTION ONE INTRODUCTION AND INSTRUCTIONS 1.01 Return Mailing Address, Contact Person, Telephone, Fax Numbers and Deadline for Receipt of Proposals Offerors must submit three copies of their proposal, in writing, to the procurement officer in a sealed envelope. It must be addressed as follows: Department of Administration Alaska Oil and Gas Conservation Commission Attention: Robert Crandall Request for Proposal (RFP) Number: AOGCC - 0501 Project name: Houston Alaska Coalbed Methane Well Abandonment 333 W. ih Avenue, Suite 100 Anchorage, AK 99501-3359 Proposals must be received no later than 1 :30 P.M., Alaska time on June 9, 2004 Fax proposals are not acceptable. Oral proposals are not acceptable. An offeror's failure to submit its proposal prior to the deadline will cause the proposal to be disqualified. Late proposals or amendments will not be opened or accepted for evaluation. PROCUREMENT OFFICER: Robert Crandall- PHONE 907-793-1230 - FAX 907-275-7542 1.02 Contract Term and Work Schedule The contract term and work schedule set out herein represent the State of Alaska's best estimate of the schedule that will be followed. If a component of this schedule, such as the opening date, is delayed, the rest of the schedule will be shifted by the same number of days. The length of the contract will be from the date of award, approximately June 25, 2004, for approximately 76 calendar days until completion, approximately, September 10, 2004 The approximate contract schedule is as follows: · Issue RFP May 12, 2004 · Pre-proposal conference May 25, 2004, · Open RFP DATE June 9,2004 · Proposal Evaluation Committee complete evaluation by June 14, 2004 · State of Alaska issues Notice of Intent to Award a Contract June 15, 2004, · State of Alaska issues contract June 25, 2004, · Contract start June 25, 2004, · Projected Completion Date September 10, 2004 ~ {'¡IiCf''! ibJ ¿vw'"~ Page 6 e e 1.03 Purpose of the RFP The Department of Administration, Alaska Oil and Gas Conservation Commission (AOGCC), is soliciting proposals for proper abandonment in compliance with AOGCC regulations as specified below, of five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed, Any toxic substances or contaminated materials must be removed and properly disposed of. Drill sites are to be returned to original grade, 1.04 Budget The Department of Administration, Alaska Oil and Gas Conservation Commission, estimates a budget of between $ 125,000 and $200,000 dollars for completion of this project. Proposals priced at more than $200,000 will be considered non-responsive, 1.05 Location of Work The locations the work to be performed are in the vicinity of Houston Alaska ( see Appendix C ), the location of the specific sites and site descriptions are included in SECTION FOUR Scope of Work. Offerors are encouraged to visit the sites prior to submitting proposals. The State of Alaska is the owner of the subsurface estate throughout the project area. Portions of the surface are owned by the State of Alaska, private parties, or the Matanuska- Susitna Borough. 1.06 Assistance to Offerors With a Disability Offerors with a disability may receive accommodation regarding the means of communicating this RFP or participating in the procurement process. For more information, contact the procurement officer no later than ten days prior to the deadline for receipt of proposals, 1.07 Required Review Offerors should carefully review this solicitation for defects and questionable or objectionable material. Comments concerning defects and objectionable material must be made in writing and received by the procurement officer at least ten days before the proposal opening. This will allow issuance of any necessary amendments, It will also help prevent the opening of a defective solicitation and exposure of offeror's proposals upon which award could not be made, Protests based on any omission or error, or on the content of the solicitation, will be disallowed if these faults have not been brought to the attention of the procurement officer, in writing, at least ten days before the time set for opening. ~; Ð Page 7 e e 1.08 Questions Received Prior to Opening of Proposals All questions must be in writing and directed to the issuing office, addressed to the procurement officer. Telephone conversations must be confirmed in writing by the interested party. Two types of questions generally arise. One may be answered by directing the questioner to a specific section of the RFP. These questions may be answered over the telephone. Other questions may be more complex and may require a written amendment to the RFP. The procurement officer will make that decision. 1.09 Amendments If an amendment is issued, it will be provided to all who were mailed a copy of the RFP and to those who have registered with the procurement officer as having downloaded the RFP from the State of Alaska Online Public Notice web site. 1.10 Alternate Proposals Offerors may only submit one proposal for evaluation. In accordance with 2 MC 12.830 alternate proposals (proposals that offer something different than what is asked for) will be rejected. 1.11 Right of Rejection Offerors must comply with all of the terms of the RFP, the State Procurement Code (AS 36.30), and all applicable local, state, and federal laws, codes, and regulations, The procurement officer may reject any proposal that does not comply with all of the material and substantial terms, conditions, and performance requirements of the RFP, Offerors may not qualify the proposal nor restrict the rights of the State. If an offeror does so, the procurement officer may determine the proposal to be a non-responsive counter-offer and the proposal may be rejected. Minor informalities that: · do not affect responsiveness, · are merely a matter of form or format, · do not change the relative standing or otherwise prejudice other offers, · do not change the meaning or scope of the RFP, · are trivial, negligible, or immaterial in nature, · do not reflect a material change in the work, or, · do not constitute a substantial reservation against a requirement or provision, may be waived by the procurement officer. The State reserves the right to refrain from making an award if it determines that to be in its best interest. A proposal from a debarred or suspended offeror shall be rejected. Page 8 e e 1.12 State Not Responsible for Preparation Costs The State will not pay any cost associated with the preparation, submittal, presentation, or evaluation of any proposal. 1.13 Disclosure of Proposal Contents All proposals and other material submitted become the property of the State of Alaska and may be returned only at the State's option. 40.25.110 requires public records to be open to reasonable inspection. All proposal information, including detailed price and cost information, will be held in confidence during the evaluation process and prior to the time a Notice of Intent to Award is issued. Thereafter, proposals will become public information. Trade secrets and other proprietary data contained in proposals may be held confidential if the offeror requests, in writing, that the procurement officer does so, and if the procurement officer agrees, in writing, to do so. Material considered confidential by the offeror must be clearly identified and the offeror must include a brief statement that sets out the reasons for confidentiality. 1.14 Subcontractors Subcontractors may be used to perform work under this contract. If an offeror intends to use subcontractors, the offeror must identify in the proposal the names of the subcontractors and the portions of the work the subcontractors will perform. If a proposal with subcontractors is selected, the offeror must provide the following information concerning each prospective subcontractor within five working days from the date of the State's request: (a) complete name of the subcontractor, (b) complete address of the subcontractor, (c) type of work the subcontractor will be performing, (d) percentage of work the subcontractor will be providing, (e) evidence, as set out in the relevant section of this RFP, that the subcontractor holds a valid Alaska business license, and (f) a written statement, signed by each proposed subcontractor, that clearly verifies that the subcontractor is committed to render the services required by the contract. An offeror's failure to provide this information, within the time set, may cause the State to consider their proposal non-responsive and reject it. The substitution of one subcontractor for another may be made only at the discretion and prior written approval of the project director. J. :J ?nOl ..... ,,> ". ~ Page 9 e e 1.15 Joint Ventures Joint ventures are acceptable. If submitting a proposal as a joint venture, the offeror must submit a copy of the joint venture agreement which identifies the principles involved and their rights and responsibilities regarding performance and payment. 1.16 Offeror's Certification By signature on the proposal, offerors certify that they comply with: (a) the laws of the State of Alaska, (b) the applicable portion of the Federal Civil Rights Act of 1964, (c) the Equal Employment Opportunity Act and the regulations issued thereunder by the federal government, (d) the Americans with Disabilities Act of 1990 and the regulations issued thereunder by the federal government, (e) all terms and conditions set out in this RFP, (f) a condition that the proposal submitted was independently arrived at, without collusion, under penalty of perjury, (g) that the offers will remain open and valid for at least 90 days, and (h) that programs, services, and activities provided to the general public under the resulting contract conform with the Americans with Disabilities Act of 1990, and the regulations issued thereunder by the federal government. If any offeror fails to comply with [a] through [h] of this paragraph, the State reserves the right to disregard the proposal, terminate the contract, or consider the contractor in default. 1.17 Conflict of Interest Each proposal shall include a statement indicating whether or not the firm or any individuals working on the contract has a possible conflict of interest (e.g., employed by the State of Alaska) and, if so, the nature of that contlict. The Commissioner, Department of Administration, reserves the right to cancel the award if any interest disclosed from any source could either give the appearance of a conflict or cause speculation as to the objectivity of the program to be developed by the offeror. The Commissioner's determination regarding any questions of contlict of interest shall be final. ~; 20r~· Page 10 e e 1.18 Right to Inspect Place of Business At reasonable times, the State may inspect those work sites that are related to the performance of a contract. If the State makes such an inspection, the contractor must provide reasonable assistance, 1.19 Solicitation Advertising Public notice has been provided in accordance with 2 MC 12.220, 1.20 News Releases News releases related to this RFP will not be made without prior approval of the project director. 1.21 Assignment Per 2 MC 12.480, the contractor may not transfer or assign any portion of the contract without prior written approval from the procurement officer. 1.22 Disputes Any dispute arising out of this agreement will be resolved under the laws of the State of Alaska. Any appeal of an administrative order or any original action to enforce any provision of this agreement or to obtain relief from or remedy in connection with this agreement may be brought only in the Superior Court for the State of Alaska. 1.23 Severability If any provision of the contract or agreement is declared by a court to be illegal or in conflict with any law, the validity of the remaining terms and provisions will not be affected; and, the rights and obligations of the parties will be construed and enforced as if the contract did not contain the particular provision held to be invalid. 1.24 Federal Requirements The offeror must identify all known federal requirements that apply to the proposal, the evaluation, or the contract. ?f1fj~ "" I") .""'-j' (¿~\,,-) ","""".,"-' Page 11 e e SECTION TWO STANDARD PROPOSAL INFORMATION 2.01 Authorized Signature All proposals must be signed by an individual authorized to bind the offeror to the provisions of the RFP, Proposals must remain open and valid for at least ninety (90) days from the opening date. 2.02 Pre-proposal Conference A pre-proposal conference will be held at 10:00 am, Alaska Time, on May 25,2004 in the Alaska Oil and Gas Conservation Commission hearing room in Suite 100, 333 W. ih Ave., Anchorage, Alaska. The purpose of the conference is to discuss the work to be performed with the prospective offerors and allow them to ask questions concerning the RFP. Questions and answers will be transcribed and sent to prospective offerors as soon as possible after the meeting. Offerors not able to attend in person may call 907-793-1229 to participate via conference call. Offerors with a disability needing accommodation should contact the procurement officer prior to the date set for the pre-proposal conference so that reasonable accommodation can be made. 2.03 Site Inspection The State may conduct on-site visits to evaluate the offeror's capacity to perform the contract. An offeror must agree, at risk of being found non-responsive and having its proposal rejected, to provide the State reasonable access to relevant portions of its work sites, Site inspection will be made by individuals designated by the procurement officer at the State's expense. 2.04 Amendments to Proposals Amendments to or withdrawals of proposals will only be allowed if acceptable requests are received prior to the deadline set for receipt of proposals. No amendments or withdrawals will be accepted after the deadline unless they are in response to the State's request in accordance with 2 MC 12.290. 2.05 Supplemental Terms and Conditions Proposals must comply with Section 1.11 Right of Rejection. However, if the state fails to identify or detect supplemental terms or conditions that conflict with those contained in this RFP or that diminish the State's rights under any contract resulting from the RFP, the term(s) or condition(s) will be considered null and void. After award of contract: C'? 'I ~" Page 12 e e a) if conflict arises between a supplemental term or condition included in the proposal and a term or condition of the RFP, the term or condition of the RFP will prevail; and b) if the State's rights would be diminished as a result of application of a supplemental term or condition included in the proposal, the supplemental term or condition will be considered null and void. 2.06 Clarification of Offers In order to determine if a proposal is reasonably susceptible for award, communications by the procurement officer or the proposal evaluation committee are permitted with an offeror to clarify uncertainties or eliminate confusion concerning the contents of a proposal. Clarifications may not result in a material or substantive change to the proposal. The evaluation by the procurement officer or the proposal evaluation committee may be adjusted as a result of a clarification under this section. 2.07 Discussions with Offerors The State may conduct discussions with offerors in accordance with AS 36.30.240 and 2 AAC 12.290. The purpose of these discussions will be to ensure full understanding of the requirements of the RFP and proposal. Discussions will be limited to specific sections of the RFP or proposal identified by the procurement officer. Discussions will only be held with offerors who have submitted a proposal deemed reasonably susceptible for award by the procurement officer. Discussions, if held, will be after initial evaluation of proposals by the PEC. If modifications are made as a result of these discussions they will be put in writing. Following discussions, the procurement officer may set a time for best and final proposal submissions from those offerors with whom discussions were held. Proposals may be reevaluated after receipt of best and final proposal submissions. If an offeror does not submit a best and final proposal or a notice of withdrawal, the offeror's immediate previous proposal is considered the offeror's best and final proposal. Offerors with a disability needing accommodation should contact the procurement officer prior to the date set for discussions so that reasonable accommodation can be made. Any oral modification of a proposal must be reduced to writing by the offeror. 2.08 Prior Experience Qualified offerors must have proof of compliance with the Well Control Training requirements of 20 AAC 25.527 (d), and must have five years prior experience in oil and gas field well operations including plugging and abandonment. Documentation that these requirements have been met must be included in the Experience and Qualifications portion of their proposal ( See Section 5.05). An offeror's failure to meet these minimum prior experience requirements will cause their proposal to be considered non-responsive and their proposal will be rejected. ~ C 200/~ Page 13 e e 2.09 Evaluation of Proposals The procurement officer, or an evaluation committee made up of at least three State employees or public officials, will evaluate proposals. The evaluation will be based solely on the evaluation factors set out in Section SEVEN of this RFP. After receipt of proposals, if there is a need for any substantial clarification or material change in the RFP, an amendment will be issued. The amendment will incorporate the clarification or change, and a new date and time established for new or amended proposals. Evaluations may be adjusted as a result of receiving new or amended proposals. 2.10 VendorTaxlD A valid Vendor Tax ID must be submitted to the issuing office with the proposal or within five days of the State's request. 2.11 Alaska Business License and Other Required Licenses At the time the proposals are opened, all offerors must hold a valid Alaska business license and any necessary applicable professional licenses required by Alaska Statute. Offerors should contact the Department of Community and Economic Development, Division of Occupational Licensing, P. O. Box 110806, Juneau, Alaska 99811-0806, for information on these licenses. Offerors must submit evidence of a valid Alaska business license with the proposal. An offeror's failure to submit this evidence with the proposal will cause their proposal to be determined non-responsive. Acceptable evidence that the offeror possesses a valid Alaska business license may consist of anyone of the following: (a) copy of an Alaska business license with the correct SIC code; (b) certification on the proposal that the offeror has a valid Alaska business license and has included the license number in the proposal; (c) a canceled check for the Alaska business license fee; (d) a copy of the Alaska business license application with a receipt stamp from the State's occupational licensing office; (e) a sworn and notarized affidavit that the offeror has applied and paid for the Alaska business license; or (f) A current Alaska Contractors License Page 14 ~. tD ZDO;1~ e e 2.12 Application of Preferences Certain preferences apply to all contracts for professional services, regardless of their dollar value. The Alaskan Bidder and Offeror preferences are the two most common preferences involved in the RFP process. Additional preferences that may apply to this procurement are listed below. Guides that contain excerpts from the relevant statutes and codes, explain when the preferences apply and provide examples of how to calculate the preferences are available at the Department of Administration, Division of General Services' web site: http://www.state.ak.us/local/akpaqes/ADMIN/dqs/policv.htm Alaska Products Preference - AS 36.30.332 Recycled Products Preference - AS 36.30.337 Local Agriculture and Fisheries Products Preference - AS 36.15.050 Employment Program Preference - AS 36.30.170(c) Alaskans with Disability Preference - AS 36.30.170 (e) Employers of People with Disabilities Preference - AS 36.30.170 (f) The Division of Vocational Rehabilitation in the Department of Labor and Workforce Development keeps a list of qualified employment programs; a list of individuals who qualify as persons with a disability; and a list of persons who qualify as employers with 50 percent or more of their employees being disabled. A person must be on this list at the time the bid is opened in order to qualify for a preference under this section. As evidence of an individual's or a business' right to a certain preference, the Division of Vocational Rehabilitation will issue a certification letter. To take advantage of the Employment Program Preference, Alaskans with Disability Preference or Employers of People with Disabilities Preference described above, an individual or business must be on the appropriate Division of Vocational Rehabilitation list at the time the proposal is opened, and must provide the procurement officer a copy of their certification letter. Offerors must attach a copy of their certification letter to the proposal. The offeror's failure to provide the certification letter mentioned above with the proposal will cause the State to disallow the preference. 2.13 5 Percent Alaskan Bidder Preference 2 AAC 12.260 & AS 36.30.170 An Alaskan Bidder Preference of five percent will be applied prior to evaluation. The preference will be given to an offeror who: (a) holds a current Alaska business license; (b) submits a proposal for goods or services under the name on the Alaska business license; (c) has maintained a place of business within the State staffed by the offeror, or an employee of the offeror, for a period of six months immediately preceding the date of the proposal; (d) is incorporated or qualified to do business under the laws of the state, is a sole proprietorship and the Page 15 ~ C 20C,t e e proprietor is a resident of the state, is a limited liability company organized under AS 10.50 and all members are residents of the state, or is a partnership under AS 32.05 or AS 32,11 and all partners are residents of the state; and (e) if a joint venture, is composed entirely of entities that qualify under (a)-(d) of this subsection. Alaskan Bidder Preference Affidavit In order to receive the Alaskan Bidder Preference, proposals must include an affidavit certifying that the offeror is eligible to receive the Alaskan Bidder Preference. 2.14 Formula Used to Convert Cost to Points AS 36.30.250 & 2 AAC 12.260 The distribution of points based on cost will be determined as set out in 2 AAC 12,260 (d). The lowest cost proposal will receive the maximum number of points allocated to cost. The point allocations for cost on the other proposals will be determined through the method set out below. In the generic example below, cost is weighted as 70% of the overall total score. The weighting of cost may be different in your particular RFP, See section SEVEN to determine the value, or weight of cost for this RFP, Formula Used to Convert Cost to Points [STEP 1] List all proposal prices, adjusted where appropriate by the application of all applicable preferences. Offeror #1 Offeror #2 Non-Alaskan Proposer Alaskan Proposer Alaskan Proposer $40,000 $42,750 $47,500 Offeror #3 [STEP 2] Convert cost to points using this formula. [(Price of Lowest Cost Proposal) x (Maximum Points for Cost)] = POINTS (Cost of Each Higher Priced Proposal) The RFP allotted 70% (70 points) of the total of 100 points for cost. Offeror #1 receives 70 points. The reason they receive that amount is because the lowest cost proposal, in this case $40,000, receives the maximum number of points allocated to cost, 70 points. Offeror #2 receives 65.5 points. $40,000 x LOWEST COST 70 MAX POINTS = 2,800,000 $42,750 = 65.5 OFFEROR #2 POINTS ADJUSTED BY Page 16 t;;-, 'ì n fil "J .} !",·~JV""' e e THE APPLICATION OF ALL APPLICABLE PREFERENCES Offeror #3 receives 58.6 points. $40,000 x LOWEST COST 70 MAX POINTS = 2,800,000 $47,500 = 58,9 OFFEROR #3 POINTS ADJUSTED BY THE APPLICATION OF ALL APPLICABLE PREFERENCES 2.15 Alaskan Offeror's Preference AS 36.30.250 & 2 AAC 12.260 2 AAC 12.260(e) provides Alaskan offerors a 10 percent overall evaluation point preference. Alaskan Bidders, as defined in AS 36,30.170(b), are eligible for the preference. This preference will be added to the overall evaluation score of each Alaskan offeror. Each Alaskan offeror will receive 10 percent of the total available points added to their evaluation score as a preference. Alaskan Offeror's Preference [STEP 1] Determine the number of points available to Alaskan offerors under the preference. Total number of points available - 100 Points 100 Total Points Available x 10% Alaskan Offerors Percentage Preference = 10 Number of Points Given to Alaskan Offerors Under the Preference [STEP 2] Add the preference points to the Alaskan offers, There are three offerors; Offeror #1, Offeror #2, and Offeror #3. Offeror #2 and Offeror #3 are eligible for the Alaskan Offeror's Preference. For the purpose of this example presume that all of the proposals have been completely evaluated based on the evaluation criteria in the RFP. Their scores at this point are: Offeror #1 - 89 points Offeror #2 - 80 points Offeror #3 - 88 points Offeror #2 and Offeror #3 each receive 10 additional points, The final scores for all of the offers are: Offeror #1 - 89 points Offeror #2 - 90 points Page 17 ...-\ f¡:¡ e e Offeror #3 - 98 points Offeror #3 is awarded the contract. 2.16 Contract Negotiation 2 MC 12.315 CONTRACT NEGOTIATIONS. After final evaluation, the procurement officer may negotiate with the offeror of the highest-ranked proposal. Negotiations, if held, shall be within the scope of the request for proposals and limited to those items which would not have an effect on the ranking of proposals. If the highest- ranked offeror fails to provide necessary information for negotiations in a timely manner, or fails to negotiate in good faith, the State may terminate negotiations and negotiate with the offeror of the next highest-ranked proposal. If contract negotiations are commenced, they may be held in the Alaska Oil and Gas Conservation Commission conference room in Suite 100, 333 W th Ave., Anchorage Alaska, If the contract negotiations take place in Anchorage, Alaska, the offeror will be responsible for their travel and per diem expenses. 2.17 Failure to Negotiate If the selected offeror · fails to provide the information required to begin negotiations in a timely manner; or · fails to negotiate in good faith; or · indicates they cannot perform the contract within the budgeted funds available for the project; or · if the offeror and the State, after a good faith effort, simply cannot come to terms, the State may terminate negotiations with the offeror initially selected and commence negotiations with the next highest ranked offeror. 2.18 Notice of Intent to Award (NIA) - Offeror Notification of Selection After the completion of contract negotiation the procurement officer will issue a written Notice of Intent to Award (NIA) and send copies to all offerors. The NIA will set out the names of all offerors and identify the proposal selected for award. 2.19 Protest AS 36.30.560; provides that an interested party may protest the content of the RFP. An interested party is defined in 2 MC 12.990(a)(7) as "an actual or prospective bidder or offeror whose economic interest might be affected substantially and directly by the issuance of a contract solicitation, the award of a contract, or the failure to award a contract." If an interested party wishes to protest the content of a solicitation, the protest must be received, in writing, by the procurement officer at least ten days prior to the deadline for receipt of proposals. Page 18 <i,j n 'ìnOl t.,) ¡,i} ~ L ~.,;r e e AS 36.30.560 also provides that an interested party may protest the award of a contract or the proposed award of a contract. If an offeror wishes to protest the award of a contract or the proposed award of a contract, the protest must be received, in writing, by the procurement officer within ten days after the date the Notice of Intent to Award the contract is issued. A protester must have submitted a proposal in order to have sufficient standing to protest the proposed award of a contract. Protests must include the following information; (a) the name, address, and telephone number of the protester; (b) the signature of the protester or the protester's representative; (c) identification of the contracting agency and the solicitation or contract at issue; (d) a detailed statement of the legal and factual grounds of the protest including copies of relevant documents; and (e) the form of relief requested. Protests filed by telex or telegram are not acceptable because they do not contain a signature. Fax copies containing a signature are acceptable. The procurement officer will issue a written response to the protest. The response will set out the procurement officer's decision and contain the basis of the decision within the statutory time limit in AS 36.30.580. A copy of the decision will be furnished to the protester by certified mail, fax or another method that provides evidence of receipt. All offerors will be notified of any protests. The review of protests, decisions of the procurement officer, appeals, and hearings, will be conducted in accordance with the State Procurement Code (AS 36.30), Article 8" Legal and Contractual Remedies." Page 19 f\ r¡ 0 f\~, ';;/ t..._c; ....." J e e SECTION THREE STANDARD CONTRACT INFORMATION 3.01 Contract Type This contract is a firm fixed price contract. 3.02 Contract Approval This RFP does not, by itself, obligate the State. The State's obligation will commence when the contract is approved by the Commissioner of the Department of Administration, or the Commissioner's designee. Upon written notice to the contractor, the State may set a different starting date for the contract. The State will not be responsible for any work done by the contractor, even work done in good faith, if it occurs prior to the contract start date set by the State. 3.03 Standard Contract Provisions The contractor will be required to sign and submit the attached State's Standard Agreement Form for Professional Services Contracts (form 02-093/Appendix A). The contractor must comply with the contract provisions set out in this attachment. No alteration of these provisions will be permitted without prior written approval from the Department of Law. Objections to any of the provisions in Appendix A must be set out in the offeror's proposal. 3.04 Proposal as a Part of the Contract Part or all of this RFP and the successful proposal may be incorporated into the contract. 3.05 Additional Terms and Conditions The State reserves the right to add terms and conditions during contract negotiations. These terms and conditions will be within the scope of the RFP and will not affect the proposal evaluations. 3.06 Insurance Requirements The successful offeror must provide proof of workers' compensation insurance prior to contract approval. The successful offeror must secure the insurance coverage required by the State. The coverage must be satisfactory to the Department of Administration Division of Risk Management. An offeror's failure to provide evidence of such insurance coverage is a material breach and grounds for withdrawal of the award or termination of the contract. Offerors must review form APPENDIX B, attached, for details on required coverage. ~ 0 2001. Page 20 e e 3.07 Bid Bond - Performance Bond - Surety Deposit Bid Bond Offerors must obtain a bid bond and submit it with the proposal. The amount of the bid bond for this contract is Five Thousand Dollars. If an offeror is selected to receive the contract and fails to negotiate, or fails to deliver a fully executed contract after negotiation, the bid bond will be immediately forfeited to the State. The time limit for negotiation or delivery of a contract is fourteen days from the date the offeror receives notice from the procurement officer. Proposals submitted without a bid bond will be rejected. PERFORMANCE AND PAYMENT BONDS. A performance bond is to be in the amount of 75% of the total contract value. The surety on each bond may be any corporation or partnership authorized to do business in the State as an insurer under AS 21.09 or two responsible individual sureties approved by the Contracting Officer. If individual sureties are used, 2 individual sureties must each provide the AOGCC with security equal to the specified amount of each bond. The net worth and the total value of the security assets, located in Alaska, of each individual surety may not be less than the penal amount of the bond. In addition, each individual surety must execute an affidavit of individual surety on a form provided by the AOGCC upon request. Each individual surety affidavit contains a Certificate of Sufficiency which must be signed by an official of an institution having full knowledge of assets and responsibilities of the surety, Any costs incurred by you or the individual surety are subsidiary. Security may be one, or a combination, of: 1, Escrow Account, with a Federally-insured financial institution, in the name of the AOGCC. Acceptable securities include, but are not limited to, cash, treasury notes, bearer instruments having a specific value, or money market certificates. 2. First Deed of Trust, with the AOGCC named as beneficiary, against the unencumbered value of real property or an agreement by a second party, including deeds of trust, mortgage, lien or judgment interests to subrogate their interests to the AOGCC in the real property offered by the individual surety. A title insurance policy, with the AOGCC as a named beneficiary, and a current (within 3 months) professional appraisal or assessed valuation is required to ascertain the true value of the property offered as collateral. If buildings or other valued improvements are involved then fire and casualty insurance with the AOGCC as a named insured and in limits and coverages acceptable to the Contracting Officer are required. The appraiser must acknowledge in writing that the appraisal is prepared for the benefit of the AOGCC and the AOGCC has the right to rely on its contents. This deed of trust must be recorded in the recording office where the property is located, Keep all bonds and security assets, as applicable, in effect for 12 months after the date of final payment and until all obligations and liens under this Contract are satisfied. The Contracting Officer may, at his option, notify the bonding company or surety of any potential default or liability. Substitute, within 5 working days, another bond and surety, both acceptable to the AOGCC, if the surety 1. becomes insolvent or is declared bankrupt, 2, loses its right to do business in any state affecting the work, 3. ceases to meet Contract requirements, 4. fails to furnish reports of financial condition upon request, or 5. otherwise becomes unacceptable to the AOGCC. When approved by the Contracting Officer, you may replace 1. an individual surety with a corporate surety, or 2. posted collateral with substitute collateral. Page 21 e e 3.08 Contract Funding Payment for the contract is sUbject to funds already appropriated and identified. 3.09 Proposed Payment Procedures The State will make payments based on a negotiated payment schedule. Each billing must consist of an invoice and progress report. No payment will be made until the progress report and invoice have been approved by the project director. 3.10 Contract Payment No payment will be made until the contract is approved by the Commissioner of the Department of Administration or the Commissioner's designee. Under no conditions will the State be liable for the payment of any interest charges associated with the cost of the contract. The State is not responsible for and will not pay local, state, or federal taxes, All costs associated with the contract must be stated in U.S. currency. 3.11 Informal Debriefing When the contract is completed, an informal debriefing may be performed at the discretion of the project director. If performed, the scope of the debriefing will be limited to the work performed by the contractor. 3.12 Inspection & Modification - Reimbursement for Unacceptable Deliverables The contractor is responsible for the completion of all work set out in the contract. All work is subject to inspection, evaluation, and approval by the project director. The State may employ all reasonable means to ensure that the work is progressing and being performed in compliance with the contract. Should the project director determine that corrections or modifications are necessary in order to accomplish its intent, the project director may direct the contractor to make such changes. The contractor will not unreasonably withhold such changes. Substantial failure of the contractor to perform the contract may cause the State to terminate the contract. In this event, the State may require the contractor to reimburse monies paid (based on the identified portion of unacceptable work received) and may seek associated damages. Page 22 ~') t'J Zr¡nï .. UL>~' e e 3.13 Termination for Default If the project director determines that the contractor has refused to perform the work or has failed to perform the work with such diligence as to ensure its timely and accurate completion, the State may, by providing written notice to the contractor, terminate the contractor's right to proceed with part or all of the remaining work. This clause does not restrict the State's termination rights under the contract provisions of Appendix A, attached. 3.14 Contract Changes - Unanticipated Amendments During the course of this contract, the contractor may be required to perform additional work. That work will be within the general scope of the initial contract. When additional work is required, the project director will provide the contractor a written description of the additional work and request the contractor to submit a firm time schedule for accomplishing the additional work and a firm price for the additional work. Cost and pricing data must be provided to justify the cost of such amendments per AS 36.30.400. The contractor will not commence additional work until the project director has secured any required State approvals necessary for the amendment and issued a written contract amendment, approved by the Commissioner of the Department of Administration or the Commissioner's designee. 3.15 Contract Invalidation If any provision of this contract is found to be invalid, such invalidation will not be construed to invalidate the entire contract. Page 23 j ZOO,ì e e SECTION FOUR SCOPE OF WORK 4.01 Scope of Work General Statement of Objective Five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska, require proper abandonment in compliance with AOGCC regulations as specified below. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of in accordance with applicable law. Drill sites are to be returned to original grade. Access to work areas Access to all site locations in the sunnner is generally adequate for use of two-wheel drive vehicles. The access road is unmaintained and winter access may be limited. The attached map (see Appendix C) is provided for convenience in identifying access but its accuracy is not warranted. Bruce Webb, a Natural Resource Specialist with the Department of Natural Resources, is familiar with the GRI well locations and can provide additional access information. Mr. Webb's phone number is (907) 269-8778. ACRONYMS Interpret acronyms used in the Contract, as follows: BOPE - Blowout prevention equipment. BPV - Back pressure valve. CBL - Cement Bond Log DRO - Diesel Range Organics LD - Lay down. md - measured depth MIRU - Move in / rig up, ND - Nipple down, NU - Nipple up, POH - Pull out of hole. ppg - Ibs. per gallon PU - Pick up. RD - Rig down. RDMO - Rig down/ move off. RIH - Run in hole. RU - Rig up. TD - Total depth. Statement of Work Houston No. 22 Description The Houston 22 well location has no gravel pad and access to the location may be limited. According to the operator, Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 515 feet. The well was not perforated or completed. An obstruction was reported at 220 feet when an attempt was made to run wireline logs. Page 24 >'1 n ?mH. ,)'j :-.,~,", e e No information was presented as to what may be the obstruction. There is no wellhead on the well, only a steel plate welded over the top of the 8-5/8 inch casing. The AOGCC has not independently verified information reported by the operator. Tasks H22,1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H22.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up, Notify Ron Swansen «907) 745-9868), Director of Community Development, Matanuska- Susitna Borough of start of operations. H22,3) MIRU workover rig, Fill water tanks. H22.4) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. Ifunsafe to proceed, AOGCC must review and approve alternate abandonment procedure, H22.5) Remove (cut oft) existing well cover plate. H22.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to TD if possible (reportedly at 515 feet). An obstruction is reported at approx. 220 feet. H22.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H22.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from total depth to surface or, if an obstruction is encountered at approx. 220 feet, from the obstruction to surface. H22,9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H22.10) Cut off 10 inch conductor and 8-5/8 inch casing at least 4 feet below grade level. H22,11) Weld on a marker plate per attached specifications (see Appendix One, Section Four). H22.12) RDMO workover rig. H22, 13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Notify Ron Swans en «907) 745-9868), Director of Community Development, Matanuska-Susitna Borough for [mal location inspection. Houston No.4 Description The Houston 4 well location has no gravel pad and access to the location may be limited. According to the operator Houston No.4 was completed with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the metamorphic lithology encountered, The well at the surface appears to be the 8 inch conductor sticking up. The AOGCC has not independently verified information reported by the operator. Page 25 '~~ () e e H4.1) H4,2) H4.3) H4.4) H4.5) H4.6) H4.7) H4.8) H4.9) H4.10) H4.1l) H4.12) Tasks Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. Obtain any required pennits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. MIRU workover rig. Fill water tanks. Ensure well is dead. Have AOGCC inspector confIrm well is dead, and that proposed operations can safely proceed. Ifunsafe to proceed, AOGCC must review and approve alternate abandonment procedure. PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing until fill is encountered (reported TD is approx, 478 feet). Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to surface. POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. Cut off 8 inch conductor at least 4 feet below grade level. Weld on a well marker plate per attached specifications (see Appendix One, Section Four). RDMO workover rig. Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No. 3 Description This gravel pad is located at the end of the access road that runs in front of pad #2, The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. The pad is approximately 60 feet by 80 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well has a wellhead and discharge line. See photos #8. #9 and #10. A couple of steel 55 gallon drums are present, the contents of which are unknown. The well is located within a wood-framed enclosure. An electrical control panel is mounted on a temporary wooden support adjacent to the well house. See photo #11. Photo #10 also shows a section of culvert, presumed to be used for cellar construction. The culvert is approximately 48 inches in diameter and 6 feet long. To the south of the well house, there is a mound of diesel-contaminated gravel covered with a blue tarp. The contamination came from a leak in the generator fuel line over a reported period of two weeks. It is estimated the gravel quantity is between two and three cubic feet. The gravel has been insitu for approximately six years and is expected to have low concentrations ofDRO. See photo #12. According to the operator Houston No.3 is completed with 7 inch surface casing set and cemented from 505 feet to surface. A 4-~ inch production casing string was run, set and cemented to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with cement bond discernable from 2002 feet to 1000 feet, and from 760 feet to surface. The interval from 760 feet - 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet md and a progressive cavity Page 26 (~r?nrl (io' '\.; I....-\;;;'.:..,,'J e e pump was hung off the packer in a tubingless completion. A centralized reverse threaded sucker rod was run ÍÌ"om surface to the pump as a drive shaft. The intent was to dewater the coals in the perforated zones and pump them for disposal into a sandstone penetrated by the wellbore below the shoe. The packer set at 1900 feet was intended to be the sealing element to prevent water ÍÌ"om loading up the perforated gas producing interval. Well is shut in, the wellhead may be under pressure. The AOGCC has not independently verified information reported by the operator. Tasks H3.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H3.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up, H3.3) Remove surface control equipment including wellhouse and any related equipment in the area. H3.4) MIRV workover rig. Fill water tanks. H3.5) Ensure well is dead, Have AOGCC inspector confIrm well is dead, and that proposed operations can safely proceed. Ifunsafe to proceed, AOGCC must review and approve alternate abandonment procedure, H3.6) Remove tree. Install a back pressure valve (BPV). NU and test BOPE. Remove BPV, H3.7) POH and LD reverse threaded sucker rods. H3,8) PV 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to reported packer depth @ approx. 1900 feet. H3.9) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H3,10) RV cementing equipment. Spot a balanced 15.8 ppg cement plug ÍÌ"om approx. 1900 feet to approx. 1200 feet. POH to approx. 700 feet. H3.11) Spot a balanced 15.8 ppg cement plug ÍÌ"om approx, 700 feet to surface. H3.12) POH and LD workstring. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. ND BOPE. H3.13) Cut off 7 inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. H3.14) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H3.15) RDMO workover rig. H3.16) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance Houston No.2 Description Page 27 Q !>' 0PPj, [,..",....... ~ e e This gravel pad is located around the east end of the airstrip, and to the south, off an extension of the main access. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. See photo #4. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well is capped with a blind-flange and the immediate area is sunken. A flanged casing is present on the site, as well as several (6+) lengths ofapprox. 2 inch tubing (approx. 30 feet long) and a submersible pump, See photos #5 and #6 . Photo #6 also shows a black approx. 2 inch plastic pipe. This pipe runs the entire length between sites #2 and #3, and between site #2 and the reserve pit, See also photo #7. According to the operator, Houston No.2 is completed with 7 inch casing set at 462 feet and cemented back to surface, 4-Yz inch casing set and cemented back to surface from 1662 feet, and the shoe drilled out for a fmal TD of 21 05 feet. This well is currently completed with a flange at surface. The AOGCC has not independently verified information reported by the operator, Tasks H2.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H2.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H2.3) MIRU workover rig, Fill water tanks. H2.4) Ensure well is dead. Have AOGCC inspector confIrm well is dead, and that proposed operations can safely proceed. Ifunsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H2.5) Remove casing flange. H2.6) PU 2-3/8inch tubing workstring. RIH carefully with open ended tubing to TD (reported @ approx. 2105 feet). 4- 1/2 inch casing was reportedly set @ 1662 feet. H2.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H2.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to approx, 1500 feet. POH to approx. 500 feet. H2.9) Spot a balanced 15.8 ppg cement plug from approx. 500 feet to surface. H2.10) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H2.11) Cut off 7inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. H2.12) Weld on a well marker plate per attached specifications (see Appendix One, Section Four), H2,13) RDMO workover rig, H2.14) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. ~~ D 7nQ-1· Page 28 e e Houston No.1 Description This gravel pad is located at the end, and to the north of the main access road which borders the front of the Mikkelsen and Baird residences, and is immediately north of and parallel to the Airstrip. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small trees. The well is capped with a blind- flange, Several wooden timbers, wood pallets, a primitive choke/diverter manifold, and a flanged casing are present on the site, See vhoto #1. To the west of the main well pad is a depression approximately 10 feet by 10 feet that was used as a temporary reserve pit. The depression is approximately three feet deep. This temporary pit is to be filled and returned to original grade, See vhoto #2. At the entrance to the Houston #1 well pad, are two pallets of drilling additives, which are believed to be clay and gel (but this has not been verified), See vhoto #3. According to the operator, Houston No.1 is completed with a 10 inch conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 Y:z inch casing cemented from TD to surface. A cement plug is present from 240 feet to 840 feet. The well has no open perforations. The AOGCC has not independently verified information reported by the operator. Tasks Hl.l) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. Hl.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGGC inspector for rig up. Hl.3) MIRU workover rig. Fill water tanks. HIA) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. Ifunsafe to proceed, AOGCC must review and approve alternate abandonment procedure. Hl.5) Remove casing flange, Hl,6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to plug depth (reported @ approx. 240 feet). Hl.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H1.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from top of existing plug (approx. 240 feet) to surface. Hl,9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H1.l0) Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level. H1.l1) Weld on a well marker plate per attached specifications (see Appendix One, Section Four), Hl.12) RDMO workover rig. Page 29 ?, :] 200~· e e H1.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Miscellaneous Debris Description Between the airstrip and the reserve pit, at the end of the main access road, there are several (approximately 10) lengths of what appear to be 6 inch well casing. In the adjacent vicinity are miscellaneous wooden debris, valves and flanges. The area is overgrown with grass. See vhoto #15. Between well pads #2 and #3, there are several rusted steel pipes laying in a relatively undisturbed area ofland, to the south of the road. This debris appears to be sucker rods or small diameter tubing. The length and quantity are not estimated. See vhoto #16. Task MD.l) Miscellaneous debris described above must be removed for disposal or salvage. Reserve Pit Closure Description A reserve pit is located at the end of an airstrip, near Houston No, 1. The pit is approximately 75 feet X 100 feet X 6 feet. Inspection revealed the pit to be lined and in good condition. Water in the pit appears to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. A gravel berm surrounds the pit and is approximately two feet high. The pit extends approximately four feet below the surrounding ground surface, for a total interior depth of approximately six feet. See vhotos #13 and #14, Since the date of photos #13 and #14, the reserve pit has been pumped out (September 2002) by the surface estate owner for child-safety concerns, The fluid within the pit was discharged directly onto the surface. Aportion of the reserve pit liner was also removed. A clay-like material was present at the bottom of the drained pit. Any fluid presently in the pit is likely ÍÌom rain water and snowmelt. Tasks RPC.l) The water in the pit must be tested to establish what disposal options are possible. Hopefully most of it can be used for cementing and injectivity tests in Houston No.3. RPC.2) Water in the pit must be properly disposed of if not used for cementing and in injectivity tests in Houston No.3. RPC.3) The pit liner must be removed and disposed of. The reserve pit is to have all toxic substances and hazardous materials removed. RPCA) The pit berms are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation. RPC.5) Any loose debris present must be removed and the site left in a clean condition, Page 30 "'J .'j ! !;.;' APPENDIX ONE to SECTION FOUR WELL MARKER PLATE REQUIREMENTS A marker plate must be at least 1/4 inch thick steel; at least 18 inches square or in diameter; and welded to and must cover the outermost casing string. The following information must be bead -welded directly to the marker: the name of the operator that drilled the well; the name of the contractor that abandoned the well; the Permit to Drill number for the well; the name designated for the well by the operator under 20 AAC 25.005(f); the API number for the well, with any suffix appended to the number under 20 AAC 25.005(f). Page 31 e e SECTION FIVE PROPOSAL FORMAT AND CONTENT 5.01 Proposal Format and Content The State discourages overly lengthy and costly proposals, however, in order for the State to evaluate proposals fairly and completely, offerors must follow the format set out in this RFP and provide all information requested. 5.02 Introduction Proposals must include the complete name and address of offeror's firm and the name, mailing address, and telephone number of the person the State should contact regarding the proposal. Proposals must confirm that the offeror will comply with all provisions in this RFP; and, if applicable, provide notice that the firm qualifies as an Alaskan bidder. Proposals must be signed by a company officer empowered to bind the company. An offeror's failure to include these items in the proposals may cause the proposal to be determined to be non-responsive and the proposal may be rejected. 5.03 Methodology and Timeline Used for the Project Offerors must provide comprehensive narrative statements, timelines and drawings if necessary, that set out the methodology they intend to employ and illustrate how the methodology will serve to accomplish the work and meet the State's project schedule. 5.04 Management Plan for the Project Offerors must provide comprehensive narrative statements that set out the management plan they intend to follow and illustrate how the plan will serve to accomplish the work and meet the State's project schedule. 5.05 Experience and Qualifications Offeror's must provide a narrative describing other successfully completed projects of similar scope and complexity, Offerors must provide an organizational chart specific to the personnel assigned to accomplish the work called for in this RFP, including any sub-contractors; illustrate the lines of authority; designate the individual responsible and accountable for the completion of each component of the RFP. Offeror's must document how they meet the prior experience requirement as described in section 2.08. Offerors must provide reference names, addresses and phone numbers for similar projects the offeror's firm has completed. Page 32 ~ D 2n e e 5.06 Cost Proposal Cost Proposal should be included with the proposal but sealed in a separate envelope. Cost proposals must include an itemized list of all direct and indirect costs associated with the performance of the contract, including, but not limited to, total number of hours at various hourly rates, direct expenses, payroll, supplies, overhead assigned to each person working on the project, percentage of each person's time devoted to the project, and profit. 5.07 Evaluation Criteria All proposals will be reviewed to determine if they are responsive, They will then be evaluated using the criteria set out in the following Section SIX, An evaluation may not be based on discrimination due to the race, religion, color, national origin, sex, age, marital status, pregnancy, parenthood, disability, or political affiliation of the offeror. A proposal shall be evaluated to determine whether the offeror responds to the provisions, including goals and financial incentives, established in the request for proposals in order to eliminate and prevent discrimination in State contracting because of race, religion, color, national origin, sex, age, marital status, pregnancy, parenthood, or disability. Page 33 ~~\', ?n! (,:1 ¡i" """,) e e SECTION SIX EVALUATION CRITERIA AND CONTRACTOR SELECTION THE TOTAL NUMBER OF POINTS USED TO SCORE THIS CONTRACT IS 100 6.01 Methodology Used for the Project (5 Percent) Proposals will be evaluated against the questions set out below: [a] Does the methodology depict a logical approach to fulfilling the requirements of the RFP? [b] Does the methodology match and achieve the objectives set out in the RFP? [c] Does the methodology interface with the time schedule in the RFP? 6.02 Management Plan for the Project (5 Percent) Proposals will be evaluated against the questions set out below: [a] How well does the management plan support all of the project requirements and logically lead to the deliverables required in the RFP? [b] How well is accountability completely and clearly defined? [c] Is the organization of the project team clear? [d] How well does the management plan illustrate the lines of authority and communication? [e] To what extent does the offeror already, equipment, and licenses necessary to perform the contract? [f] Does it appear that the offeror can meet the schedule set out in the RFP? [g] Is the proposal practical, feasible, and within budget? [h] How well have any potential problems been identified? [i] Is the proposal submitted responsive to all material requirements in the RFP? Page 34 <:) 7nfì' ~JU;' e e 6.03 Experience and Qualifications (20 Percent) Proposals will be evaluated against the questions set out below: [d] How well has the firm demonstrated experience in completing similar projects on time and within budget? [e] How successful is the general history of the firm regarding timely and successful completion of projects? [f] Has the firm provided letters of reference from previous clients? [g] If a subcontractor will perform work on the contract, how well do they measure up to the evaluation used for the offeror? 6.04 Contract Cost (60 Percent) Converting Cost to Points The lowest cost proposal will receive the maximum number of points allocated to cost. The point allocations for cost on the other proposals will be determined through the method set out in Section 2.14. 6.05 Alaskan Offeror's Preference (10 Percent) If an offeror qualifies for the Alaskan Bidder Preference, the offeror will receive an Alaskan Offeror's Preference. The preference will be 10 percent of the total available points. This amount will be added to the overall evaluation score of each Alaskan offeror. Page 35 SECTION SEVEN ATTACHMENTS 7.01 Attachments Attachments 1. Proposal Evaluation Form 2. Standard Agreement Form 3. Appendix A 4. Appendix B1 5. Notice of Intent to Award 6. Appendix C Map and Site Pictures Page 36 „ m e e PROPOSAL EVALUATION FORM All proposals will be reviewed for responsiveness and then evaluated using the criteria set out herein. Person or Firm Name Name of Proposal Evaluation (PEG) Member Date of Review RFP Number EVALUATION CRITERIA AND SCORING THE TOTAL NUMBER OF POINTS USED TO SCORE THIS CONTRACT IS 100 7.01 Methodology Used for the Project-5 Percent Maximum Point Value for this Section - 5 Points 100 Points x 5 Percent = 5 Points Proposals will be evaluated against the questions set out below. [a] Does the methodology depict a logical approach to fulfilling the requirements of the RFP? EVALUATOR'S NOTES [b] Does the methodology match and achieve the objectives set out in the proposal? EVALUATOR'S NOTES [c] Does the methodology interface with the time schedule in the proposal? EVALUATOR'S NOTES EVALUATOR'S POINT TOTAL FOR 7.01 Page 37 (') r! ?nflj ",:1 ;:'~ t ~ tJ ,,-,'. á e e 7.02 Management Plan for he Project-5 Percent Maximum Point Value for this Section - 5 Points 100 Points x 5 Percent = 5 Points Proposals will be evaluated against the questions set out below. [a] How well does the management plan support all of the project requirements and logically lead to the deliverables required in the RFP? EVALUATOR'S NOTES [b] How well is accountability completely and clearly defined? EVALUATOR'S NOTES [c] Is the organization of the project team clear? EVALUATOR'S NOTES [d] How well does the management plan illustrate the lines of authority and communication? EVALUATOR'S NOTES [e] To what extent does the offeror already have, equipment, and licenses necessary to perform the contract? EVALUATOR'S NOTES [f] Does it appear that offeror can meet the schedule set out in the RFP? EVALUATOR'S NOTES Page 38 ~:} D 20C;1, e . [g] Is the proposal practical, feasible, and within budget? EVALUATOR'S NOTES [h] Have any potential problems been identified? EVALUATOR'S NOTES [i] Is the proposal submitted responsive to all material requirements in the RFP? EVALUATOR'S NOTES EVALUATOR'S POINT TOTAL FOR 7.02 7.03 Experience and Qualifications-20 Percent Maximum Point Value for this Section - 20 Points 100 Points x 20 Percent = 20 Points Proposals will be evaluated against the questions set out below. Questions regarding the personnel. [a] Do the individuals assigned to the project have experience on similar projects? EVALUATOR'S NOTES [b] Are resumes complete and do they demonstrate backgrounds that would be desirable for individuals engaged in the work the RFP requires? EVALUATOR'S NOTES [c] How extensive is the applicable education and experience of the personnel designated to work on the project? EVALUATOR'S NOTES Page 39 (')c ç, :", ')f\ \ d. {"\ ',\} !,. t_J \,i .', Questions regarding the firm. [d] Has the firm demonstrated experience in completing similar projects on time and within budget? EVALUATOR'S NOTES [e] How successful is the general history of the firm regarding timely and successful completion of projects? EVALUATOR'S NOTES [f] Has the firm provided letters of reference from previous clients? EVALUATOR'S NOTES [g] If a subcontractor will perform work on the project, how well do they measure up to the evaluation used for the offeror? EVALUATOR'S NOTES EVALUATOR'S POINT TOTAL FOR 7.03 Page 40 e e 7.04 Contract Cost - 60 - Percent Maximum Point Value for this Section - 60 Points 100 Points x 60 Percent = 60 Points Overall, a minimum of 60 percent of the total evaluation points will be assigned to cost. The cost amount used for evaluation may be affected by one or more of the preferences referenced under Section 2.13. Converting Cost to Points The lowest cost proposal will receive the maximum number of points allocated to cost. The point allocations for cost on the other proposals will be determined through the method set out in Section 2.14. EVALUATOR'S POINT TOTAL FOR 7.05 7.05 Alaska Preference - 10 Percent Alaskan Bidders receive a 10 Percent overall evaluation point preference. Point Value for Alaskan Bidders in this Section -- 10 Points 100 Points x 10 Percent = 10 Points If an offeror qualifies for the Alaskan Bidder Preference, the offeror will receive an Alaskan Offeror's Preference. The preference will be 10 percent of the total available points. This amount will be added to the overall evaluation score of each Alaskan offeror. EVALUATOR'S POINT TOTAL FOR 7.05 (either 0 or 10) EVALUATOR'S COMBINED POINT TOTAL FOR ALL SECTIONS Page 41 ~) ?nfì ~, ~,.,'v'V ) e e STATE OF ALASKA RFP NUMBER AOGCC - 0501 AMENDMENT NUMBER ONE (1) AMENDMENT ISSUING OFFICE: Department of Administration Oil and Gas Conservation Commission 333W. ih Avenue Suite 100 Anchorage, AK 99501-3539 THIS IS NOT AN ORDER DATE AMENDMENT ISSUED: May 27, 2004 ITB OPENING DATE AND TIME: June 9, 2004 @ 3:00pm Alaska Daylight Time This amendment serves to address questions posed during the pre-proposal conference held May 25, 2004. This amendment is for informational purposes only and need not be returned to the State. . The Following text is added to Section Four: · The detailed tasks outlined in Section Four are meant to achieve the minimum acceptable outcomes from this RFP. The State does not mean to limit contractors in their approach or methodology to achieving the goals of this RFP, as set forth in the General Statement of Objective in Section Four. If an offeror intends to employ a methodology which deviates from the tasks outlined in the Statement of Work in Section Four, the proposal must describe how the methodology will achieve the required results, including compliance with 20 AAC 25.112 (well plugging requirements), 20 AAC 25.120 (well abandonment marker), and 20 AAC 25.170 (onshore location clearance); must be within budget constraints as described in Section 1.04; and must not entail unacceptable impact to the property owners. Note: the depth specifications set out in Tasks H22.9, H22.10, H4.9, H4.10, H3.12, H3.13, H2.10, H2.l1, H1.9, and Hl.lO are mandatory. · The diesel-contaminated material described on page 26 of the RFP is the only contamination the state is aware of. If the contactor discovers contaminated material not described in the RFP, the removal of this material will be addressed in a change order. · Task RPC.l is amended to include the following statements Two potential options exist for onsite disposal of the reserve pit water: surface disposal or disposal by underground injection in the Houston No.3 Disposal Well. Surface disposal of the reserve pit water is subject to the approval of the Alaska Department of Environmental Conservation (ADEC), Division of Water, Waste Water Discharge Program, if the water meets criteria described ~.~ 2GD'1· Page 2 e e Amendment Number One in ADEC regulation 18 AAC 70.020 (b) using test methods described in 18 AAC 70.020 (c). Guidance on testing and disposal options can be obtained from Sharmon Stambaugh (ADEC) at (907) 269-7565. Three conditions must be met prior to disposing of water from the reserve pit by underground injection in the Houston No.3 well: 1) Water in the reserve pit must be tested to establish ifit is hazardous waste; tests must conform to those specified in "EPA SW-846, Test Methods For Evaluating Solid Waste." If the water tests to be hazardous waste it is not eligible to disposed of in the Houston No.3 Class II Disposal Well. 2) The mechanical integrity of the Houston No.3 Disposal well must be established through pressure testing prior to disposal operations. 3) The contractor must obtain approval from the AOGCC for disposal injection into the Houston No. 3 Well. If the contractor is unable to obtain authorization for on-site disposal by one of these options, off-site disposal of reserve pit water will be accommodated by a change order. · Task RPCA states, "The pit berms are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation." The grading criteria should have been stated as and are corrected to read, "Berm material will be used to fill the reserve pit, and the filled pit and berm area must be graded to the elevation of the surrounding ground." . Task Hl.1 0 states, "Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level". The task should have been stated as and is corrected to read "Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 4 feet below grade level." . The well location plat referred to in the "Access to work areas" section appears to have two wells labeled Houston 6 in the eastern portion of section 21. The eastern-most wells shown on the plat are actually labeled five and six; however, neither of these wells was drilled. The plat enclosed in the RFP was included as a generalized location map. Specific information on site access including site visits can be obtained by contacting Bruce Webb at the Department of Natural Resources (269-8778) or Bob Crandall at the AOGCC (793-1230). The descriptions of the well locations reported to the commission by the operator follow (the accuracy of these locations is not warranted). Well Houston 1 was drilled 1436 feet from the east line and 1545 feet from the south line of Section 21 Township 18 North Range 3 West SM. Well Houston 2 was drilled 2111 feet from the east line and 1216 feet from the south line of Section 21 Township 18 North Range 3 West SM. Well Houston 3 was drilled 1402 feet from the east line and 1269 feet from the south line of Section 21 Township 18 North Range 3 West SM. Well Houston 4 was drilled 75 feet from the east line and 2380 feet from the south line of Section 10 Township 18 North and Range 2 West SM. Well Houston 22 was drilled 3460 feet from the south line and 730 feet from the west line of Section 9, Township 18 North Range 3 West SM. · Tasks H22.13, H4.12, H3.16, H2.14, H1.13, and MD,I provide for the removal of abandoned materials, supplies, structures, installations, and debris. A question was raised at the pre-proposal conference whether the contractor may retain possession of such items if they are believed to have economic utility or value. The answer is yes. After removing abandoned materials, supplies, structures, installations, and debris, the contractor may retain possession of or dispose of removed items at the contractor's option. ~~ C) 'I f! n~, f¿' ,~' t.. \)~, ,~ Page 2 e e Amendment Number One · Section 5.06 is amended to read: Cost Proposal should be included with the proposal but sealed in a separate envelope. Cost proposals must include an itemized list of all direct and indirect costs associated with the performance of the contract, including, but not limited to, total number of hours at various hourly rates, direct expenses, payroll, supplies, overhead assigned to each person working on the project, percentage of each person's time devoted to the project, and profit. Offerors must include in their cost proposal, a per cubic yard unit cost for removal of contaminated material not identified in Section Four but that may be necessary to the completion of the contract. If the removal of additional contaminated material becomes necessary, the work will be performed at this rate, but only with prior approval from the project manager, through a written change order This is not a mandatory return Amendment. Robert Crandall Procurement Officer PHONE: (907) 793-1230 FAX: (907) 276-7542 ~ t;~_'! e . Amendment Number One, issued May 27, 2004, answered a question, among others, concerning whether the contractor may retain possession of abandoned materials, supplies, structures, installations, and debris that the contractor will be required to remove from the affected property pursuant to tasks H22.13, H4.12, H3.16, H2.14, H1.13, or MD.!. This Amendment Number Two is to clarify that the State's pennission for the contractor to retain possession of or dispose of such items at the contractor's option extends only to any interest the State itself has in such items. The State makes no representation or guarantee as to the title to such items or as to whether any other persons may claim any interest in any such items. "'nnr¡ ¿LU, *33 ~ (fwd: RE: GRI Abandonment Contract] e Grift '-~,crYlLt J.¡1)"1 - 3 7 IV~ t, Bob, the final contract must be signature ready by 9:00 AM Wednesday morning. Please have two originals ready for approval and signature at that time. Be sure Rob has approved the final version prior to Wednesday AM. At the public meeting you will need to give a brief presentation on the terms of the contract before we vote. Thanks, John cc: GRI contract file -------- Original Message -------- Subject:RE: GRI Abandonment Contract Date:Fri, 25 Jun 2004 16:38:57 -0800 From:Bill Penrose <bill(â¿fairweather.com> To:Rob Mintz <robert mintz(â¿law.state.ak.us> CC:Bill McLaughlin <billmclaughlin(â¿fairweather.com>, bob crandall(â¿admin.state.ak.us, john norman(â¿admin.state.ak.us, larry mcbride(â¿dot.state.ak.us Mr. Mintz, We're still concerned about a point or two, but not enough to hold up the process. We're as determined as you to have this ready for signing by Wednesday. If you would please draft up the parts of the contract that reflect the concessions made by Fairweather and the AOGCC over the past several days, we'll give it a final reading and stand by to sign it after the Commission vote. Meanwhile, we're pursuing the required performance bond which should be ready at about the time of the signing. Regards, Bill Penrose -----Original Message----- From: Rob Mintz (mailto:Robert Mintz@law.state.ak.us] Sent: Friday, June 25, 2004 11:32 AM To: bob crandall@admin.state.ak.us; iohn norman@admin.state.ak.us; larry mcbride@dot.state.ak.us; Bill Penrose Cc: Bill McLaughlin Subject: RE: GRI Abandonment Contract With regard to item 2, my understanding is that this is a very standard provision in state contracts, Your comment seems to involve a concern with the possibility of claims being made where Fairweather is not at fault. In such cases, Fairweather would of course be able to assert any applicable defenses. All the indemnification provision says is that, whatever the nature of the claim - and frankly it is hard to imagine a meritorious claim being made against the state or the borough in this matter -- if it arises out of Fairweather's work under the contract, the state will rely on Fairweather to defend, indemnify, and save it and the Borough harmless. That is lof3 ... .-- ·U't.\ ') Ü {)lìGL SGANI-i!::.L J l~ >-, oJ ....' - ., 6/28/2004 I :31 PM [Fwd: RB: GRI Abandonment Contract] e e fair, because it is Fairweather that will be doing the work and getting paid by the state. We can't make any further changes in this provision. With regard to item 3, we would need to consult with the state's risk management person, who is not available today. If this is a matter of reviewing the specific terms ofa specific insurance policy, I guess you should provide us with a copy. With regard to item 4, we agree that the state and the Mat-Su Borough do not need to be and will not be insureds under your workers' compo coverage. The reason to delete this reference from Article 2.2 is that Article 2.2 deals only with "Commercial General Liability Insurance," so any reference to worker's compo is simply out of place. Workers' compo is dealt with in Artcle 2.1, which does not have any language requiring the state or Mat-Su to be named as insureds. It just causes confusion to refer to worker's compo in Article 2.2. Thanks for your prompt comments and responses. Just a reminder: the Commission is scheduled to meet Wednesday morning, June 30, to vote on approving the contract, so that is the "drop dead date" for having all issues resolved. »> Bill Penrose <billra?fairweather.com> 6/25/2004 9:54:28 AM »> Gentlemen, Below please find our attorney's response to me when I forwarded your contract comments to him. Fairweather agrees that, per Point #1 below, potential change order work is sufficiently addressed in related correspondence (including the Proposal, which is part ofthe contract) and does not need to be additionally referenced in the contract. However, we would be interested in receiving your response to the remaining three points. For your information, the "FEPSI" referred to here is the acronym for Fairweather E&P Services, Inc. Please let me know if it would be of help for your contracting person(s) to speak directly with our attorney on these matters. Regards, Bill Penrose I, I don't understand AOGCC's reluctance to include the change order language in Section 4,1 of the standard agreement form. However, FEPSI should be able to omit this language if you make it clear through correspondence leading to the formation of the contract that FEPSI is entitled to add the cost of any change orders for work that FEPSI is not committed to perform under the contract to its $197,000 contract price if and when AOGCC requires FEPSI to perform such work. 2. The effect of the changes requested by the State to Article I of Appendix B will be to require FEPSI to indemnify the State, Borough and their related persons against bodily injuries, wrongful death and property damage arising out of FE PSI's work in all instances (regardless of whether FEPSI is at fault) except where the fault of the State, Borough or their related persons is the sole cause of such i~uries, death or damage. FEPSI should not agree to this unless it is able to obtain contractual liability insurance coverage for this contractual liability. 3. FEPSI should confirm that naming in the State, Borough and their {;,O'/t' h!l.n 'E'~'\'" ~~oJi.B'ii!'!"" :2 .~ 20D~ 20f3 6/28/2004 I :31 PM · [.fw~: RR: GRI Abandonment Contract] e e related persons as additional insureds under FEPSl's GCI insurance policy will satisfy the State's requirement that FEPSl's GCI coverage provide the State, the Borough and their related persons with protection against vicarious liability in Section 2,2 of Appendix B. Otherwise FEPSI should not agree to this requirement. 4. FEPSI should not agree to delete the exception for its workers compensation insurance coverage from the State's requirement that the State and the Borough be named as additional insureds, because such workers compensation coverage only applies to employers, and the State and the Borough will never be employers of FE PSI's employees under the subject contract. cc: contract file John K. Norman <John Norman@¿admin.state.us> Commissioner Alaska Oil & Gas Cæservation Commission 30f3 2. ~. 20D4 6/28/2004 I :31 PM .:tt:3d-. I I I I I I I I I I I I I I I I I I I Proposal for: Abandonment in Compliance With AOGCC Regulations of Five Coalbed Methane Wells In the General Vicinity of Houston, Alaska Prepared for: State of Alaska Department of Administration Oil & Gas Conservation Commission RFP AOGCC - 0501 June 9, 2004 I I I I I I I I I I I I I I I I I I I e e TABLE OF CONTENTS Page 1.0 INTRODUCTION.............................................................................................................. 1 2.0 METHODOLOGY AND TIME LINE ............................................................................. 3 2.1 Project Organization ............ ........ .......... ...... ....... ........... ........ ....... .............................. 3 2.2 Proj ect Schedule.... ................ ...... ............... ............ .... ........ ..................... ....... ... .......... 3 2.3 Project Execution Plan... ...... .... .......... ...... ...... .... ... ......... ..... ....................... ................. 3 2.3.1 Contract Negotiation and Execution................................................................. 5 2.3.2 Permitting, Engineering and Planning .............................................................. 5 2.3.3 Mobilization...................................................................................................... 5 2.3.4 P &A Houston No.4... ..... ...... .............. ............. ........ ........ ............. .................... 6 2.3.5 P &A Houston No. 22.. ........... ................ ......... ..... ...... ..... ....................... .... ....... 7 2.3.6 P&A Houston No. 1..........................................................................................8 2.3.7 P &A Houston No.2.... ....... ...... ............ ..... ........... ............................ ................. 9 2.3.8 P&A Houston No. 3 ........................................................................................ 10 2.3.9 Houston No.1 Reserve Pit Closure ................................................................11 2.3.10 Debris and Waste Disposal............ ..................... .......................................... 12 2.3.11 Demobilization......... .............. ............. ............ ....... ...... ........ ......................... 13 2.3.12 Final Reporting. ..... ....... .... ... ............ .... ... ............ ..... ....................... .............. 13 3.0 MANAGEMENT PLAN ................................ ....... ................... ...... .................. ............... 14 4.0 EXPERIENCE AND QUALIFICATIONS ...................................................................15 4.1 Profiles of Key Personnel..... .......... ........... ....... ................. ............................. .......... 15 4.2 Fairweather E&P Services, Inc. Company Profile.................................................... 17 4.3 Representative Project Experience ...........................................................................18 4.4 5- Y ear Prior Experience and Well Control Training ................................................ 23 5.0 COST PROPOSAL ........ .......... .............. ........... ....... .............. ............... ...........................24 6.0 MISCELLANEOUS REQUIRED INFORMATION 6.1 Subcontractors........................................................................................................... 25 6.2 Conflict of Interest ................. ........... ............ .... .............. .,. .......................................25 6.3 Vendor Tax ill ... .... .................... ... '" .............. ............. ........ ........ ..............................25 6.4 Alaska Business License ... ..... ......... .......... ...... ..... .... ....... ........... ........................ .......25 6.2 Alaskan Bidder Preference Affidavit............ ..... ................. ............... ......... ........ ...... 25 6.3 Insurance Requirements............................................................................................ 25 6.4 Bid Bond - Performance Bond - Surety Deposit ..................................................... 25 1t1) I I I I I I I I I I I I I I I I I I I e e 1. INTRODUCTION In response to the State of Alaska's Request for Proposal dated May 12, 2004, Fairweather E&P Services, Inc. (Fairweather) hereby submits a detailed proposal to permanently plug and abandon (P&A) five coalbed methane wells and close a reserve pit in the vicinity of Houston, Alaska in complete compliance with RFP AOGCC - 0501. Fairweather is an Alaskan bidder headquartered in Anchorage, AK with a valid Alaska Business License (No. 220925). Fairweather's contact person and address for this proposal is the following: Mr. Bill Penrose Vice PresidentlDrilling Manager Fairweather E&P Services, Inc. 2000 East 88th Avenue, Suite 200 Anchorage, Alaska 99507 907-258-3446 Tel 907-279-5740 Fax email: bill@fairweather.com The well P&A program and reserve pit closure described herein covers the permanent P&A work and site clearance program for the Growth Resources International, Inc. (GRI) Houston well No.'s 1, 2, 3, 4, and 22. These wells were drilled in anticipation of developing a coalbed methane gas field in an area of the Matanuska-Susitna Borough, north of Houston, Alaska. The wells were permitted and drilled during the years from 1997 - 2000. GRI, an Australian company, failed to complete the field as planned when the cost of development and other project conditions resulted in an uneconomic venture. The leases were dropped and the wells became the responsibility of their bonding company, ACE USA and ultimately the AOGCC. Fairweather is intimately familiar with well P&A operations and the regulations governing this work in Alaska and has assembled a highly qualified team of professionals to manage and execute the project. Fairweather staff have managed and executed P&A operations on over 65 wells in remote areas of Alaska and elsewhere with comprehensive services including planning, cost estimating, permitting, field operations, drill site clean-up, follow-up inspections and final reporting. For this project we have selected Messrs. Bill Penrose as the Project Manager, Jeff Osborne as Assistant Project Manager, James Nunley as Logistics and HSE Specialist and John Youngstrom as Lead Cementer. All of these individuals are experienced in well P&A operations and collectively bring over 50 years of well operations experience to the project. Reserve pit closures are also part of Fairweather's service suite where we have closed numerous reserve pits in Alaska and served as construction manager for over 180 reserve pit closures internationally. 1 ~'f: ii' (; ~- I I I I I I I I I I I I I I I I I I I e e The following proposal complies with the provisions ofRFP AOGCC - 0501. The undersigned is an officer of the Company and is empowered to bind the Company to this proposal and the provisions of the RFP. IL William J. Penrose Vice PresidentlDrilling Manager 2 'J I I I I I I I I I I I I I I I I I I I ~ e AOGCC PiA PROPOSAl e 2. METHODOLOGY AND TIME LINE This section describes Fairweather's plan for completing the work and provides a proposed schedule for permitting, planning and executing the work. 2.1 Project Organization Fairweather has organized the project by assembling a highly qualified team of personnel and subcontractors to manage and execute the well P&A program and reserve pit closure. The Fairweather Project Manager will direct the project work and is experienced in well P&A operations. When possible, local Matanuska Valley contractors will be utilized to support the well work. All field work will be under the immediate supervision of a Fairweather field supervisor who is experienced in well operations and P&A procedures. Daily field reports will be transmitted to the AOGCC to document field progress on the proj ect. 2.2 Project Schedule Fairweather intends to begin well plugging and abandonment operations as soon as is practicable after contract award. Fairweather's cost proposal assumes the work will follow the project schedule set forth in RFP AOGCC - 0501 where permitting and planning ofthe operations will be able to commence in late June and field work can be done in early August. A preliminary proposed project schedule is presented in Figure 2-1. The proposed schedule calls for P&A of the Houston No.4 and the Houston No. 22 wells first, followed by work at Houston No.'s 1,2 and 3. This approach will get the relatively simple P&A's at No.4 and 22 completed first with subsequent consolidation of the P&A and reserve pit operations at the airstrip location of wells 1, 2 and 3. These three wells are located in a sparsely populated area, with access through private property. Fairweather intends to P&A these wells in sequence with well No.3 the last to be P&A'd. This approach will minimize cost and time requirements to perform the work. Closure of the reserve pit will be done simultaneously with the well work at No.'s 1,2 and 3. This operation is estimated to require one (1) to three (3) days to complete pending the final disposition of the water in the reserve pit. Fairweather's methodology for reserve pit closure is discussed in more detail below. 2.3 Project Execution Plan The following project execution plan has been designed to be an efficient and cost effective plan for conducting the work. This plan will result in the lowest overall price to the State of Alaska and will ensure that the project schedule in RFP AOGCC - 0501 is complied with. 3 'è' - - - - - - - - - - - - - - - - - - - - ~ - - - - - - - - - - - - - Figure 2-1 Proposed Project Schedule AOGCC P & A Proposal - - - - - - - July 2004 - I - ne 2004 August 2004 ID Task Name Duration Start 6/14 ~ 7/12 7/19 I 7/26 8/2 I 8/9 I 8/18 8/23 - - - - 1 Contract Award 1 day Fri 6/25/04 ~ 2 Obtain Project Permits 36 days Sat 6/26/04 - - i 3 Mobilize Equipment and Personnel 1 day Mon 8/2/04 ~ 4 P & A Houston # 4 1 day Tue 8/3/04 5 P & A Houston # 22 1 day Wed 8/4/04 - 6 P & A Houston # 1 1 day Thu 8/5/04 7 Close Houston # 1 Reserve Pit and Regrade Site 2 days Fri 8/6/04 8 P & A Houston # 2 1 day Fri 8/6/04 9 P & A Houston # 3 1 day Sat 817104 10 Demobilize Equipment and Personnel 1 day Sun 8/8/04 : 11 Prepare Final Reports 10 days Tue 8/10/04 - - - e ? ~ ~ , , , - - - Task Summary .... .... RoI1ed Up Progress Project Summary .... .... Project:AOGCC #137-100 Progress Rolled Up Task ¡:~:~:::~:~:::~:>~:~:~:I Split Group By Summary .... .... Date: Tue 6/8/04 Milestone . Rolled Up Milestone <> External Tasks - Page I I I I I I I I I I I I I I I I I I I ~ AOGCC PiA PROPOSAl e e 2.3.1 Contract Negotiation and Execution Upon notice from the AOGCC that Fairweather has been selected to negotiate a contract for the work, Fairweather will be immediately available to commence contract negotiations and finalization for signature. It is Fairweather's intent to commence contract negotiations no later than June 15 with contract signature by June 25, 2004. Fairweather has included the $5000.00 bid bond with this proposal and will finalize the performance bond during the contract negotiation period and prior to contract signature. 2.3.2 Permitting, Engineering and Planning Upon contract signature, Fairweather will commence permitting and planning operations for the project. Anticipated permit documents and approvals include the following: · Application for Sundry Approvals for each well; · ADEC Surface Discharge Permit for pump off of reserve pit water; · ADEC reserve pit closure approval; · ADNR Lease Operations Permit; and · Local landowner coordination and access approval. We anticipate receiving all permit approvals for the project on or about August 1, 2004, assuming contract signing on or about June 25, 2004. Engineering for the P&A project will include final specification of equipment, cement slurry design and other design modifications that may be made based on new and additional information. 2.3.3 Mobilization After receipt of all necessary project permits, Fairweather will commence mobilization for the project. Initial mobilization will be to the Houston No.4 location. Anticipated personnel and equipment for this mobilization includes the following: Personnel: Working Supervisor (1) Logistics Specialist (I) Cementer (1) Equipment Operator (1) Roustabouts (2) Truck Driver (1) ? C' 5 I I I I I I I I I I I I I I I I I I I ~ AOGCC PiA PROPOSAl e e Equipment: Boom Truck Batch Cementing Unit Rig Truck Pickup Trucks (2) Case 580 Backhoe Loader Spill Kit Slop Tank Vac Truck Water Truck Cement (sack) Pipe, Valves, Fittings 2.3.4 P&A Houston No.4 Houston No. 4 was suspended with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the unfavorable lithology encountered. The well at the surface consists of just the 8 inch conductor sticking up with a plastic bucket covering it. Fairweather has inspected this site, measured the depth to water and fill and verified adequate access for operations. A Fairweather representative has also met with local residents about the upcoming P&A work. Fairweather proposes that the P&A procedure listed in RFP AOGCC - 0501 for P&A of the Houston No.4 well be modified as presented below. This modified procedure will meet AOGCC regulations and result in reduced cost to the project. H4.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. H4.2 Mobilize necessary equipment and personnel to location. H4.3 RU boom truck, remove plastic bucket from top of casing and RIH with tubing to TD/fill level. The TD/fill level has been measured at 105 feet BGL with water at 15 feet BGL. H4.4 RU batch cementing unit. Mix and pump 30± sack, 15± ppg, Type I cement plug from 105 feet to surface. Collect returns in vac truck for later disposal in Houston No. 3 well. Hang off tubing and cement same in place or recover for future use depending on cementing conditions. H4.5 Clean up cementing equipment and recover cement rinse water for future reuse or treatment and disposal. WOC. 6 C\ Î~· ,)(':0'~ (> ,) c....Ul:','J~ I I I I I I I I I I I I I I I I I I I ~ e AOGCC PiA PROPOSAl e H4.6 Excavate around casing to six (6) feet, cut off casing a minimum of four (4) feet below grade level and weld on well ill marker plate. Backfill well excavation and grade for positive drainage. Perform complete site clearance immediately after P&A operations if AOGCC inspector is available. H4.7 Pick up any debris and demobilize equipment to the Houston No. 22 location. 2.3.5 P&A Houston No. 22 Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 513 feet. The well was not perforated or completed. An obstruction was discovered at approximately 220 feet when an attempt was made to run wireline logs. No information is presented as to what may be in the hole. There is no wellhead on the well, only a steel plate partially welded over the top of the 8-5/8" casmg. Fairweather's inspection of the well on June 2, 2004 indicated that the 10 x 8-5/8 inch annulus is dry at the surface with some debris in the annulus at depths below visible range due to the 8-5/8 inch casing being wedged off center from the 10 inch conductor. Water is present in the 8-5/8 inch casing near the surface and the steel plate cap is not sealed. Fairweather proposes that the P&A procedure listed in RFP AOGCC - 0501 for P&A of the Houston No. 22 well be modified as presented below. This modified procedure will meet AOGCC regulations and result in reduced cost to the project. H22.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. H22.2 Mobilize necessary equipment and personnel to location. H22.3 RU boom truck, confirm well is dead and remove steel cap from top of casing. Rill with tubing to TD or until tubing meets an obstruction. H22.4 RU batch cementing unit. Mix and pump 15± ppg, Type I cement plug from final tubing depth to surface. Collect returns in vac truck for later disposal in Houston No.3 well. Hang off tubing and cement same in place or recover for future use depending on cementing conditions. H22.5 Fill 1 0 x 8-5/8 inch annulus with cement to surface. H22.6 Clean up cementing equipment and recover cement rinse water for future reuse or treatment and disposal. WOC. 7 (1;\' .!J () I I I I I I I I I I I I I I I I I I I e e H22.7 Excavate around casing to six (6) feet, cut off casing a minimum of four (4) feet below grade level and weld on well ill marker plate. Backfill well excavation and grade for positive drainage. Perform complete site clearance immediately after P&A operations if AOGCC inspector is available. H22.8 Pick up any debris and demobilize equipment to the Houston No. 1 location. 2.3.6 P&A Houston No.1 Houston No. 1 is completed with a 10 inch Conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 ~ inch casing cemented from TD to surface. Information indicates a cement plug was placed in the well from 240 to 840 feet. There is no record of the well ever being perforated, or having the shoe drilled out for production or testing purposes. Fairweather's inspection of the Houston No.1 well on June 2, 2004 confirmed the information presented in RFP AOGCC - 0501. Fairweather representatives also met with local residents to discuss access and other project related issues. Fairweather proposes that the P&A procedure listed in RFP AOGCC - 0501 for P&A of the Houston No. 1 well be modified as presented below. This modified procedure will meet AOGCC regulations and result in reduced cost to the proj ect. H1.l Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. Hl.2 Mobilize any additional equipment and personnel needed to location such as a JD 450 dozer. H1.3 Open valves at surface to verify well is dead, install gauges as needed for monitoring. Bleed off any pressure. HlA Remove blind flange from top of well. Hl.5 RU boom truck and Rill with tubing and tag TOC at 240 feet. Hl.6 RU batch cementing unit. Mix and pump l5± ppg, Type I cement plug from 240 feet to surface. H1.7 Clean up cementing equipment and recover cement rinse water for future reuse or treatment and disposal. WOC. Hl.8 Excavate around well to six (6) feet, cut off casing strings a minimum of four (4) feet below grade level and weld on well ill marker plate. Top off 7 x 4- 8 I I I I I I I I I I I I I I I I I I I ~ It looee P&A PROPOSAL e 1/2 inch annulus with cement if necessary prior to installing well marker plate. H1.9 Backfill well excavation and lOx 10 x 3 foot depression immediately west of the well pad and grade location to blend in with surroundings and provide positive drainage. H1.lO Pick up any debris and move necessary equipment to the Houston No. 2 location. 2.3.7 P&A Houston No.2 Houston No.2 is reported to be suspended with 7 inch casing set at 462 feet and cemented back to surface, 4-Y2 inch casing set and cemented back to surface from 1662 feet, and the 4-~ inch shoe drilled out for a final TD of 2105 feet. While not in the records, the well was completed at one time with tubing and a submersible pump according to interviews of persons familiar with the project. The pump was used to de-water the well for gas production but due to excessive water production, attempts at doing so were abandoned and the pump and tubing were removed. Fairweather's inspection of the Houston No.2 well on June 2, 2004 confirmed the information presented in RFP AOGCC - 0501. Fairweather representatives also met with local residents to discuss access and other project related issues. Fairweather proposes that the P&A procedure listed in RFP AOGCC - 0501 for P&A of the Houston No.2 well be modified as presented below. This modified procedure will meet AOGCC regulations and result in reduced cost to the project. H2.l Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. H2.2 Well is currently suspended with a blind flange at surface. Open valves to verify the well is dead. Install gauges as necessary for monitoring. H2.3 RU batch cementing equipment and triplex pump, initiate injection test for bullheading cement using cement rinse water from Houston No.'s 4, 22 and 1. When injectivity is verified (2 casing volumes or 56 barrels of water minimum), mix and bullhead 28 bbls of l5± ppg, Type I cement to fill casing from TD to surface. WOC. H2.4 RD cementing equipment and clean up same. Recover rinse water in storage tank for later use in injection test on Houston No.3. 9 o 200/1 I I I I I I I I I I I I I I I I I I I ~ IOGee P&A PROPOSAL e e H2.5 Excavate around well to six (6) foot depth, cut off casing strings a minimum of 4 feet below grade level and weld on well ill marker plate. Top off annulus with cement if necessary before installing marker plate. Backfill the well excavation and grade location to blend in with surroundings and provide positive drainage. H2.6 Pick up any debris and move necessary equipment to the Houston No.3 location. 2.3.8 P&A Houston No.3 Houston No.3 is reported to be completed with 7 inch surface casing set and cemented from 505 feet to surface. A 4-~ inch production casing string was run, set and cemented back to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with good bonding evident from 2002 feet to 1000 feet, and from 760 feet to surface. The interval from 760 feet to 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet and a progressive cavity pump was hung off in the packer. Records indicate a tubingless completion. Centralized reverse threaded sucker rods were then run from surface to the pump as a drive shaft. The scheme was to dewater the coals in the perforated zones and pump them for disposal into a Tyonek sandstone member penetrated by the openhole wellbore below the shoe. The packer set at 1900' was intended to be the sealing element to prevent water from loading up the gas producing interval represented by the perforations. The well has been shut in for several years and was recorded to have 50 psi on the wellhead in 2002. Fairweather's inspection of the Houston No.3 well on June 2, 2004 confirmed some of the information presented in RFP AOGCC - 0501 although the well house was locked prohibiting entry. Fairweather representatives also met with local residents to discuss access and other project related issues. Fairweather proposes that the P&A procedure listed in RFP AOGCC - 0501 for P&A of the Houston No.3 well be modified as presented below. This modified procedure will meet AOGCC regulations and result in reduced cost to the project. H3.l Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. H3.2 RU boom truck and remove well-house, surface production equipment, electrical equipment and surface mounted KUDU Progressive Cavity Pump drive unit. H3.3 Inspect gauges for functionality and pressure on wellhead. 10 ~:) n ?oe 1 I I I I I I I I I I I I I I I I I I I -"'- e r......... IOGee P&A PROPOSAL e H3.4 Bleed off any surface gas on the well ensuring that no ignition sources are present. The well is anticipated have 50 psi at the wellhead. Well records previously reviewed by Fairweather indicate maximum pressure at between 50 and 100 psi. The well has been shut in for approximately four (4) years and has no doubt received some inflow of water into the wellbore. With the top of perforations at 1338 feet, an 8.33 ppg kill fluid (fresh water) would exert 580 psi at the top perforations, which will likely kill the well. H3.5 RU batch cementing equipment and triplex pump, initiate injection test for bullheading cement using cement rinse water from Houston No. 2 and fresh water. When injectivity is verified (2 casing volumes or 60 barrels minimum), mix and bullhead 29 bbls of l5± ppg, Type I cement to fill casing from TD to surface. WOe. H3.6 RD cementing equipment and clean up same. Recover cement rinse water in storage tank for treatment and disposal or recycle. H3.7 Excavate around well to six (6) foot depth, cut off casing strings a minimum of 4 feet below grade level and weld on well ill marker plate. Top off annulus with cement if necessary before installing marker plate. Backfill well excavation and grade location to blend in with surroundings and provide positive drainage. H3.8 Pick up any debris and demobilize equipment from the location. 2.3.9 Houston No.1 Reserve Pit Closure The Houston No.1 reserve pit is located on Mike Mikkelson's property at the end of the airstrip near the Houston No.1 well. The reserve pit is approximately 75 X 100 X 5 feet in dimension. Fairweather's inspection on June 2, 2004 revealed the pit to be partially lined and about 1/3 full with rainwater and snowmelt. Water in the reserve pit is clear with some sediment and organic debris on the bottom. The water is in contact with the native soils due to partial removal of the pit liner. The water in the reserve pit was also pumped out completely last winter by one of the local residents due to child safety concerns. Fairweather plans to acquire a surface discharge permit from the ADEC for the water in the reserve pit. It is very likely that the water in the reserve pit is free of any contaminantes and should meet discharge criteria. In the unlikely event that the reserve pit water can not be discharged to the surface, Fairweather will inject the water down the casing ofthe Houston No.3 well prior to performing the P&A work at No.3 discussed above. Please note that any injection operations planned in the Houston No. 3 will not involve pressure testing the mechanical integrity of the Houston No. 3 well as this would require a workover rig and BOP's to pull the existing completion and run 11 ~\, ~ ~ r\'~:,1, (,:! r~,\,j - ' I I I I I I I I I I I I I I I I I I I ~ e IOGee P&A PROPOSAL e a test packer to verify mechanical integrity. Fairweather has specifically designed the work program herein to avoid using a workover rig in an effort to minimize cost. Any offsite disposal of the reserve pit water or solids beyond the options discussed herein will be covered under a change order to the contract as described in RFP AOGCC - 0501 Amendment Number One (1). Fairweather's proposed Houston No.3 reserve pit closure procedure is the following: RP.l Immediately after contract signature, sample the water in the reserve pit for inorganic metals (EPA Method 200.8), TAH/TaqH, EPA 610, plus xylenes, TSS, TDS, chlorides and pH per suggested protocol from Sharmon Stambaugh at the ADEC. Sample the sediment for TCLP metals by method 1311. RP.2 Verify the water quality is acceptable for surface disposal and apply for a surface discharge permit from the ADEe. If water does not meet discharge criteria, plan to inject water into the Houston No. 3 well with AOGCC approval. RP.3 After acquisition of the surface discharge permit, pump water over the bank of the reserve pit in accordance with permit requirements. Remove liner material leaving sediment and organic debris in pit. Recycle liner or dispose of same in dumpster for landfill. If sediment is not suitable for direct burial at reserve pit site due to sample analysis results, treat sediment for stabilization and non hazardous status by mixing with cement and onsite gravel to make concrete blocks or other beneficial use. Consult with local residents about such potential beneficial use. Otherwise collect sediment for landfill disposal or offsite treatment through contract change order referenced above. RP.4 Backfill pit with berm material originally used to build pit and recontour area to provide positive drainage. RP.5 Remove all debris and demobilize location. RP.6 Request inspection by AOGCC representative for final site clearance at Houston No.'s 1,2 and 3. 2.3.10 Debris and Waste Disposal The Houston well sites No.1, 2, and 3 have numerous items that need to be removed, including a pallet of bentonite, a pallet of barite, sucker rods, well tubing, casing, wellheads, plastic line pipe and assorted objects. All will be removed for disposal or salvage as applicable. General solid waste (e.g. cement bags, wood, scrap, liner) 12 Q C ?Q~~ I I I I I I I I I I I I I I I I I I I ~ e IOGee P&A PROPOSAL e stored in the dumpster will be removed for disposal at the Borough landfill. Also to be disposed of will be the final cement rinse water generated during equipment clean up after cementing at the Houston No.3 well. This fluid will be treated for surface disposal or sanitary sewer discharge or recycle. The diesel contaminated gravel (approximately 1 to 2 cubic yards) at the Houston No. 3 location that is currently covered by a blue tarp will be taken to Anchorage Sand and Gravel or other State approved thermal treatment facility for disposal. Discovery of any quantities of diesel contaminated gravel beyond the material staged under the blue tarp will be covered under a change order to the contract as specified in RFP AOGCC - 0501. 2.3.11 Demobilization At the conclusion of field operations in the vicinity of the Houston No.'s 1, 2 and 3 wells, all equipment and materials will be demobilized to the appropriate locations. 2.3.12 Final Reporting Final reports including Report of Sundry Well Operations for each well and any reporting necessary for the ADEC will be generated for review by the AOGCC. 13 ~,~ (.'ý r' 2nn,ry ¡ >; (0)_,' ,...." l.~" ':t' I I I I I I I I I I I I I I I I I I I ~ e IOGee P&A PROPOSAL e 3.0 MANAGEMENT PLAN Fairweather's Management Plan for this project will be based on experienced personnel to plan and execute the work. The following management structure for the project has been developed by Fairweather to ensure that the RFP AOGCC - 0501 objectives and schedule are achieved. This project management structure has been effectively implemented by Fairweather on numerous successful proj ects. Project Manager The Project Manager will direct and be responsible for the overall project from contract negotiations through final reporting. He is an officer of Fairweather E&P Services, Inc. and is able to bind the Company and make financial commitments on behalf of the Company for the project. The Project Manager will also be the primary Fairweather contact with the AOGCC. The Project Manager has extensive experience in well abandonment operations and will the ultimate authority on the project for Fairweather. Assistant Project Manager The Project Manager will be supported by the Assistant Project Manager who will report to the Project Manager on the project. The Assistant Project Manager will coordinate the project permitting activities and the detail planning for project execution. He will be the main client representative in the field and direct field activities. The Assistant Project Manager will also generate project status reports and daily field reports for review by the Project Manager and submittal to the AOGCC. Logistics Specialist/HSE Representative The Logistics/HSE Specialist will report to the Assistant Project Manager and will be responsible for coordinating the movement of equipment and materials on the project. He will also manage the purchase of materials on the project and any waste management issues. As the project HSE representative, this position has the independent right to stop the field activities at any time to rectify a potential HSE issue or compliance situation. 14 I I I I I I I I I I I I I I I I I I I ~ e IOGee P&A PROPOSAl e 4.0 EXPERIENCE AND QUALIFICATIONS Fairweather's experience and qualifications for this work are second to none in Alaska. As a Company, we have performed over 65 well abandonments since 1993, all of which have been in remote or offshore operating areas. This section identifies Fairweather's key personnel for the project, major subcontractors, and provides a summary of well P&A experience and representative project examples. Figure 4-1 provides an organizational chart for the project. 4.1 Profiles of Key Personnel Bill Penrose - Proiect Mana2:er Fairweather proposes Mr. Bill Penrose as the Project Manager for this job. Mr. Penrose has 25 years of experience in the petroleum industry involved in the planning and implementation of large-scale drilling projects from the cost estimating stage through engineering design, permitting logistical set-up and field implementation including drilling supervision. He has lead multidisciplinary teams in the capacity of drilling engineer, drilling superintendent and as Project Manager. Mr. Penrose has supervised the P&A operations on numerous wells and is highly qualified to oversee this work. Mr. Penrose will be responsible for the overall completion of the project in accordance with the contract and AOGCC regulations. He will also be on-site during critical operations such as squeeze cementing. Jeff Osborne - Assistant Proiect Mana2:er Mr. Osborne will work in the capacity of Assistant Project Manager under Mr. Penrose's supervision. Mr. Osborne 14 years of oilfield experience and has previous P&A project management and execution experience (squeeze cementing, balanced plugs, perforating, waste management, Class II disposal, etc.) on the North Slope for operators such as ExxonMobil and BP. Mr. Osborne will be responsible for obtaining all permits that are necessary for the work, project planning and coordinating the day to day field operations. Post project reporting will also be completed by Mr. Osborne. James Nunlev - L02:istics/HSE Suecialist Mr. Nunley is a full time Fairweather employee and a resident of the Matanuska Valley. He also has well P&A experience and will be responsible for coordinating all movements of equipment and materials for the project and accommodations for the crew. Mr. Nunley has 15 years experience working in remote areas of Alaska and has extensive experience in HSE planning, training and compliance. Mr. Nunley is an Emergency Trauma Technician and he will also serve as the project HSE Representative for Fairweather. 15 ij ZOGl ------------------- ~ ,~ ,...'_t' Figure 4-1 Proj ect Organization Chart AOGCC P&A Proposal AOGCC Project Representative Bill Penrose Fairweather Project Manager Jeff Osborne, P .E. Assistant Project Manager James Nunley Logistics Specialist/HSE ABC R & K Industrial Fairweather Equipment Rental Analyticia Inc. Cementing Services Equipment Operators Dozer/Backhoe Loader Lab Analysis Pumping Services Roustabouts Vac Truck e e I I I I I I I I I I I I I I I I I I I e e John Y oun2:strom - Lead Cementer Mr. Youngstrom is an employee of R&K Industrial of Kenai, AK, Fairweather's primary subcontractor on the project. Mr. Youngstrom will work as the Lead Cementer and run the cement mixing and pumping operations and operate selected equipment when not performing cementing duties. He is a former BJ Services Company employee and is highly experienced in cementing operations and having operated batch cementing units for over 15 years. 4.2 Fairweather E&P Services, Inc. Company Profile Fairweather E&P Services, Inc. provides engineering management services for exploration and production operations, including permitting and regulatory coordination, drilling engi- neering and supervision, well abandonments (onshore and offshore), facilities decommissioning, reservoir engineering and production operations. Turnkey operations including drilling, well abandonments and facilities decommissioning. Fairweather is headquartered in Anchorage, Alaska with a branch office in Houston, Texas and a wholly owned subsidiary, Fairweather Pacific, LLC, in Ventura, California. Specific to upstream oil and gas operations, Fairweather E&P Services, Inc. has accumulated successful project histories in the following disciplines: Project Planning and Engineering Fairweather has worked with numerous client companies to develop plans for project execution in remote areas, with particular emphasis on remote Arctic and offshore operations. The majority of this work has been in the areas of exploration drilling, well abandonments, and remote location logistics. Permitting and Regulatory Coordination Fairweather E&P offers permitting services for a wide range of exploration and production operations, both onshore and offshore. Our experience is in both State and Federal areas onshore and offshore. Specialized Well Abandonment Services Fairweather E&P provides these services to the oil industry both on a turnkey and T&M basis. This work is directed principally at remotely situated wells, onshore and offshore, which have been left in suspended status. Our approach to this work is particularly results- focused, and offers the industry a cost and operationally effective way to discharge the liability of aging suspended wells. Drilling Engineering and Supervision Fairweather E&P personnel provide these services for numerous clients operating in remote areas both onshore and offshore. In many instances, the scope of this work has involved overall project management, for nonresident operators. Fairweather has a staff of highly qualified drilling supervisors who are MMS certified as operators' representatives. 17 (3 0 20D'1> I I I I I I I I I I I I I I I I I I I ~ IOGee P&A PROPOSAL e e Construction Management Fairweather is actively providing construction management support services to a wide variety of projects including offshore pipeline and platform upgrades, onshore production facilities installation, ice and gravel road construction and many other areas of E&P development. Offshore Site Clearance and Shallow Hazard Surveys Fairweather E&P offers these services directed towards the safe siting of offshore drilling structures throughout the Pacific Rim. These surveys include geotechnical drilling, high resolution seismic surveys, sub-bottom profiling, side-scan sonar imaging and precision depth recording. Our experience includes work under the extreme tidal excursions in Cook Inlet, Alaska as well as open-water and over-the-ice surveys in mid-winter in the Beaufort Sea. Production Operations Fairweather E&P provides contract production operators and engineers for onshore and offshore production operations. These personnel generally work directly for the operator either on location or in the office, allowing our clients to easily meet workload demand with available personnel. 4.3 Representative Project Experience Fairweather recognizes the public and regulatory sensitivity that operations and projects in Alaska carry, particularly those performed in close proximity to residential areas and in sensitive environmental locations. Fairweather's strong record of successfully executing environmentally sound projects in the intensely scrutinized theatres such as the Alaskan Arctic, Cook Inlet, the Beaufort Sea and Southern California coastal areas provides the environmental background that is a key element to successfully managing and executing high profile projects. All P&A operations on this project will be coordinated with local residents to avoid miscommunication and ensure their positive cooperation in the project. The project work summarized below covers a variety of Fairweather projects that are relevant to well abandonment and reserve pit closure in Alaska. These projects also demonstrate the magnitude of projects that Fairweather routinely performs. Fairweather has always actively pursued challenging remote projects, and thus our staff is highly experienced in remote Alaska operations. Table 4-1 lists the P&A projects that Fairweather has completed worldwide and provides client references for these projects. 18 'lon j '- J Vi ------------------- "'-~,., a e - . alrwea er e an ODmen xpenence ns ore an sore . , Year Well Location Operator Client Contact 1991 (2) David River #lA AK Peninsula AMOCO NA 1993/94 Northstar 1,2 & 3 Northstar Island, Beaufort Sea Amerada Hess Corp. Craig Edel 1994 Seal Island, 4 wells Seal Island, Beaufort Sea 500 Dallas St, Houston, TX - (713) 609-5000 BPX Mark Stanley 1994 Kemik # I Brooks Range Foothills 900 E Benson Blvd. Anchorage, AK 907-564-4999 1994 Kavik #1 Brooks Range Foothills ARCO (ConocoPhillips) Mike Winfree 700 G Street, Anch. AK 907-276-1215 1995 NW Milne #1 Beaufort Sea BPX . 900 E Benson Blvd. Anchorage, AK NA 1995 Niakuk 4, 5 & 6 Beaufort Sea, Niakuk Island 907-564-4999 1996 13 land wells Ecuador, Oriente Region Texaco (ChevronTexaco) Juice Marin Houston, TX 1997/1998 23 subsea wells Santa Barbara Channel, CA Chevron, Unocal, Texaco, Shell, Phillips, NA ARCO 1998 Alaska State A-I, D-1, F-1 Flaxman Island, Beaufort Sea Exxon (ExxonMobil) 1999 Alaska State G-2 Flaxman Island, Beaufort Sea 3301 CSt. Anch, AK 907-561-5331 Mike Barker BPX 2001 Sag Delta 8 Beaufort Sea, Resolution Island 900 E Benson Blvd. Anchorage, AK Jason Moncrief 907-564-4999 2002 Alaska State D-2 Flaxman Island, Beaufort Sea ExxonMobil Mike Barker Gwyder Bay So. #1 North Slope, AK 3301 CSt. Anch, AK 907-561-5331 Sag Delta 1 West Sak 25 BPX 2002 West Kuparuk S1. 3-11-11 North Slope, AK 900 E Benson Blvd. Anchorage, AK Jason Moncrief Kuparuk River State 1 907-564-4999 Milne P1. N-OlB BP Amoco 2003 Eugene Island Gulf of Mexico 501 Westlake Park Blvd Tom Straub Houston, TX 281-366-2000 Sag Delta 2A, 5 Beaufort Sea BPX 2004 900 E Benson Blvd. Anchorage, AK Jason Moncrief NW Eileen State 1, 2 North Slope, AK 907 -564-4999 T bl 4 1 F· th W II Ab d tE (1) 0 h dOff: h Notes: (1) Over 65 wells P&A'd since 1993, all remote or offshore operations. (2) Completed by Fairweather staff prior to startup of Fairweather E&P Services, Inc. in 1993. I I I I I I I I I I I I I I I I I I I IOGce P&A PROPOSAL Kemik Well Abandonment, Brooks Range Foothills Fairweather completed the abandonment of the BP Exploration (Alaska) Inc. Kemik Unit #1 well in the Brooks Range Foothills, 65 miles southeast of Prudhoe Bay. The project was completely self-sufficient rolligon supported operation including camp, equipment, air support and well operations. The project was conducted during the winter season to facilitate rolligon access to the location. . Emergency Well Abandonment and Island Decommissioning This project consisted of the emergency abandonment of two wells situated on a manmade gravel island in the Beaufort Sea. The island was severely damaged by large masses of floating sea ice. The work included constructing an ice road to access the island after freeze- up, mobilization of equipment, and the physical abandonment of the wells; all under arctic winter conditions. After top plugs were set, all casing strings were explosively severed below the island base and recovered using a vibratory hammer. Fairweather engineered the job, obtained all permits and was responsible for all field operations. During the following open water season, Fairweather teamed with Alaska Interstate Construction to decommission the island. This work included the removal of seawater intake and discharge lines, and the removal of linked concrete mat slope protection. 20 I I I I I I I I I I I I I I I I I I I IODce P&A PROPOSAL 4& Multiple Well Abandonments followed by Island Decommissioning Subsequent to the emergency winter well abandonment above, four wells located on a separate manmade offshore island in the Beaufort Sea were abandoned the following summer. The work required a marine (barge) mobilization and demobilization of equipment. The down hole procedures were much the same as in the Emergency Well Abandonment above, using explosives and vibratory hammer for final removal of severed casing strings. Fairweather performed the work on a turnkey basis and was responsible for all regulatory matters, engineering and project execution. Once the wells were abandoned Fairweather teamed with Alaska Interstate Construction to decommission the islands as discussed above. 4& David River Well Abandonment. Alaska Peninsula Fairweather staff managed and executed a remedial well abandonment on behalf of Amoco at the David River well location on the Alaska Peninsula. This project required complete mobilization by cargo aircraft out of Anchorage and Cold Bay with remote operation of a self sufficient camp, cementing operations, wildlife avoidance (bears) and extensive interaction with nearby communities for logistical and materials support. 21 I I I I I I I I I I I I I I I I I I looee P&A PROPOSAL · Routine Abandonment of Old Exploratory and Confirmation Wells Routine winter projects for Fairweather often includes P&A work to abandon wells within and on the margins of existing North Slope oilfields in support of various operators' efforts to close out old, unused well sites in accordance with State and Federal regulations. These abandonments run the full range of complexity, from simply cutting off the wellhead to killing and abandoning live wells from the bottom up. To accomplish this, Fairweather has built and maintains specialized well P&A equipment such as a portable wellhead shelter, hot tap machine, boiler unit, generator unit/work shed, etc. These projects are always preceded with research and planning by highly experienced engineers in Fairweather's Anchorage office. These engineers support the field crews on a daily basis, interface with regulatory agencies before, during and after field operations, and work closely with the client operators' project management as the jobs progress. 22 2~ [J all I I I I I I I I I I I I I I I I I I I -~ r IOGee P&A PROPOSAL . e . Reserve Pit Cap and Re-abandonment Fairweather recently completed a reserve pit cap and re-abandonment at the Canning River Unit A-I location in the Brooks Range Foothills for ExxonMobil. The project involved cat train mobilization of a camp, heavy equipment, and personnel for performing the work. The work involved recovery of approximately 600 yards of gravel from the existing pad for use in recapping of the reserve pit. Numerous items of metal debris were also recovered from a surface impoundment. . Flare Pit Excavation and Regrade Fairweather recently provided construction management services for the flare pit excavation and clean backfill project at Pt. Storkersen on the North Slope. This project required precise excavation of overburden and waste material followed by backfill and grading for positive drainage. 4.4 Five (5) Year Prior Experience and Well Control Training Fairweather as a company has 11 years experience in oil and gas field well operations, including plug and abandonment (see Table 4-1). All well work, including P&A work, undertaken by Fairweather is performed by crews supervised by foremen who are trained and certified in well control procedures as required in 20 AAC 25.527. Fairweather's field supervisors' well control certifications are constantly updated as they become due for new and refresher training. The names and certification documentation of the P &A supervisor(s) will be submitted to the AOGCC before the commencement of field operations. 23 ~~ t: ?n I I I I I I I I I I I I I I I I I I I r;' e IOGee P&A PROPOSAL e 5.0 COST PROPOSAL Fairweather proposes to perform the tasks requested and described in RFP AOGCC - 0501 on a firm fixed price basis. Fairweather's Cost Proposal for this work is provided in the sealed envelope at the end of this proposal. We request that the details of our cost proposal be kept confidential. The reasoning for confidentiality is that while we have no problem providing specific payroll, burden and overhead information to the State for the purposes of this bid, this information is not suitable for potential business competitors of Fairweather. If our business competitors are provided with sensitive internal information such as payroll and overhead information, Fairweather could be placed at a competitive disadvantage on future proposal opportunities with the State or private industry. We have provided a secondary Cost Proposal with the same overall information for public display. Fairweather's cost proposal is based on implementation of the modified P&A procedures specified above in Section 2.0, Methodology and Timeline. Furthermore, our proposal is based on timely award of the work and commencement of the contract negotiations on or about June 15, 2004. This time frame is necessary so that there will be sufficient time to permit, plan and execute the work prior to the onset of cold weather in September. Fairweather also reserves the right to modify equipment or personnel resources dedicated to the project such that the overall project objectives, quality of work, safety, regulatory compliance and project schedule are not compromised. This provision is necessary due to the dynamic business environment of the Alaskan oil patch. 24 :.....J C. \ ') n¡ n') ·...4 "''; (;",1" \;',;" I I I I I I I I I I I I I I I I I I I ~ IOGee P&A PROPOSAL e e 6.0 Miscellaneous Required Information 6.1 Subcontractors (RFP Section 1.14) Fairweather intends to use two primary subcontractors on the project. These are R&K Industrial of Kenai, AK who will provide vac truck and cementing services and ABC Equipment Rental of Was in a who will provide a backhoe loader and dozer to the project. Fairweather may also employ local individuals and/or firms near the work sites for limited assistance. 6.2 Conflict of Interest (RFP Section 1.17) Neither Fairweather nor any of its employees are currently employed by the State of Alaska and, as such, there exist no conflicts of interest relative to performing the work anticipated under this RFP. 6.3 Vendor Tax ID (RFP Section 2.10) The Tax ill for Fairweather E&P Services, Inc. is 92-0147333. 6.4 Alaska Business License (RFP Section 2.11) A copy of Fairweather's Alaska business license is included at the end of this proposal. 6.5 Alaskan Bidder Preference Mfidavit (RFP Section 2.13) The undersigned certifies that Fairweather E&P Services, Inc. is eligible to receive the Alaskan Bidder Preference for this proposal as describ in ction 2.13 ofRFP AOGCC- 0501. William J. Penrose Vice PresidentlDrilling Manager 6.6 Insurance Requirements (RFP Section 3.06) Fairweather maintains insurance coverage in the amounts required by RFP AOGCC - 0501 and win provide a Certificate of Insurance to the AOGCC prior to contract signature. 6.7 Bid Bond - Performance Bond - Surety Deposit (RFP Section 3.07) Please find attached a $5000.00 check made out to the AOGCC for the bid bond. If Fairweather is the successful bidder, the performance bond required in Section 3.07 of the RFP will be acquired prior to contract execution. 25 (~ 2DO:J' I I I I I I I I I I I I I I I I I I ~ ~ IOGee P&A PROPOSAL e e Sealed ¿os1 ~posal Envelope 26 'I \1'1 "" F ')r¡1ì'! .J~}¡~ \,:' ~,r L.UC'·~' FAIRWEATHER EXPLORATION & PRODUCTION SERVICES INC. - GENERAL ACCOUNT VENDOR ID i"JAME AMOUNT AMOUNT PAID DISCOUNT WRITE-OFF NET PAYMENT NUMBER CHECK DATE 12714 1804 Alaska Oil & Gas Conserv t'o OUR VOUCHER NUMBER YOUR VOUCHER NUMBER 00016050 1804040607 6/8/2004 $5,000.00 $5,000.00 $0.00 $0,00 $5,000.00 COMMENT "':,.""4~~.""",_,,,.~.,.<,,,=~~.<-ç,,,,,,,,,,.,,,V'.._,,,,,,,,,~,;~,""""'",.c...·;,·k··.''"'''''...·_..._~_1'-''''''''.-.·''''''''=._'''O.'_'''''''''''~.......~~.,,·.'.,_""."".'.,·"'''~~'"<'*',:I''.,'''"._~'''''''c''',·.;.;·.'"..'"..·.·",.·..''',,'3,,-."""" .."....,;""'".-'"-.=;'+'_""':._<f_~.".~~.',...,.,~,t;"'..~~.,,'.,'O'..>W"'""""'_':"''''~__>''''''__''''"''''''-~'-'''_'-''''''",,,,,,~,,,,,,,,,,,-,,~",,,,,-,,,,,,-,,,,,,,,,'~'~- """""".:.'o"_S'"'''_'__''",_''"~,v··"",''''''~.''''''''''·'' "·">";'·_""'»-_·'":""."':"~."",,"·_'Ä''''"''_·r' -~ FAI~WEA,.H.ER .EXPLORATION & PRODUCTION SERVICES INC. GENERAL ACCOUNT P,O. BOX 103296 ANCHORAGE, AK9951 0-3296 PH. (907)258-3446 FIRST NATIONAL BANK A LAS K A 89-6-1252 ..",.,.".....'1 J.~IJ.q ....... DATE AMOUNT 6/8/2004 $5,000.00 .~ :i! JJ c: o o j .. c PAY Five Thöusand Dollars And 00 Cents cJ~ {Ð TO THE OFmERAlåS]œ Oil & Gas Conservation Conunission OF i ~ o .. " ¡g u. >- " " .. '" M' ._._._.....".-----~-~-----_._----.-------------- III 0 ¡. 2 7 . ~ III I:. 2 5 20 0 0 b 0 I: 0.. 2 a 2 ~ 0 III FAIRWEATHER EXPLORATION & PRODUCTION SERVICES INC. - GENERAL ACCOUNT , ~ 'NAME PAYMENT NUMBER CHECK DATE 2714 12714 DATE AMOUNT MOUNT PAID DISCOUNT WRITE-OFF NET 00016050 804040607 /8/2004 $5,000.00 $5,000.00 $0.00 $0.00 $5,000.00 COMMENT .00 COP'! I I I I I I I I I I I I I I I I I I I ~ IOGee P&A PROPOSAL e e !' , $5,000 Bid Bond Check 27 Ç't (;') - - - - - - -- ., --------- - - B e Alaska Departm~~tOJ'~()rn~qnitYa,f1c1¡,¡e;ç?nOmiC Development P.O. Box11 O&P6:~¡ Ji~heau, Älps~9 'Q,9ß1.1-0806 "i;. ,",Ô"\¡;;, ;'I',;,.:"~:I' i!~~ENS E ",,,-... "'c,. .... . '~. NurnQ,e'r*!~20925 b~rt~1',2Q05 at SèrviO.eS ALAS'KA The IiG~ns~~né:irneg GoveriryQ, fhe.'~ Line of 6.¡;.t$i,¡ /,':: '(~__~":ó"",:' ,::,j:" .,,>i-":_.'..: ^I~~:ÎI,ON: SVS FAIR"'~_ i..::::." ">:;.::;:"";'- ,~:_>,;..,::..:¡:t ',""cO;:'-:'::-""';'''' ":';' . ":f-'::\-;:" ..' '0"--';"";>.,' . ..-....,.' L,," .....,.,. _,'_ "..,_.,..._.....".._ .0....'.'".,. ,__ e ....,.'..........-.,....,-,.."...,...,..... lo~?~ß'~,~~tHORAGE. AK ,Þe'state,~i!h()~l,ihaving complied with s~~.,~{of:t~eUrilted States. Depart'!Jent of Community and Economic Development . Commissioner: Edgar Blatchford is not transferable or assignable. .1 It This license must be posted in a conspicuous place at the business location. I This . c::: ~~,:"..,.,. ',' t'_ '~ LAW OFFICES OF WALLACE B. ADAMS A PROF!!:SSIONAL CORPORATION III SAN'rA ROSA AVe:NI.JE, SUITE 405 SANTA ~OSA, CALIFORNIA 9540..-. TELEFHONE(7C7)S~5~0300 FACS M I J..G: (707) B4B~03 99 F1LE: NO. 15223 fu F~c.simile...&..JI.s.....Mail June 3,2003 Robert Crandall Alaska Oil and Gas Conservation Commission 333 W. 7th Ave. Suite 100 Anchorage, Alaska 99501 Re: Principal: ORI, Inc. Obligee: State of Alaska Bond No: K06880877 Claim No.: 340 B 167603-7 Surety: Insurance Company of North America Dear Mr. Crandall: In furtherance of our telephone conversation, enclosed is a copy of the Faitweather E&P Services Inc.'8 Proposal For Well Abandonment as well as their revised quote. We understand that your department received a copy of the Hoefler Consulting Group's Request for Proposals on which the Fairweather- bid was based and that the work set forth in the Request For Proposals was acceptable to the AOGCC. In that regard, the Fairweather bid proposes an alternative cementing procedure for wells No- 2 and 3 (see last paragraph, page 3 of FaiIW'eather bid). We would appreciate the AOGCC reviewing the Fairweather proposal and Revised Quote and advising us if the work and method proposed by Fairweather is acceptable to the AOGCC. Mr. David Johnston of Hoefler Consulting has reco:m.nJ..ended that water samples be obtained from the reserve pit to determine if it is contaminated or not. If it is not contaminated it would not be necessary to transport the water for disposal and would result in a savings of $18,000. It is still INA's intention to negotiate a contact for the completion of the work as well as negotiating a contract with Hoefler to assist and oversee the completion of the work. This is taking longer that expected, but we are attempting to 0 btaîn a finn, fixed price for the work and consulting to the extent possible as well as arrange for perfonnance of the work this summer. 81/Z 'd lelv'ON s~vav 8 3JVllVM jO S3J!jjO MVl ~d89:Zl SOOZ 'S 'unr --- '-" Robert Crandall June 3, 2003 Page 2 We will advise of our progress and await your advice regarding approval of the Fairweather proposal. Very truly yours, 81/8 'd 181v'oN swvav 8 3JVllVM jO S3JljjO MVl ~d89: Zl 8002 '8 'unr -~'.""'/ E & P SERVICES, INC. September 17, 2002 Mr. David Johnston Project Manager Hoefler Consulting Group 701 Sesame Street, Suite 200 Anchorage, AK 99503 RE: Revised Quote, Abandonment ofGRI Houston Coal Bed Methane Wells_ Dear Mr. Johnston: This letter is in response to a phone conversation we had on the 16th of September, 2002. Per your request, we have reviewed our price schedule for the OR! well abandonment work. The $161,000 quote for this project was inclusive of all water transportation for disposal ($18,000), hauling in gravel for backfilling pit (calculated at ~ $6000), as well as equipment charges for excavating and leveling etc. This left a total of $137,000. If it indeed turned out we did not have to assume responsìbility for transporting the pit water for disposal (Vac trucks are ~xpensive) than you would poot be charged for same. And if it turned out we did not have to haul gravel to backfill the pit, or if it turned out there wasn't some residual contamination below the pit liner that needed to be hauled away, again, you would not be charged. As you know, there are certain f!Xed costs which must be covered, not the least of which are cementing equîpment and cement, drilling rig or boom 1mck as needed, personnel, însurance~ fuel, BOPE (required), excavating eqtûpmen~ mob/demob etc. Fairweather prepared this quote based research and a comprehensive knowledge of the miscellaneous materials and equipment requirements that go into performing these procedures in a safe and envíronmentally sound manner. While there were some uncertainties involved in putting together the quote, Fairweather was quite confident in the accuracy of the numbers used and in the fact that these wells would be P&A~ d properly at the suggested cost without getting into the netherworld of change orders and associated paperwork. Fairweather can appreciate your concerns about cost containment, however, the best we can do is drop our package price to $153,000.. Here again~ should water disposal not be an issue, the $18,000 hauling fee would be dismissed:> and nit is not necessary to haul in gravel to backfill the reserve pit, $6000 would be deducted as well, for a :final price of $129,000. These costs, which as you know are variable and depend on rain, contamination, salvageable gravels etc., would be pro-rated to reflect the actual amount of water or gravel hauled. This cost could range ITam nothing to fairly close to our quote. If you wish, we will provide the water removal and gravel hauling services at cost + 22% to cover supervisory and reporting duties. There will still be a. charge though for transport and disposal of the cement rinsate generated during the P&A and equipment wash down 715 L Street · Anchorage. Alaska 99501 · (907) 258~3446 · FAX (907) 258~5557 650 North Sam Houston Parkway East, Suite 505" Houston1 Texas 77060· (281) 445"5711 · FAX (281) 445-3388 SIlt 'd ISlt'ON SWVOV 8 3JVllVM jO S3JljjO MVl ~d89:ll 800l '8 'unr , --- pC procedures. We feel confident the remainder of the work can be performed as described without any adjustment to cost. In the event you do not wish to use our services to P&A these well's, Fairweather would still be interested in providing an on site representative to Hoefler Consulting Group tQ monitor the well work activities on behalf of Hoefler and ACE USA. Fairweather has a wealth of experience in perfomùng P&A procedures as well supervising all types of oil- field and construction projects for companies in Alaska, California and Texas- Please give me a call you if you think you might be interested in this service. I appreciated the phone call yesterday and I thank you for your consideration in this matter. Please contact the undersigned at 258-3446 îfyou have any questions or require additi onal infonnation- Sincerely:> SERVICES, INC. Duane H. Vaagen Proj ect Engineer Attachment cc: Bill Penrose - Fairweather 81/9 'd Itlv·oN S~VQV 8 3JVllVM jO S3J!jjO MVl ~d69:2l 8002 '8 'unr ,,,_/ '- ~. ~, .,,;¡i ~'ç:' . ... ' ~~ ~Wf~mf~ E & P SERVICES, INC September 6, 2002 Mr. David Johnston Project Manager Hoefler Consulting Group 701 Sesame Street, Suit 200 Puachorage,AJC 99503 RE: Abandonment ofGRI Houston Coal Bed Methane Wells No.1, 2,3,4, and 22. Dear Mr. Johnston: Thank you fot providing Fairweather E&P Service~ Inc. the opportunity to review a.nd resPQnd to your Request for Proposal to plug and abandon the Houston coal bed methane wells drilled by the former Growth Resources International After reviewing the infonnation presented in the RFP, performing an on-site investigation and other research, we have prepared for your coDSideration the attached proposal for the permanent plugging and abandomnent work requested. The proposal is broken out in tasks as requested, with a discussion of each task, the procedures used and subtasks as necessary. This proposal is submitted based on the premise that work will start shortly after award of a contract in mid-September and before significant snowfall and winter conditions set in. In the event the contract award is let later, the costs must be adjusted accordingly to allow for work during winter weather conditions. The total estimated cost for all tasks and subtasks in the attached proposal is $161~OOO~ TItis cost is based on Fairweather receiving all of the work. associated with the Hoefler / GRI RFP received. There are certain costs, such as equipment rentaI;! mobldemob, trucking:r personne~ etc. that are spread over all the tasks, which if done individually, would increase the cost per task. The attached document ""Proposal for Well Abandonment" contains individual task costs that do not reflect true stand-alone charges if the tasks are awarded individua11y~ This proposal is based on information provided by the Hoefler Consulting Group and Fairweather's investigation of the sites. It also draws on insight Fairweather has gained in performing these procedures in the past for a number of clients. We submit this proposal on the good-faith assumption that the data provided to Fairweather is accurate and there are no unidentified problems areas that will result in large changes to the work scope. The only wen flie that the AOGCC allowed Fairweather to view was that for the 81/9 . d 715 L Street ¡ 8 ¡ t . ON Anchorage, Alaska 99501 (907) 258-3446 FAX (907) 258-5557 S~VQV 8 3JVllVM jO S3JljjO MVl ~d6g:Zl SOOZ 's 'unr ._~ ."-~ ~ No. 3 well and, while the file was helpful~ there is still a question as to the exact completion equipment downhole. By way of experience, Fairweather has perfonned wen plugging and abandonment services for numerous clients, both onshore and offshore> Jrom Prudhoe Bay to Ecuador. We are confident that the work required. to abandon and close out these wells and associated sites does not pose any insurmountable technical challenges and that the costs projected for the work as proposed will remain as stated. In the event that a significant unexpected condition is encountered, Fairweather will work closely with the Hoefler Group to ensure that any additional repair or remediation costs are rn.ll1imized as practica.lly and efficiently as possible. Thank you for your consideration in this matter. Please contact the undersigned at 258- 3446 if you have any questions or require additional information. Sincerely, FAIRWEATIŒRE&P SERVICES, INC. d for Duane H. Vaagen Project Engineer Attachment cc: Bill Penrose - Fairweather 811L 'd ISIP'oN S~~Q~ 8 3J~11~M jO S3JljjO M~l ~dOO:l 8006 's 'unr --- ~ FAIRWEATHERE&P SERVICES, INC. PROPOSAL FOR WELL ABANDONMENT For HOEFLER CONSULTING GROUP GIU's COAL BED lVIETHANE WELLS HOUSTON, ALASKA September 6, 2002 1.0 INTRODUCTION ~ HISTORY The well plugging and abandonment program described herein, covers the permanent P&A work and site clearance program for GRPs Houston well No.~s 1, 2, 3, 4"and 22 wells. These wells were drilled in anticipation of developing a coalbed methane gas field in an area of the Matanuska-Susitna Borou~ north of Houston, Alaska. The wells were permitted and drilled during the years 1 ?97 - 2000. The operator, Growth Resources International Inc. (an Australian company) failed to complete the field as planned when the cost of development coupled with a disillusioned investment community forced GRI to forfeit their investment. The leases were dropped and the properties became the responsìbility of their bonding company, ACE USA. Hoefler Consulting Group, working on behalf of GRl through ACE USA, is at tbis time requ~sting bid proposals for the permanent abandonment and site clean-up of the wells drilled by OR!. 2.0 PROJECT ORGANIZATION AND MANAGEMENT 2.1 Project Organization: Fairweather will utilize· local contractors in performing the well work. All work will be under the immediate supervision of a Fairweather su~$Or) experienced in well operations and P&A procedures. Contractors will be interviewed and materials will be ex.amined to be fit-fur purpose in meeting the objectives of this program.. Fairweather E&P Services, Inc_ Page 1 of 10 Houston Well Abandorunent Program 9/6/02 81/8 'd ISlv'oN SWVOV 8 3JVllVM jO S3JljjO MVl ~dOO:l SOOl 'S 'unr '""-~ ~....",,-, . ~ 2.2 Project Schedule: Fairweather intends to begin well plugging and abandonment operations as soon as is practical after award of a contract The prices in this proposal assume that the work will be awarded promptly so that operations will be able to commence in mid September and can be completed before winter sets in. Due to location and logistical considerations, the Houston No.4 and the Houston No. 22, will be P&A'd rust (Tasks 4 and 5 below). The reason for this îs two- fold- First, of the five well sites requiring P&A work, these sites are the only on~s that do not appear to have a sufficient gravel pad for heavy equipment. These wells are located in areas that would require road maintenance should it rain excessively or heavy snowfall occur. This should also minimize the amount of surface damage in the immediate vicinity of the well caused by heavy equipment. Immediately after fmish1ng well operations, the sites will be cleared of all debris and graded as necessary to blend in with the surrounding natural grade. Following the work on wells No.4 and No. 22, the equipment will be mobilized to the vicinity of the No.1, 2, and 3 wells. These wells are located in a sparsely populated area with access through private property. Well's No.1 and 2 ,are . located directly on property owned by :MI. Mike Mikkelson and are within ~ mile of his residence. Access appears to be good with gravel road to all three sites. Fairweather intends to P&A these wells in sequence, perform the casing cuts, P &A marker installation and finish grading after all wells have been P &A' d. Tlús will minimize cost and time requirements to perform the work. The draining and close-out of the reserve pit will be left until last. It is planned to use some of the fluid for well work and as mix water for cementing purposes. This will minimize the amount of fluid that needs to be hauled away. Water analysis of the pit water by Hoefler is pending and transport of pit fluids for disposal cannot occur until the results are known. Attachment I provides a tîme1ine for completing all tasks. 2.3 ResponsibiHties Fairweather E&P Services, Inc. will directly supervise all well P&A and site remediation operations. The RFP submitted to Fairweather for bid purposes indicated all permitting operations will be handled by Hoefler Consulting Group. Fairweather win ensure that all procedures perfonned fullow AOGCC guidelines for well P &A work as described in 20 AAC 25.112 [Well Plugging Requj¡ements]~ 20 AAC 25.120 [Well Abandonment Marker] and 20 AAC 25.170 [Onshore Location Clearance]. Fairweather will keep a record of all work performed, inspection results and correspondence related to wen work operations. Upon completion of the project Fairweather will submit a detailed report containing all information pertinent to operation.s for Hoefler's use in filing Fonn 10-407 required for each well. Fairweather E&P Services, Inc. Page 2 of 10 Houston Well Abandonment Program 9/6/02 81/6 'd l8lv'oN S~VOV 8 3JVllVM jO S3JljjO MVl ~dOO:l 800Z 's 'unr ...~/ ~ The RFP indicates that any materials discovered that are unsuitable for disposal ìn the Matanuska-Susîtna. Borough landfill should be handled separately. Fairweather will report any findings of materials that are unsuitable for normal disposal directly to Hoefler Consulting GToup and will aid in fIDding an economic and efficient means of disposal if requested. At present, the only known material which may qualify for special disposal procedlU'es is a small amount of diesel- contaminated gravel on the Houston No. 3 well-site. This materia17 approximately 1 cubic yard, was pointed out by former GRI well operator l\1ike Mikkelson. Apparently, a generator that is no longer on site developed a fuel leak, resulting in the contamination. 3.0 Well Abandonment Procedures by Task As requested by Hoefler Consulting Group, the proposal is being broken Qut in the following tasks as described in the RFP. Task No. 1 2 3 4 5 6 Work To Be Peñormed P&AHoustonNo.l P&A Houston No.2 P&A Houston No.3 P&A Houston No.4 P&A Houston No. 22 Closure of Reserve Pit and Reclamation Sub-task's performed in completing the roam task, will be noted as (Task n.n). Again, it should be noted that the following tasks and procedures are based on information that was provided to Fairweather. Fairweather does not have access to all of the original well files for research. The only well file that was available as public record was for the completed well Houston No. 3 and the file was incomplete at that. The following procedures are submitted as good faith efforts by Fairweather to P&A the wells in as efficient a manner as possible based on good oilfield practices following regulations as spelled Qut in 20 AAC 25. The cementing procedures given here for Wells No.2 and 3 do not follow the exact bid guidelines requested in the RFP. Fairweather is of the opinion that the procedures recommended in this proposal follow SOWld oil field practices and will ultimately exceed requirement's mandated for P&A cementing procedures as outlined in 20 AAC 25.112. The cementing procedures recommended here have been chosen for the simplicity and economics they afford for cementing these wells. That being noted, a price ìs included fur cementing procedures that follow the RFP guidelines as well for comparison. Fairweather E&P Services, Inc. Page 3 of 10 Houston Well Abandonment Program 9/6/02 8//01 'd IElv'oN S~~Q~ 8 3J~11~M jO S3J!jjO M~l ~dlO:l SOOZ 'S 'unr "- ~ 3.1 Task 1: P&A Houston No.1 Houston No.1 is completed with a 10" Conductor driven to 367, a T7 surface casing set at 492' and cemented to surface~ and 1680' of 4 Y;" casing cemented from TD to surface. Information indicates a cement plug was placed in the well from 240' - 840'. There is no record of the well ever being perforated, or having the shoe drilled out for production or testing purposes. The following are the sub- tasks to be undertaken: Sub-Task No. Procedure 1.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 1.2 Open valves at surface to verify well is dead, install gauges as needed for monitoring. 1.3 Remove blind flange. 1.4 RU boom truck and RIH with 2-3/8" tubing and with. AOGCC witness if required, tag and verify TOe at ~ 2407. 1.5 RU and begin cementing, using displacement method, while pulling tubing out of the hole. Cement with Class "An cement until clean cement is observed at surface. woe. 1.6 Clean equipmen~ and store rinsate, in onsite storage tank used to capture displaced well fluîds. 1.7 Excavate to -5', cut off casing strings a minimum of 3' below grade level and weld on well ill marker pIate. Backfill and grade to blend with surroundings. (This task to be performed after Wells No. 1,2 and 3 have all been P&A'd.) Total Estimated Cost, Task No.1: $19,000 3.2 Task 2: P&A Houston No.2 Houston No.2 is completed with 7'7 casing set at 462' and cemented back to smmce, 4-~;' casing set and cemented back to surface from 1662'} and the shoe drilled out for a final TD of (~2100'?). While not in the records, the wen was completed at one time with tubing and a submersible pump (according to interviews ofper50ns familiar with the project). The pump was used to de-water Fairweather E&P Services, Inc. Page 4 of 10 Houston Well Abandonment Program 9/6/02 8[/[[ 'd [8[v'ON S~VOV 8 3JVllVM jO S3JljjO MVl ~dlO: l SOOZ 'S ·unr ~ '--' ~ the well for gas production but, due to excessive water productîon, attempts at dQing so were abandoned and the pump and tubing were removed. Sub-Task No. Procedure 2.1 Verify all pennit paperwork is in place and gìve AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 2.2 Well is currently completed with flange at surface. Open valves to verify well is dead. Install gauges as necessary for monitoring_ 2.3 RU cementing equipment, initiate injection test for bullheading cement into place using pit water. When injectivity is verified (2 casing volumes or 56 barrels of water minimum), insert robber wiper plug to provide a clean cement / water interface. Displace 28 bbls of Class "A" cement to fill casing fi:om TD to surface. woc. 2.4 RD cementing equipment and clean up, catching rinsate in storage tank. 2.5 Excavate to ....,5', cut off casing strings a minimmn of 3' below grade level and weld on well ill marker plate. Backfill and grade to blend with SUlToundìngs. (This task to be performed after Wells No. 1~ 2 and 3 have all beenP&A7d.) Total Estimated Cost, Task No. 2~ $28,000 $32,000 Bullhead Cementing Method Displacement Method 3.3 Task 3: P&A Houston No.3 Houston No. 3 is completed with r" surface casing set and cemented ITom 50S" to surface. A 4-~" production casing string was run, set and cemented back to surface ftom 20027. A CBL indicates cementing to only be partially effective7 with good bonding evident :trom 2002' ~ 1000', and 1Ì'om 760' - surface. The interval ftom 760" - 1000' does not appear to be cemented. The well was perforated with a series offivè (5) sets of perforations iiom 1338' - 1856'. The records are sketchy on the exact completion scheme, but it appears the shoe was drilled out, a packer was set at ~ 1900' and a progressive cavity pump was hung off in the packer- Records indicate a tubing-less completion. It appears that centralized reverse threaded sucker rod was. run ftom surface to the pump as a drive shaft. The scheme was to dewater the coals in the perforated zones and Fairweather E&P Services, Inc. Page 5 of 10 Houston Well Abandonment Program 9/6/02 81/Z1 'd lelv'oN S~VOV 8 3JVllVM jO S3JljjO MVl ~d60:l 8002 '8 'unr ~.. ',- ~ pump them for disposal into a Tyonek sandstone member penetrated by the wellbore below the shoe. The packer set at 1900' was intended to be the sealing element to prevent water ftom loading up the gas producing interval represented by the perforations. The well has been shut in for 2 years, and the latest readings, indicate ~ 50 psi on the wellhead. A discussion with Mike Mikkelson, who worked for GRI as a well operato:r;> revealed diesel-contaminated gravel near the well house that is covered by a blue tarp- It appears that approximately I cubic yard of material will have to be disposed of. Evidently the generator, which has since been removed, sprung a fuel leak. The leak was reported and the gravel was dug up and stockpiled for later disposal- Sub-Task No. Procedure 3.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 3_2 RU boom truck and remove well-house, surface p:roduction equipment, electrical equipment and surface mounted KUDU Progressive Cavity Pump drive unit. 3.3 . Inspect gauges for pressure. NOTE: Because of lack of detail in well records, the following Procedure is based on inferences made while reviewing the well ftIe and other information revealed during the course of research. 3.4 Kin well with pit water. Well currently has 50 psi at wellhead, records indicate maximum pressure at between 50 and 100 psi. Well has been shut in 2 years and has no doubt received some inflow of water into the wellbore. Wrth top of perforations at ~1338 fee~ an 8.33 ppg kill fluid (ftesh water) would exert 580 psi at the top perforations;> which exceeds by a factor of 5 any pressures indicated in original records. 3.5 Loosen packing nut on polished rod, and pull rod and pump assembly. If tubing is present, pump may not come out in this step. 3.6 If tubing is present, after pulling sucker ro~ ensure well is killed and fluid level :in well is stable and install backpressure valve. Remove remaining valves above tubing hanger and install BOP system. Test BOP system to 500 psi. If no tubing is present~ install packer at surface to isolate wellbore while installing BOP. Fairweather E&P Semces, Inc_ Page 6 of 10 Houston Well Abandonment Program 9/6/02 81/£1 'd 1£lt'ON S~VQV 8 3JVllVM jO S3JljjO MVl ~d60:l 8006 '8 'unr ~ pC: NOTE: BOP system will consist ofT' 5M single gate with blind rams and an annular preventor. 3.7 Pull backpressure valve, PU pup joint oftubîng and procæd to pull the tubing out of the well. (Note: this step applies only îftubing is in fact present). While pulling tubing, ensure well is kept full of fluid to account for displacement of tubing. 3.8 After the tubing has been pulled, close blind rams and connect pump to tubing / casing annulus valve, RU pump and initiate injectivity test with pit water. Pump a minimum of 2 casing volumes (64 bbls). 3.9 When injectivity is verified, check wellhead for pressures, open blind rams and insert 4-~" rubber wiper plug into 4-~" casing. Close blind rams and displace well full of cement ftom top to bottom with -32 bbls of Class ~£A" cement. WOC. 3.10 RD cementing equipment and clean up, catching rinsate in storage tank. 3.11 Excavate to .......5', cut off casing strings a minimum of 3' below grade level and weld on well ill marker plate. Backfill and grade to blend with sUlTOundings. (This task to be perfunned after Wells No. 1,2 and 3 have all been P&A'd.) Total Estimated Cost, Task No. 3: $37~OOO $42;0000 Bullliead. Cementing Method Displacement Method 3.4 Task 4: P&A Houston No.4 Houston No.4 was co:m:pleted with an W' conductor driven to 28'. The bole was then drilled to 478' when the project was abandoned due to the unfavorable lithology encountered. The well at the surface appears from reports to consist of just the 8" conductor stickùJg up with a plà.Stîc bucket covering it. Fairweather was not able to inspect this' site since it could not be found. Sub-Task No. Proeedure 4.1 Verify all pemút paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. Fairweather E&P Services, Inc. Page 7 of 10 Houston Well Abandonment Program 9/6/02 8 [Iv l 'd [ 8 [ 17 ' 0 N SWVOV 8 3JVllVM jO S3JljjO MVl ~d20:l 8002 '8 'unr - '~' ~ 4.2 RU boom truck, remove cover (reportedly a plastic bucket) from top of casing and RIH with tubìng to ID. 4.3 RU and pump hole full of cement from TD to surface while pulling tubing. 4.4 Clean equipment and woe. 4.5 Excavate to ~5'7 cut off casing strings a minirn.um of 33 below grade level and weld on well ill marker plate. Backfill and grade to blend with SUlToundings. Due to the remoteness of this w~ll with relationslùp to others in project, complete site clearance will be performed immediately after P&A operations. Total Estimated Cost, Task No.4: $15,000 3.5 Task 5: P&A Houston No. 22 Houston No- 22 is completed with 10" conductor driven to 76' and 8-5/8" production casing set at 513'. The well was not perforated or completed. An obstruction was discovered at ~220' when an attempt was made to run wireline logs. No infonnation is presented as to what ma.y be in the hole. There is no weHhead on the well, only a steel plate welded over the top of the 8-5/8" casing. Subtask No. Procedure 5.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations 3JJ.d intent to cement well and give chance to witness same. 5.2 Cut off steel cover plate. 5.3 RU boom truck and roH with tubing to top of obstruction. 5.3 Displace hole to cement :trom top of obstruction to surfuce (220'). 5.4 Clean equipment and WOC. 5-5 Excavate to ...,-5", cut offcasmg strings minimum of3' below grade level and weld on well ill marker plate. Backfill and grade to blend with S\UToundings. (This task to be performed after Wells No.1, 2 and 3 have all been P&A'd.) Total Estimated Cost, Task No.5: $22,000 Fairweather E&P Services, Inc. Page 8 of 10 Houston Well Abandonment Program 9/6/02 81/9¡ 'd lelv'oN s~vav 8 3JVllVM jO S3JljjO MVl ~d80:l 800Z '8 'unr ---- '~ ~ 3.6 Task 6: Reserve Pit Closure The reserve pit is located on Mike Mikkelson's property at the end of an airstrip, near Houston No. L The pit, as indicated in the RFP:> is approximately 75' X 1 OO~ X 5'. Inspection revealed the pit to be lined and in good condition. The pit is currently ~ full. Water in the pit appeared to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. Subtask No. Procedure 6.1 Pump and dispose of remaining water as per instructions provided by Hoefler Consulting Group after results of water analysis have been made. Ensure manifests are properly f1l1ed out if water Îs trucked off site. (Depending on salinity and orders from Hoefler, this procedure may be as sÙTIple as pumping out the pit to a nearby ravine.) 6.2 Remove silt fÌ'om pit liner and dispose of silt and liner as recommended by Hoefler. 63 Backfill pit with bexm material originally used to build pit and haul in fill material sufficient to blend site with natural grade of surrounding terrain. 6.4 Ensure all debris is removed as pit is currently located at end of runway. 6.5 Request irispection by AOGCC for final site clearance. Total Estimated Cost, Task No. 6: $30~OOO $12~OOO TruckinglDîsposa1/Closure Pumping Empty and Closure 3.7 Task 7: Removal of aU debris and materials The Houston well sites No.1, 2, and 3 have numerous items that need to be removed~ including a pallet of bentonite~ a pallet of barite, sucker rods, well tubing, casìng, wellheads, plastic line pipe and assorted objects. All will be removed for disposal or salvage as applicable. Also to be disposed of will be the wellbore fluids displaced during cementing operations· and the cement rinsate generated during equipment clean up after cementing jobs. Total Estimated Cost, Task No.7: $10,000 Trucking and waste disposal fees. Fairweather E&P Services, Inc. Page 9 of 10 Houston Well Abandomnent Program 9/6/02 8!/9/ 'd IS!v'ON S~VOV 8 3JVllVM jO S3JljjO MVl ~d80:1 800Z '8 'unr ~~ --- .......~ Summary of Houston (GRI) Wells Project Cost (Using procedures recommended by Fairweather as discussed above) Task 1 $19,000 Task 2 $28,000 Task 3 $37,000 Task 4 $15,000 Task 5 $22,000 Task 6 $30,000 Task 7 ifj 1 0..000 Total: $161,000 Fairweather E&P Services;1 Inc. Page 10 of 10 BilLi 'd iGlv'oN Houston Well Abandonment Program 9/6/02 s~vav 8 3JVllVM jO S3J!jjO MVl ~d80: l 800Z '8 'unr = = ---:> cv:> cv:> c:::> c:::> ç-...J ~ CL cv:> c:::> ( Attachment I LL LL C> 3= <C -I en L.LJ <....:> LL C> L.LJ <....:> <C -I -I -<::C 3= co en ::E -<::C t::::::) -<::C -----. -------I CL \ l'asks ~ CV":> ~ ~ C> I Houston No. 1 2:: Houston No. 2 Hotls1on No.3 Ho"Uston No.4 Houston No. 22 ~:f'itcloSl.n a-d SIIe -c1eer'H.{> (' Day 1 I Day 2 I Day 3 I Day 4 I Day 5 I Day ô Day 7 I Day 8 ¡ Day 9 I Dayi0 f Day 111 Day 121 Day 131 Day 14~Day 15 ,Fairweather E&P Services, Ine, GRI I Houston Well P&A Program ~ 00 00 2ft 3\ ()~~ (; "- STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION GRI RFP PRE-PROPOSAL MEETING May 25, 2004 10:00 am NAME - AFFILIATION ADDRESS/PHONE NUMBER TESTIFY (Yes or No) (PLEASE PRINT) / / / µ<1:t'1": ~ Æ;/,NP.¢..4,,- / ./5ð'-Y,/,/ti, &'6 ~MA)Ðf_ M/~///P1'¡~Ø-U46 ..J,p ...-..... I.- e --'. .. þ. ~e Co- Þ -IS (2.4 -., sE1ZtJC~ ~ 3~ Co 'Z S--~ .::s-V L \ E. L\ NA ~E.. S L"" f'J)( I 2. 1 / -- Lf<oLl t~(-;f;£n\ e#d~~~~~ /73 -¿¿ ~ ò R 0 ~(t [, /V1! '" ~ \.. D -r /I' ~~7 L__C'! ~, I lAl . A-vd') Q.-v f A-o (:¡ CL \Hearing_ Sign-In < ,'i\\.~ '1 Ç; ') fì Ill\, _,0 . - -o'f' \U-ri 1. \J LV"" , S'LAt~N~t-- <d- \. :tf30 f\~-.: Gl,J: !rlc. and Alaska Oil and Gas Conservation Commission r... .~ ',,-, Subject: FW: GR!, Inc. and Alaska Oil and Gas property in Houston, AI<. From: "Annibale, Ingrid" Date: Fri, 21 May 2004 13:35:55 -0400 To: jody _ colombie@admin.state.ak.us -----Original Message----- From: Annibale, Ingrid Sent: Friday, May 21, 2004 1:27 PM To: 'jody_colombia@admin.state.ak.us' Subject: GRI, Inc. and Alaska Oil and Gas Conservation Commission re Margaret Bryant property in Houston, AK I am the daughter of Margaret Bryant. This e-mail responds to your letter to her dated May 13, 2004, together with enclosures, advising that the Alaska Oil and Gas Conservation Commission plans to issue a Request for Proposals to "perform required and proper well plugging and location clearance operations" on Margaret Bryant's land. It is our understanding the surety bond which GRI, Inc. had in place at the time if the work it performed will cover the costs of this contract award and my mother will incur no expenses in connection herewith. If this understanding is correct, then please be advised that my mother, Margaret Bryant, has no objection to your moving forward in letting the Request for Proposals issue. If you have any questions or wish to contact me, you may do so at the below address. Thank you. Ingrid Annibale for Margaret Bryant Ingrid A. Annibale Assistant for Administrative and Employment Law Practice Baker & Hostetler LLP 1050 Connecticut Ave., N. W., Suite 1100 Washington, DC 20036 Phone: 2021861-1587 FAX: 202/861-1783 e-mail: iannibale@bakerlaw.com THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT IS ADDRESSED AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL, AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this message is not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution, forwarding, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender CfrA\ ~í~l~r ¡UN 1 Ü '2004 ~~\-.¿L· ~~~~bt.¡.-~,. y . ,'-'- 10f2 5/21/2004 10:04 AM ..... - FVJ: Gy.l, Inc. and Alaska Oil and Gas Conservation Commission f... "-' ~ immediately bye-mail or telephone, and delete the original message immediately. For more information, please visit http://www.bakerlaw.com . Thank you. r--.--....------..----...-.-.-.....---..--....----..--.._--~-_.._-- SCANNED JUN 1 8 2004 20f2 5/21/2004 10:04 AM #29 ~.~- ---- i'--:\ .....~' r'\ l:1~~~¡ r--" , \ct¡ 1 r ¡ f\ \ ¡ r I r 1 f f 1 : \ ~; : ¡ \~~~/ U Lf =\.~ U \ ,b ,--- r~~~ fnì ,r< I ¡ 1 : ¡ F~-! llLJ LJ /S:; r1 Il~\ ~ r(~ i:\ u u~u u~uuu u FRANK H. MURKOWSKI, GOVERNOR A.T¿A.SIiA. OIL AND GAS CONSERVAnONCO~SSION 333 W. 'JTH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 May 13,2004 Express Mail Number EU 977869574 US Margaret Bryant 2 Oaks of Wellington 10240 Hendley Road #222 Nanassas, VA 20110 Dear Ms. Bryant: As you know, the Alaska Oil and Gas Conservation Commission ("Commission") is working to ensure that the wells drilled by GRI, Inc., in the Houston Gas Field, are properly plugged and their locations properly cleared. We understand that you are a surface owner of the land on which two of these wells are located. The Commission is planning to issue a Request for Proposals in the very near future, under which funds obtained from GRI's surety bond will be used to pay a contractor to perform the required proper well plugging and location clearance operations. If this Request is successful in leading to a contract award, we anticipate these operations will be performed this summer. I am enclosing for your information a copy of the "Scope of Work" section of the Request for Proposals. This describes in detail the operations that will be performed to plug the GRI wells and clear the locations. This document is marked "Confidential" because to be fair to all potential bidders it cannot be released until the Request for Proposals is officially issued. Therefore, please do not distribute this document or disclose to others any of its contents. The Commission is sharing it with you now only because of your special interest as a surface owner of affected land. Please note that this Scope of Work does not include surface restoration of the road or reseeding, because those tasks are not covered by GRI's surety bond filed with the Commission. However, we anticipate that the Department of Natural Resources will arrange for those tasks to be performed under a separate contract. If you have any comments on the enclosed Scope of Work, please submit them in writing to my attention so that they are received no later than May 21,2004. Unless I hear otherwise from you by that date, the Commission will assume that you have no objection to our contractor's proceeding to plug the wells and clear the locations substantially as described in the enclosed Scope of Work. If you or your representatives e questions please call collect at (907) 793- 1221. Enclosure SCANNEi¡ 0 nJ'r~ "'.¡ (~ ~)Ofl¿¡ ~ ","~l.. j -;" _3.- ~"'O'-.' L u"{ USPS - Track & Confrrm Page 1 of 1 '-- .,~ .~ UNITED STI3TES POSTJ.1L SEflVICE0 Track & Confirm Shipment Details " Track & Confirm Enter label number: r--- -- -. You entered EU97 7869 574U S Your item was delivered at 11 :12 am on May 14, 2004 in MANASSAS, VA 20110. The item was signed for by R ROBINSON. Here is what happened earlier: Track & Confirm FAQs · ARRIVAL AT UNIT, May 14, 2004,10:29 am, MANASSAS, VA 20110 · ENROUTE, May 13, 2004, 2:03 pm, ANCHORAGE, AK 99529 · ACCEPTANCE, May 13, 2004,10:15 am, ANCHORAGE, AK 99520 Notification Options . Track & Confirm by email What is this? . Request Proof of Delivery What is this? Go> {j(} :~ ...f:. ~ POSTAL INSPECTORS site map cQot~ct u.s govef'nrnent~se~icc~~ . - '> Preserving the Trust Copyright © 1999-2002 USPS. All Rights Reserved. Ter01§ of U~~ ~rivªCYLeoLiçy sr'Q~Hi,IE- r.' HiM "Íi.." ~_,: 20n·. n ,-,,\i0¡¡;;9q-~. ." "\J""",~-"" Gilb1t'IJ 1. v _ <..iLl' http://trkcnfrml.smi.usps.comlnetdata-cgi/db2www/cbd _ 243.d2w/detail 5/18/2004 illl/IIII ~I~ 1111111111111111111111I111~""'~!llllllllllllllllllltlit · /j;¡ ;,~f:F-- EU 1:f778bl:f574 us ~ .....-...--"."_. .~. --_.,-_._'--~ = 0';. . ,-:_ _ _~_ _0. '0_"_ _'. ONLY) , Day of Delivery Flat Rate Envelope D Socond D ,/ ,,:.-. Postage .:'"' D 3 PM $ / ...j Return'Receipt Fee D 3.d Day Int'l Alpha Country Code COD Fee losl/ ~J ozs. $ No Delivery i Acc:ytance Clerk Initials Total Postage ~ Fee,d../ D Weekend' D Holiday ,<.c! -) $ ../ . / FROM: (PLEASE PRINT) ¡ PHONE ( 9ð'¡ I 193.l· J () ¿:-:- I A I/J:S No.. Oil .1" (~)ä~ é1ot}5(!rl/r::,~lf'ðll . I .Otf'l ft, 517-11 e (; /'". /-) J (,t 5 k ().- .. · ~7;( .''11' I{] 'I' p... A 1/ ê /I /0(,) ,). ) ~ ~'.I. . .~ - /A, .. Ar)(}j~ I~}/} clqSol FOR PICKUP OR TRACKING CALL 1-800-222-1811 WWW.Usps.com ~~M~- PRESS HARD. You ate maklllg 3 COpICS. __ ._.d .__U~. . ___.___ _. - - - -- -- ---. _ -----.-.-."-----.-'-"""--..... -_._.~-_. .__uu···., '''_'j, Customer Copy : Label 11-B September 2002 i UNITED STIJTES POSTIJL SERVICE ® Post Office To Addressee DELIVERY (POSTAL USE ONLY) , . . . . Delivery Attempt Time Employee Signature Mo. Da DAM DPM Delivery Attempt Time Employee Signature Mo. Day DAM DPM Delivery Date Time Employee Signature Mo. Day DAM DPM . . PAYMENT BY ACCOUNT Express Mail Corporate Acct. No. Federal Agency AC(:t. No. or Postal Service Acct, No. o wee~~~ELlVE~o~day 0 TO: (PLEASE PRINTI /r(l~9art: I If/J:"'//I- Z 0/1 rs' r.J f Øe//II'Jrf It,~-; -. _ /tJ2L/O Jlel.ì(I/ëy I!ci ¡ij¿¿~ /7,£1 /Ja1-? {7~S j//f [2J ~ [LJ [2J ~ + D [_.J I~ D ZIP + 4 $~g ,~ 11 j ---- ---- STATE OF ALASKA Department of Administration Oil and Gas C~nservation Commission 333 W. 7t Avenue Suite 100 Anchorage, AK 99501-3539 Request For Proposals RFP AOGCC - 0501 Date of Issue: May 12, 2004 Abandonment in compliance with AOGCC regulations of five coalbed methane wells in the general vicinity of Houston, Alaska Offerors Are Not Required To Return This Form. Important Notice: If you received this solicitation from the State of Alaska's "Online Public Notice" web site, you must register with the Procurement Officer listed in this document to receive subsequent amendments. Failure to contact the Procurement Officer may result in the rejection of your offer. Robert Crandall Procurement Officer Department of Administration, Alaska Oil and Gas Conservation Commission TABLE OF CONTENTS 200L~ Page 1 (Rev. 6/03) · ' ~ SECTION ONE Introduction and Instructions Page 1.01 Return Mailing Address, Contact Person, Telephone, Fax Numbers and Deadline for Receipt of Proposals ..............................................................................6 1 .02 Contract Term and Work Schedule .......................................................................................................... 6 1.03 Purpose of the RFP ...................................................... ............................................................................ 7 1.04 Budget................................................................................................................................ ....................... 7 1.05 Location of Work................................... ................ ........ .................................... ........... ..... ........................7 1.06 Assistance to Offerors with a Disability.....................................................................................................7 1.07 Required Review.......... ............ ................................. ........................... ........................ ........... ...... ............7 1.08 Questions Received Prior to Opening of Proposals.......................... .................... .......... ................ ......... 8 1 .09 Am end men ts . .. . . . .. . . . . . . .. . . .. . . . . . . .. . .. .. . .. . .. . .. . .. . . . .. . .. .. . .. . .. . .. . .. . . . .. . .. . . . .. . . . . . . . . .. . . . . . . . . . . . . . .. . .. .. . . . .. .. . .. .. . .. . .. . .. . . .. .. . . .. 8 1.10 Alternate Proposals............................................. ...................................................................................... 8 1 .11 Right of Rejection...................................................................................................................................... 8 1.12 State Not Responsible for Preparation Costs ..........................................................................................9 1.13 Disclosure of Proposal Contents ............................................................................................................. 9 1.14 Subcontractors........................................................... ....................................................... ........................9 1.15 Joint Ventures .........................................................................................................................................1 0 1.16 Offeror's Certification.......................... ................. .......................... ............................... ................... ....... 10 1.17 Conflict of Interest....................... .................... ..... .................... .................................... ..... ..... .......... ....... 10 1.18 Right to Inspect Place of Business ........................................................................................................ 11 1.19 Solicitation Advertising............................................................................... ..... ............................ ............ 11 1 .20 News Releases....................................................................................................................................... 11 1 . 21 Ass i 9 n men t . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . . . . . . . .. .. . .. .. . . . . . . . . .. .. . .. . . . .. .. . . . . . . .. .. . .. .. . .. . . . . . . . . . . . . . . . . . . .. .. . . .. .. . . .. . . . . . . . .. . . . . . . .. .. . .. .. 11 1.22 Disputes.......................................................... ......................... ................... ....................... .......... .... ....... 11 1.23 Severability.................................. ........................,................................ .............................. .......... ........... 11 1.24 Federal Requirements............................................................. ......................................... ...... ................ 11 SECTION TWO Page 2 CCA!.\' h.11 E' , ., -1\ 1.:::. '¡(¡rv 0' 'B""ë\;- C ,JU;\¿, :~l,U'i' - .~ Standard Proposal Information 2.01 Authorized Signature.................................. ............................................................................................ 12 2.02 Pre-proposal Conference........................................................................................................................ 12 2.03 Site Inspection .............................................................................................. ......................................... 12 2.04 Amendments to Proposals...................................................................................................................... 12 2.05 Supplemental Terms and Conditions.......................................................................................... ............ 12 2.06 Clarification of Offers... ....... ........................................ ............ ............ .......... ................... ..... ................. 13 2.07 Discussions with Offerors ....................................................... .................................................. .............. 13 2.08 Prior Experience................................................................................................................ ..................... 13 2.09 Evaluation of Proposals......................................................................................... ................................. 14 2.10 Vendor Tax 10......................................................................................................................................... 14 2.11 Alaska Business License and Other Required Licenses ........................................................................14 2.12 Application of Preferences...................................................................................................................... 15 2.13 5 Percent Alaskan Bidder Preference ....................................................................................................15 2.14 Formula Used to Convert Costs to Points ............................................................................................. 16 2.15 Alaskan Offeror's Preference........................................................................................................ ........ 17 2.16 Contract Negotiation............................................................................................................................... 18 2.17 Failure to Negotiate................................................................................................................................. 18 2.18 Notice of Intent to Award (NIA) ............................................................................................................. 18 2.19 Protest ................................................................................................................................................... 18 SECTION THREE Standard Contract Information 3.01 Contract Type........................................ .......................... ..................... ....... ............. .................... ......... 20 3.02 Contract Approval....................................................................... .-~.............. ....... .................................... 20 3.03 Standard Contract Provisions................................................................................ ................................ 20 3.04 Proposal as a Part of the Contract............................................................................... .......................... 20 3.05 Additional Terms and Conditions.............................. ........... ...................... .......... ..... ............................. 20 3.06 Insurance Requirements.................................................................................. ...................................... 20 3.07 Bid Bond - Performance Bond - Surety Deposit .................................................................... ................ 21 3.08 Contract Funding....................................................................................... ............................ ...... .......... 22 3.09 Proposed Payment Procedures............................................................................ ................................. 23 3.10 Contract Payment...................................................................................... ............................................ 22 3.11 Informal Debriefing.................................................................................... .... ....................................... ..22 Page 3 §C/--\Nh!Er' i ~ j' U". O~.1.1¡ ,=.1 -~~ '-/ 3.12 Inspection & Modification - Reimbursement for Unacceptable Deliverables .......... ...............................22 3.13 Termination for Default ..................................................................................... ..................................... 23 3.14 Contract Changes - Unanticipated Amendments .. .............. ...... ................... ......................... .......... ..... 23 3.15 Contract Invalidation .............................................................................................................................. 23 SECTION FOUR Scope and Schedule 4.01 Scope of Work........................................................................................................................................ 24 SECTION FIVE Proposal Format and Content 5.01 Proposal Format and Content................................................................................................................. 32 5.02 Introduction.................................... ..... ............................................................. ....... ...................... ..........32 5.03 Methodology and Timeline Used for the Project..................................................................................... 32 5.04 Management Plan for the Project........................................................;.................................................. 32 5.05 Experience and Qualifications................. .............................................................. .................................32 5.06 Cost Proposal................................................... ........................................................................:.. .....:.....33 5.07 Evaluation Criteria......................................:.............................. .......................... ............................ ........33 SECTION SIX Evaluation Criteria and Contractor Selection 6.01 Methodology and Timeline Used for the Project... .... ........... .................. ........................ .........................34 6.02 Management Plan for the Project............... ........................................................... .................... ........ ..... 34 6.03 Experience and Qualifications................................................ ....................................................... .........35 6.04 Contract Cost................. ..... ........... ........................ ...... ........... ............... .... ............... ......... ........... ..... ..... 35 6.05 Alaskan Offeror's Preference 10 Percent ............................................................................................. 35 tiCANNED JUN i t~ 2004 Page 4 - .~ SECTION SEVEN Attachments 7.01 Attachments ..................... ............................................................................. ......................................... 36 Attachments 1. Proposal Evaluation Form 2. Standard Agreement Form 3. Appendix A 4. Appendix B 5. Notice of Intent to Award 6. Appendix C Map and Site Pictures Page 5 cr::F"" ~I tA i f'- n 9~H~ ,]i!\)bL J 2D04 _J "-" SECTION ONE INTRODUCTION AND INSTRUCTIONS 1.01 Return Mailing Address, Contact Person, Telephone, Fax Numbers and Deadline for Receipt of Proposals Offerors must submit three copies of their proposal, in writing, to the procurement officer in a sealed envelope. It must be addressed as follows: Department of Administration Alaska Oil and Gas Conservation Commission Attention: Robert Crandall Request for Proposal (RFP) Number: AOGCC - 0501 Project name: Houston Alaska Coalbed Methane Well Abandonment 333 W. ih Avenue, Suite 100 Anchorage, AK 99501-3359 Proposals must be received no later than 1 :30 P.M., Alaska time on June 9, 2004 Fax proposals are not acceptable. Oral proposals are not acceptable. An offeror's failure to submit its proposal prior to the deadline will cause the proposal to be disqualified. Late proposals or amendments will not be opened or accepted for evaluation. PROCUREMENT OFFICER: Robert Crandall- PHONE 907-793-1230 - FAX 907-275-7542 1.02 Contract Term and Work Schedule The contract term and work schedule set out herein represent the State of Alaska's best estimate of the schedule that will be followed. If a component of this schedule, such as the opening date, is delayed, the rest of the schedule will be shifted by the same number of days. The length of the contract will be from the date of award, approximately June 25, 2004, for approximately 76 calendar days until completion, approximately, September 10, 2004 The approximate contract schedule is as follows: · Issue RFP May 12, 2004 · Pre-proposal conference May 25, 2004, · Open RFP DATE June 9, 2004 · Proposal Evaluation Committee complete evaluation by June 14, 2004 · State of Alaska issues Notice of Intent to Award a Contract June 15, 2004, · State of Alaska issues contract June 25, 2004, · Contract start June 25, 2004, · Projected Completion Date September 10, 2004 Page 6 SCANNED JUN 1 6 2QOl~ <- -- 1.03 Purpose of the RFP The Department of Administration, Alaska Oil and Gas Conservation Commission (AOGCC), is soliciting proposals for proper abandonment in compliance with AOGCC regulations as specified below, of five coal bed methane wells drilled between 1997 and 2000 by GRllnc. in the general vicinity of Houston, Alaska. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of. Drill sites are to be returned to original grade. 1.04 Budget The Department of Administration, Alaska Oil and Gas Conservation Commission, estimates a budget of between $ 125,000 and $200,000 dollars for completion of this project. Proposals priced at more than $200,000 will be considered non-responsive. 1.05 Location of Work The locations the work to be performed are in the vicinity of Houston Alaska ( see Appendix C ), the location of the· specific sites and site descriptions are included in SECTION FOUR Scope of Work. Offerors are encouraged to visit the sites prior to submitting proposals. The State of Alaska is the owner of the subsurface estate throughout the project area. Portions of the surface are owned by the State of Alaska, private parties, or the Matanuska- Susitna Borough. 1.06 Assistance to Offerors With a ,Disability Offerors with a disability may receive accommodation regarding the means of communicating this RFP or participating in the procurement process. For more information, contact the procurement officer no later than ten days prior to the deadline for receipt of proposals. 1.07 Required Review Offerors should carefully review this solicitation for defects and questionable or objectionable material. Comments concerning defects and objectionable material must be made in writing and received by the procurement officer at least ten days before the proposal opening. This will allow issuance of any necessary amendments. It will also help prevent the opening of a defective solicitation and exposure of offeror's proposals upon which award could not be made. Protests based on any omission or error, or on the content of the solicitation, will be disallowed if these faults have not been brought to the attention of the procurement officer, in writing, at least ten days before the time set for opening. Page 7 ~CAN~\dEb" JUN 1 6 20Dll ~- ''-----'" 1.08 Questions Received Prior to Opening of Proposals All questions must be in writing and directed to the issuing office, addressed to the procurement officer. Telephone conversations must be confirmed in writing by the interested party. Two types of questions generally arise. One may be answered by directing the questioner to a specific section of the RFP. These questions may be answered over the telephone. Other questions may be more complex and may require a written amendment to the RFP. The procurement officer will make that decision. 1.09 Amendments If an amendment is issued, it will be provided to all who were mailed a copy of the RFP and to those who have registered with the procurement officer as having downloaded the RFP from the State of Alaska Online Public Notice web site. 1.10 Alternate Proposals Offerors may only submit one proposal for evaluation. In accordance with 2 AAC 12.830 alternate proposals (proposals that offer something different than what is asked for) will be rejected. 1.11 Right of Rejection Offerors must comply with all of the terms of the RFP, the State Procurement Code (AS 36.30), and all applicable local, state, and federal laws, codes, and regulations. The procurement officer may reject any proposal that does not comply with all of the material and substantial terms, conditions, and performance requirements of the RFP. Offerors may not qualify the proposal nor restrict the rights of the State. If an offeror does so, the procurement officer may determine the proposal to be a non-responsive counter-offer and the proposal may be rejected. Minor informalities that: · do not affect responsiveness, · are merely a matter of form or format, · do not change the relative standing or otherwise prejudice other offers, · do not change the meaning or scope of the RFP, · are trivial, negligible, or immaterial in nature, · do not reflect a material change in the work, or, · do not constitute a substantial reservation against a requirement or provision, may be waived by the procurement officer. The State reserves the right to refrain from making an award if it determines that to be in its best interest. A proposal from a debarred or suspended offeror shall be rejected. ~ r-~ J u c" ß .¡¡ fí?: 2fì fì fj 5-ç;.~' /J¡ Ii\. rv\]¡¡= L; d I\J ~ Ü LJ lJ't ~~~ wB~3 ~".;;;/ ~- Y...-v ~ Page 8 ~ '~ 1.12 State Not Responsible for Preparation Costs The State will not pay any cost associated with the preparation, submittal, presentation, or evaluation of any proposal. 1.13 Disclosure of Proposal Contents All proposals and other material submitted become the property of the State of Alaska and may be returned only at the State's option. 40.25.110 requires public records to be open to reasonable inspection. All proposal information, including detailed price and cost information, will be held in confidence during the evaluation process and prior to the time a Notice of Intent to Award is issued. Thereafter, proposals will become public information. Trade secrets and other proprietary data contained in proposals may be held confidential if the offeror requests, in writing, that the procurement officer does so, and if the procurement officer agrees, in writing, to do so. Material considered confidential by the offeror must be clearly identified and the offeror must include a brief statement that sets out the reasons for confidentiality. 1.14 Subcontractors Subcontractors may be used to perform work under this contract. If an offeror intends to use subcontractors, the offeror must identify in the proposal the names of the subcontractors and the portions of the work the subcontractors will perform. If a proposal with subcontractors is selected, the offeror must provide the following information concerning each prospective subcontractor within five working days from the date of the State's request: (a) complete name of the subcontractor, (b) complete address of the subcontractor, (c) type of work the subcontractor will be performing, (d) percentage of work the subcontractor will be providing, (e) evidence, as set out in the relevant section of this RFP, that the subcontractor holds a valid Alaska business license, and (f) a written statement, signed by each proposed subcontractor, that clearly verifies that the subcontractor is committed to render the services required by the contract. An offeror's failure to provide this information, within the time set, may cause the State to consider their proposal non-responsive and reject it. The substitution of one subcontractor for another may be made only at the discretion and prior written approval of the project director. - - .-... '~~~~ "" @ 2í\f¡¡1 $CANNED Jur~ 1 ¡g UU. Page 9 -' .~ 1.15 Joint Ventures Joint ventures are acceptable. If submitting a proposal as a joint venture, the offeror must submit a copy of the joint venture agreement which identifies the principles involved and their rights and responsibilities regarding performance and payment. 1.16 Offeror's Certification By signature on the proposal, offerors certify that they comply with: (a) the laws of the State of Alaska, (b) the applicable portion of the Federal Civil Rights Act of 1964, (c) the Equal Employment Opportunity Act and the regulations issued thereunder by the federal government, (d) the Americans with Disabilities Act of 1990 and the regulations issued thereunder by the federal government, (e) all terms and conditions set out in this RFP, (f) a condition that the proposal submitted was independently arrived at, without collusion, under penalty of perjury, (g) that the offers will remain open and valid for at least 90 days, and (h) that programs, services, and activities provided to the general public under the resulting contract conform with the Americans with Disabilities Act of 1990, and the regulations issued thereunder by the federal government. If any offeror fails to comply with [a] through [h] of this paragraph, the State reserves the right to disregard the proposal, terminate the contract, or consider the contractor in default. 1.17 Conflict of Interest Each proposal shall include a statement indicating whether or not the firm or any individuals working on the contract has a possible conflict of interest (e.g., employed by the State of Alaska) and, if so, the nature of that conflict. The Commissioner, Department of Administration, reserves the right to cancel the award if any interest disclosed from any source could either give the appearance of a conflict or cause speculation as to the objectivity of the program to be developed by the offeror. The Commissioner's determination regarding any questions of conflict of interest shall be final. 8CANr\\ED rlUN 1 S 2004 Page 10 --- '~ 1.18 Right to Inspect Place of Business At reasonable times, the State may inspect those work sites that are related to the performance of a contract. If the State makes such an inspection, the contractor must provide"reasonable assistance. 1.19 Solicitation Advertising Public notice has been provided in accordance with 2 MC 12.220. 1.20 News Releases News releases related to this RFP will not be made without prior approval of the project director. 1.21 Assignment Per 2 MC 12.480, the contractor may not transferor assign any portion of the contract without prior Written approval from the procurement officer. 1.22 Disputes Any dispute arising out of this agreement will be resolved under the laws of the State of Alaska. Any appeal of an administrative order or any original action to enforce any provision of this agreement or to obtain relief from or remedy in connection with this agreement may be brought only in the Superior Court for the State of Alaska. 1.23 Severability If any provision of the contract or agreement is declared by a court to be illegal or in conflict with any law, the validity of the remaining terms and provisions will not be affected; and, the rights and obligations of the parties will be construed and enforced as if the contract did not contain the particular provision held to be invalid. 1.24 Federal Requirements The offeror must identify all known federal requirements that apply to the proposal, the evaluation, or the contract. :SÇANNECì ~JUN 1 6 200,~ Page 11 .~ SECTION TWO STANDARD PROPOSAL INFORMATION 2.01 Authorized Signature All proposals must be signed by an individual authorized to bind the offeror to the provisions of the RFP. Proposals must remain open and valid for at least ninety (90) days from the opening date. 2.02 Pre-proposal Conference A pre-proposal conference will be held at 10:00 am, Alaska Time, on May 25,2004 in the Alaska Oil and Gas Conservation Commission hearing room in Suite 100,333 W. 7th Ave., Anchorage, Alaska. The purpose of the conference is to discuss the work to be performed with the prospective offerors and allow them to ask questions concerning the RFP. Questions and answers will be transcribed and sent to prospective offerors as soon as possible after the meeting. Offerors not able to attend in person may call 907-793-1229 to participate via conference call. Offerors with a disability needing accommodation should contact the procurement officer prior to the date set for the pre-proposal conference so that reasonable accommodation can be made. 2.03 Site Inspection The State may conduct on-site visits to evaluate the offeror's capacity to perform the contract. An offeror must agree, at risk of being found non-responsive and having its proposal rejected, to provide the State reasonable access to relevant portions of its work sites. Site inspection will be made by individuals designated by the procurement officer at the State's expense. 2.04 Amendments to Proposals Amendments to or withdrawals of proposals will only be allowed if acceptable requests are received prior to the deadline set for receipt of proposals. No amendments or withdrawals will be accepted after the deadline unless they are in response to the State's request in accordance with 2 AAC 12.290. 2.05 Supplemental Terms and Conditions -- Proposals must comply with Section 1.11 Right of Rejection. However, if the state fails to identify or detect supplemental terms or conditions that conflict with those contained in this RFP or that diminish the State's rights under any contract resulting from the RFP, the term(s) or condition(s) will be considered null and void. After award of contract: SCAJ\~NED JUN 1 l5 2004 Page 12 "-" a) if conflict arises between a supplemental term or condition included in the proposal and a term or condition of the RFP, the term or condition of the RFP will prevail; and b) if the State's rights would be diminished as a result of application of a supplemental term or condition included in the proposal, the supplemental term or condition will be considered null and void. 2.06 Clarification of Offers In order to determine if a proposal is reasonably susceptible for award, communications by the procurement officer or the proposal evaluation committee are permitted with an offeror to clarify uncertainties or eliminate confusion concerning the contents of a proposal. Clarifications may not result in a material or substantive change to the proposal. The evaluation by the procurement officer or the proposal evaluation committee may be adjusted as a result of a clarification under this section. 2.07 Discussions with Offerors The State may conduct discussions with offerors in accordance with AS 36.30.240 and 2 MC 12.290. The purpose of these discussions will be to ensure full understanding of the requirements of the RFP and proposal. Discussions will be limited to specific sections of the RFP or proposal identified by the procurement officer. Discussions will only be held with offerors who have submitted a proposal deemed reasonably susceptible for award by the procurement officer. Discussions, if held, will be after initial evaluation of proposals by the PEC. If modifications are made as a result of these discussions they will be put in writing. Following discussions, the procurement officer may set a time for best and final proposal submis·sions from those offerors with whom . discussions were held. Proposals may be reevaluated after receipt of best and final proposal submissions. If an offeror does not submit a best and final proposal or a notice of withdrawal, the offeror's immediate previous proposal is considered the offeror's best and final proposal. Offerors with a disability needing accommodation should contact the procurement officer prior to the date set for discussions so that reasonable accommodation can be made. Any oral modification of a proposal must be reduced to writing by the offeror. 2.08 Prior Experience Qualified offerors must have proof of compliance with the Well Control Training requirements of 20 MC 25.527 (d), and must have five years prior experience in oil and gas field well operations including plugging and abandonment. Documentation that these requirements have been met must be included in the Experience and Qualifications portion of their proposal ( See Section 5.05). An offeror's failure to meet these minimum prior experience requirements will cause their proposal to be considered non-responsive and their proposal will be rejected. iC'çc "1\ ~if"IE'r, ~¡¡ Cß~ «; {{!. ">nfì ~ 9;¡·"16'"a~\ tJ JtH\1 1 ú t..vU¿} Page 13 ',-- 2.09 Evaluation of Proposals The procurement officer, or an evaluation committee made up of at least three State employees or public officials, will evaluate proposals. The evaluation will be based solely on the evaluation factors set out in Section SEVEN of this RFP. After receipt of proposals, if there is a need for any substantial clarification or material change in the RFP, an amendment will be issued. The amendment will incorporate the clarification or change, and a new date and time established for new or amended proposals. Evaluations may be adjusted as a result of receiving new or amended proposals. 2.10 VendorTaxlD A valid Vendor Tax ID must be submitted to the issuing office with the proposal or within five days of the State's request. 2.11 Alaska Business License and Other Required Licenses At the time the proposals are opened, all offerors must hold a valid Alaska business license and any necessary applicable professional licenses required by Alaska Statute. Offerors should contact the Department of Community and Economic Development, Division of Occupational Licensing, P. O. Box 110806, Juneau, Alaska 99811-0806, for information on these licenses. Offerors must submit evidence of a valid Alaska business license with the proposal. An offeror's failure to submit this evidence with the proposal will cause their proposal to be determined non-responsive. Acceptable evidence that the offeror possesses a valid Alaska business license may consist of anyone of the following: (a) copy of an Alaska business license with the correct SIC code; (b) certification on the proposal that the offeror has a valid Alaska business license and has included the license number in the proposal; (c) a canceled check for the Alaska business license fee; (d) a copy of the Alaska business license application with a receipt stamp from the State's occupational licensing office; (e) a sworn and notarized affidavit that the offeror has applied and paid for the Alaska business license; or (f) A current Alaska Contractors License ..-...r'Ai\. 11\' ..-.."'\ ~~ it\J ~ ,fi< 'no ~ gVJ--r\j!~·~t:~~ JYlt 1 º t:_U ICt Page 14 ,--",< 2.12 Application of Preferences Certain preferences apply to all contracts for professional services, regardless of their dollar value. The Alaskan Bidder and Offeror preferences are the two most common preferences involved in the RFP process. Additional preferences that may apply to this procurement are listed below. Guides that contain excerpts from the relevant statutes and codes, explain when the preferences apply and provide examples of how to calculate the preferences are available at the Department of Administration, Division of General Services' web site: http://www.state.ak.us/local/akpaqes/ADMIN/dqs/policY.htm Alaska Products Preference - AS 36.30.332 Recycled Products Preference - AS 36.30.337 Local Agriculture and Fisheries Products Preference - AS 36.15.050 Employment Program Preference - AS 36.30.170(c) Alaskans with Disability Preference - AS 36.30.170 (e) Employers of People with Disabilities Preference - AS 36.30.170 (f) The Division of Vocational Rehabilitation in the Department of Labor and Workforce Development keeps a list of qualified employment programs; a list of individuals who qualify as persons with a disability; and a list of persons who qualify as employers with 50 percent or more of their employees being disabled. A person must be on this list at the time the bid is opened in order to qualify for a preference under this section. As evidence of an individual's or a business' right to a certain preference, the Division of Vocational Rehabilitation will issue a certification letter. To take advantage of the Employment Program Preference, Alaskans with Disability Preference or Emploýers of People with Disabilities Preference described above, an individual or business must be on the appropriate Division of Vocational Rehabilitation list at the time the proposal is opened, and must. provide the procurement officer a copy of their certification letter. Offerors must attach a copy of their certification letter to the proposal. The offeror's failure to provide the certification letter mentioned above with the proposal will cause the State to disallow the preference. 2.13 5 Percent Alaskan Bidder Preference 2 AAC 12.260 & AS 36.30.170 An Alaskan Bidder Preference of five percent will be applied prior to evaluation. The preference will be given to an offeror who: (a) holds a current Alaska business license; (b) submits a proposal for goods or services under the name on the Alaska business license; (c) has maintained a place of business within the State staffed by the offeror, or an employee of the offeror, for a period of six months immediately preceding the date of the proposal; (d) is incorporated or qualified to do business under the laws of the state, is a sole proprietorship and the Page 15 '-'f~' bl\.Jì\jt:f,: eiU' .I\~ ¿j ~ 2f)f'ìJ 9Y;i~ì~ 'oc "b.;:..,¡ J nî.l, v . iJ U . ~---' ~> proprietor is a resident of the state, is a limited liability company organized under AS 10.50 and all members are residents of the state, or is a partnership under AS 32.05 or AS 32.11 and all partners are residents of the state; and (e) if a joint venture, is composed entirely of entities that qualify under (a)-(d) of this subsection. Alaskan Bidder Preference Affidavit In order to receive the Alaskan Bidder Preference, proposals must include an affidavit certifying that the offeror is eligible to receive the Alaskan Bidder Preference. 2.14 Formula Used to Convert Cost to Points AS 36.30.250 & 2 AAC 12.260 The distribution of points based on cost will be determined as set out in 2 MC 12.260 (d). The lowest cost proposal will receive the maximum number of points allocated to cost. The point allocations for cost on the other proposals will be determined through the method set out below. In the generic example below, cost is weighted as 70% of the overall total score. The weighting of cost may be different in your particular RFP. See section SEVEN to determine the value, or weight of cost for this RFP. I I Formula Used to Convert Cost to Points [STEP 1] List all proposal prices, adjusted where appropriate by the application of all applicable preferences. Offeror #1 Offeror #2 Non-Alaskan Proposer Alaskan Proposer Alaskan Proposer $40,000 $42,750 $47,500 Offeror #3 [STEP 2] Convert cost to points using this formula. [ (Price of Lowest Cost Proposal) x (Maximum Points for Cost) ] = POINTS (Cost of Each Higher Priced Proposal) The RFP allotted 70% (70 points) of the total of 100 points for cost. Offeror #1 receives 70 points. The reason they receive that amount is because the lowest cost proposal, in this case $40,000, receives the maximum number of points allocated to cost, 70 points. Offeror #2 receives 65.5 points. $40,000 x LOWEST COST 70 MAX POINTS = 2,800,000 $42,750 = 65.5 OFFEROR #2 POINTS ADJ USTED BY Page 16 5CANNEO JUN 1 6 2004· '>;.,~ -' THE APPLICATION OF ALL APPLICABLE PREFERENCES Offeror #3 receives 58.6 points. $40,000 x LOWEST COST 70 MAX POINTS = 2,800,000 $47,500 = 58.9 OFFEROR #3 POINTS ADJ USTED BY THE APPLICATION OF ALL APPLICABLE PREFERENCES 2.15 Alaskan Offeror's Preference AS 36.30.250 & 2 AAC 12.260 2 AAC 12.260(e) provides Alaskan offerors a 10 percent overall evaluation point preference. Alaskan Bidders, as defined in AS 36.30.170(b), are eligible for the preference. This preference will be added to the overall evaluation score of each Alaskan offeror. Each Alaskan offeror will receive 10 percent of the total available points added to their evaluation score as a preference. I [ Alaskan Offeror's Preference [STEP 1] Determine the number of points available to Alaskan offerors under the preference. Total number of points available -100 Points 100 Total Points Available x 10% Alaskan Offerors Percentage Preference = 10 Number of Points Given to Alaskan Offerors Under the Preference [STEP 2] Add the preference points to the Alaskan offers. There are three offerors; Offeror #1, Offeror #2, and Offeror #3. Offeror #2 and Offeror #3 are eligible for the Alaskan Offeror's Preference. For the purpose of this example presume that all of the proposals have been completely evaluated based on the evaluation criteria in the RFP. Their scores at this point are: Offeror #1 - 89 points Offeror #2 - 80 points Offeror #3 - 88 points Offeror #2 and Offeror #3 each receive 10 additional points. The final scores for all of the offers are: Offeror #1 - 89 points Offeror #2 - 90 points 5CJ\NNED JUN 1 6 2004 Page 17 - '-- Offeror #3 - 98 points Offeror #3 is awarded the contract. 2.16 Contract Negotiation 2 MC 12.315 CONTRACT NEGOTIATIONS. After final evaluation, the procurement officer may negotiate with the offeror of the highest-ranked proposal. Negotiations, if held, shall be within the scope of the request for proposals and limited to those items which would not have an effect on the ranking of proposals. If the highest- ranked offeror fails to provide necessary information for negotiations in a timely manner, or fails to negotiate in good faith, the State may terminate negotiations and negotiate with the offeror of the next highest-ranked proposal. If contract negotiations are commenced, they may be held in the Alaska Oil and Gas Conservation Commission conference room in Suite 100,333 -W th Ave., Anchorage Alaska, If the contract negotiations take place in Anchorage, Alaska, the offeror will be responsible for their travel and per diem expenses. 2.17 Failure to Negotiate If the selected offeror · fails to provide the information required to begin negotiations in a timely manner; or · fails to negotiate in good faith; or · indicates they cannot perform the contract within the budgeted funds available for the project; or · if the offeror and the State, after a good faith effort, simply cannot come to terms, the State may terminate negotiations with the offeror initially selected and commence negotiations with the next highest ranked offeror. 2.18 Notice of Intent to Award (NIA) - Offeror Notification of Selection After the completion of contract negotiation the procurement officer will issue a written Notice of Intent to Award (NIA) and send copies to all offerors. The NIA will set out the names of all offerors and identify the proposal selected for award. 2.19 Protest AS 36.30.560; provides that an interested party may protest the content of the RFP. An interested party is defined in 2 MC 12.990(a)(7) as "an actual or prospective bidder or offeror whose economic interest might be affected substantially and directly by the issuance of a contract solicitation, the award of a contract, or the failure to award a contract." If an interested party wishes to protest the content of a solicitation, the protest must be received, in writing, by the procurement officer at least ten days prior to the deadline for receipt of proposals. Page 18 CC-hI['>.H\,t::n iU, n,~ &1 fP' 2nfÌl1. ~ ff'\f\1u\Jí!.:.!;.:' v!~ Q ...,w't '- ~ AS 36.30.560 also provides that an interested party may protest the award of a contract or the proposed award of a contract. If an offeror wishes to protest the award of a contract or the proposed award of a contract, the protest must be received, in writing, by the procurement officer within ten days after the date the Notice of Intent to Award the contract is issued. A protester must have submitted a proposal in order to have sufficient standing to protest the proposed award of a contract. Protests must include the following information; (a) the name, address, and telephone number of the protester; (b) the signature of the protester or the protester's representative; (c) identification of the contracting agency and the solicitation or contract at issue; (d) a detailed statement of the legal and factual grounds of the protest including copies of relevant documents; and (e) the form of relief requested. Protests filed by telex or telegram are not acceptable because they do not contain a signature. Fax copies containing a signature are acceptable. The procurement officer will issue a written response to the protest. The response will set out the procurement officer's decision and contain the basis of the decision within the statutory time limit in AS 36.30.580. A copy of the decision will be furnished to the protester by certified mail, fax or another method that provides evidence of receipt. All offerors will be notified of any protests. The review of protests, decisions of the procurement officer, appeals, and hearings, will be conducted in accordance with the State Procurement Code (AS 36.30), Article 8 " Legal and' Contractual Remedies." Page 19 §;;.r'~~F",!I¡¡::;:C' F.·U~M 1 ~ 20f\!ì \;¿I'i:;¡IIq"~r{!1'\1&a,,'" t;,$ e ¡j db t;} ~ J oJ f SECTION THREE STANDARD CONTRACT INFORMATION 3.01 Contract Type This contract is a firm fixed price contract. 3.02 Contract Approval This RFP does not, by itself, obligate the State. The State's obligation will commence when the contract is approved by the Commissioner of the Department of Administration, or the Commissioner's designee. Upon written notice to the contractor, the State may set a different starting date for the contract. The State will not be responsible for any work done by the contractor, even work done in good faith, if it occurs prior to the contract start date set by the State. 3.03 Standard Contract Provisions The contractor will be required to sign and submit the attached State's Standard Agreement Form for Professional Services Contracts (form 02-093/Appendix A). The contractor must comply with the contract provisions set out in this attachment. No alteration of these provisions will be permitted without prior written approval from the Department of Law. Objections to any of the provisions in Appendix A must be· set out in the offeror's proposal. 3.04 Proposal as a Part of the Contract Part or all of this RFP and the successful proposal may be incorporated into the contract. 3.05 Additional Terms and Conditions The State reserves the right to add terms and conditions during contract negotiations. These terms and conditions will be within the scope of the RFP and will not affect the proposal evaluations. 3.06 Insurance Requirements The successful offeror must provide proof of workers' compensation insurance prior to contract approval. The successful offeror must secure the insurance coverage required by the State. The coverage must be satisfactory to the Department of Administration Division of Risk Management. An offeror's failure to provide evidence of such insurance coverage is a material breach and grounds for withdrawal of the award or termination of the contract. Offerors must review form APPENDIX 8, attached, for details on required coverage. Page 20 s,rr" (\Ií\H,\\~[)-:- < H i~~ 1 5 2004 ~4\::!lIw'rJ y--.. ~~~HCq- ':::ff~... ìJ ~ ~ - -~ 3.07 Bid Bond - Performance Bond - Surety Deposit Bid Bond Offerors must obtain a bid bond and submit it with the proposal. The amount of the bid bond for this contract is Five Thousand Dollars. If an offeror is selected to receive the contract and fails to negotiate, or fails to deliver a fully executed contract after negotiation, the bid bond will be immediately forfeited to the State. The time limit for negotiation or delivery of a contract is fourteen days from the date the offeror receives notice from the procurement officer. Proposals submitted without a bid bond will be rejected. PERFORMANCE AND PAYMENT BONDS. A performance bond is to be in the amount of 75% of the total contract value. The surety on each bond may be any corporation or partnership authorized to do business in the State as an insurer under AS 21.09 or two responsible individual sureties approved by the Contracting Officer. If individual sureties are used, 2 individual sureties must each provide the AOGCC with security equal to the specified amount of each bond. The net worth and the total value of the security assets, located in Alaska, of each individual surety may not be less than the penal amount of the bond. In addition, each individual surety must execute an affidavit of individual surety on a form provided by the AOGCC upon request. Each individual surety affidavit contains a Certificate of Sufficiency which must be signed by an official of an institution having full knowledge of assets and responsibilities of the surety. Any costs incurred by you or the individual surety are subsidiary. Security may be one, or a combination, of: 1. Escrow Account, with a Federally-insured financial institution, in the name of the AOGCC. Acceptable securities include, but are not limited to, cash, treasury notes, bearer instruments having a specific value, or money market certificates. 2. First Deed of Trust, with the AOGCC named as beneficiary, against the unencumbered value of real property or an agreement by a second party, including deeds of trust, mortgage, lien or judgment interests to subrogate their interests to the AOGCC in the real property offered by the individual surety. A title insurance policy, with the AOGCC as a named beneficiary, and a current (within 3 months) professional appraisal or assessed valuation is required to ascertain the true value of the property offered as collateral. If buildings or other valued improvements are involved then fire and casualty insurance with the AOGCC as a named insured and in limits and coverages acceptable to the Contracting Officer are required. The appraiser must acknowledge in writing that the appraisal is prepared for the benefit of the AOGCC and the AOGCC has the right to rely on its contents. This deed of trust must be recorded in the recording office where the property is located. Keep all bonds and security assets, as applicable, in effect for 12 months after the date of final payment and until all obligations and liens under this Contract are satisfied. The Contracting Officer may, at his option, notify the bonding company or surety of any potential default or liability. Substitute, within 5 working days, another bond and surety, both acceptable to the AOGCC, if the surety 1 . becomes insolvent or is declared bankrupt, 2. loses its right to do business in any state affecting the work, 3. ceases to meet Contract requirements, 4. fails to furnish reports of financial condition upon request, or 5. otherwise becomes unacceptable to the AOGCC. When approved by the Contracting Officer, you may replace 1. an individual surety with a corporate surety, or 2. posted collateral with substitute collateral. Page 21 S{':;l\E~jNED JUN 1 (5 2004 .' ~ -- 3.08 Contract Funding Payment for the contract is subject to funds already appropriated and identified. 3.09 Proposed Payment Procedures The State will make payments based on a negotiated payment schedule. Each billing must consist of an invoice and progress report. No payment will be made until the progress report and invoice have been approved by the project director. 3.10 Contract Payment No payment will be made until the contract is approved by the Commissioner of the Department of Administration or the Commissioner's designee. Under no conditions will the State be liable for the payment of any interest charges associated with the cost of the contract. The State is not responsible for and will not pay local, state, or federal taxes. All costs associated with the contract must be stated in U.S. currency. 3.11 In~ormal Debriefing When the contract is completed, an informal debriefing may be performed at the discretion of the project director. If performed, the scope of the debriefing will be limited to the-work performed by the contractor. 3.12 Inspection & Modification - Reimbursement for Unacceptable Deliverables The contractor is responsible for the completion of all work set out in the contract. All work is subject to inspection, evaluation, and approval by the project director. The State may employ all reasonable means to ensure that the work is progressing and being performed in compliance with the contract. Should the project director determine that corrections or modifications are necessary in order to accomplish its intent, the project director may direct the contractor to make such changes. The contractor will not unreasonably withhold such changes. Substantial failure of the contractor to perform the contract may cause the State to terminate the contract. In this event, the State may require the contractor to reimburse monies paid (based on the identified portion of unacceptable work received) and may seek associated damages. Page 22 r-- ~·/H,,·f>.éþ:r\ ~þ. t(\!' -r @ 5JOfiJ1 ~~VtS~~f'j~k {d}vì'{¡ JL ~¿i €... U,. -..,.... --' 3.13 Termination for Default If the project director determines that the contractor has refused to perform the work or has failed to perform the work with such diligence as to ensure its timely and accurate completion, the State may, by providing written notice to the contractor, terminate the contractor's right to proceed with part or all of the remaining work. This clause does not restrict the State's termination rights under the contract provisions of Appendix A, attached. 3.14 Contract Changes - Unanticipated Amendments During the course of this contract, the contractor may be required to perform additional work. That work will be within the general scope of the initial contract. When additional work is required, the project director will provide the contractor a written description of the additional work and request the contractor to submit a firm time schedule for accomplishing the additional work and a firm price for the additional work. Cost and pricing data must be provided to justify the cost of such amendments per AS 36.30.400. The contractor will not commence additional work until the project director has secured any required State approvals necessary for the amendment and issued a written contract amendment, approved by the Commissioner of the Department of Administration or the Commissioner's designee. 3.15 Contract Invalidation If any provision of this contract is found to be invalid, such invalidation will not be construed to invalidate the entire contract. 5JCþj\H\!ED JUN 1 G 2004 Page 23 ~ -~ SECTION FOUR SCOPE OF WORK 4.01 Scope of Work General Statement of Objective Five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska, require proper abandonment in compliance with AOGCC regulations as specified below. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of in accordance with applicable law. Drill sites are to be returned to original grade. Access to work areas Access to all site locations in the summer is generally adequate for use of two-wheel drive vehicles. The access road is unmaintained and winter access may be limited. The attached map (see Appendix C) is provided for convenience in identifying access but its accuracy is not warranted. Bruce Webb, a Natural Resource Specialist with the Department of Natural Resources, is familiar with the GRJ well locations and can provide additional access infonnation. Mr. Webb's phone number is (907) 269-8778. ACRONYMS Interpret acronyms used in the Contract, as follows: BOPE - Blowout prevention equipment. BPV - Back pressure valve. CBL - Cement Bond Log DRO - Diesel Range Organics LO - Lay down. md - measured depth MIRU - Move in I rig up. NO - Nipple down. NU - Nipple up. POH - Pull out of hole. ppg -Ibs. per gallon PU - Pick up. RO - Rig down. ROMO - Rig down I move off. RIH - Run in hole. RU - Rig up. TO - Total depth. Statement of Work Houston No. 22 Description The Houston 22 well location has no gravel pad and access to the location may be limited. According to the operator, Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 515 feet. The well was not perforated or completed. An obstruction was reported at 220 feet when an attempt was made to run wire line logs. Page 24 SCANNED JUN 1 6 2004 -- - No information was presented as to what may be the obstruction. There is no wellhead on the well, only a steel plate welded over the top of the 8-5/8 inch casing. The AOGCC has not independently verified information reported by the operator. Tasks H22.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H22.2) Obtain any required pennits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. Notify Ron Swansen ((907) 745-9868), Director of Corrrrnunity Development, Matanuska- Susitna Borough of start of operations. H22.3) MIRU workover rig. Fill water tanks. H22.4) Ensure well is dead. Have AOGCC inspector confIrm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H22.5) Remove (cut off) existing well cover plate. H22.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to TD if possible (reportedly at 515 feet). An obstruction is reported at approx. 220 feet. . . H22.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H22.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from total depth to surface or, if an obstruction is encountered at approx. 220 feet, from the obstruction to surface. H22.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H22.10) Cut off 10 inch conductor and 8-5/8 inch casing at least 4 feet below grade level. H22.11) Weld on a marker plate per attached specifications (see Appendix One, Section Four). H22.12) RDMO workover rig. H22.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Notify Ron Swansen ((907) 745-9868), Director of Community Development, Matanuska-Susitna Borough for [mal location inspection. Houston No.4 Descri ption The Houston 4 well location has no gravel pad and access to the location may be limited. According to the operator Houston No.4 was completed with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the metamorphic lithology encountered. The well at the surface appears to be the 8 inch conductor sticking up. The AOGCC has not independently verified information reported by the operator. Page 25 - ~--'--" RUN 1 c. 2íìf1l\ ~rß.M:."\~~~¡ ~.. · Q !jY' ~Vf1.~\Jht;,;.1'? r..J" & ¿. '-' H4.1) H4.2) H4.3) H4.4) H4.5) H4.6) H4.7) H4.8) H4.9) H4.10) H4.11 ) H4.12) Tasks Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. Obtain any required pernrits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. MIRV workover rig. Fill water tanks. Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. PV 2-3/8 inch tubing workstring. RIH carefully with open ended tubing until fill is encountered (reported TD is approx. 478 feet). Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. RV cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to surface. POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. Cut off 8 inch conductor at least 4 feet below grade level. Weld on a well marker plate per attached specifications (see Appendix One, Section Four). RDMO workover rig. Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.3 Description This gravel pad is located at the end of the access road that runs in front of pad #2. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. The pad is approximately 60 feet by 80 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well has a wellhead and discharge line. See photos #8. #9 and #10. A couple of steel 55 gallon drums are present, the contents of which are unknown. The well is located within a wood-framed enclosure. An electrical control panel is mounted on a temporary wooden support adjacent to the well house. See vhoto #11. Photo #10 also shows a section of culvert, presumed to be used for cellar construction. The culvert is approximately 48 inches in diameter and 6 feet long. To the south of the well house, there is a mound of diesel-contaminated gravel covered with a blue tarp. The contamination came from a leak in the generator fuel line over a reported period of two weeks. It is estimated the gravel quantity is between two and three cubic feet. The gravel has been insitu for approximately six years and is expected to have low concentrations ofDRO. See photo #12. According to the operator Houston No.3 is completed with 7 inch surface casing set and cemented from 505 feet to surface. A 4-~ inch production casing string was run, set and cemented to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with cement bond discernable from 2002 feet to 1000 feet, and from 760 feet to surface. The interval from 760 feet - 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet md and a progressive cavity Page 26 SCANNED JUN 1 tò 20DLj ~--- pump was hung off the packer in a tubingless completion. A centralized reverse threaded sucker rod was run from surface to the pump as a drive shaft. The intent was to dewater the coals in the perforated zones and pump them for disposal into a sandstone penetrated by the wellbore below the shoe. The packer set at 1900 feet was intended to be the sealing element to prevent water from loading up the perforated gas producing interval. Well is shut in, the wellhead may be under pressure. The AOGCC has not independently verified infonnation reported by the operator. Tasks H3.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H3.2) Obtain any required pennits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H3.3) Remove surface control equipment including wellhouse and any related equipment in the area. H3.4) MIRU workover rig. Fill water tanks. H3.5) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H3.6) Remove tree. Install a back pressure valve (BPV). NU and test BOPE. Remove BPV. H3.7) POH and LD reverse threaded sucker rods. H3.8) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to reported packer depth @ approx. 1900 feet. H3.9) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H3.10) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from approx. 1900 feet to approx. 1200 feet. POH to approx. 700 feet. H3 .11) Spot a balanced 15.8 ppg cement plug from approx. 700 feet to surface. H3.12) POH and LD workstring. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. ND BOPE. H3.B) Cut off7 inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. H3.14) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H3.15) RDMO workover rig. H3.16) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance Houston No.2 Descri pti on Page 27 - '¿'E-~ ÐU~O i ñ! znfj/ì ~CAN~'d U J.f\1 .! Q . JlY't ~-/ '"-' This gravel pad is located around the east end of the airstrip, and to the south, off an extension of the main access. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. See vhoto #4. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well is capped with a blind-flange and the immediate area is sunken. A flanged casing is present on the site, as well as several (6+) lengths of approx. 2 inch tubing (approx. 30 feet long) and a submersible pump . See photos #5 and #6 . Photo #6 also shows a black approx. 2 inch plastic pipe. This pipe runs the entire length between sites #2 and #3, and between site #2 and the reserve pit. See also photo #7. According to the operator, Houston No.2 is completed with 7 inch casing set at 462 feet and cemented back to surface, 4-~ inch casing set and cemented back to surface from 1662 feet, and the shoe drilled out for a final TD of 21 05 feet. This well is currently completed with a flange at surface. The AOGCC has not independently verified information reported by the operator. H2.1) H2.2) H2.3) ·H2.4) H2.5) H2.6) H2.7) H2.8) H2.9) H2.10) H2.11 ) H2 .12) H2.13) H2.14) Tasks Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. Obtain any required pennits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. MIRV workover rig. Fill water tanks. Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. Remove casing flange. PU 2-3/8inch tubing workstring. Rill carefully with open ended tubing to TD (reported @ approx. 2105 feet). 4- 1/2 inch casing was reportedly set @ 1662 feet. Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. RV cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to approx. 1500 feet. POH to approx. 500 feet. Spot a balanced 15.8 ppg cement plug from approx. 500 feet to surface. POH and LD tubing. Ensure cement level inside casing is 5· feet below grade level. RD cementing equipment. Cut off7inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. Weld on a well marker plate per attached specifications (see Appendix. One, Section Four). RDMO workover rig. Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. - .-. -. ·Ut'., <1. Ii! ?ony, >;;:C· 1\ i\ I ?\' ¡:.: f."i I f';' ~ © .... . ,y':¡ ft;;P .;__n~ ~,' !~.~, ~ ~ 1;.1 =-'" Page 28 -- '-' Houston No.1 Description This gravel pad is located at the end, and to the north of the main access road which borders the fÌont of the Mikkelsen and Baird residences, and is immediately north of and parallel to the Airstrip. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small trees. The well is capped with a blind- flange. Several wooden timbers, wood pallets, a primitive chokeldiverter manifold, and a flanged casing are present on the site. See photo #1. To the west of the main well pad is a depression approximately 10 feet by 10 feet that was used as a temporary reserve pit. The depression is approximately three feet deep. This temporary pit is to be filled and returned to original grade. See photo #2. At the entrance to the Houston #1 well pad, are two pallets of drilling additives, which are believed to be clay and gel (but this has not been verified). See photo #3. According to the operator, Houston No.1 is completed with a 10 inch conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 ~ inch casing cemented fÌom TD to surface. A cement plug is present from 240 feet to 840 feet. The well has no open perforations. The AOGCC has not independently verified infonnation reported by the operator. H1.I) H1.2) Hl.3) Hl.4) H1.5) H1.6) H1.7) Hl.8) HI.9) HI. 10) H1.11) H1.12) Tasks Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGGC inspector for rig up. MIRU workover rig. Fill water tanks. Ensure well is dead. Have AOGCC inspector confinn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. Remove casing flange. PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to plug depth (reported @ approx. 240 feet). Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. RU cementing equipment. Spot a balanced 15.8 ppg cement plug fÌom top of existing plug (approx. 240 feet) to surface. POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level. Weld on a well marker plate per attached specifications (see Appendix One, Section Four). RDMO workover rig. S·'C'f·\ I\n\'~rì ~~ ~í\' t· . .,,~ "0 "!~""" ~,) d 1~. 1 6 200t} Page 29 '--- --- HI. 13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Miscellaneous Debris Description Between the airstrip and the reserve pit, at the end of the main access road, there are several (approximately 10) lengths of what appear to be 6 inch well casing. In the adjacent vicinity are miscellaneous wooden debris, valves and flanges. The area is overgrown with grass. See photo #15. Between well pads #2 and #3, there are several rusted steel pipes laying in a relatively undisturbed area of land, to the south of the road. This debris appears to be sucker rods or small diameter tubing. The length and quantity are not estimated. See vhoto #16. Task MD. 1) Miscellaneous debris described above must be removed for disposal or salvage. Reserve Pit Closure Description A reserve pit is located at the end of an airstrip, near Houston No.1. The pit is approximately 75 feet X 100 feet X 6 feet. Inspection revealed the pit to be lined and in good condition. Water in the pit appears to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. A gravel berm surrounds the pit and is approximately two feet high. The pit extends approximately four feet below the surrounding ground surface, for a total interior depth of approximately six feet. See photos #13 and #14. Since the date of photos #13 and #14, the reserve pit has been pmnped out (September 2002) by the surface estate owner for child-safety concerns. The fluid within the pit was discharged directly onto the surface. A portion of the reserve pit liner was also removed. A clay-like material was present at the bottom of the drained pit. Any fluid presently in the pit is likely from rain water and snowmelt. Tasks RPC.l) The water in the pit must be tested to establish what disposal options are possible. Hopefully most of it can be used for cementing and injectivity tests in Houston No.3. RPC.2) Water in the pit must be properly disposed of if not used for cementing and in injectivity tests in Houston No.3. RPC.3) The pit liner must be removed and disposed of. The reserve pit is to have all toxic substances and hazardous materials removed. RPCA) The pit berms are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation. RPC.5) Any loose debris present must be removed and the site left in a clean condition. ¡SCANNED JUN 1 6 20D4 Page 30 --- .---- APPENDIX ONE to SECTION FOUR WELL MARKER PLATE REQUIREMENTS A marker plate must be at least 1/4 inch thick steel; at least 18 inches square or in diameter; and welded to and must cover the outermost casing string. The following infonnation must be bead-welded directly to the marker: the name of the operator that drilled the well; the name of the contractor that abandoned the well; the Permit to Drill number for the well; the name designated for the well by the operator under 20 AAC 25.005(f); the API number for the well, with any suffIX appended to the number under 20 AAC 25.005(f). SC;\NNED ·JUN 1 6 2004 Page 31 -- '-" SECTION FIVE PROPOSAL FORMAT AND CONTENT 5.01 Proposal Format and Content The State discourages overly lengthy and costly proposals, however, in order for the State to evaluate proposals fairly and completely, offerors must follow the format set out in this RFP and provide all information requested. 5.02 Introduction Proposals must include the complete name and address of offeror's firm and the name, mailing address, and telephone number of the person the State should contact regarding the proposal. Proposals must confirm that the offeror will comply with all provisions in this RFP; and, if applicable, provide notice that the firm qualifies as an Alaskan bidder. Proposals must be signed by a company officer empowered to bind the company. An offeror's failure to include these items in the proposals may cause the proposal to be determined to be non-responsive and the proposal may be rejected. 5.03 Methodology and Timeline Used for the Project Offerors must provide comprehensive narrative statements, timelines and drawings if necessary, that set out the methodology they intend to employ and illustrate how the methodology will serve to accomplish the work and meet the State's project schedule. 5.04 Management Plan for the Project Offerors must provide comprehensive narrative statements that set out the management plan they intend to follow and illustrate how the plan will serve to accomplish the work and meet the State's project schedule. 5.05 Experience and Qualifications Offeror's must provide a narrative describing other successfully completed projects of similar scope and complexity. Offerors must provide an organizational chart specific to the personnel assigned to accomplish the work called for in this RFP, including any sub-contractors; illustrate the lines of authority; designate the individual responsible and accountable for the completion of each component of the RFP. Offeror's must document how they meet the prior experience requirement as described in section 2.08. Offerors must provide reference names, addresses and phone numbers for similar projects the offeror's firm has completed. Page 32 ~r·lJ.!\t/¡\li="'~· .~.. '>;!JV(¡ '8 ,~p ~I' '; T,,'! ,I\~ <'j ., ,,'= "=' \k" U i\~ J 6 20D4 ......... -.- 5.06 Cost Proposal Cost Proposal should be included with the proposal but sealed in a separate envelope. Cost proposals must include an itemized list of all direct and indirect costs associated with the performance of the contract, including, but not limited to, total number of hours at various hourly rates, direct expenses, payroll, supplies, overhead assigned to each person working on the project, percentage of each person's time devoted to the project, and profit. 5.07 Evaluation Criteria All proposals will be reviewed to determine if they are responsive. They will then be evaluated using the criteria set out in the following Section SIX. An evaluation may not be based on discrimination due to the race, religion, color, national origin, sex, age, marital status, pregnancy, parenthood, disability, or political affiliation of the offeror. A proposal shall be evaluated to determine whether the offeror responds to the provisions, including goals and financial incentives, established in the request for proposals in order to eliminate and prevent discrimination in State contracting because of race, religion, color, national origin, sex, age, marital status, pregnancy, parenthood, or disability. SCAN(\~EC JUN 1 6 2004 Page 33 '-" - SECTION SIX EVALUATION CRITERIA AND CONTRACTOR SELECTION THE TOTAL NUMBER OF POINTS USED TO SCORE THIS CONTRACT IS 100 6.01 Methodology Used for the Project (5 Percent) Proposals will be evaluated against the questions set out below: [a] Does the methodology depict a logical approach to fulfilling the requirements of the RFP? [b] Does the methodology match and achieve the objectives set out in the RFP? [c] Does the methodology interface with th~ time schedule in the RFP? 6.02 Management Plan for the Project (5 Percent) Proposals will be evaluated against the questions set out below: [a] How well does the management plan support all of the project requirements and logically lead to the deliverables required in the RFP? [b] How well is accountability completely and clearly defined? [c] Is the organization of the project team clear? [d] How well does the management plan illustrate the lines of authority and communication? [e] To what extent does the offeror already, equipment, and licenses necessary to perform the contract? [f] Does it appear that the offeror can meet the schedule set out in the RFP? [g] Is the proposal practical, feasible, and within budget? [h] How well have any potential problems been identified? [i] Is the proposal submitted responsive to all material requirements in the RFP? 8CANNEC JUN 1 {} 2004 Page 34 - --- 6.03 Experience and Qualifications (20 Percent) Proposals will be evaluated against the questions set out below: [d] How well has the firm demonstrated experience in completing similar projects on time and within budget? [e] How successful is the general history of the firm regarding timely and successful completion of projects? [f] Has the firm provided letters of reference from previous clients? [g] If a subcontractor will perform work on the contract, how well do they measure up to the evaluation used for the offeror? 6.04 Contract Cost (60 Percent) Converting Cost to Points The lowest cost proposal will receive the maximum number of points allocated to cost. The point allocations for cost on the other proposals will be determined through the method set out in Section 2.14. 6.05 Alaskan Offeror's Preference (10 Percent) If an offeror qualifies for the Alaskan Bidder Preference, the offeror will receive an Alaskan Offeror's Preference. The preference will be 10 percent of the total available points. This amount will be added to the overall evaluation score of each Alaskan offeror. ~. r.A\;\.^.!.~jt:[;, .iUN "t 6200l.l ~ÿttlJ ~. \:" ~e;;;._ <:d. t (! ¿~ Page 35 'c~ -.; 7.01 Attachments Attachments 1. 2. 3. 4. 5. 6. SECTION SEVEN ATTACHMENTS Proposal Evaluation Form Standard Agreement Form Appendix A Appendix B 1 Notice of Intent to Award Appendix C Map and Site Pictures Page 36 SCANNED ,JUN 1 6 2004 .~ ~. PROPOSAL EVALUATION FORM All proposals will be reviewed for responsiveness and then evaluated using the criteria set out herein. Person or Firm Name Name of Proposal Evaluation (PEG) Member Date of Review RFP Number EVALUATION CRITERIA AND SCORING THE TOTAL NUMBER OF POINTS USED TO SCORE THIS CONTRACT IS 100 7.01 Methodology Used for the Project-5 Percent Maximum Point Value for this Section - 5 Points 100 Points x 5 Percent = 5 Points Proposals will be evaluated against the questions set out below. [a] Does the methodology depict a logical approach to fulfilling the requirements of the RFP? EVALUATOR'S NOTES [b] Does the methodology match and achieve the objectives set out in the proposal? EVALUATOR'S NOTES [c] Does the methodology interface with the time schedule in the proposal? EVALUATOR'S NOTES EVALUATOR'S POINT TOTAL FOR 7.01 °C·J\·l¡~·r=~'-;. "'~N ~ @ 2001i 5 n~\â\]t:L JUL Jl ú "t.} Page 37 '"'ii;I~ "- 7.02 Management Plan for he Project-5 Percent Maximum Point Value for this Section - 5 Points 100 Points x 5 Percent = 5 Points Proposals will be evaluated against the questions set out below. [a] How well does the management plan support all of the project requirements and logically lead to the deliverables required in the RFP? EVALUATOR'S NOTES [b] How well is accountability completely and clearly defined? EVALUATOR'S NOTES [c] Is the organization of the project team clear? EVALUATOR'S NOTES [d] How well does the management plan illustrate the lines of authority and communication? EVALUATOR'S NOTES [e] To what extent does the offeror already have, equipment, and licenses necessary to perform the contract? EVALUATOR'S NOTES [f] Does it appear that offeror can meet the schedule set out in the RFP? EVALUATOR'S NOTES ~r'.'·'A- ~]ß..i. i~~'~\ 5~ 1M 1 ¡;, 20D!) ~~a~~'\j~b' JU~\ 1. '0 . i' Page 38 ''-~ """--~' [g] Is the proposal practical, feasible, and within budget? EVALUATOR'S NOTES [h] Have any potential problems been identified? EVALUATOR'S NOTES [i] Is the proposal submitted responsive to all material requirements in the RFP? EVALUATOR'S NOTES EVALUATOR'S POINT TOTAL FOR 7.02 7.03 Experience and Qualifications-20 Percent Maximum Point Value for this Section - 20 Points 100 Points x 20 Percent = 20 Points Proposals will be evaluated against the questions set out below. Questions regarding the personnel. [a] Do the individuals assigned to the project have experience on similar projects? EVALUATOR'S NOTES [b] Are resumes complete and do they demonstrate backgrounds that would be desirable for individuals engaged in the work the RFP requires? EVALUATOR'S NOTES [c] How extensive is the applicable education and experience of the personnel designated to work on the project? EVALUATOR'S NOTES S- r~t\'\\jr\lç:[O, iU1N 1 B 2QO~l ~-=- ~¥ ,,~'"'~~. ~~ --' t::,;;' _ ¡ t1 <='k- - =- Page 39 -~- "-' Questions regarding the firm. [d] Has the firm demonstrated experience in completing similar projects on time and within budget? EVALUATOR'S NOTES [e] How successful is the general history of the firm regarding timely and successful completion of projects? EVALUATOR'S NOTES [f] Has the firm provided letters of reference from previous clients? EVALUATOR'S NOTES [g] If a subcontractor will perform work on the project, how well do they measure up to the evaluation used for the offeror? EVALUATOR'S NOTES EV ALUA TOR"S POINT TOTAL FOR 7.03 ~r>~.f\1f\IE-·r-, Jqr'~ 1 (j ?OD!ß ~\.-fF GH' . ;J- b l! p¿, .& J c.. . Page 40 "- -- 7.04 Contract Cost - 60 - Percent Maximum Point Value for this Section - 60 Points 100 Points x 60 Percent = 60 Points Overall, a minimum of 60 percent of the total evaluation points will be assigned to cost. The cost amount used for evaluation may be affected by one or more of the preferences referenced under Section 2.13. Converting Cost to Points The lowest cost proposal will receive the maximum number of points allocated to cost. The point allocations for cost on the other proposals will be determined through the method set out in Section 2.14. EVALUATOR'S POINT TOTAL FOR 7.05 7.05 Alaska Preference - 10 Percent Alaskan Bidders receive a 10 Percent overall evaluation point preference. Point Value for Alaskan Bidders in this Section -- 10 Points 100 Points x 10 Percent = 10 Points If an offeror qualifies for the Alaskan Bidder Preference, the offeror will receive an Alaskan Offeror's Preference. The preference will be 10 percent of the total available points. This amount will be added to the overall evaluation score of each Alaskan offeror. EVALUATOR'S POINT TOTAL FOR 7.05 (either 0 or 10) EVALUATOR'S COMBINED POINT TOTAL FOR ALL SECTIONS C.. -r ~ !!\v:..u:: r'\ O¡' n i\ ~ '1 i~ ryO. nIt U~Pt\j\J~~\!~~,J {d U6\~ ~t ~! L '=' ~ Page 41 ~.:'LI~~ ~. ·~:·~~~~~::~~In~ - .~ QUOTATION PO Box 6720 Englewood, Colorado 80155-6720 USA 800-525-7052 +1-303-790-0600 fax 303-790-0686 www.lHS.com SHIP TO: State of Alaska AtteRÜOQ: Jim Regg I I I IHS Safes Rei): David Tilley Date: 5/21/200"¡ Account # 0 Si~os PCN i ME DBCRI PTlON , AJlUJUAl. ' EXTENDED PRtC!! PRICE I 592N "Ç-oI ' E....F L':'¡;'':' 11·:,1 ':'1 leI ¡: R')DIJ': 11,:',1 I ~ Ü,!J (II) : ú2J ú ) 1 596N API - MEASUREMENT 2,466.75 2,466.75 I Simo user 4,490.75 4,490.75 2 592N API- EXPLORATION AND PRODUCTION 2,288,ÒO 2,288.00 2 596N API - MEASUREMENT 2,788.50 2,788.50 2 simo user 5,076.50 5,076.50 .6 1 'I ù4J1E!104 TOTAl ILOC,"O",' Anchom"e, AK; North Slope, AK All prices valid for 30 days from the date of this quote. Any state use taxes will be added as a separate line item on invoices. Discounts are subject to qualification criteria in the price list. Please see the applicable License Agreement. <IHS is FA CNE T capable> VISA, MC, AMERICAN EXPRESS accepted Notes 1.) Society approval for this product is required before this order can be accepted. 2.) Pricing for this product requires Sales Administration approval from the SDO prior to quoting to the customer. 5CANNEC JUN 1 tj 2004 *- ;;J.. 7 -~ MATANUSKA-SUSITI~":~-'Í BOROUGH Community Development Department 350 East Dahlia A venue · Palmer, AK 99645 Phone (907) 745-9869 · Fax (907) 745-9635 E-mail: 1mb@matsugov.us - 1964-2004 lY~c M-4r 'I2/V12D AIII$Kl1 ". 1 2 20(1/1 V11& f':I u..,. ua$~ All Ons. C Charage oll1ll7iSSion Celebrating 40 Years! May 11,2004 John K. Norman, Chairman Alaska Oil and Gas Conservation Commission 333 W. 7th Avenue, Suite 100 Anchorage, AK 99501-3539 SE~IT VIA FAX (907) 276-7542 Re: Houston No. 22 Well Dear Mr. Norman: Thank you for the opportunity to review the proposed scope of work for the above referenced project. The changes you have proposed for Appendix "B" dealing with indemnity and insurance satisfy our concerns over land use and liability. The only suggestion I have is that within clause (2.2) add the word "officials" in the second sentence so the phrase would read; "Coverage must extend protection to the State and the Matanuska-Susitna Borough their agents, officials and employees. . ." Thank you for the opportunity to review this document and for your help in finding a solution to this land use issue. ~~r- ,_"."~¡,.o__ riR!I.~ '" P'2nOIl ;"jt;A~~~\!Eu .j wi~ 1 Q . >d ¿f ~~to ..~ ~ MATANUSKA-SUSITNA BOROUGH Community Development Department 350 East Dahlia Avenue · Palmer, AK 99645 Phone (907) 745-9869 · Fax (907) 745-9635 E-mail: 1mb@matsugov.us Celebrating40 Years! - 1964-2004 May 3, 2004 RECEIVED MAr 0 5 2004 Alaska Oil & Gas Gons. Lommission Anchorage John Norman, Chair State of Alaska, AOGCC 333 W. ih Avenue, Suite 100 Anchorage, AK 99501-3539 Sent via US mail and facsimile-907-276-7542 Re: Houston No. 22 Well Dear Mr. Norman, Thank you for the 21-page facsimile this morning detailing the scope of work for the GRI well restoration work. While the information provided does give sufficient detail for this department to understand the work to be performed on borough property, the state has not provided the liability waiver that was requested. The Matanuska-Susitna Borough still requires a written waiver of liability from either the State of Alaska or the contractor prior to performing the restoration work. Our director has stated he would accept a letter containing such a statement from the state. The state must provide either a letter accepting all liability or apply for a land use permit. The contractor would need to apply for a land use permit which would take more than 30 days to complete. Thank you for your attention to this matter. Sincerely, f//þ;Ilt//~ ~bby Broneske Resource Management Specialist sct,\NNEC JUN 1 6 200~, :4F~5 .. -- . <r:. ", ~~'r¡- 17\ 1r.;j r=r (,'\~-' ! ".,' /1'0. \'\ ¡ 1,.1 1,' f~." { . t) j 1 ! \ l L_ '..___..' L." ... _,' b..~~ P-.. r~ (í1 \ I r . , E : t L·~_ f i ~ ; : :-,,- Ud) U n\"\ 11 I ; ì (fu! t ¡ . d \ U~J i si~ 2~ U¿i<i -,-- FRANK H. MURKOWSKI, GOVERNOR AI1ASKA OIL AND GAS CONSERVATION COMMISSION 333 W. 7'" AVENUE. SUITE 100 ANCHORAGE. ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 April 30, 2004 Debby Broneske The Matanuska-Susitna Borough Land Management Division 350 E. Dahlia Avenue Palmer AK 99645 Dear Ms. Broneske: As you know, the Alaska Oil and Gas Conservation Commission has been working to ensure that five coalbed methane wells drilled by GRI, Inc., in the vicinity of Houston, Alaska, are properly plugged and their locations properly cleared. We understand that the Matanuska-Susitna Borough is the surface owner of the property on which one of these wells -- known as Houston No. 22 -- is located. We also understand that GRI had obtained a Permit to Use Borough Owned Land that covered its well-related operations, which would include the proper plugging and location clearance of Houston No. 22. Since GRI did not perform those final steps, which are required by the Commission's regulations, the Commission has been trying to arrange for those steps to be performed by a contractor who will in effect be stepping into GRI's shoes for that purpose. The Commission is planning to issue a Request for Proposals in the very near future, under which funds obtained from GRI's surety bond will be used to pay the contractor to complete the required well plugging and location clearance operations. If this RFP is successful in leading to a contract award, we anticipate these operations will be perfonned this summer. The current plan calls for this be completed by September 30, 2004. I am enclosing for your information a copy of the "Scope of Work" section of the RFP. This describes in detail the operations that will be perfonned to plug the GRI wells and clear the locations, including Houston No. 22. The Scope of Work document is Inarked "Confidential," because to be fair to all potential bidders it cannot be released until the RFP is officially issued. Therefore, please do not distribute this document or disclose its contents outside the Land Management Division of the Matanuska-Susitna Borough. The Commission is sharing it with you now only because of the Borough's special interest as a surface owner of affected land. ç " . '" .' , ,,' . j 1,',1.'1, \i!,' SGÞI.~\]N¿C ,JJ¡\~ - !-: QebÞy Broneske April 30, 2004 Page 2 of2 '.~ ,-,~ Please note that this Scope of Work does not include surface restoration of the road or reseeding. Those tasks are not covered by GRI's surety bond filed with the Commission; however, we anticipate the Department of Natural Resources will arrange for those tasks to be perfonned under a separate contract. I hope that this information will satisfy the Borough's needs regarding access authorization. We are hoping to issue the RFP on May 10. Therefore, if you have any comments on the enclosed Scope of Work, please submit them in writing to my attention so that they are received no later than May 7, 2004. Unless we hear otherwise from you by that date, we will assume that you have no objection to our contractor's proceeding to plug the Houston No. 22 well and clear its location substantially as described in the Scope of Work. Your cooperation in this matter is appreciated. You will be notified when the work has been completed. Enclosure. cc: Mark Myers, Director Division of Oil and Gas _~, ,. k ". 'rV- n'r,\ <;' g 7n!l,0. (~·r,[)!;\·~.'\.h=~: "~¡\, 1 v' b'-'V, ,._;~~~ \¡~: \J~~ t:d ~~ . ~ ""-== ~-;,(/~ ~~¿/7-?~ ¿ d ¿¿4¿ ~.r77e"-/ 1'-:7_ /" ')' -"" <-=~' CONFIDENTIAL Miscellaneous Debris Description Between the airstrip and the reserve pit, at the end of the main access road, there are several (approximately 10) lengths of what appear to be 6 inch well casing. In the adjacent vicinity are miscellaneous wooden debris, valves and flanges. The area is overgrown with grass. See vhoto #15. Between well pads #2 and #3, there are several rusted steel pipes laying in a relatively undisturbed area of land, to the south of the road. This debris appears to be sucker rods or small diameter tubing. The length and quantity are not estimated. See photo #16. Task MD.l) Miscellaneous debris described above must be removed for disposal or salvage. Reserve Pit Closure Description A reserve pit is located at the end of an airstrip, near Houston No.1. The pit is approximately 75 feet X 100 feet X 6 feet. Inspection revealed the pit to be lined and in good condition. Water in the pit appears to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. A gravel benn surrounds the pit and is approximately two feet high. The pit extends approximately four feet below the surrounding ground surface, for a total interior depth of approximately six feet. See vhotos #13 and #14. Since the date of photos # 13 and #14, the reserve pit has been pumped out (September 2002) by the surface estate owner for child-safety concerns. The fluid within the pit was discharged directly onto the surface. A portion of the reserve pit liner was also removed. A clay-like material was present at the bottom of the drained pit. Any fluid presently in the pit would be from rain water and snowmelt. Tasks RPC.l) The water in the pit must be tested to establish what disposal options are possible. Hopefully most of it can be used for cementing and injectivity tests in Houston No.3. RPC.2) Water in the pit must be properly disposed of if not used for cementing and in injectivity tests in Houston No.3. RPC.3) The pit liner must be removed and disposed of. The reserve pit is to have all toxic substances and hazardous materials removed. - , , '.' ~.~"~ "~ "N1 <'1 ~ ? 0 fì 1, ç~c' < i...\ ~ . 1(\1 è ~ ; . hJ ¡ \ i. \'j ~ L u~, t-]-~:: ~~'j_\I~.~-./ Y.7/'-' -- -- CONFIDENTIAL ,-' RPCA) The pit berms are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation. RPC.5) Any loose debris present must be removed and the site left in a clean condition. APPENDIX ONE WELL MARKER PLATE REQUIREMENTS A marker plate must be at least 1/4 inch thick steel; at least 18 inches square or in diameter; and welded to and must cover the outermost casing string. The following information must be bead-welded directly to the marker: the name of the operator that drilled the well; the name of the contractor that abandoned the well; the Permit to Drill number for the well; the name designated for the well by the operator under 20 AAC 25.005(t); the API number for the well, with any suffix appended to the number under 20 AAC 25.005(t). fro 2' Qt"ì R ~I~, q n~ i t} ULf sC!~N~\!E.Lo J~} ¡~ .L , r"'"' CONFIDENTIAL- According to the operator, Houston No. 1 is completed with a 10 inch conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 ~ inch casing cemented from TD to surface. A cement plug is present from 240 feet to 840 feet. The well has no open perforations. The AOGCC has not independently verified information reported by the operator. Tasks H1.I) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H 1.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. HI.3) MIRV workover rig. Fill water tanks. H1.4) Ensure well is dead. Have AOGCC inspector confIrm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. HI.5) Remove casing flange. HI.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to plug depth (reported @ approx. 240 feet). HI.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. HI.8) RV cementing equipment. Spot a balanced 15.8 ppg cement plug from top of existing plug (approx. 240 feet) to surface. H1.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. HI.IO) Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level. H1.Il) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). HI.I2) RDMO workover rig. H1.I3) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. §C!~\~\rNED JUN 1 ß 2ûG4 "- CONFIDENTIAL'-, H2.6) PU 2-3/8inch tubing workstring. RIH carefully with open ended tubing to TD (reported @ approx. 2105 feet). 4-1/2 inch casing was reportedly set @ 1662 feet. H2.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H2.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to approx. 1500 feet. POH to approx. 500 feet. H2.9) Spot a balanced 15.8 ppg cement plug from approx. 500 feet to surface. H2.10) POH and LD tubing. Ensure cement level inside casing is 5feet below grade level. RD cementing equipment. H2.1l) Cut off 7inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. H2.l2) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H2.l3) RDMO workover rig. H2.l4) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.1 Description This gravel pad is located at the end, and to the north of the main access road which borders the front of the Mikkelsen and Baird residences, and is immediately north orand parallel to the Airstrip. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small trees. The well is capped with a blind-flange. Several wooden timbers, wood pallets, a primitive choke/diverter manifold, and a flanged casing are present on the site. See vhoto #1. To the west of the main well pad is a depression approximately 10 feet by 10 feet that was used as a temporary reserve pit. The depression is approximately three feet deep. This temporary pit is to be filled and returned to original grade. See vhoto #2. At the entrance to the Houston # 1 well pad, are two pallets of drilling additives, which are believed to be clay and gel (but this has not been verified). See photo #3. SCf\Ni\~E[ JUN 1 6 200{~ '~- CONFIDENTIAL -- H3 .14 ) Weld on a well marker plate per attached specifications (see Appendix One~ Section Four). H3.I5) RDMO workover rig. H3.16) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance Houston No.2 Description This gravel pad is located around the east end of the airstrip, and to the south, off an extension of the main access. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. See photo #4. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well is capped with a blind-flange and the immediate area is sunken. A flanged casing is present on the site, as well as several (6+) lengths of approx. 2 inch tubing (approx. 30 feet long) and a submersible pump . See photos #5 and #6. Photo #6 also shows a black approx. 2 inch plastic pipe. This pipe runs the entire length between sites #2 and #3, and between site #2 and the reserve pit. See also photo #7. According to the operator, Houston No.2 is completed with 7 inch casing set at 462 feet and cemented back to surface, 4-~ inch casing set and cemented back to surface from 1662 feet, and the shoe drilled out for a fmal TD of 2105 feet. This well is currently completed with a flange at surface. The AOGCC has not independently verified infonnation reported by the operator. Tasks H2.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H2.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H2.3) MIRV workover rig. Fill water tanks. H2.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H2.5) Remove casing flange. - p ~~~ 1: ([J ~fìfì4 C,-C'-£' £~H~~C tlft'i J. v l-vlí - t..~.¿J r-\t ~~ ~ ~ ~-;;ö\ -- v ---- t CONFIDENTIAL '''--' in the perforated zones and pump them for disposal into a sandstone penetrated by the wellbore below the shoe. The packer set at 1900 feet was intended to be the sealing element to prevent water from loading up the perforated gas producing interval. Well is shut in, the wellhead may be under pressure. The AOGCC has not independently verified information reported by the operator. Tasks H3.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H3.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H3.3) Remove surface control equipment including wellhouse and any related equipment in the area. H3.4) MIRU workover rig. Fill water tanks. H3.5) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. R3.6) Remove tree. Install a back pressure valve (BPV). NU and test BOPE. Remove BPV. H3.7) POH and LD reverse threaded sucker rods. H3.8) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to reported packer depth @ approx. 1900 feet. H3.9) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H3.10) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from approx. 1900 feet to approx. 1200 feet. POH to approx. 700 feet. H3 .11) Spot a balanced 15.8 ppg cement plug from approx. 700 feet to surface. H3.12) POR and LD workstring. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. ND BOPE. H3.13) Cut off 7 inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. ~:C/\ NNEC' JUN l 6 20Q~· "it':'?,~ ~~.,; ~c -~,' \-;'.;..~ _~o./ -_'" "'..... \J ,,=- c~ CONFIDENTIAL-~ H4.7) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to surface. H4.8) POR and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H4.9) Cut off 8 inch conductor at least 4 feet below grade level. H4.10) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H4.11) RDMO workover rig. R4.12) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.3 Description This gravel pad is located at the end of the access road that runs in front of pad #2. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. The pad is approximately 60 feet by 80 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well has a wellhead and discharge line. See vhotos #8. #9 and #10. A couple of steel 55 gallon drums are present, the contents of which are unknown. The well is located within a wood-framed enclosure. An electrical control panel is mounted on a _ temporary wooden support adjacent to the well house. See vhoto #11. Photo # 10 also shows a section of culvert, presumed to be used for cellar construction. The culvert is approximately 48 inches in diameter and 6 feet long. To the south of the well house, there is a mound of diesel-contaminated gravel covered with a blue tarp. The contamination came from a leak in the generator fuel line over a reported period of two weeks. It is estimated the gravel quantity is between two and three cubic feet. The gravel has been insitu for approximately six years and is expected to have low concentrations of DRO. See photo #12. According to the operator Houston No.3 is completed with 7 inch surface casing set and cemented from 505 feet to surface. A 4-~ inch production casing string was run, set and cemented to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with cement bond discemable from 2002 feet to 1000 feet, and from 760 feet to surface. The interval from 760 feet - 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet rod and a progressive cavity pump was hung off the packer in a tubingless completion. A centralized reverse threaded sucker rod was run from surface to the pump as a drive shaft. The intent was to dewater the coals cr J\ t\J\\JÞ=f' Jt'Ü· N 1, e 20Dt: Ii;.~vt--~" "'¡:~ '\:L--=..=-· ~_ ì:........ """- " CONFIDENTIAL -' H22.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H22.10) Cut off 10 inch conductor and 8-5/8 inch casing at least 4 feet below grade level. H22.11) Weld on a marker plate per attached specifications (see Appendix One, Section Four)). H22.12) RDMO workover rig. H22.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.4 Description The Houston 4 well location has no gravel pad and access to the location may be limited. According to the operator Houston No.4 was completed with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the metamorphic lithology encountered. The well at the surface appears to be the 8 inch conductor sticking up. The -AOGCC has not independently verified information reported by the operator. Tasks H4.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H4.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H4.3) MIRV workover rig. Fill water tanks. H4.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H4.5) PV 2-3/8 inch tubing workstring. RIH carefully with open ended tubing until fill is encountered (reported TD is approx. 478 feet). H4.6) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. " . ¡).J ~ @ '1QtîLl _ "" "F"T- t~ h~ ~ U b v" cr ." j'o.,i~;~ b- "---" U ~, ...~ ,y\,,!,,"ì:'~: 'J= -~.' CONFIDENTIAL --- Statement of Work Houston No. 22 Description The Houston 22 well location has no gravel pad and access to the location may be limited. According to the operator, Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 515 feet. The well was not perforated or completed. An obstruction was reported at 220 feet when an attempt was made to run wireline logs. No information was presented as to what may be the obstruction. There is no wellhead on the well, only a steel plate welded over the top of the 8-5/8 inch casIng. The AOGCC has not independently verified information reported by the operator. Tasks H22.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H22.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H22.3) MIRU workover rig. Fill water tanks. H22.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H22.5) Remove (cut oft) existing well cover plate. H22.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to TD if possible (reportedly at 515 feet). An obstruction is reported at approx. 220 feet. H22.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H22.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from total depth to surface or, if an obstruction is encountered at approx. 220 feet, from the obstruction to surface. §C/-':,J\!h~Þr n H\1 l' 6· ?orH "'_.J~"~" >__. --:~~ "_Þ'\\_~"ri ':'; .3 r ~f!l,k "="'----::.>',0... ~ - ~',,~. fI ,-,' CONFIDENTIAL --' General Statement of Objective Five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska, require proper abandonment in compliance with AOGCC regulations as specified below. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of. Drill sites are to be returned to original grade. Access to work areas Access to all site locations in the summer is generally adequate for use of two-wheel drive vehicles. The access road is unmaintained and winter access may be limited. The attached map (see Appendix C, Section Seven) is provided for convenience in identifying access but its accuracy is not warranted. Bruce Webb, a Natural Resource Specialist with the Department of Natural Resources, is familiar with the GRI well locations and can provide additional access information. Mr. Webb's phone number is (907) 269-8778. ACRONYMS Interpret acronyms used in the Contract, as follows: BOPE - Blowout prevention equipment. BPV - Back pressure valve. CBL- Cement Bond Log DRO- Diesel Range Organics LD - Lay down. md - measured depth MIRU - Move in / rig up. ND - Nipple down. NU - Nipple up. POH - Pull out of hole. ppg - lbs. per gallon PU - Pick up. RD - Rig down. RDMO - Rig down / move off. RIH - Run in hole. RU - Rig up. TD - Total depth. '- 'r' ß f\.1,1.\V:-',- ~~un 'ÍÌ ~ 2' 00:1 ~YhH~ Jt':r,~ W'v t\J 1, Vi ''-; ¡r-.r'>- i.. ~. '" i ,ru",-" "" E"" ¿ @ 2nn ¡:) _"",1. ;1=,f,~~M~=i; H ~~î fi I,","; " U· l¡ .....~,~1 .:..~ >J:i~.J.~L:.,;...' t:-)~Ci"!- J_ V _ALtl..-~' Leue: ADL 374135 Drawn: DWL Dec. Hi. 1997 - Scale: 1"';750" GRI, Inc. 4100 ~D Drt'fe AtloIIOI'..... ø HlU-4UJI I'b~ 1 107 2M-71IS h: 1 tI07 ue-7Z78 . 1Iou~ It , ...J';"- ~~~úf.( V"""- (I' . Ruv.t- .. 2J '7 r\ ; .:'- ".(:; ........., p\_> <-0' øC IÍ ....... U =~ "-~,- -.." ~~....:.t_.:-=-:-~_--~-~ , rA.~~.:~~;¡\:~'íê!-,- YJ Houston Proposed Well Section 21 Gasfield Locations T18N R3W 1320 Feel _, .--J . Propoøed Well Locations 2J Houeton Gaøti,ld Boundary ~ ...u.. . ",Iar _.'4a u, TD IØ7' lteeelt.. I . 2 - . 000 '~~l 21 "200 PØ2 FEB-23-'98 ~ .0.;2:44 ~:LAPP RE5O.fiŒS INC TB.. f\O: 1 9Ø? 2~. 7278 ''-' - ~ ell\- . D5· oS . Frank Murkowski, GOVERNOR .... 550 WEST 7TH A VE, SUITE 800 ANCHORAGE, ALASKA 99501 PHONE: (907) 269-8778 FAX: (907) 269-8943 DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS April 28, 2004 Commissioner John Norman Alaska Oil and Gas Conservation Commission 333 W. 7th Ave., Ste. 100 Anchorage, Alaska 99501 RE: GRI (Houston #1, #2, #3, #4 and #22) Site Abandonment and Restoration Dear Chairman Norman: I understand that the Alaska Oil and Gas Conservation Commission is issuing a Request for Proposals under which a contractor will plug and abandon and perform location clearance for five coalbed methane wells in the vicinity of Houston, Alaska. As you know these wells - Houston Nos. I, 2, 3, 4, and 22 - were drilled by GRI, Inc., on oil and gas leases issued by the Department of Natural Resources, through the Division of Oil and Gas. The lessee failed to perform the required well abandonment and location clearance operations in accordance with the Commission's regulations, and the Commission is now proposing to have these operations performed by a contractor using funds obtained by the AOGCC from GRI's surety bond with the Commission. To the extent that the Commission or any contractor may seek or require the authorization or consent of the Department of Natural Resources as owner of the oil and gas estate to enter the affected lands and perform well plugging and abandonment and location clearing operations, such authorization and consent are hereby given. As a courtesy to the owners of the surface estate, we request that your contractor contact the surface owner(s) in advance of the work being performed and share your work plan with them. Sincerely, ~ø~ Mark D. Myers Director "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans. " *:1.3 .y , . . @~ ~~~~~ . AItASIiA. OIL A1Q) GAS CONSERVAnONCO~SSION FRANK H. MURKOWSKI, GOVERNOR 333 W. 7'" AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 April 26, 2004 Express Mail Number EU 977869591 US Margaret Bryant 104 Ridgefield Avenue Stephens City, VA 22655 Dear Ms. Bryant: As you know, the Alaska Oil and Gas Conservation Commission ("Commission") is working to ensure that the wells drilled by GRI, Inc., in the Houston Gas Field, are properly plugged and their locations properly cleared. We understand that you are a surface owner of the land on which two of these wells are located. The Commission is planning to issue a Request for Proposals in the very near future, under which funds obtained from GRI's surety bond will be used to pay a contractor tp perform the required proper well plugging and location clearance operations. If this Request is successful in leading to a contract award, we anticipate these operations will be performed this summer. I am enclosing for your information a copy of the "Scope of Work" section of the Request for Proposals. This describes in detail the operations that will be performed to plug the GRI wells and clear the locations. This document is marked "Confidential" because to be fair to all potential bidders it cannot be released until the Request for Proposals is officially issued. Therefore, please do not distribute this document or disclose to others any of its contents. The Commission is sharing it with you now only because of your special interest as a surface owner of affected land. Please note that this Scope of Work does not include surface restoration of the road or reseeding, because those tasks are not covered by GRI's surety bond filed with the Commission. However, we anticipate that the Department of Natural Resources will arrange for those tasks to be performed under a separate contract. If you have any comments on the enclosed Scope of Work, please submit them in writing to my attention so that they are received no later than May 7,2004. Unless I hear otherwise from you by that date, the Commission will assume that you have no objection to our contractor's proceeding to plug the wells and clear the locations substantially as described in the enclosed Scope of Work. Enclosure Your cooperation is appreciated. , . . CONFIDENTIAL . General Statement of Objective Five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska, require proper abandonment in compliance with AOGCC regulations as specified below. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of. Drill sites are to be returned to original grade. Access to work areas Access to all site locations in the summer is generally adequate for use of two-wheel drive vehicles. The access road is unmaintained and winter access may be limited. The attached map (see Appendix C, Section Seven) is provided for convenience in identifying access but its accuracy is not warranted. Bruce Webb, a Natural Resource Specialist with the Department of Natural Resources, is familiar with the GRI well locations and can provide additional access information. Mr. Webb's phone number is (907) 269-8778. ACRONYMS Interpret acronyms used in the Contract, as follows: BOPE - Blowout prevention equipment. BPV - Back pressure valve. CBL- Cement Bond Log DRO- Diesel Range Organics LD - Lay down. md - measured depth MIRU - Move in / rig up. ND - Nipple down. NU - Nipple up. POH - Pullout of hole. ppg - lbs. per gallon PU - Pick up. RD - Rig down. RDMO - Rig down / move off. Rill - Run in hole. RU - Rig up. TD - Total depth. · . · CONFIDENTIAL . Statement of Work Houston No. 22 Description The Houston 22 well location has no gravel pad and access to the location may be limited. According to the operator, Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 515 feet. The well was not perforated or completed. An obstruction was reported at 220 feet when an attempt was made to run wireline logs. No information was presented as to what may be the obstruction. There is no wellhead on the well, only a steel plate welded over the top of the 8-5/8 inch casmg. The AOGCC has not independently verified information reported by the operator. Tasks H22.l) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H22.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H22.3) MIRU workover rig. Fill water tanks. H22.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H22.5) Remove (cut oft) existing well cover plate. H22.6) PU 2-3/8 inch tubing workstring. Rill carefully with open ended tubing to TD if possible (reportedly at 515 feet). An obstruction is reported at approx. 220 feet. H22.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H22.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from total depth to surface or, if an obstruction is encountered at approx. 220 feet, from the obstruction to surface. · CONFIDENTIAL . H22.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H22.l0) Cut off 10 inch conductor and 8-5/8 inch casing at least 4 feet below grade level. H22.ll) Weld on a marker plate per attached specifications (see Appendix One, Section Four)). H22.l2) RDMO workover rig. H22.l3) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.4 Description The Houston 4 well location has no gravel pad and access to the location may be limited. According to the operator Houston No.4 was completed with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the metamorphic lithology encountered. The well at the surface appears to be the 8 inch conductor sticking up. The -AOGCC has not independently verified information reported by the operator. Tasks H4.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H4.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H4.3) MIRU workover rig. Fill water tanks. H4.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H4.5) PU 2-3/8 inch tubing workstring. RlH carefully with open ended tubing until fill is encountered (reported TD is approx. 478 feet). H4.6) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. . CONFIDENTIAL . H4.7) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to surface. H4.8) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H4.9) Cut off 8 inch conductor at least 4 feet below grade level. H4.1O) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H4.ll) RDMO workover rig. H4.l2) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.3 Description This gravel pad is located at the end of the access road that runs in front of pad #2. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. The pad is approximately 60 feet by 80 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well has a wellhead and discharge line. See vhotos #8. #9 and #10. A couple of steel 55 gallon drums are present, the contents of which are unknown. The well is located within a wood-framed enclosure. An electrical control panel is mounted on a temporary wooden support adjacent to the well house. See photo #11. Photo #10 also shows a section of culvert, presumed to be used for cellar construction. The culvert is approximately 48 inches in diameter and 6 feet long. To the south of the well house, there is a mound of diesel-contaminated gravel covered with a blue tarp. The contamination came from a leak in the generator fuel line over a reported period of two weeks. It is estimated the gravel quantity is between two and three cubic feet. The gravel has been insitu for approximately six years and is expected to have low concentrations of DRO. See vhoto #12. According to the operator Houston No. 3 is completed with 7 inch surface casing set and cemented from 505 feet to surface. A 4-~ inch production casing string was run, set and cemented to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with cement bond discemable from 2002 feet to 1000 feet, and from 760 feet to surface. The interval from 760 feet - 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet md and a progressive cavity pump was hung off the packer in a tubingless completion. A centralized reverse threaded sucker rod was run from surface to the pump as a drive shaft. The intent was to dewater the coals . CONFIDENTIAL . in the perforated zones and pump them for disposal into a sandstone penetrated by the wellbore below the shoe. The packer set at 1900 feet was intended to be the sealing element to prevent water from loading up the perforated gas producing interval. Well is shut in, the wellhead may be under pressure. The AOGCC has not independently verified information reported by the operator. Tasks H3.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H3.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H3.3) Remove surface control equipment including wellhouse and any related equipment in the area. H3.4) MIRU workover rig. Fill water tanks. H3.5) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H3.6) Remove tree. Install a back pressure valve (BPV). NU and test BOPE. Remove BPV. H3.7) POH and LD reverse threaded sucker rods. H3.8) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to reported packer depth @ approx. 1900 feet. H3.9) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H3.1O) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from approx. 1900 feet to approx. 1200 feet. POH to approx. 700 feet. H3.ll) Spot a balanced 15.8 ppg cement plug from approx. 700 feet to surface. H3.l2) POH and LD workstring. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. ND BOPE. H3.13) Cut off 7 inch surface casing and 4-112 inch casing at least 4 feet below grade level. . CONFIDENTIAL . H3.14) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H3.l5) RDMO workover rig. H3.16) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance Houston No.2 Description This gravel pad is located around the east end of the airstrip, and to the south, off an extension of the main access. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. See photo #4. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well is capped with a blind-flange and the immediate area is sunken. A flanged casing is present on the site, as well as several (6+) lengths of approx. 2 inch tubing (approx. 30 feet long) and a submersible pump . See photos #5 and #6. Photo #6 also shows a black approx. 2 inch plastic pipe. This pipe runs the entire length between sites #2 and #3, and between site #2 and the reserve pit. See also photo #7. According to the operator, Houston No.2 is completed with 7 inch casing set at 462 feet and cemented back to surface, 4-~ inch casing set and cemented back to surface from 1662 feet, and the shoe drilled out for a final TD of 2105 feet. This well is currently completed with a flange at surface. The AOGCC has not independently verified information reported by the operator. Tasks H2.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H2.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H2.3) MIRU workover rig. Fill water tanks. H2.4) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H2.5) Remove casing flange. . CONFIDENTIAL . H2.6) PU 2-3/8inch tubing workstring. RIH carefully with open ended tubing to TD (reported @ approx. 2105 feet). 4-112 inch casing was reportedly set @ 1662 feet. H2.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H2.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to approx. 1500 feet. POH to approx. 500 feet. H2.9) Spot a balanced 15.8 ppg cement plug from approx. 500 feet to surface. H2.10) POH and LD tubing. Ensure cement level inside casing is 5feet below grade level. RD cementing equipment. H2.ll) Cut off 7inch surface casing and 4-112 inch casing at least 4 feet below grade level. H2.12) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H2.13) RDMO workover rig. H2.l4) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.1 Description This gravel pad is located at the end, and to the north of the main access road which borders the front of the Mikkelsen and Baird residences, and is immediately north of and parallel to the Airstrip. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small trees. The well is capped with a blind-flange. Several wooden timbers, wood pallets, a primitive choke/diverter manifold, and a flanged casing are present on the site. See vhoto #1. To the west of the main well pad is a depression approximately 10 feet by 10 feet that was used as a temporary reserve pit. The depression is approximately three feet deep. This temporary pit is to be filled and returned to original grade. See photo #2. At the entrance to the Houston # 1 well pad, are two pallets of drilling additives, which are believed to be clay and gel (but this has not been verified). See photo #3. · CONFIDENTIAL · According to the operator, Houston No. 1 is completed with a 10 inch conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 ~ inch casing cemented from TD to surface. A cement plug is present from 240 feet to 840 feet. The well has no open perforations. The AOGCC has not independently verified information reported by the operator. Tasks Hl.I) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. HI.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. Hl.3) MIRU workover rig. Fill water tanks. Hl.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. Hl.5) Remove casing flange. Hl.6) PU 2-3/8 inch tubing workstring. RlH carefully with open ended tubing to plug depth (reported @ approx. 240 feet). H1.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H1.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from top of existing plug (approx. 240 feet) to surface. HI.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H1.lO) Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level. H1.11) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). HI.I2) RDMO workover rig. H1.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. · CONFIDENTIAL · Miscellaneous Debris Description Between the airstrip and the reserve pit, at the end of the main access road, there are several (approximately 10) lengths of what appear to be 6 inch well casing. In the adjacent vicinity are miscellaneous wooden debris, valves and flanges. The area is overgrown with grass. See photo #15. Between well pads #2 and #3, there are several rusted steel pipes laying in a relatively undisturbed area of land, to the south of the road. This debris appears to be sucker rods or small diameter tubing. The length and quantity are not estimated. See photo #16. Task MD. 1) Miscellaneous debris described above must be removed for disposal or salvage. Reserve Pit Closure Description A reserve pit is located at the end of an airstrip, near Houston No.1. The pit is approximately 75 feet X 100 feet X 6 feet. Inspection revealed the pit to be lined and in good condition. Water in the pit appears to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. A gravel berm surrounds the pit and is approximately two feet high. The pit extends approximately four feet below the surrounding ground surface, for a total interior depth of approximately six feet. See photos #13 and #14. Since the date of photos # 13 and #14, the reserve pit has been pumped out (September 2002) by the surface estate owner for child-safety concerns. The fluid within the pit was discharged directly onto the surface. A portion of the reserve pit liner was also removed. A clay-like material was present at the bottom of the drained pit. Any fluid presently in the pit would be :&om rain water and snowmelt. Tasks RPC.l) The water in the pit must be tested to establish what disposal options are possible. Hopefully most of it can be used for cementing and injectivity tests in Houston No.3. RPC.2) Water in the pit must be properly disposed of if not used for cementing and in injectivity tests in Houston No.3. RPC.3) The pit liner must be removed and disposed of. The reserve pit is to have all toxic substances and hazardous materials removed. . CONFIDENTIAL . RPCA) The pit berms are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation. RPC.5) Any loose debris present must be removed and the site left in a clean condition. APPENDIX ONE WELL MARKER PLATE REQUIREMENTS A marker plate must be at least 1/4 inch thick steel; at least 18 inches square or in diameter; and welded to and must cover the outennost casing string. The following infonnation must be bead-welded directly to the marker: the name of the operator that drilled the well; the name of the contractor that abandoned the well; the Permit to Drill number for the well; the name designated for the well by the operator under 20 AAC 25.005(f); the API number for the well, with any suffix appended to the number under 20 AAC 25.005(t). . . FEÐ-23-'98 I'D-< .e2'44 ~:lߥ"P RE50..I<CES INC TEL 1'(J'1 '3Ø7 2';. ?278 $1200 PØ2 :u -2\ __t.....J.~ - looG lcot''' ~_.C"1.J.a. ß ..... ....~ iliA ...~ . R........ iI Houston Gasli Id Eoundary I ,,'7 {', f' r".J r\> ~o· .' ~~,~~~:;;I I ~.;:.;)'~;:",,;;,."~:;,:.:,';_...i~-.;' i _' -.Ì!;;~",;;-e' ___7 lAC..:...,t.' ~_~ ,"Z0f\i) ~-1tt ~">~,( . ..u....... - II ,._ ØlJlWAT 21 . Proposed Well Locetionø -..--' 1320 Feel Proposed Section Houston Gasfield ye,r ell Locations 21 T18N R3W GRI, Inc. .gj O "rart-a'" D,h. A...b01'.... ~ IIIHIU-U6f I'b: 1 1107 ¡¡f,iI~1U8 r>" i 901 "48-111711 Dec. 15, 1997 Dra.wn: DlfL Scale: 1 H=150' Lease; AnL 374135 ---_._---~_..,~~-'---.---~ . . Photo #1, Houston #1 Well Site (looking northerly) Photo #2, Houston #1 Temporary Reserve Pit (looking northwesterly) . . Photo #3, Pallets of Drillìng Additives Q,ooking easterly) Photo #4, Access Road Between Sites #2 and #3 (looking easterly) F l. (otoqd J0:tJdI yo ITéM·\ 'ÁI.Ia\finos ~UPTOOI) øtIS f[é}M Z# uOlsnoH '9# Ol01.Jd (poo.r SSd;);:n~ preMO.} ÁlJiqsæqµoU ~UP{OOI 'di!S 00) at!S 1FJM Z# UOtsnoH 'S# 01Oq¿ . . .' . . Photo #7, Plactic Pipe through Undisturbed Area (looking southwesterly) Photo #8; Houston #3 Well Head (inside well house; looking westerly) ". . . Photo #9, Houston #3 Well Discharge Une (behind well house, looking southerly) Photo #10, Houston #3 Well Site (at end of road, looking westerly) ~ r· \ ,..'" . . Photo #11, Houston #3 Electrical Control Panel (on pad, looking southwesterly) Photo #12, Insitu Contaminated Gravel (looking westerly) "¡""of . . Photo #13, Reserve pit (looking easterly from end of airstrip) Photo #14, Reserve Pit Qooking southeasterly) *~~ Co. ::.}~? 11:'\ err r[ "" <". í ¡ ! f\ I i ¡~:i l~S) U Lf~ U lb ~ ~~=. (n' I r ;! J It- i i i f-' \~. U ~\ n íf:\ fQJ IV7 ,='¡ 11\\\ I, /.. ,. ..\ ' . tw.. i 1.\1 ""-'\ if.'t I ~i ! f~ \ ~ L I ~ \ fI) ì (.!\\\. ¡ F~ \ U \.J b--lLl ü ~ Uuw 'w .~ í /. FRANK H. MURKOWSKI, GOVERNOR AI,i\SKA OILAlWD GAS CONSERVATION COMMISSION í / l ¡ ¡ ! 333 W. ]TH AVENUE,SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 April 26, 2004 Express Mail Number EU 977869588 US Pam Mikkelson P.o. Box 940005 Houston, AK 99694-0005 Dear Ms. Mikkelson: As you know, the Alaska Oil and Gas Conservation Commission is working to ensure that the wells drilled by GRI, Inc., in the Houston Gas Field, are properly plugged and their locations properly cleared. We understand that you are a surface owner of the land on which one or more of these wells are located. The Commission is planning to issue a Request for Proposals in the very near future, under which funds obtained from GRI's surety bond will be used to pay a contractor to perform the required proper well plugging and location clearance operations. If this Request is successful in leading to a contract award, we anticipate these operations will be performed this summer. I am enclosing for your information a copy of the "Scope of Work" section of the Request for Proposals. This describes in detail the operations that will be performed to plug the GRI wells and clear the locations. This document is marked "Confidential" because to be fair to all potential bidders it cannot be released until the Request for Proposals is officially issued. Therefore, please do not distribute this document or disclose to others any of its contents. The Commission is sharing it with you now only because of your special interest as a surface owner of affected land. Please note that this Scope of Work does not include surface restoration of the road or reseeding, because those tasks are not covered by GRI's surety bond filed with the Commission. However, we anticipate that the Department of Natural Resources will arrange for those tasks to be performed under a separate contract. If you have any comments on the enclosed Scope of Work, please submit them in writing to my attention so that they are received no later than May 7, 2004. Unless I hear otherwise from you by that date, the Commission will assume that you have no objection to our contractor's proceeding to plug the wells and clear the locations substantially as described in the enclosed Scope of Work. Your cooperation is appreciated. n.chk Enclosure Q. CA~,\\\\En JUN 1 Q) 20D4 \:2)t;;;;IfJ -~~""J5 ¡,J~þ- ~ \J -~- CONFIDENTIAL -- General Statement of Objective Five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska, require proper abandonment in compliance with AOGCC regulations as specified below. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of. Drill sites are to be returned to original grade. Access to work areas Access to all site locations in the summer is generally adequate for use of two-wheel drive vehicles. The access road is unmaintained and winter access may be limited. The attached map (see Appendix C, Section Seven) is provided for convenience in identifying access but its accuracy is not warranted. Bruce·Webb, a Natural Resource Specialist with the Department of Natural Resources, is familiar with the GRI well locations and can provide additional access information. Mr. Webb's phone number is (907) 269-8778. ACRONYMS Interpret acronyms used in the Contrac"4 as follows: BOPE - Blowout prevention equipment. BPV - Back pressure valve. CBL- Cement Bond Log DRO- Diesel Range Organics LD - Lay down. md - measured depth MIRU - Move in / rig up. ND - Nipple down. NU - Nipple up. POH - Pull out of hole. ppg -lbs. per gallon PU - Pick up. RD - Rig down. RDMO - Rig down / move off. RIH - Run in hole. RU - Rig up. TD - Total depth. ~CANNED JUN 1 {) 2DO¿1 --- CONFIDENTIAL "- Statement of Work Houston No. 22 Description The Houston 22 well location has no gravel pad and access to the location may be limited. According to the operator, Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 515 feet. The well was not perforated or completed. An obstruction was reported at 220 feet when an attempt was made to run wire line logs. No information was presented as to what may be the obstruction. There is no wellhead on the well, only a steel plate welded over the top of the 8-5/8 inch casIng. The AOGCC has not independently verified information reported by the operator. Tasks H22.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H22.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H22.3) MIRV workover rig. Fill water tanks. H22.4) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H22.5) Remove (cut off) existing well cover plate. H22.6) PU 2-3/8 inch tubing workstring. Rill carefully with open ended tubing to TD if possible (reportedly at 515 feet). An obstruction is reported at approx. 220 feet. H22.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H22.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from total depth to surface or, if an obstruction is encountered at approx. 220 feet, from the obstruction to surface. "{:::'rr' b Ik.I /;\IE- C-, · ¡U- 0'" '~~6,3~~\j W J ~~ ~ ¡¡:; 20DL1 CD ~ Q - J q '"-.-.- CONFIDENTIAL -~ H22.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H22.10) Cut off 10 inch conductor and 8-5/8 inch casing at least 4 feet below grade level. H22.11) Weld on a marker plate per attached specifications (see Appendix One, Section Four»). H22.12) RDMO workover rig. H22.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.4 Description The Houston 4 well location has no gravel pad and access to the location may be limited. According to the operator Houston No.4 was completed with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the metamorphic lithology encountered. The well at the surface appears to be the 8 inch conductor sticking up. The -AOGCC has not independently verified information reported by the operator. Tasks H4.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H4.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H4.3) MIRU workover rig. Fill water tanks. H4.4) Ensure well is dead. Have AOGCC inspector confnm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H4.5) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing until fill is encountered (reported TD is approx. 478 feet). H4.6) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. -~c q iI\~ <;'1 t!'. i}D1ì!~ ,'"""' r· ^ M N IF ,'; _ i U \\1 ¡ VJ (.. "" c~ ç" y t"'H 'H .~ i!= 'dJ "'" -~ . ~ - - CONFIDENTIAL -- H4.7) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to surface. H4.8) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H4.9) Cut off 8 inch conductor at least 4 feet below grade level. H4.10) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H4.11) RDMO workover rig. H4.12) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.3 Description This gravel pad is located at the end of the access road that runs in front of pad #2. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. The pad is approximately 60 feet by 80 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well has a wellhead and discharge line. See photos #8. #9 and #10. A couple of steel 55 gallon drums are present, the contents of which are unknown. The well is located within a wood-framed enclosure. An electrical control panel is mounted on a temporary wooden support adjacent to the well house. See vhoto #11. Photo #10 also shows a section of culvert, presumed to be used for cellar construction. The culvert is approximately 48 inches in diameter and 6 feet long. To the south of the well house, there is a mound of diesel-contaminated gravel covered with a blue tarp. The contamination came from a leak in the generator fuel line over a reported period of two weeks. It is estimated the gravel quantity is between two and three cubic feet. The gravel has been insitu for approximately six years and is expected to have low concentrations of DRO. See photo #12. According to the operator Houston No.3 is completed with 7 inch surface casing set and cemented ftom 505 feet to surface. A 4-~ inch production casing string was run, set and cemented to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with cement bond discemable from 2002 feet to 1000 feet, and from 760 feet to surface. The interval ftom 760 feet - 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet md and a progressive cavity pump was hung off the packer in a tubingless completion. A centralized reverse threaded sucker rod was run from surface to the pump as a drive shaft. The intent was to - dewater the coals C'CA&..t1ìl.tEr"ì iUM'¡¡ g 200-4- <~Y.i ..!'d'3 ~ r.,} ., J. \oJ - ·~- CONFIDENTIAL '"-,, in the perforated zones and pump them for disposal into a sandstone penetrated by the well bore below the shoe. The packer set at 1900 feet was intended to be the sealing element to prevent water from loading up the perforated gas producing interval. Well is shut in, the wellhead may be under pressure. The AOGCC has not independently verified information reported by the operator. Tasks H3.I) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H3.2) Obtain any required pennits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H3.3) Remove surface control equipment including wellhouse and any related equipment in the area. H3.4) MIRU workover rig. Fill water tanks. H3.5) Ensure well is dead. Have AOGCC inspector corrfmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. R3.6) Remove tree. Install a back pressure valve (BPV). NU and test BOPE. Remove BPV. H3.7) POH and LD reverse threaded sucker rods. H3.8) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to reported packer depth @ approx. 1900 feet. H3.9) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H3.10) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from approx. 1900 feet to approx. 1200 feet. POR to approx. 700 feet. H3.1I) Spot a balanced 15.8 ppg cement plug from approx. 700 feet to surface. H3.12) POR and LD workstring. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. ND BOPE. H3.I3) Cut off 7 inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. . ~,...- 'ï · ~\. <2 f2 2fìf\.1 Qû' !\M'i\.\~¥. \ ¡ 01.,! , u_vU. vVh~ d~......:;..d y .... --- CONFIDENTIAL "~' H3.14) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H3.15) RDMO workover rig. H3.16) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. A OGCC inspector must witness and approve site clearance Houston No.2 Description This gravel pad is located around the east end of the airstrip, and to the south, off an extension of the main access. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. See photo #4. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well is capped with a blind-flange and the immediate area is sunken. A flanged casing is present on the site, as well as several (6+) lengths of approx. 2 inch tubing (approx. 30 feet long) and a submersible pump . See photos #5 and #6. Photo #6 also shows a black approx. 2 inch plastic pipe. This pipe runs the entire length between sites #2 and #3, and between site #2 and the reserve pit. See also photo #7. According to the operator, Houston No.2 is completed with 7 inch casing set at 462 feet and cemented back to surface, 4-Y2 inch casing set and cemented back to surface ITom 1662 feet, and the shoe drilled out for a fmal TD of 2105 feet. This well is currently completed with a flange at surface. The AOGCC has not independently verified information reported by the operator. Tasks H2.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H2.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H2.3) MIRU workover rig. Fill water tanks. H2.4) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H2.5) Remove casing flange. SCP\NNEG JUN 1 6 2004· CONFIDENTIAL o~ H2.6) PU 2-3/8inch tubing workstring. RIH carefully with open ended tubing to TD (reported @ approx. 2105 feet). 4-1/2 inch casing was reportedly set @ 1662 feet. H2.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H2.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to approx. 1500 feet. POH to approx. 500 feet. H2.9) Spot a balanced 15.8 ppg cement plug from approx. 500 feet to surface. H2.10) POH and LD tubing. Ensure cement level inside casing is 5feet below grade level. RD cementing equipment. H2.11) Cut off 7inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. H2.12) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H2.13) RDMO workover rig. H2.14) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.1 Description This gravel pad is located at the end, and to the north of the main access road which borders the front of the Mikkelsen and Baird residences, and is immediately north of and parallel to the Airstrip. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small trees. The well is capped with a blind-flange. Several wooden timbers, wood pallets, a primitive choke/diverter manifold, and a flanged casing are present on the site. See vhoto #1. To the west of the main well pad is a depression approximately 10 feet by 10 feet that was· used as a temporary reserve pit. The depression is approximately three feet deep. This temporary pit is to be filled and returned to original grade. See photo #2. At the entrance to the Houston # 1 well pad, are two pallets of drilling additives, which are believed to be clay and gel (but this has not been verified). See photo #3. SCANNED JUN 1 6 2004 o~ CONFIDENTIAL --' According to the operator, Houston No.1 is completed with a 10 inch conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 ~ inch casing cemented from TD to surface. A cement plug is present from 240 feet to 840 feet. The well has no open perforations. The AOGCC has not independently verified information reported by the operator. Tasks H 1.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H1.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. Hl.3) MIRV workover rig. Fill water tanks. HIA) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H 1.5) Remove casing flange. H1.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to plug depth (reported @ approx. 240 feet). HI.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H1.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from top of existing plug (approx. 240 feet) to surface. Hl.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. HI.IO) Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level. H 1.11) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). Hl.12) RDMO workover rig. H1.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. -. -~ "'J"o '11 ~ I}OAJì SCJ:\NNEU JtN 1 û b u~ --- CONFIDENTIAL '---/ Miscellaneous Debris Description Between the airstrip and the reserve pit, at the end of the main access road, there are several (approximately 10) lengths of what appear to be 6 inch well casing. In the adjacent vicinity are miscellaneous wooden debris, valves and flanges. The area is overgrown with grass. See vhoto #15. Between well pads #2 and #3, there are several rusted steel pipes laying in a relatively undisturbed area of land, to the south of the road. This debris appears to be sucker rods or small diameter tubing. The length and quantity are not estimated. See vhoto #16. Task MD.1) Miscellaneous debris described above must be removed for disposal or salvage. Reserve Pit Closure Description A reserve pit is located at the end of an airstrip, near Houston No. 1. The pit is approximately 75 feet X 100 feet X 6 feet. Inspection revealed the pit to be lined and in good condition. Water in the pit appears to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. A gravel benn surrounds the pit and is approximately two feet high. The pit extends approximately four feet below the surrounding ground surface, for a total interior depth of approximately six feet. See vhotos #13 and #14. Since the date of photos #13 and #14, the reserve pit has been pumped out (September 2002) by the surface estate owner for child-safety concerns. The fluid within the pit was discharged directly onto the surface. A portion of the reserve pit liner was also removed. A clay-like material was present at the bottom of the drained pit. Any fluid presently in the pit would be from rain water and snowmelt. Tasks RPC.l) The water in the pit must be tested to establish what disposal options are possible. Hopefully most of it can be used for cementing and injectivity tests in Houston No.3. RPC.2) Water in the pit must be properly disposed of if not used for cementing and in injectivity tests in Houston No.3. RPC.3) The pit liner must be removed and disposed of. The reserve pit is to have all toxic substances and hazardous materials removed. ~ -' . (- I'"I¡~-,-- i-IN.q, 0 l)QI"'H'I ti,(;l\f\H'!br~) ,oJ Ln 1 U d 1Jl} '--- CONFIDENTIAL ,-,' RPC.4) The pit berms are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation. RPC.5) Any loose debris present must be removed and the site left in a clean condition. APPENDIX ONE WELL MARKER PLATE REQUIREMENTS A marker plate must be at least 1/4 inch thick steel; at least 18 inches square or in diameter; and welded to and must cover the outermost casing string. The following information must be bead-welded directly to the marker: the name of the operator that drilled the well; the name of the contractor that abandoned the well; the Permit to Drill number for the well; the name designated for the well by the operator under 20 AAC 25.005(f); the API number for the well, with any suffIX appended to the number under 20 AAC 25.005(f). --.'~"~' if ¡r-f\- ·ur~- <íi 3- ,no a -~:;~ . !~..\. ~\S I~ ~ ~ f * ~ -. ~ .-~ I. t-~ ~<: ~~ -. -' '\:;::õ=;I~.~ (..;:g. -..,." ¿ q I V '-t' ...~ -~ FEB-P..-'98 t'Q-. _~:<44 ~:LFPP RESCt.lRCES ItC TEL t-«): 1 9Ø7 2~_ 7278 tt200 F'02 21 21 ttee.u... I .. R .. ,DOG ..et -¢- .......u. . "' ,ar ....u. ... ft t4.r . Ro""" IS Houst.on Gaøti Id Boundary _'- ~7 "-.,; pf"- ;:c'!" m~ ~nø~.'.~. 1 ~.:>-~::7~~~' . ~ . n......;-t.n¡ i'--~7 l/~~:~2-"~.:- RO"<~:ï . lIo1Iñn II pØD JllØWA1' IJ . Proposed WelJ Locations _--1 1320 Feel Proposed Section Houston Gasfield Well Locations 21 T18N R3W GRI, Inc. UfIO IlpartAmaD Drty. AnolllCw.... oUt nan-uet I'b: I 1107 2"-71111 I'Sl I It07 a"-7278 Dec. 15, 1997 Scale: 1";;750' Drawn: DWL Lealie: ADL 374135 'C-r-f- Ì¡\.~W\ir-D·~-' . p i¡>"¡ ~.. ~v,,'-1g 'ìJ" uc, . v V! \Ì ..: (} 2004 -- --=--,. Photo #1, Houston #1 Well Site (looking northerly) Photo #2, Houston #1 Temporary Reserve Pit (looking northwesterly) S(~Þf~J¡\1E=n 'Ut-,Î 1 g 200¡1 ~ ~- L=- "-..:..;: r--d- td I ~ -... ~, ..- _ ~--: . a . . . . . . . :..... ~ . ~.~';.......... , ~'~-~4~~ . . .-H· < -~-:- ~;''''->:-f~ ~ -, , ~. ~ . ¡ . . .'- r - -...... -- ..-', ' ~ i~·b:'> :f ;. -v ~tj-J:-;; .;i .:..L- ~ It . . . . . a -0 ~ "--' '---' Photo #5, Houston #2 Well Site (on site, looking northeasterly toward access road) Photo #6, Houston #2 Well Site (looking southerly, well off left of photo) ~CANNED JUN 1 6 200¿~ <-~ -~--. Photo #7, Plactic Pipe through Undisturbed Area (looking southwesterly) Photo #8, Houston #3 Well Head (iœide well house, looking westerly) SCt:1NNED JUN 1 6 2004 Line (behind well house, looldng southerly) --- Photo #9, Houston #3 Well Discharge ; I' / I I' ; Houston #3 Well Site (at end of road, looking westerly) Photo #10, 20D4 ~. Ð 1 se /.1J\Hi.IE~r J U'\I -.;/ v~ Ii:.: .. ~ " ~, J \: '- - Photo #11, Houston #3 Electrical Control Panel (on pad, looking southwesterly) ~ - - '-~ Photo #12, Insitu Contanúnated Gravel (looking westerly) :SC1~N~,!ED JUN 1 6 2004 - ~ Photo #13, Reserve pit (looking easterly from end of airstrip) Photo #14, Reserve Pit Qooking southeasterly) Ii? ~ ~~~& ~ - - ~ ~l~, iii ..:_~ - 1 ~ ,-_r- t- r r' "c~r-c H Ef\~ « 6 2nQLi ,~t;-.J-i{\~\J:'~' ""U1~ .i Jì 'd ¡ t ,-. "-' Photo #15, Miscellaneous Debris between Reserve Pit and Airstrip Photo #16, Unidentified Steel Pipe South of Access Road :If- d-. \ 0,_ r n. ~."\ r:~? . r-~ . c:; r ~-=-; \ ,k.J I ~ '\ \ i r '\ ',- ¡ I /1 \ í ~:) c~UL;~lt1 WJm? . , ! II i l~¡ I' ¡ I r~~ U¡U 1&\ n ¡r-:\ rrù-- fì íI f=\ !^\ ' ¡A,\ tl i~'! \ "" ! 11\; ~"'f , Lf.j tiL~ ~ u~w~~ .~ / , í FRANK H. MURKOWSKI, GOVERNOR , t ATfA.SIiA OIL AND GAS / CONSERVATION COMMISSION í 333 W. ']TH AVENUE. SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 April 26, 2004 Express Mail Number EU 977869605 US T om Baird P.O. Box 940005 Houston, AK 99694-0005 Dear Mr. Baird: As you know, the Alas~a Oil and Gas Conservation Commission is working to ensure that the wells drilled by GRI, Inc., in the Houston Gas Field, are properly plugged and their locations properly cleared. We understand that you are a surface owner of the land on which one or more of these wells are located. The Commission is planning to issue a Request for Proposals in the very near future, under which funds obtained from GRI's surety bond will be used to. pay a contractor to perform the required proper well plugging and location clearance operations. If this Request is successful in leading to a contract award, we anticipate these operations will be performed this summer. I am enclosing for your infonnation a copy of the "Scope of Work" section of the Request for Proposals. This describes in detail the operations that will be performed to plug the GRI wells and clear the locations. This document is marked "Confidential" because to be fair to all potential bidders it cannot be released until the Request for Proposals is officially issued. Therefore, please do not distribute this document or disclose to others any of its contents. The Commission is sharing it with you now only because of your special interest as a surface owner of affected land. Please note that this Scope of Work does not include surface restoration of the road or reseeding, because those tasks are not covered by GRI's surety bond filed with the Commission. However, we anticipate that the Department of Natural Resources will arrange for those tasks to be perfonned under a separate contract. If you have any comments on the enclosed Scope of Work, please submit them in writing to my attention so that they are received no later than May 7, 2004. Unless I hear otherwise from you by that date, the Commission will assume that you have no objection to our contractor's proceeding to plug the wells and clear the locations substantially as described in the enclosed Scope of Work. Your cooperation is appreciated. Enclosure ~CpJ\!NED JUN 1 6 2004 CONFIDENTIAL --' General Statement of Objective Five coalbed methane wells drilled between 1997 and 2000 by GRI Inc. in the general vicinity of Houston, Alaska, require proper abandonment in compliance with AOGCC regulations as specified below. In addition all materials, supplies, structures, installations, and debris related to well drilling, construction and production are to be removed. Any toxic substances or contaminated materials must be removed and properly disposed of. Drill sites are to be returned to original grade. Access to work areas Access to all site locations in the summer is generally adequate for use of two-wheel drive vehicles. The access road is unmaintained and winter access may be limited. The attached map (see Appendix C, Section Seven) is provided for convenience in identifying access but its accuracy is not warranted. Bruce Webb, a Natural Resource Specialist with the Department of Natural Resources, is familiar with the GRI well locations and can provide additional access infonnation. Mr. Webb's phone number is (907) 269-8778. ACRONYMS Interpret acronyms used in the Contract, as follows: BOPE - Blowout prevention equipment. BPV - Back pressure valve. CBL- Cement Bond Log DRO- Diesel Range Organics LD - Lay down. md - measured depth MIRU - Move in / rig up. ND - Nipple down. NU - Nipple up. POR - Pull out of hole. ppg - lbs. per gallon PU - Pick up. RD - Rig down. RDMO - Rig down / move off. RIH - Run in hole. RU - Rig up. TD - Total depth. 5Ct\NNE[) JUN 1 (3 2004 '- CONFIDENTIAL '- Statement of Work Houston No. 22 Description The Houston 22 well location has no gravel pad and access to the location may be limited. According to the operator, Houston No. 22 is completed with 10 inch conductor driven to 76 feet and 8-5/8 inch production casing set at 515 feet. The well was not perforated or completed. An obstruction was reported at 220 feet when an attempt was made to run wireline logs. No information was presented as to what may be the obstruction. There is no wellhead on the well, only a steel plate welded over the top of the 8-5/8 inch casIng. The AOGCC has not independently verified information reported by the operator. Tasks H22.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H22.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H22.3) MIRU workover rig. Fill water tanks. H22.4) Ensure well is dead. Have AOGCC inspector confmn well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H22.5) Remove (cut oft) existing well cover plate. H22.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to TD if possible (reportedly at 515 feet). An obstruction is reported at approx. 220 feet. H22.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H22.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from total depth to surface or, if an obstruction is encountered at approx. 220 feet, from the obstruction to surface. ç.;:ß""f' h.g\i¡ç:r, fU' Uì\~ 1 g ?fH'Vì \;;;;?\Jnhh"J(i;aw Cd H1.t ¡Q tr..,\JU'1- CONFIDENTIAL '--' H22.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H22.10) Cut off 10 inch conductor and 8-5/8 inch casing at least 4 feet below grade level. H22.11) Weld on a marker plate per attached specifications (see Appendix One, Section Four)). H22.12) RDMO workover rig. H22.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.4 Description The Houston 4 well location has no gravel pad and access to the location may be limited. According to the operator Houston No. 4 was completed with an 8 inch conductor driven to 78 feet. The hole was then drilled to 478 feet when the project was abandoned due to the metamorphic lithology encountered. The well at the surface appears to be the 8 inch conductor sticking up. The -AOGCC has not independently verified infonnation reported by the operator. Tasks H4.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H4.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H4.3) MIRU workover rig. Fill water tanks. H4.4) Ensure well is dead. Have AOGCC inspector COnflfID well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H4.5) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing until fill is encountered (reported TD is approx. 478 feet). H4.6) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. GJr"'ht.\.\N¡¡:::t"\ JU·~J 1 fl r¡on4. ~~VW~r.\j!ii¡;;oko. ~I,) ~ lb1 b ...... ...~/ CONFIDENTIAL '~ H4.7) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to surface. H4.8) POR and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. H4.9) Cut off 8 inch conductor at least 4 feet below grade level. H4.10) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H4.11) RDMO workover rig. H4.12) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. Houston No.3 Description This gravel pad is located at the end of the access road that runs in front of pad #2. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. The pad is approximately 60 feet by 80 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well has a wellhead and discharge line. See photos #8. #9 and #10. A couple of steel 55 gallon drums are present, the contents of which are unknown. The well is located within a wood-framed enclosure. An electrical control panel is mounted on a temporary wooden support adjacent to the well house. See photo #11. Photo #10 also shows a section of culvert, presumed to be used for cellar construction. The culvert is approximately 48 inches in diameter and 6 feet long. To the south of the well house, there is a mound of diesel-contaminated gravel covered with a blue tarp. The contamination came from a leak in the generator fuel line over a reported period of two weeks. It is estimated the gravel quantity is between two and three cubic feet. The gravel has been insitu for approximately six years and is expected to have low concentrations of DRO. See photo #12. According to the operator Houston No.3 is completed with 7 inch surface casing set and cemented from 505 feet to surface. A 4-Y2 inch production casing string was run, set and cemented to surface from 2002 feet. A CBL indicates cementing to only be partially effective, with cement bond discernable from 2002 feet to 1000 feet, and from 760 feet to surface. The interval from 760 feet - 1000 feet does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338 feet to 1856 feet. The shoe was drilled out, a packer was set at 1900 feet md and a progressive cavity pump was hung off the packer in a tubingless completion. A centralized reverse threaded sucker rod was run from surface to the pump as a drive shaft. The intent was to dewater the coals ~'r¡-"'jÄ¡e-tr-- "1", "'1 P P\o-~ ~t¡¡¡9ru~"Pj ~ JUN .1 g Ll.-O'7 "- CONFIDENTIAL ",-, in the perforated zones and pump them for disposal into a sandstone penetrated by the wellbore below the shoe. The packer set at 1900 feet was intended to be the sealing element to prevent water from loading up the perforated gas producing interval. Well is shut in, the wellhead may be under pressure. The AOGCC has not independently verified information reported by the operator. Tasks H3.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H3.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H3.3) Remove surface control equipment including wellhouse and any related equipment in the area. H3.4) MIRU workover rig. Fill water tanks. H3.5) Ensure well is dead. Have AOGCC inspector confirm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H3.6) Remove tree. Install a back pressure valve (BPV). NU and test BOPE. Remove BPV. H3.7) POH and LD reverse threaded- sucker rods. H3.8) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to reported packer depth @ approx. 1900 feet. H3.9) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H3.10) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from approx. 1900 feet to approx. 1200 feet. POH to approx. 700 feet. H3 .11) Spot a balanced 15.8 ppg cement plug from approx. 700 feet to surface. H3.12) POH and LD workstring. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. ND BOPE. H3.I3) Cut off 7 inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. ---.- ....., 0 2nD Po =..'_. ("'_'A- t\JN~n . ¡'UN ~~) .) it '~¥a !~...;~~-....~~.~ "::J.,._.~.... ~ -- --' CONFIDENTIAL '~ H3 .14) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H3.I5) RDMO workover rig. H3.16) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance Houston No.2 Description This gravel pad is located around the east end of the airstrip, and to the south, off an extension of the main access. The road is approximately 20 feet wide, constructed of a thin layer of gravel (less than 6 inches) over a geotextile fabric. See photo #4. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small (one to three feet) trees. The well is capped with a blind- flange and the immediate area is sunken. A flanged casing is present on the site, as well as several (6+) lengths of approx. 2 inch tubing (approx. 30 feet long) and a submersible pump. See photos #5 and #6. Photo #6 also shows a black approx. 2 inch plastic pipe. This pipe runs the entire length between sites #2 and#3, and between site #2 and the reserve pit. See also photo #7. According to the operator, Houston No.2 is completed with 7 inch casing set at 462 feet and cemented back to surface, 4-YZ inch casing set and cemented back to surface from 1662 feet, and the shoe drilled out for a final TD of 2105 feet. This well is currently completed with a flange at surface. The AOGCC has not independently verified information reported by the operator. Tasks H2.1) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H2.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H2.3) MIRV workover rig. Fill water tanks. H2.4) Ensure well is dead. Have AOGCC inspector confrrm well is dead, and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H2.5) Remove casing flange. sr- þ,. ~!¡¡, ie-- -. ~ vt-\5\'N¡ç;[) JlJN 1 8 2004 '- CONFIDENTIAL ',-,,' H2.6) PU 2-3/8inch tubing workstring. RIH carefully with open ended tubing to TD (reported @ approx. 2105 feet). 4-1/2 inch casing was reportedly set @ 1662 feet. H2.7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H2.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from TD to approx. 1500 feet. POH to approx. 500 feet. H2.9) Spot a balanced 15.8 ppg cement plug from approx. 500 feet to surface. H2.10) POH and LD tubing. Ensure cement level inside casing is 5feet below grade level. RD cementing equipment. H2.1l) Cut off 7inch surface casing and 4-1/2 inch casing at least 4 feet below grade level. H2.12) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H2.13) RDMO workover rig. H2.14) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave. location in a clean condition. A OGCC inspector must witness and approve site clearance. Houston No.1 Description This gravel pad is located at the end, and to the north of the main access road which borders the front of the Mikkelsen and Baird residences, and is immediately north of and parallel to the Airstrip. The pad is approximately 60 feet by 40 feet. The gravel surface is accessible, however, it is overgrown with grass, brush and small trees. The well is capped with a blind-flange. Several wooden timbers, wood pallets, a primitive choke/diverter manifold, and a flanged casing are present on the site. See vhoto #1. To the west of the main well pad is a depression approximately 10 feet by 10 feet that was used as a temporary reserve pit. The depression is approximately three feet deep. This temporary pit is to be filled and returned to original grade. See vhoto #2. At the entrance to the Houston # 1 well pad, are two pallets of drilling additives, which are believed to be clay and gel (but this has not been verified). See photo #3. ~ÇANNED eJUN 1 6 2004 -- CONFIDENTIAL '--' According to the operator, Houston No.1 is completed with a 10 inch conductor driven to 36 feet, a 7 inch surface casing set at 492 feet and cemented to surface, and 1680 feet of 4 'h inch casing cemented from TD to surface. A cement plug is present nom 240 feet to 840 feet. The well has no open perforations. The AOGCC has not independently verified information reported by the operator. Tasks H 1.1 ) Notify surface owners before starting operations to schedule operations so as not to unreasonably disturb occupants. H1.2) Obtain any required permits or other government approvals, notify AOGCC prior to rig up, schedule AOGCC inspector for rig up. H1.3) MIRU workover rig. Fill water tanks. H1.4) Ensure well is dead. Have AOGCC inspector confirm well is dea~ and that proposed operations can safely proceed. If unsafe to proceed, AOGCC must review and approve alternate abandonment procedure. H 1.5) Remove casing flange. Hl.6) PU 2-3/8 inch tubing workstring. RIH carefully with open ended tubing to plug depth (reported @ approx. 240 feet). H 1. 7) Establish circulation and displace well fluid with water. Catch and retain for disposal all fluid returns. H1.8) RU cementing equipment. Spot a balanced 15.8 ppg cement plug from top of existing plug (approx. 240 feet) to surface. H1.9) POH and LD tubing. Ensure cement level inside casing is 5 feet below grade level. RD cementing equipment. Hl.10) Cut off 10 inch conductor, 7 inch surface casing, and 4-1/2 inch casing at least 3 feet below grade level. H1.11) Weld on a well marker plate per attached specifications (see Appendix One, Section Four). H 1.12) RDMO workover rig. H 1.13) Backfill and grade to blend with surroundings. Remove abandoned materials, supplies, structures, installations, and loose debris; leave location in a clean condition. AOGCC inspector must witness and approve site clearance. SCANNED JUN 1 6 20D4- CONFIDENTIAL ~' Miscellaneous Debris Description Between the airstrip and the reserve pit, at the end of the main access road, there are several (approximately 10) lengths of what appear to be 6 inch well casing. In the adjacent vicinity are miscellaneous wooden debris, valves and flanges. The area is overgrown with grass. See photo #15. Between well pads #2 and #3, there are several rusted steel pipes laying in a relatively undisturbed area of land, to the south of the road. This debris appears to be sucker rods or small diameter tubing. The length and quantity are not estimated. See vhoto #16. Task MD.1) Miscellaneous debris described above must be removed for disposal or salvage. Reserve Pit Closure Description A reserve pit is located at the end of an airstrip, near Houston No. 1. The pit is approximately 75 feet X 100 feet X 6 feet. Inspection revealed the pit to be lined and in good condition. Water in the pit appears to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the' pit. A gravel berm surrounds the pit and is approximately two feet high. The pit extends approximately four feet below the surrounding ground surface, for a total interior depth of approximately six feet. See vhotos #13 and #14. Since the date of photos #13 and #14, the reserve pit has been pumped out (September 2002) by the surface estate owner for child-safety concerns. The fluid within the pit was discharged directly onto the surface. A portion of the reserve pit liner was also removed. A clay-like material was present at the bottom of the drained pit. Any fluid presently in the pit would be from rain water and snowmelt. Tasks RPC.1) The water in the pit must be tested to establish what disposal options are possible. Hopefully most of it can be used for cementing and injectivity tests in Houston No.3. RPC.2) Water in the pit must be properly disposed of if not used for cementing and in injectivity tests in Houston No.3. RPC.3) The pit liner must be removed and disposed of. The reserve pit is to have all toxic substances and hazardous materials removed. ell' b ~i"iElt\ .' ø\iJin~. ü b} JUN 1 6 20D4 -- CONFIDENTIAL ~ RPC.4) The pit benns are to be graded and the interior of the pit is to be filled. The resultant elevation of the surface over the reserve pit is to match the existing airstrip elevation. RPC.5) Any loose debris present must be removed and the site left in a clean condition. APPENDIX ONE WELL MARKER PLATE REQUIREMENTS A marker plate must be at least 1/4 inch thick steel; at least 18 inches square or in diameter; and welded to and must cover the outennost casing string. The following infonnation must be bead-welded directly to the marker: the name of the operator that drilled the well; the name of the contractor that abandoned the well; the Pennit to Drill number for the well; the name designated for the well by the operator under 20 AAC 25.005(f); the API number for the well, with any suffix appended to the number under 20 . AAC 25.005(f). ;ç;:C·J:\"'N" f- r, H·r,r..., 6 200fi ~.,.J}= Ví.D '0 ~ . ~,: H ~ i!\~ § "" t.'. '" - ~".i;. ~~:: ~~-t:t ¿ -¿ i '{,-;r' f' ~¡i\P~~ n gl\~ 'Í! F.J 200~ -_:I\.J'~~hr '~CL) oj U¡\, J Q - L,l LeBse: ADL 374135 Drawn: D1fL Dec. 15, 1997 Scale: 1";:750' Gasfield Locations T1BN R3W Houston Proposed Well Section 21 GRI, Inc. 4800 llrarumaD øm. .Þobo".... AJt eHDZ-Uao Ph: I 1107 a"-71H rs:, eØ7 .48-72711 1320 Feel . Prop oiled "ell Locations :; r-""\ . .~- ..'- \.....,.-ì ~ \~' ··-.,.,0'1: t'· ~ ~c-Þ~::::, II ~~~--~----~: , -r --¡ñ--::';-te;; ê~--7 _ ~- r_ ,--" _ "-...... A~:L..t- ~ --- \<......._1f'~ ~ 21 .... ""AY . KG...... . ~ RaeeUa . n .ar _.ue ... ,.. ....,. _~. . " J! - 'DOe f~~' 21 21 st2ØØ P02 FEB-Z'...--'98 ~ .~:44 ~;LPPP RE5O..R:ES INC TB... t-IJ: 1 9Ø7 2~_ ?27B ~- --- (c'°'c· I ~.fÅf¡'=F' "f F·' <'1J D 2(')1"111 ,;:) ¿-\nw~ t:LJ .J w N 1 ~~ ,U U(ì¡\ Photo #2, Houston #1 Temporary Reserve Pit Qooking northwesterly) Photo #1, Houston #1 Well Site (looking northerly) -- '-' . :.¡ . . . . \ ~ f'- ~ ",. - ~ .~ -......... ~< ,r . ;¡ --.- "-" Photo #5, Houston #2 Well Site (on site, looking northeasterly toward acœssroad) Photo #6, Houston #2 Well Site (looking southerly, well off left of photo) sr'A~'i\jen tUN 1 6 20D4 \....., 'tJ. ~ ", .. - - r0 ,....r.. '--- Photo 17, Plactic Pipe through Undisturbed Area (looking southwesterly) Photo #8, Houston #3 Well Head (inside well house, looking westerly) RCt\f\I~!En JtJ<9 1 ø 200 ~ ,)~,,~ Uh=td', ~~ ~ j '.'~ ~ Houston #3 Well Discharge Line (behind well house, looking southerly) Photo #9, (at end of road, looking westerly) Houston #3 Well Site Photo #10, 0...'. AI Oft. Ii f,~' _ ~ U'T 1 J -SCtÜ\J\,1EC JUN -' Photo #11, Houston #3 Electrical Control Panel (on pad, looking southwesterly) Photo #12, Insitu Contaminated Gravel (looking westerly) 'Sr'/~NNEr~ !UN 4 t, 2004 '=:-==~ v~ ~ ".J - - .::::-= -~- !;~]..- -.. ~ Photo #13, Reserve pit (looking easterly from end of airstrip) ~~~..'. ~~ ~] ....11-. i:~ I I.: ~~ ~~~ Photo #14, Reserve Pit (looking southeasterly) -~ ~~~!~ ~~-= ;1. ~~~s:..r ~,-.'~ ?"~{~ . '"' ~-~ kt _I. ~cþ f\H\IEn ~UN j 6 2004 t~.; !J ~. '0,~ ~ ~- L..., ..,.. "---'op~ .~. Miscellaneous Debris between Reserve Pit and Airstrip Photo #15, Unidentified Steel Pipe South of Access Road Photo #16, !{J, 2nO.1 ü u ,q, ~l 5C/~\NNED JUN :\\:- ~ 0 (.'<~.td.. [1, "f¡~:;¡ Itf\: \.\ LIT' l¡-t.~: \,\ l~ì!11 r"" nJ ~ II I r~l \ ¡ L ',_.co>,' :~.I i_' ~y', L", .-j ['nl.'='.'llt:;-' I!L~~ fl .//[1\\ (,~? "rlffJ.( ¡í.'t.;\ IJlf -~\ L ,J )\ >.' -\ . ~-, 11, \ ',! \,~L, LJ L1 \.1 Lcd J\.l l_~) _ \"1 Lnd ¡"-' / i FRANK H. MURKOWSKI. GOVERNOR AI(A.SIiA. OIL Alft) GAS CONSERVATION COMMISSION í ! ! ¡ ! ¡ ¡ I i 333 W. ]TH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 April 26, 2004 Express Mail Number EU 977869591 US Margaret Bryant 104 Ridgefie1d A venue Stephens City, VA 22655 Dear Ms. Bryant: As you know, the Alaska Oil and Gas Conservation Commission ("Commission") is working to ensure that the wells drilled by GRI, Inc., in the Houston Gas Field, are properly plugged and their locations properly cleared. We understand that you are a surface owner of the land on which two of these wells are located. The Commission is planning to issue a Request for Proposals in the very near future, under which funds obtained from GRI's surety bond will be used to pay a contractor to perfonn the required proper well plugging and location clearance operations. If this Request is successful in leading to a contract award, we anticipate these operations will be perfonned this summer. I am enclosing for your infonnation a copy of the "Scope of Work" section of the Request for Proposals. This describes in detail the operations that will be perfonned to plug the GRI wells and clear the locations. This document is marked "Confidential" because to be fair to all potential bidders it cannot be released until the Request for Proposals is officially issued. Therefore, please do not distribute this document or disclose to others any of its contents. The Commission is sharing it with you now only because of your special interest as a surface owner of affected land. ' Please note that this Scope of Work does not include surface restoration of the road or reseeding, because those tasks are not covered by GRI's surety bond filed with the Commission. However, we anticipate that the Department of Natural Resources will arrange for those tasks to be perfonned under a separate contract. If you have any comments on the enclosed Scope of Work, please submit them in writing to my attention so that they are received no later than May 7, 2004. Unless I hear otherwise from you by that date, the Commission will assume that you have no objection to our contractor's proceeding to plug the wells and clear the locations substantially as described in the enclosed Scope of Work. Enclosure . , Your cooperation is appreciated. SCI\NNE£> ¿, I'¡) t')nf\~ H tN 1 b LlJVf <dU,-, "'-" SC!-\!\H\JEC .JUN 1 6 2004 5/7/2004 http://trkcnfiml.smi.usps.comlnetdata-cgildb2www/cbd _ 243.d2~.v/output :.; POMA~~ ~·..c(}ntacrus.._ .". Preservjng the Trust Copyright© 1999-2002 U$PS.AIIRightsReserved. Terms of Use~ .. Track & Confirm byemail .. Request Proof of Delivery f"~!~) t}~!!) What is this? What is this? r-'·~··~:'--·-·_"~'''·-''''-'"·''''''''~-''''·'''' .. ¡ Track & Confirm ' ¡ Enter label number: i I""....,. ....."...,."....... ¡ I Track & Confirm FAQs (~ Notification Options _._--._---_..._-~---_...~.._..._--_._...__._..._...._-.---..._-.-.._--_._....__.__.__.-.__..__.-..._.--~.----~~~-_.~._._.. .0~--·--~-·~----""^""~- tShipmtt~~.~!!~» Your item was delivered at 1:10 am on April 27, 2004 in HOUSTON, AK 99694. The item was signed for by R BAIRD. You entered EU97 7869 605U S Current Status Track & Confirm ~#/IrT!lCvrg~ '-- .-- Page 1 of 1 USPS - Track & Confmn BSPS - Track & Confirm Page 1 of 1 '- .~ ~/!&rT~~ Track & Confirm Current Status I"'''~''''''''''____'_~'_ ~""'~_...._-..~ ...-...~r-.'.......................",¥,"__ I ¡ Track $ Confirm . ¡ I Enter label number: ì lœ'~.....~,...,~..^,.......,... ¡ ¡ ¡ , You entered EU97 7869 588U S Your item was delivered at 9:10 am on April 27, 2004 in HOUSTON, AK 99694. The item was signed for by R BAIRD. .;i<"""""-~~~~.~:;:' LSñipmlMllJÐtaf/s.» . --.-..._-----~--_....._-~-_._-~---_..~._.__._~._--~._.-_.._~_.__.,,-_._-~._~_.~_.._._,--------- Track & Confirm FAQs -\;:... Notification Options ÞO Track & Confirm by email ÞO Request Proof of Delivery What is this? What is this? fun;:. J !. ûc::>} .. ; '. POSTAL INSPECTORS ~ contact us _ , ". Preserying the.Jru~t Copyright©1999-2002 USPS. AU Rights Reserved. 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Here is what happened earlier: · FORWARD EXPIRED, April 29, 2004, 1 :50 pm, STEPHENS CITY, VA · UNDELIVERABLE AS ADDRESSED, April 28, 2004, 11 :33 am, STEPHENS CITY, VA 22655 · ARRIVAL AT UNIT, April 28, 2004,10:45 am, STEPHENS CITY, VA 22655 · EN ROUTE, April 26, 2004, 5:20 pm, ANCHORAGE, AK 99529 · ACCEPTANCE, April 26, 2004,2:30 pm, ANCHORAGE, AK 99501 Notification Options ~ Track & Confirm by email yVhat is this? Q"~J , POSTAL INSPECTORS site map contact us government services " ' Preserving the Trust Copyright © 1999-2002 USPS. All Rights Reserved. Terms of Use Privacy Policy SC!ì~\H\!Er' n H\~ ~ @ 2- DO' H .. '-' o,,¡ ~ ~- c~o; ~ t ~ jt D . _ ~t!.J. http://trkcnfrml.smi.usps.com/netdata-cgi/db2www/cbd _243 .d2w/detail 4/30/2004 EXTREME. FLAT RATE ENVELOPE FLAT~1!~AGE _ :~~,: ,~'i"·","'\ \::~~~::'~':' , , , ", - ". .' , " ,,' , i" .,." , : _. ~. .' ,", ..','. . ' .."..' . ~ EXPRESS ~ MIJIL TED ST/JTES POST/JL SERVICEü') " r-----... , I I I I I I HOW TO USE: I L .> ~11~ ~e IVlMI 0 !f11311Y 0 ~~~ ::? U Thl the Iff::. .. 111111111111111111~~ 1111I1"m 11I11 <" - *EU977869591US* ~ ORIGIN' (POSTAL;,; USE ONt::.Y'~';, .~ ;f ¡ , : " ~ PO ZIP Code Day of Delivery I Flat Rate Envelope - ' , , D Next o Second D Date In Postage ,', :'; ,., Mo. Day Year D 12 Noon D~PM $ TIme In , , Military Return Receipt Fee DAM DpM D 2nd Day D 3rd Day Weight Int'l Alpha Country Code COD Fee Insurance Fee Ibs. ozs. $ No Delivery Acceptance Clerk Initials Total Postage & Fees o Weekend o Holiday $ --. FROM: (Pl.EASI! PRINt) PHONE ( I _.- '. 1 - , ' " c , " .- i :)'1 Officig! Business ST ;\T~ OF ALASK.~ '~,ù.z!e "';"'~n~!t;1 For < ,pr:vate USt.; " ", .~ ,:'",.'-.. ,.' '~ ./_\,C,\-\OR';G', ~ /'¡>-\ "', ( IPR 26 'O~ ) Addressee Copy Label 11-B September 2002 !'f!iI EXPRESS MIJIL UNITED ST.ðTES POST.ðLSERVICE~ Post Office To Addressee . DELlVE.mf (P.QSTAl:..USEONt..'(.),~¡ , ' " " \) ,:,- \ " . J "'", .I~'. ) \ ~. . ..\ \..1' Delivery Attempt Time Employee Signature Mo. Dav DAM DPM Delivery Attempt Time Employee Signature Mo, Dav DAM DPM Delivery Date TIme Employee Signature Mo. Day DAM OPM CUSTOMER USE ONLY ~resa~: ~~~~Acct. No. 0 =:="'OFn::=-=~IrW8lwr f' ~=:-tore:=-wtthout obtaining 8Ignån of 1IddnIesee« ~'8 agent (If deUv8rY IÌn'I )IOye8 Federal Agency Acct. No. or Iudaea that artIde can be left In aean 1oc&IkIn) IÙ1dl Postal ServIce Acct. No. 8utIiortze that deIIveIy employee's sIgnatur8 constItutøs WIld proof of delivery. o w~~DEUVE~~da 0 CusIDm« SIgnature TO: (PLI!ASI! PRINT) PHONE ( d~ U.SPOSTAGtl i ~ 3.6 6 ::: I ~ ¿~ * ~:;\ F METER * ~l 3701593 '" ;:e J!! ~ :§ '0'; .... Q c: ~ .!!! .~ as Ib .Q fir e ~ ~ ~ ~ I ~ .~ "t5 æ ~ oS II) !g .2 t à .} ~ e Q, J!! "t3 " fä Cb ,"'C" ~ ~ ( ) 11 ~ æ cr) :) Q) ~ .... Q ~ ë- Q, CD ;; ~ ~ ~ ~ (,) ttI Q, ~ ~ I -------¡ I , I I I I ~« I - e,O. ~~".~"'~'~_~'."~.~~:_ ø~~~~~ X' 'fJ Me SUØi STREU '., _ __~-~ " ::J ;jC) HOT MlttAtl ..f~, ~~'- Ci ,r~~'<:'!£~1~"' ::J ~~ " '~~ II p,~r.::"i~t.Lt :-:=1 ;~=ry,~t r.~'m1 ¡'l\~ ._~I*:~ many )(". :,,1,\\Fr ~çJ 3¡\"!\~,...., ..; \~~ 2 0 (t~l nrlnr-In+finnn ~\q --- ---}-- STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: ENFORCEMENT ACTION AGAINST ) GID,mC. ) ) March 12, 2002 Other No. 15 NOTICE The Alaska Oil and Gas Conservation Commission issued an Enforcement Order in the above captioned matter March 8, 2002. This notice is to infonn affected persons of certain rights regarding rehearing and appeal. AS 31.05.080(a) provides that within 20 days after receipt of written notice of the entry of an order or such further time as the Commission grants for good cause shown, a person affected by it may file with the Commission an application for rehearing. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or -mails-_ (or:Qíherwise_ :distributes )an-order_ ~Up()Rlehe,aring~-eitb:e:r:_b_eing.Jhe-=fmal order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30 day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). DONE at Anchorage, Alaska, this 12Th day of March 2002. 1,./ sli Taylor, Chao d Gas Conservation Commission I certify that a copy of the above was mailed on March 13,2002 to the following at their addresses of record: Jennifer Coughlin, Esq. Vicki Moore ~(ì~~ Jo Col m Ie, lal Staff Assistant · ...- ...~~ '-~ STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: ENFORCEMENT ACTION AGAINST ) GID,INC. ) ) March 8, 2002 Other No. 15 ENFORCEMENT ORDER IT APPEARING THAT: 1. Pursuant to 20 AAC 25.535, on July 18, 2001, the Alaska Oil and Gas Conservation Commission ("Commission") issued written notice to GID, Inc. ("GRI"), and to its surety, Insurance Company of North America ("ICNA"), infonning them that the Commission proposed to take enforcement action, including requiring payment under GID's surety bond filed with the Commission, due to GRI's failure to comply with 20 AAC 25.105(a), 20 AAC 25.112, and=20 AAC-25.17~~~bynot'~plugging and clearing the locations of specified wells as required by those regulations. 2. The Commission's written notice informed GRI and ICNA, inter alia, that if they failed to file a timely written response, the Commission would consider them to have accepted the proposed Commission action by default, as provided in 20 AAC 25.535(c). 3. At GRI's request, the Commission extended until September 15,2001, the time within which GID or ICNA could respond to the July 18,2001, written notice. 4. The Commission received no response from GID or ICNA. ,5. On October 12, 2001 the Commission wrote GRI and ICNA infonning them that the Commission would proceed to order payment under GID's surety bond unless GRI or its surety showed good cause no later than October 24, 2001, why the Commission should not do so. 6. The Commission received no response from GID or ICNA. .-.. , --- .~~J FINDINGS: 1. GRI is the operator of the Houston # 1, #2, #3, #4, and #22 wells in Alaska ("Houston wells"). 2. GRI was owner of the oil and gas leases on which the Houston wells are located at the time they were drilled. 3. GRI's leases on which the Houston wells are located have expired. 4. The Houston wells have not been plugged. 5. The locations of the Houston wells have not been cleared. 6. GRI is the principal and ICNA is the surety on a blanket well surety bond, no. K05880877, in favor of the Commission, under which GRI and ICNA bound themselves to comply, inter alia, with the regulations and orders of the Commission. CONCLUSIONS: 1. Within the' meaning of 20 AACd·25.105(a),~theowner's rights in the , properties on which the Houston wells are located have expired. 2. GRI's failure to plug the Houston wells constitutes non-compliance with 20 AAC 25.105 and 20 AAC 25.112. 3. GRI's failure to clear the locations of the Houston wells constitutes non-compliance with 20 AAC 25.120 and 20 AAC 25.170. 4. GRI and ICNA are liable to pay to the Commission the penal sum of $200,000 under their surety bond no. K05880877. 5. Pursuant to 20 AAC 25.535(c), GRI and ICNA have accepted by default the Commission's proposed action ordering payment under their surety bond no. K05880877. Enforcement Order March 8, 2002 Page 2 of3 ~ , ~..."..-"'. " ~ ./ NOW THEREFORE IT IS ORDERED: 1. No later than March 29, 2002, Insurance Company of North America shall pay to the Commission the penal sum of $200,000 under surety bond no. K05880877. 2. The Commission reserves decision on ordering additional remedies or sanctions. DONE at Anchorage, Alaska, this 8th day of March 2002. ~1!~lbk4·1tM/ Cammy 0 sli Taylor, C If Alaska Oil and Gas Conservation Commission RJY;;;;/~ Daniel T. Seamount, Jr Alaska Oil and Gas Conservation Commission ~M.t~ Julie M. Heusser, Commissioner Alaska Oil and Gas Conservation Commission I certify that a copy of the above was mailed certified delivery on March 8, 2002 to the following at their addresses of record: Jennifer Coughlin, Esq. Preston, Gates & Ellis, 420 L Street Ste 400 Anchorage AK 99501 Certified Mail No 7099 3220 0004 9024 3945 Vicki Moore ACE USA Route 1175 21860 Burbank Blvd., #200 Woodland Hills, CA 91367 Certified Mail No 7099 3220 0004 9024 3938 ~~C~ Jo . J. lomb'e, ecial Staff Assistant Enforcement Order March 8, 2002 Page 3 of3 ,+ UNITED STATES POST^L SERVIC~ First-Class Mail Postage & Fees Paid USPS Permit No. G-10 · Sender: Please print your name, address, and ZIP+4 in this box · Slate of Alaska . . Alaska Oil and Gas conservati~n COßnD1SSlOn 333 West 7th Ave., SUite 100 Anchorage, Alaska 99501 I P\f :·~~:·o 'l./:~:~::·3 U.S. Postal Service CERTIFIED MAIL RECEIPT ., (0, estic Mail Only; No Insurance Coverage Provided) ;. E:Q m n- m .:t' Postage $ ru 0 Certified Fee n- .:t' Return Receipt Fee 0 (Er"jorsement Required) 0 Restricted Delivery Fee 0 (E~dorsement Required) 0 Total Postage & Fees $ ru ru m n- n- D r'- Ve3t¡ UNIT Hi: ~.r""~~ \rJj~) 2,10 ..I ..-". J.. ~)!.} ~) . )ll} PS Form 3800, July 1999 See Reverse for Instructions Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. . Print your name and address on the reverse so that we can return the card to you. . Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: + \/Ich t vYJOO(e- ACE U5A e+ IllS· ~ , ~ ú> 0 ßJ r Bon \é.. Blvd Jf Lùctdbnd J-h IIs'S~7 MAR 2 J Iii: sian 4. Restricted Delivery? (Extra Fee) DYes 2. Article Number (Copy from service labelj =>8 Form 3811, July 1999 Domestic Return Receipt 102595-00-M-0952 ·. . - -- - U.S .Postai Service CEArlFIED MAIL RECEIPT . (DomeStiC}Lllail Only; No Insurance Coverage Provided) 1I1 .::t' U- rn J / 'VL- .::J- ru t:J U- Postage $ Certified Fee 2al0 ,".¡.i¿ït~~~:1~ L f!" ::~¡)/¡/~J~l. ~. ~) $ r Ÿ. ,j 1(1':' 2002 n 1 " !t..;:.c , ..10.., ('.) , t:J £ ~ ru ru Name (Please Print Clearly) (To be completed by mal èlj U" -" 'y rn ~~)PS ,/' - - - - -. - -- - -.. - - - - - -.. - - -.. - - --.. -- -.... -. - --... -- -- -... -.. -- - ---_ - __ __ __ u _ u _.. __ _;;-____c=::.. _ _____ __ Street, Apt. No.; or PO Box No. Return Receipt Fee .::J- (Endorsement Required) t:J t:J t:J 1. n -;.;1.} Restricted Delivery Fee (Endorsement Required) Total Postage & Fees 3 ~ 9it U- U- .. __ _.... _ _ _ _ _.. _ _ _ h.. _ _ _ _____ _ __.. _ _ __ _ u ___ _u _ _.. __ _ _u. _ _. u u __ _ ___ __ __. _...__ ____ u _.__ _ u... u_ t:J City, State, ZIP+ 4 r'- PS F'orm 3800, July 1999 See Reverse for Instructions ::t:t:: ~ 00 . '. ~~l~I ~iÐ)F NATURAL RESOURCES DEC 2 4 ZOO'\ DIVISION OF OIL AND GAS " 0\\ & Gas cons. Commission hlasKa Anc\1<)f8ge ~t R~~~ Xl ~ ONY KNOWLES, GOVERNOR 550 WEST 7TH A VENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3560 PHONE: (907) 269-8800 FAX: (907) 269-8938 CERTIFIED MAIL # 70993220000490211876 RETURN RECEIPT REQUESTED December 19, 2001 DECISION ON APPEAL ORI, Inc. Attn: Jennifer M. Coughlin Preston Oates & Ellis LLP 420 L Street, Suite 400 Anchorage, AK 99501 Oil & Gas Lease ADL 381134 ORI, Inc. appealed from the October 26, 2000 decision of the Division of Oil and Oas (division) titled "Lease Surrender Application Deficient - Lease Expired." The decision determined that lease ADL 381134 expired by its own terms at 11:59 p.m. on October 13, 2000, and that the purported surrender letter signed by Paul R. Benetti had no effect on ORI, Inc.' s interest in the lease. BACKOROUND The facts are as stated in the division's October 26, 2000 decision. The State of Alaska issued oil and gas lease ADL 381134 in April 1993. The lease had a seven-year primary term to expire on March 31, 2000 unless the lease extension terms were met. OR!, Inc. acquired a 100 percent working interest in the lease in 1997. GRI, Inc. commenced drilling operations before the expiration date and continued them through the end of the primary term. This extended the lease "until 90 days after cessation of that drilling."I The division was later infonned that drilling operations had ceased on April 18, 2000. On May 3,2000, the division notified OR!, Inc. that the lease would expire at 11 :59 p.m. on J illy 17, 2000, unless further extended. Following OR!, Inc.' s attempt to log the Houston #22 well on July 14,2000, the division extended the lease term to 11:59 p.m. on October 13,2000. The division informed OR!, Inc. at that time that significant new and continuous activity, such as the spudding of a new well, was required to extend the lease beyond the October 13 expiration date. OR!, Inc. did not undertake such operations. On October 13, 2000, just hours before the lease was due to expire, the division received a copy of a telefaxed letter signed by Paul R. Benetti purporting to surrender GRI, Inc.' s interest in lease ADL 1 Lease ADL 381134 at paragraph 4(c)(I); see also AS 38.05.180(m) and 11 AAC 83.125. "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." ~~ printed on recycicd paper b ''1 C. 0, -..;... ) \.) 12/17/01 Director's Decision on Appeal of ADL 381134 Surrender and Lease Expiration Decision 10-26-2000.doc . Page 2 of 5 381134 (hereafter referred to as the "Benetti letter"). After the division was unable to confirm that Paul R. Benetti was authorized to act on behalf of GRI, Inc. under the lease, it determined that the letter was inadequate to surrender GRI, Inc.' s interest in the lease. The lease continued in effect until it expired under its own terms at 11 :59 p.m. the same day. DISCUSSION On appeal, GRI claìms that its failure to designate Paul Benetti as an individual authorized to act on its behalf is an immaterial and excusable error. GRI, Inc. requests the director to excuse the unauthorized signature as an immaterial omission and accept the Benetti letter as an effective surrender of its interest in the lease. The department disagrees and declines for the following reasons. First, because the Benetti letter was not signed by any individual authorized to act on GRI, Inc.' s behalf under the lease or applicable regulations, it is has no effect on GRI, Inc.' s interest in the lease. The lease requires the lessee to designate an authorized representative to . act on its behalf for purposes of administering the lease (Lease paragraph 24).2 GRI, Inc. had changed the authorized representative (notification lessee) to GRI, Inc., John Teich, President in February, 2000 (Lease paragraph 25). In addition, in order for a corporate lessee to be qualified to transfer an interest in a lease, 11 AAC 82.205 requires that it have on file with the department a statement of qualifications that lists all individuals who are authorized to act on its behalf. GRI,Inc.'s statement of qualifications listed only John Teich, President and Treasurer, and Robert Rohrlach, Secretary, as individuals authorized to act on its behalf under the lease. The Benetti letter was not signed by either of the individuals authorized by the lease or the statement of qualifications to act on behalf of GRI, Inc. The omission of an authorized signature on a document purporting to surrender the lessee's rights and interests in an oil and gas lease is certaìnly not immaterial. It goes to the essence of the contractual relationship between the state and the lessee. Without an authorized signature the Benetti letter is deficient under the law and has no effect on any interests in lease ADL 381134. Even if GRI, Inc.'s faìlure to designate Paul Benetti as its authorized representative under ~e lease was an error, as asserted, GRI has not provided any evidence that it was due to excusable inadvertence. In fact, Paul Benetti's affidavit shows otherwise. The Consent in Lieu of Board Meeting (attached to the affidavit as Exhibit A) states that Mr. Benetti was elected president and treasurer on July 7, 2000, and all other officers were removed from their positions.3 Both Mr. Benetti and GRI, Inc. had ample time between July 7 and October 13 to notify the director that Mr. Teich was no longer president and to change the designation of authorized representatives. 2 The lessee may change the designation of its authorized representative through written notice to the Director of the Division of Oil and Gas as provided under Lease paragraph 25. The notice is effective when it is delivered to the director. 3 There is an apparent discrepancy in Mr. Benetti's affidavit, filed December 21, 2000. Mr. Benetti states, at paragraph 3, that John Teich resigned as president of GRI, Inc. on September 6, 2000. However, the Consent in Lieu of Board Meeting (Exhibit A) states that Mr. Benetti was elected president and treasurer on July 9,2000, removing all other officers from their positions. Thus, Mr. Teich had already been removed as president by September 6, 2000, the date Mr. Benetti claims Mr. Teich resigned. w) .\. 12/17/01 Director's Decision on Appeal of ADL 381134 Surrender and Lease Expiration Decision 10-26-2000.doc Page 3 of5 There is no merit to Mr. Benetti's claims that he would have submitted the documentation of his authority to act for ORI, Inc. if anyone had contacted him or David Johnston about it. First, the department had no duty to inform ORI, Inc. or Paul Benetti of their legal obligations. Second, it is apparent that ORI, Inc. was aware of the requirement in 11 AAC 82.205 to maintain a current statement of qualifications listing the individuals authorized to act on its behalf as ORI, Inc., as recently as February 2000, had filed such a statement with the department. Third, on more than one occasion before October 2000, the department had notified GRI, Inc.. through local counsel (preston Gates & Ellis LLP) and local consultant (David Johnson), verbally and in writing, that ORI, Inc. needed to update its statement of qualifications.4 Neither OR!, Inc. nor any other contact responded with a corrected statement of qualifications. Last, the department spoke with David Johnston on October 13, but as Mr. Johnston was not a designated representative under the lease or the statement of qualifications he could not cure the deficiency caused by failure to have an authorized signature. ORI, Inc. urges the director to exercise discretionary authority to acknowledge Mr. Benetti's purported authority and accept the deficient letter as an effective surrender of the lease. As discussed above, however, the failure to have an authorized signature on a document purporting to surrender a lessee's interest in an oil and gas lease is a material omission. The department declines to deem.it either as immaterial or as an omission that may be corrected by administrative action. Finally, OR!, Inc. contends that even though the Benetti letter did not describe the land it intended to surrender, its reference to the lease by serial number is sufficient to identify the land affected. The department does not agree. l1AAC 88.105 requires that the applicant describe the land affected by the application in addition to identifying the lease by serial number. The two requirements are not redundant. The lease serial number does not tell the department whether the applicant intended to surrender all of the land subject tothe lease, only a portion of the land, or what portion. Without a description of the land to be affected by the surrender the department cannot ascertain the lessee's intent. Both requirements must be satisfied or the application is deficient. While the director has discretionary authority to allow correction of a land description under 11 AAC 88.120(c), the correction would not have rendered the application complete in this case; there was still no authorized signature. DECISION After consideration of the record, briefing and legal standards applicable in this matter, GR! Inc.' s appeal is denied. The department's October 26, 2000 decision, "Lease Surrender Application Deficient - Lease Expired," is affmned. APPEALS A person affected by this decision may appeal it, in accordance with 11 AAC 02. Any appeal must be received within 20 calendar days after the date of "issuance" of this decision, as defined in 11 AAC 02.040 (c) and (d) and may be mailed or delivered to Pat Pourchot, Commissioner, Department of Natural Resources, 550 West 7tl1 Avenue, Suite 1400, Anchorage, AK 99501: faxed to 1-907-269-8918, or sent by electronic mail to dnrappeals@dnr.state.ak.us. If no appeal is filed by that date, this decision 4 E. g. see department's letter to GRI, Inc., September 20,2000, with copies to Jennifer Coughlin, David Johnston and Paul Benetti. w) ~') 12/17/01 Director's Decision on Appeal of ADL 381134 Surrender and Lease Expiration Decision 10-26-2000.doc Page 4 ofS goes into effect as a final order and decision on the 31st day after issuance. An eligible person must first appeal this decision in accordance with 11 AAC 02 before appealing this decision to Superior Court. A copy of 1 r"AAC 02 is enclosed. ~Q~~ Mark D. Myers Director Enclosures: Copy of Appeal Appeal Regulations cc: Paul R. Benetti, GRI Inc. via Fed Ex David Johnston, Consultant Cert. Mail # 70993220000490211890 AOGCC Matt Rader, DO&G Bonnie Harris, AAG [KOry Bradshaw II Ir89559 1~~6~ber 16, 1110600 Prospect Drive I~~~~~rage, AK faroline Bradshaw II Ir89560 11~~6~ber 16, 1110600 Prospect Drive I~~~~~rage, AK 'Elizabeth Orell II Ir89558 1~~6~ber 16, \110600 Prospect Drive I~~~~~rage, AK " ILowell Thomas II Ir89556 1~~6~ber 16, If7980 Norris Road I~~~~~an, MT ~ohn Tanigawa If Ir89546 ~~6~ber 16. If 012 South Yank Way 1~~~:~'1CO IDOUglaS L. Walton IIBabcock & Brown 11389540 & I(october 13 & 11600 Seventeenth Street, I(Denver, CO Energy, Inc. 1389541 16, 2000 ISuite 2630, South Tower 80202 'Douglas L. Walton Ilvan Z. Spence 11389542 Iloctober 16, 11600 Seventeenth Street, IIDenver, CO I 12000 Isuite 2630, South Tower 80202 IDOUglaS L. Walton \lJulie L. Weber 11389543 Iloctober 16. 1161.600 Seventeenth Street,1IDenver, CO I I 12000 Isuite 2630, South Towerlla0202 (Douglas L Walton \1 11389544 Iloctober 16, 11600 Seventeenth Street, IIDenver, CO I 12000 ISuite 2630, South Tower 80202 'Douglas L Walton Itnmothy L. Smith 11389545 \1()~tnhAr 1 n \~nn ~AvAntAAnth ~trAAt IlnAnvAr r,() ¡r099 3220 0004 9021 1906 ' \17099322000049021 1913 t f099 3220 0004 9021 1920 I t099 3220 0004 9021 19371 \F099 3220 0004 9021 19441: Ir099 3220 0004 9021 1951 r \F099 3220 0004 9021 19681 IF099 3220 0004 9021 19751 t099 3220 0004 902119821, \(7099 3220 0004 9021 1999 t ~' ) ~,) 12/17/01 Director's Decision on Appeal of ADL 381134 Surrender and Lease Expiration Decision IO-26-2000.doc Page 5 of 5 I i.ttf~~ë:~i~1~t/~\I.:;::~.'~;..:~;:~E:j~})::\ell :~~~L!~\11 ~~§~T~j~rled_' ~ .11 '~tt~~;!;*~~1:~~~~:ët~x~~,11 ~~êi~¥;-:~fâ~!~.;.~1~)::1Iw~~:{q~R.~{~~~:~~~~!It~~~1 I 1\ II 112000 IISuite 2630, South Tower 80202 II . I Ipaula J. Mills II 11389547 11~~¿~ber 16, {27980 North Road I~~;;;an, MT IF099 3220 0004 9021 20021 ILinda Lappi II 11389548 11~~¿~ber 16, 1~900 Sportsman Drive 1I~~~~~rage, AK 117099 3220 0004 9021 20191 IDavid Lappi II 11389549 11~~¿~ber 16, 114900 Sportsman Drive J~~~~~rage, AK If 099 3220 0004 9021 2026\ INanCy A. Hollmann II 11389550 It~~¿~ber 16, 111310 Highland Drive 11~~1a¿I~la, NE If 099 3220 0004 9021 20331 Elizabeth M. II 11389551 Iloctober 16, (HC 52 Box 108F [Hot Springs, SD If 099 322000049021 2040 I Hollmann 2000 57747 IFranklin A. Birkholt II ]1389552 11~~¿~ber 16, 11345 S. 5th 1I~;¡lrings, SD If 099 3220 0004 9021 20571 IPamela J. Emery II 11389553 11~~¿~ber 16, IIp.o. Box 9 11~~;¡lrings, SD 1[7099322000049021 20641 pOhn P. Hollmann II \1389554 1I~~¿~ber 16, IIHC 52 Box 108F 11~~;¡lrings, SD 117099322000049021 21011 IRonald D. \\ \\389555 Iloctober 16, 111310 Highland Drive \IOgallala. NE If 099 322000049021 2071 j Hollmann 1 1 2000 1 169153 ~ennifer Grell II If89557 11~~¿~ber 16, 1110600 Prospect Drive l~~~~~rage, AK lf099 3220 0004 9021 20951 MDMlpbjlDirector's Decision on Appeal of ADL 381134 Surrender and Lease Expiration Decision 10-26-2000.doc . .. .-.' ) 6r,)) Preston I Gates I Ellis LLP RECEIVED NOV 27 2000 November 27,2000 DIV. OF O:L &. GA~., DIRECTOR'S OFFICE Mr. Kenneth A. Boyd, Director Alaska Division of Oil and Gas 550 West 7th Avenue, Suite 800 Anchorage, AK 99501 °. . Re: Appeal of October 26, 2000 decision (rejection of GRllease surrender application) Dear Mr. Boyd: As discussed below, the purpose of this letter is to appeal to your office the decision dated October 26,2000. . 1. Case reference: This appeal relates to ADL 381134. 2. Decision being appealed: October 26, 2000 decision signed by Pirtle Bates, Jr., a copy of which is attached (herein "Decision"). 3. Remedy requested and grounds on which request is based: OR! respectfully submits that the rejection of its lease surrender was improper, and asks that the Decision be reversed, and that GRI's surrender of ADL 381134 be deemed to have been effective as of October 13, 2000 (the date the letter of surrender was received by the division). As set forth in the Decision, GRI Inc.'s attempt to surrender its rights under ADL 381134 (through a letter dated October 12,2000 and signed by Paul R. Benetti) was rejected as being deficient for two reasons: 1) Mr. Benetti was not one of the persons previously designated by OR!, Inc. ("GRI") as an authorized representative; and 2) although the surrender letter correctly named the lease at issue as ADL 381134, it did not also provide a legal description of the land covered by that ADL. For the reasons set forth below, GRI submits that the rejection was the result of an improperly strict construction of the regulations, and that any technical violation is of the sort that the director has the power to excuse. A lAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES 420 l STREET, SUITE 400 ANCHORAGE, AK 99501-1931 TEL: (907) 276-1969 FAX: (907) 276-1365 www.prestongates.com Anchorage Coeur d'Alene Hong Kong Los Angeles Orange County Palo Alto Portland San Francisco Seattle Spokane Washington, DC .. . ..':¡, Mr. Kenneth A. Boyd, Dire<;tor November 27,2000 Page 2 ~.': A. The Failure To Designate Mr. Benetti As An "Authorized Person Is A Correctable Error. Under 11 AAC 82.205, a corporation is required to submit a list of the individuals authorized to act on its behalf. GR! admits that Mr. Benetti's name was not on the list of authorized individuals that it had previously provided. However, failure to have the letter signed by someone on the previously submitted list is not one of the five listed deficiencies in 11 AAC 88.120 that give an applicant no priority. While the failure to amend the list and add Mr. Benetti was an error, it is an error of the type that the director may allow to be corrected if he determines that the omission or error is immaterial or due to excusable inadvertence. 11 AAC 88.120. GRI respectfully submits that its error should be seen as being of the "correctable" kind under this regulation. While John Teich had been the person with whom the Division had previously dealt, Mr. Teich had resigned as of September 6, 2000, and Mr. Benetti had taken on Mr. Teich's responsibilities at GR!. Mr. Benetti's letter indicated that if there were any questions, the Division could contact either him or David Johnston (with whom the Division had been dealing regarding GRI's matters), providing phone numbers for each. If the Division had called either Mr. Benetti or Mr. Johnston with a question regarding Mr. Benetti's authority, the necessary paperwork would have been provided on October 13. In the context of this appeal, ORI will be providing proof within twenty calendar days of this filing, pursuant to 11 AAC 02.030, confirming that Mr. Benetti was in fact authorized to surrender ADL38114 at the time that the October 12 letter was sent. Failure to file an amended list of authorized representatives was simply a paperwork error of the type that can (and should) be retroactively corrected. B. Reference To The ADL Number Was 'Sufficient To Identify the Land At Issue. As an additional grounds for rejecting ORI's surrender, the Decision also notes that under 11 AAC 88.105, an application must "describe the land affected by the application." Under 11 AAC 88.120, documents (including lease surrenders) are deficient if "the land description is insufficient to identify the land. . . " However, the regulations do not require a forma1legal description: the regulation requires a description that is sufficient to "identify" the land, and only rejects documents where the description provided does not adequately indicate the land in question. In the case of a new lease application (where no ADL number has been established), a complete legal description would presumably be required to indicate precisely what acreage was at issue. However, once an ADL number exists, the ADL number is plainly sufficient to identify the land in question. In the instant case, GRI's letter "identified the land" when it stated that it was surrendering 'CADL 381134." There can be no dispute regarding the land that was being surrendered, and indeed, a letter surrendering "ADL 381134" provides more clarity of po . : à ,. ..:) Mr. Kenneth A. Boyd, Director November 27,2000 Page 3 ~~.) . -~ .' identification than if GRI had announced that it was surrendering its lease rights solely by reference to a legal description (i.e. Tract 67A-W-134, T. 18 N., R. 3 W., Seward Meridian, Alaska, followed by a listing of the lots in the various sections). Under the circumstances, rejecting GRI's surrender for the absence of a "section, township, range" description was improper. 4. Address to which notice or decision should be sent: GRl requ~sts that all future correspondence regarding this appeal should be directed to the undersigned, at Preston Gates & Ellis LLP, 420 L. Street, Suite 400, Anchorage, Alaska 99501. Very truly yours, PRESTON GATES & ELLIS LLP B cc: Paul Benetti David Jolmston " ~') CHAPTER 002 APPEALS 11AAC 02.010 APPLICABILITY. (a) This chapter establishes the administrative procedure available to a person adversely affected by a decision of the department. If a different procedure is prescribed by statute or regulation with respect to a particular decision, that procedure must be followed when it conflicts with this chapter. (b) A person adversely affected by a decision made by an employee of a division without the written concurrence of the division's director may appeal to the division director. (c) A person adversely affected by a decision made by or with the concurrence of a division director, but without the written concurrence of the commissioner, may appeal to the commissioner. (d) A person adversely affected by a decision made by or with the written concurrence of the commissioner, which is the final administrative decision, may either (1) seek reconsideration in accordance with 11 AAC 02.020 , or (2) appeal to superior court in accordance with the rules of court and to the extent permitted by applicable law. Any right to a judicial appeal is not affected by the failure to seek reconsideration. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.020 RECONSIDERATION OF A C01\1MISSIONER DECISION. (a) A person adversely affected by a decision made by, or with the written concurrence of, the commissioner may request the commissioner to reconsider the decision if the person has new or additional information relevant to the decision. ..,.. .... (b) A request fo"t reconsideration must be received by the commissioner within 20 calendar days after the date of delivery of the decision, as determined under 11 AAC 02.040 (c) and (d). The request must meet the requirements of 11 AAC 02.030 (a)(I) -(a)(8). (c) The commissioner will, in his or her discretion, order or deny reconsideration within 30 calendar days after the date of delivery of the decision as determined under 11 AAC 02.040 (c) and (d). If the commissioner takes no action during the 3D-day period, the request for reconsideration is considered denied. Denial of a request for reconsideration is the final administrative decision of the department for purposes of appeal to superior court. (d) If the commissioner timely orders reconsideration of the decision, the commissioner will, in his or her discretion, affirm the decision, issue a new or modified decision, or remand the matter to the director for further proceedings. The commissioner's decision, other than a remand decision, is the final administrative decision of ,the department for purposes of appeal to superior court. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.030 FILING AN APPEAL. (a) An appeal under this chapter must (1) be in writing; (2) be signed by the appellant or the appellant's attorney; (3) be timely filed in accordance with 11 AAC 02.040 ; (4) specify the case reference number used by the department, if any; (5) specify the decision being appealed; (6) specify the remedy requested by the appellant and the grounds on which the request is based; (7) state the address to which any notice or decision concerning the appeal is to be mailed; (8) identify any other affected agreement, contract, lease, permit, or application by case reference number, if any; 6,.., ~d") (9) include a request for a hearing, if a hearing is desired, accompanied by a request for. any special procedures to be used at the hearing and a description of the factual issues that need to be decided at the hearing. (b) At the time an appeal is filed, the appellant may submit additional written material in support of the appeal, including evidence or legal argument, or, if additional time is desired, the appellant may file a notice of intent indicating that additional written material will be submitted. If a notice of intent to submit additional written material is filed, the additional material must be received by the department within 20 calendar days after the filing of the appeal, unless the department, in its discretion, grants an extension . of time. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.040 TJ1v1EL Y Fll..ING; DELIVERY OF DECISION. (a) To be timely filed, an appeal must be received by the department within 30 calendar days after the date of delivery of the decision, as that date is determined under (c) or (d) of this section. If the 30th day falls on a day when the department is officially closed, the appeal must be filed by the next working day. (b) An appeal will not be accepted if it is not timely filed. (c) The department will, in its discretion, deliver a decision by personal service or by registered or certified mail, return receipt requested. Delivery by registered or certified mail occurs when the decision is signed for by the addressee or the addressee's agent. If the addressee neglects or refuses to sign for the registered or certified mail, or if the address that the addressee provided to the department is not correct, delivery by registered or certified mail occurs when the decision is deposited in a U.S. general or branch post office, enclosed in a postage-paid wrapper or envelope, addressed to the person's current address of record with the department. (d) If the appellant is a person to whom the department did not deliver a decision by personal service or registered or certified mail, the date of delivery is considered to be the fITst date the department gave public notice of the decision, or, if public notice was not given, the date the decision was signed. .., -' History - . Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.050 HEARINGS. (a) The department will, in its discretion, hold a hearing when questions of fact must be resolved. (b) The hearing procedure will be determined by the department on a case-by-case basis. As provided in 11 AAC 02.030 (a)(9), any request for special procedures must be included with the request for a hearing. (c) In a hearing held under this section (1) fonnal rules of evidence need not apply; and (2) the hearing will be recorded, and may be transcribed at the request and expense of the party requesting the transcript. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 . . '-, ~ AS 46.15.020 AS 46.17.030 11 AAC 02.060 STAYS. (a) Timely appealing a decision within the department in accordance with this chapter stays' the decision during the department's consideration of the appeal or request for reconsideration unless the director or commissioner, in his or her discretion, decides that the public interest requires that the decision or any part of it should take effect on the date stated in the decision or, if that date has passed, on a date set by the director or commissioner. (b) The department will, in its discretion, stay the imposition of late payment penalty charges during consideration of an appeal. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.070 WANER OF PROCEDURAL VIOLATIONS. The commissioner will, in his or her discretion, and to the extent allowed by applicable law, waive a requirement of this chapter if the public interest or the interests of justice so require. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 .... AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.080 DEFINITIONS. In this chapter' (1) "appeal" means a request to a director or the commissioner to review a subordinate's decision; (2) "commissioner" means the commissioner of the Department of Natural Resources; (3) "decision" means a written determination by the department specifying the details of the action taken; (4) "department" means, depending on the particular context in which the term is used, the Department of Natural Resources, or the commissioner, director, or other authorized employee of the Department of Natural Resources; (5) "director" means a director of a division within the Department of Natural Resources; (6) "division" means any division within the Department of Natural Resources; and (7) "request for reconsideration" means a request to the commissioner to review his or her original decision, or a decision in which he or she concurred, based on new or additional information. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 ::t:t:: ~ -...) 'Ir.: ~ DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS October 29, 2001 GRI, Inc. cIa Jennifer M. Coughlin Preston Gates Ellis LLP 420 L Street - #400 Anchorage, Alaska 99501-1937 Dear Ms. Coughlin; ') ~ONY KNOWLES, GOVERNOR . 3601 C STREET, SUITE 1380 ANCHORAGE, ALASKA 99503-5948 PHONE: (907) 269-8800 FAX: (907) 562-3852 RECEIVED Ocr :3 l' . AlaskaOi/& G . '-'-v" as Cons C Anchorage' omrnisSion To reiterate our conversation and provide file documentation, Wells Fargo Bank Alaska NA has responded to our request to redeem the GRICertificate of Deposit. We have received a check in the amount of $50,000. That money will be used to complete GRl's obligation to surrender their leasehold interest "in a condition satisfactory to the state". Once that work is completed, unused funds, if any, will be forwarded to your attention. If you need more, please feel free to contact me at 269-8775. ~S. i.nCereIY, '. .. ~~-~ '^ Jin Haynes cc: ~ Cammy Oechsli Taylor, AOGCC Bobbi Frisby, DO&G "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans. " 1417 Office AU # 11-24 1210(8) CASHIER'S CHECK Purchaser: Purchaser Account: . Operator J.D.: GRIINC alas1719 . alas1719 PAY TO THE ORDER OF ***$TATE OF ALASKA*** . ~ ~ ***Fifty thousand dolla~s and no cents *** ~ WELLS FAR~O BANK, N.A. PAYABLE IF DESIRED AT WELLS FARGO BANK ALASKA, N.A. 301 W NORll-fERN LIGHTS ANCHORAGE, AK 99503 FOR INQUIRiES CAll (480) 394-3122 NOTlCETO PURCHASER -IF THIS INSTRUMENT 15 LOST, STOLEN OR DESTROYED, YOU MAY REQUEST CANCELlATION AND REISSUANCE. AS A CONDITION TO CANCELLATION AND REISSUANCE, WELLS FARGO 'BANK MAY IMPOSE A FEE AND REQUIRE AN INDEMNI1Y AGREEMENT AND BOND. Purchaser Copy fII<IOflll£ll.HØJ . ." SERIAL #: 1417001558 ACCOUNT#: 4861-505873 October 25, 2001 **$50,000.00** VOID IF OVER US $ 50,000.00 NON-NEGOTIABLE ..., "'-"'" .................... *'iifR¡¡y7tþi?1ï~~h~'~~í!~fs~:~h~~q"c~hi~t~".~.::. '}'S}'...:,:':[Æ'~Ei'.:.{;fiJJt~%j]l~~¡j~{:t~:41~;tg~~92fl~~ql~,n::~'lZ~' - ì III 3. ~ 3. 700 .558111 I:. 2 3.000 2 L.81: 1.8 b 3. SO 5 B ? :¡ 1/1 " ." .6. " ~ ) tONY KNOWLES, GOVERNOR , . . .~ . . . DEPARTMENT OF NATURAL RESOURCES . 3601 C STREET, SUITE 1380 ANCHORAGE, ALASKA 99503-5948 PHONE: (907) 269-8800 FAX: (907) 562-3852 DIVISION OF OIL AND GAS October 23,2001 Jessica L. West Wells Fargo Bank Alaska NA P.O. Box 100600 Anchorage, Alaska 99503 Dear Ms. West; As discussed, National Bank of Alaska, now Wells Fargo Bank Alaska NA, holds a timed certificate òf deposit TCD 053435 (copy attached) in the amount of $50,000 naming the State of Alaska in trust for GRI, Inc. The certificate was accepted by the state in lieu of a performance bond to secure full performance for Oil and Gas Leases ADL 381134 and ADL 374135. GRI, Inc. is in default of their leasehold obligations. As a result, the State of Alaska, Department of Natural Resources, Division of Oil and Gas is seeking redemption of the certificate. Please have the check made payable to the State of Alaska and sent to: Jim Haynes Division of Oil and Gas, DNR 550 West 7th Avenue - Suite 800 Anchorage, Alaska 99501-3560 Thank you for your cooperation, we appreciate it. ~SincerelV' \-~\..._.\ im~aynes cc: GRI, Inc. c/o Jennifer M. Coughl'in Preston Gates Ellis LLP 420 L Street - #400 Anchorage, Alaska 99501-1937 "Develop, Conserve, and Enhance Natural Resources for Present and Fut".~e Alaskans. " ". \... i"!. !,~!¡ ~'¿;: :":1' i :',:, .~U'!".:f;. :"ì':.r...'~1 ¡'j 'oJ . ::t:t: ~ 0'\ ~~~~E .) : ~ !Æ~fÆ~~~!Æ L) .. ALASIiA. OIL AND GAS CONSERVAnONCO~SSION TONY KNOWLES, GOVERNOR 333 W. ¡m AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 October 12, 2001 GR! Inc. Ms, Jennifer Coughlin- Agent Preston, Gates, and Ellis, LLP 420 L Street,Ste 400 ~chorage,AJ( 99501 Vicki Moore Ace USA Route 1175 21860 Burbank Blvd. #200 Woodland Hills, CA 91367 Dear Ms. Coughlin and Ms. Moore: On July 18, 2001, the Alaska Oil and Gas Conservation Commission issued a written notice of a proposed enforcement action under 20 AAC 25.535(b), relating to the failure of GR!, Inc. ("GRI"), to plug certain wells and clear their locations. In response to a request from GRI's counsel, the Commission extended until September 15, 2001, the time by which ORI and its surety could respond to the notice. To date the Commission has received no response. The applicable regulation provides: "If a person fails to file a timely written response [to a notification of proposed enforcement action], the commission will consider the person to have accepted the proposed commission action by default. II Accordingly, the Commission will now proceed to order payment under GRI's sutety bond, as well as other remedies referred to in its July 18 notice, unless ORI or its surety no later than October 24, 2001, shows good cause in writing why the Commission should not do so. Sincerely, ~~~ Cammy Oechsli Taylor Chair COT\jjc ~ ¡..-..\ v. , ~ .. ) 1r~Tæ : f !Æ~!Æ~~~!Æ AI1ASIiA OIL AND GAS CONSERVATION COMMISSION TONY KNOWLES, GOVERNOR 333 W. yrn AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 August 9, 2001 Vicki Moore Bond Claim Specialist ACE USA Routing 1175 21860 Burbank Blvd. #200 Woodland Hills, CA 91367 Re: Your file number 340 B 167603-7 Principal - GRI, Inc. Bond Number K05880877 Dear Ms. Moore: In response to your letter of July 30, 2001, I am enclosing copies of the documents you requested that are in the Commission's possession. Please note that we do not have any documents "detailing the proposed corrective action" beyond what is stated in the Commission's notice of July 18, 2001, nor are there yet documents detailing the estimated cost of well plugging and abandonment. Also enclosed for your information is a copy of a letter dated August 7, 2001, to GRI's attorney, in which the Commission extends until September 15, 2001, the time by which GRI (and the surety) may respond to the July 18 notice. Sincerely, JtvuV ¡1,1i H-c-u~~ Julie M. Heusser Commissioner Enclosures =+1:: ~ ~ ) . ~~ fK\ ~ ,c ~ ( fK\. - fK\ ~ -r¡ fK\. @ J 1ro - Lb ~ J 1ro -.=11ro @ ~ \\1ro ) ) . TONY KNOWLES, GOVERNOR ALASHA OIL AND GAS CONSERVATION COMMISSION 333 W. 7fH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 August 9, 2001 Jennifer M. Coughlin Preston, Gates & Ellis, LLP 420 L Street, Suite 400 i\nchorage,AJe 99501 Re: GRI well abandonment obligations Dear Ms. Coughlin: In your letter of August 3, 2001, you requested an extension of time until September 15, 2001, for GRI, Inc. to respond to the Commission's July 18, 2001, notice under 20 AAC 25.535(c). Your request is granted. ~..~ Sincerely, ~ l\Æ; ~ Julie M. Heusser Commissioner Daniel T. amount, Jr. Comm. ioner cc: Insurance Company of North America, attn: Vicki Moore :t:t:: ¡..-.¡. VJ O&./~J/Ul .J:'';''~1 12: 26 1"'A!. ~U7 25~7U~,) t'~~TU1~ \:iATt;~&J::;LL1;::; LLt' 'l!!: VV"," Preston IGateslEllis LLP . August 3, 2001 Daniel T- Seamount, Jr. Alaska Oil and Gas Conversation Commission 333 W. 7th Avenue, Suite 100 Anchorage, AK 99501 Re: OR! well abandonment obligations Dear Mr. Seamount: We are in receipt of your July 18, 20011etter, and have dlscussed this matter with our cHent, ORI, Inc. Enclosed please find a letter that Paul Benetti enlailed to me this morning, summarizing OR!' s plans for dealing with these issues. As set forth in that letter, OR! agrees that it must complete the work necessary to plug and abandon the wells in question, as well as carry out the necessary repair work to the access roads, and has taken steps to get bids for the completion of that work. While we are not in a position today to state the exact starting and completion dates, OR! hasev~ry intention of finalizing contractor selection by the end of this month, and completing the work this season. We therefore ask that the Commission extend the time for responding to the July 18, . 20011etter until September 15,2001, so that we can present a detailed plan for complying with our lease obligations and address any concerns that the Commission may have. However, if the COD1mÌssion is not inclined to grant this extension: then GRI respectfully. requests anjnformal review of this matter. . Very truly yours: PRESTON GATES & ELLIS LL'P ~(' - 'v'. j\ -. / I .' B» I ~,~ C:6:n . cc: Paul Benetti Dave Johnston Vicki Moore . A LAW ~IRlII I A LIMITED lIABIUTY PARTNERSHIP INClUÞI"G OTHER LIMITED lIABtllTY EHTITlES 420 L STRIET SUITE 400 ANCHORAGE, AK 995111 TEL: {I01} 271-1969 FAX: (907) 216.131i5www.Jlresto,g~te$.c:om Anchorage Coeur d'Alene Ho"g Kong Los Angelss Orange County Palo Alto Portland San Francisco Seattle Spokane Wuhlngton, OC O~/O~/Ol .~! 12:26 FAX 907 258702) PRESTON GATES&ELLIS LLP IßI uu., ) , . GR., Inc. 125~~Sa:$Va&yCA9.5OX) Tel:831-4(6.W F8K:831439-55&5 August 3. 2001 Jennifer M. Coughlin Partner Preston Gates Ellis 420 L Street Suite 400 Anchorage, AK 99501 Dear Jennifer, Alaskan Oil and Gas Conservation COntmission (AOGCC) Correspondence Further to your correspondence and OUf subsequent discussions regarding the above subject, I confirm the following information that I provided: . - 1. We have authorized David Johnston to; 0 Dispose of the remaining well assets located at the various well sites; 0 Secure. quotcitions for the completion on the work necessary. to plug & abandon the wells on the leases in question and carry out the neœssaryitêþair work to the access roads utilized in drilling the w~lIs; and 0 Following the selection of a contractöf, complete the work required of GRI under its leases. 2, It is our intention to have completed selection of a contractor prior to 31 August 2001 and have them commence work as soon as practicable after their aþpointrnen~ thereby enabling us to have the matter resolved as soon as possible. 3. We are attempting to dose-out the required work prior to the retum of the area to a state of inaccessibility due to the weather conditions. To this end, 1 confirm my instructions for you to discuss this màtter with the AOGCC in light of their recent correspondence with a view to obtaining a delay in their action to enable us to fulfill our plans. Please feel free to contact me on 831-234-3693 to discuss any of the above. Sincerely, GRI, Inc. PaulR.Benetti Authorised Representative , . ø . ' ) ") ~~fÆ~I :'1 !Æ~!Æ~~~!Æ ,. 11 -; ,; ~. , '- :/it ,.ALASKA OIL AND GAS CONSERVATION ÇOMMlSSION 333 W. -¡nt AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907)27~7542 CERTIFIED MAIL NO. 7099 3400 0004 8967 1562 RETURN RECEIPT REQUESTED I / / / / / TONY KNOWLES~ GOVERNOR "f/ .-,'... . " ~ GRI InC. Paul Benetti, CEO 89-91 Burswood Road Victoria Park, W A 6100 Australia Dear Mr. Benetti: In correspondence dated January 26, 2001 from Matt Rader, Natural Resource Manager; Alaska Department of Natural Resources, to Paul Benetti, CEO GRI Inc., and copied to this office, you were notified that three of your leases (ADL 37135, ADL 388911, and ADL 381134) in the Houston, Alaska vicinity had terminated. . Each of the three leases has a different expiration date, as indicated in the letter. ADL 388911, containing the Houston #4 well expired July 6, 1998. ADL 374135, containing Houston wells #1, #2, and #3 expired September 30,2000. ADL 381134 containing Houston well #22 expired October 13,2000. The regulations of the Alaska Oil and Gas Conservation Commission, 20 MC 25.1 05(a), require wells on a leased property to be abandoned (i.e., plugged) before expiration of the lease. It would appear, therefore, that Houston #1, #2~ #3, #4, and #22 wells are past due for plugging. Please advise us by March 23, 2001 as to your plans for expeditiously meeting your well abandonment obligations. You should review, in particular, 20 MC 25.1 05 (e), which requires submission and approval of an Application for Sundry Approvals authorizing abandonment work; 20 AAC 25.112, which sets out the substantive requirements for well plugging; 20 AAC 25.120, which addresses well abandonment markers; and 20 AAC 25.170, which addresses onshore location clearance. Please direct your communications in this matter to me. Sincerely ./ #'? ~,~~ Robert P. Crandall . Senior Petroleum Geologist cc Rob Mintz - Law Matt Rader - DNR Jennifer Coughlin - Preston, Gates & Ellis LLP =t:t:: ........ N m ~~ &b~ ~ . ACE USA Routing 1175 21860 Burbank Blvd. #200 Woodland Hills, CA 91367 ) " 818.712.6266 tel 818.712.6206 fax ace usa Vicki Moore Bond Claim Specialist July 30, 2001 Ms. Cammy Taylor Chairperson Alaska Oil & Gas Conservation Commission 333 W 7th Ave Suite 100 Anchorage, AK 99501-3539 Re: Our File Number: Principal: Bond Number: Company: Wells: 340 B 167603-7 GR! Inc. K05880877 Insurance Company of North America Houston # 1, #2, #3, #4 and #22 Dear Ms. Taylor: This will acknowledge receipt of a copy of your correspondence dated July 18, 2001, advising GR! Inc. that the referenced wells "appear to be past due for plugging." Please direct future correspondence to Insurance Company of North America to my attention at the Woodland Hills address noted above. I can be reached by phone at 818.712.6266 between the hours of 7:00 a.m. and 4:00 p.m. Before taking any further action on this matter, it will be necessary for us to conduct an investigation of the allegations detailed in your letter. As part of our investigation, we request copies of the following: 1. April 2, 2001 letter referenced in your correspondence 2. All documents detailing the proposed corrective action and estimated cost 3. Any correspondence you have received from GR! relative to this matter. Please be advised that Insurance Company of North America is proceeding in this matter under a full reservation of all rights and defenses it may have under any applicable bond, policy, the law, equity or otherwise and does not waive any of its rights under the terms, provisions or conditions of any applicable bond or policy. Very truly yours, ) {/J~ ~/L-A-./i!A-- j/ JI{ ûû~ Vicki Moore One of the ACE Group of Insurance & Reinsurance Companies RECEIVED AUG 0 2 2001 Alaska Oil & Gas Cons. Commission Anchorage =t:t: ~ ~ " ~~~~~ ~ .~ ) r ~~~~~~~ TONY KNOWLES, GOVERNOR ~ ALASKA OIL AND GAS CONSERVATION COMMISSION 333 W. "JTH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 July 18, 2001 Paul Benetti, CEO GRI, Inc. 89-91 Burswood Road Victoria Park W A6100 Australia Certified Mail No. 7099 3400 0004 8967 1449 Frederick H. Boness, Registered Agent Preston, Gates, and Ellis, LLP 420 L Street, Suite 400 Anchorage, Alaska 99501 Certified Mail No. 7099 3400 0004 8967 1418 Gentlemen: In a letter from the Commission dated April 2, 2001, GRI, Inc. ("GRI") was advised that the Houston #1, #2,#3, #4, and #22 wells, of which GRI, Inc., is operator, appear to be past due for plugging. GRlwas asked to inform the Commission as to its plans for expeditiously meeting its well abandonment obligations. The Commission has not received any response to this inquiry. In accordance with 20 AAC 25.535(b), you are notified that the Alaska Oil and Gas Conservation Commission proposes to take. enforcement action against GRI, Inc. The nature of the apparent violation(s) or noncompliance is GRl'sfailure to comply with 20 AAC25.105(a), 20 AAC 25.112, and 20 AAC 25.170, concerning abandonment of the Houston # 1, #2, #3, #4, and #22 wells and concerning location clearance for those wells. The reasons why the Commission considers violation(s) or noncompliance to have occurred are: (1) GRI's leases on which the Houston #1, #2, #3, #4, and #22 wells were drilled have expired; (2) those wells have not been plugged in accordance with 20 AAC 25.112, as required by 20 AAC 25.105(a); and (3) the well locations have not been cleared in accordance with and as required by 20 AAC 25.170. The actions that the Commission proposes to take include requiring payment under GRI's surety bond number K05880877, imposing monetary penalties under AS 31.05.150, and ordering corrective action or remedial work. As provided under 20 AAC 25.535(c), within 15 days after receipt of this notice, GRI (or GRl's surety) may file with the Commission a written response that concurs in whole or in part t. ) " ;) July 18,2001 Page 2 of2 with a proposed Commission action, requests informal review, or requests a hearing under 20 AAC 25.540. The Commission will, in its discretion, extend the 15-day response period for good cause shown. If GRI and its surety fail to file a timely written response, the Commission will consider them to have accepted the proposed Commission action by default. If GRI or its surety requests a hearing, the Commission will schedule a hearing under 20 AAC 25.540. If GRI or GRI's surety requests informal review under 20 AAC 25.535(c), the Commission will provide an opportunity for them to submit documentary material and make a written or oral statement. The Commission will then issue a proposed decision or order. A proposed decision or order becomes final 11 days after it is issued unless within 10 days after it is issued GRI or its surety files a written. request for a hearing, in which case the proposed decision or order is of no effect. If GRI or its surety requests a hearing, the Commission will schedule a hearing under 20 AAC 25.540. . If GRI and its surety concur in the Commission's proposed action( s) described above, or after an informal review or a hearing under 20 AAC 25.535(c) or 20 AAC 25.535(d), and if the Commission finds that GRI has violated or failed to comply with a provision of AS 31.05, 20 AAC 25, or a Commission order, permit, or other approval, the Commission will, in its discretion, order one or more of the following, as it determines to be applicable: (1) corrective action or remedial work; (2) revocation or suspension of a permit or other approval; (3) payment under the bond required by 20 AAC 25.025; (4) imposition of penalties under AS 31.05.150. Because one of the actions the Commission proposes to take is requiring forfeiture of and payment under GRI's surety bond, a copy of tl~is notice is also being provided to the surety. ( ÛJv.~ ':vJ d Cammy ta~ï~~~' - Chair mission cc: Ace USA Insurance Company PO Box 41484 Philadelphia P A 19101-1484 Certified Mail No. 7099 3400 0004 8967 1296 Insurance Company of North America 4220 B Street Anchorage AK 99503 Certified Mail No. 7099 3400 0004 8967 1326 ~.M, ~ Julie M. Heusser Commissioner ::jt: ~ 0 .. "'. ') -- ~TiÆ~æ :¡ fÆ~fÆ~~«fÆ ..- ..J ALASKA OIL AND GAS CONSERVATION COMMISSION TONY KNOWLES, GOVERNOR I 333 W. ]TH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 August 9,2001 Vicki Moore Bond Claim Specialist ACE USA Routing 1175 21860 Burbank: Blvd. #200 Woodland Hills, CA 91367 Re: Your file number 340 B 167603-7 Principal - GRI, Inc. Bond Number K05880877 Dear Ms. Moore: In response to your letter of July 30, 2001, I am enclosing copies of the documents you requested that are in the Commission's possession. Please note that we do not have any documents "detailing the proposed corrective .action" beyond what is stated in the Commission's notice of July 18,2001, nor are there yet documents detailing the estimated cost. of well plugging and abandonment. Also enclosed for your information is a. copy of a letter dated August 7, 2001, to GRI's attorney, in which the Commission extends until September 15, 2001, the time by which GRI (and the surety) may respond to the July 18 notice. Sincerely, Ju~ 41, ~~/ Julie M. Heusser Commissioner Enclosures ~ ~j~T! ='f !Æ~!Æ~:~!Æ .,) ALASKA. OIL AND GAS CONSERVATION COMMISSION TONY KNOWLES, GOVERNOR 333 W. -¡rn AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907)27&7542 August 9,2001 Jennifer M. Coughlin Preston, Gates & Ellis, LLP 420 L Street, Suite 400 Anchorage, AK 99501 Re: GRI well abandonment obligations Dear Ms. Coughlin: In your letter of August 3, 2001, you requested an extension of time until September 15, 2001, for GRI, Inc. to respond to the Commission's July 18, 2001, notice under 20 AAC 25.535(c). Your request is granted. fJ~ Sincerely, .Ju~ M¡.~ Julie M. Heusser Commissioner Daniel T. amount, Jr. Comm. ioner cc: Insurance Company of North America, attn: Vicki Moore 08,/~3/01 ",'Rl U:Z6 ~'A.!. 907 Z5t .,) YlU',;~TUN \:iAT!:;;:;~1..1..1;:; 1..1., ) -. ~vu"" Preston I GateslEllis LLP . August 3, 2001 Daniel T- Seamount, Jr. Alaska Oil and Gas Conversation Commission 333 W. 7th Avenue, Suite 100 Anchorage: AK 99501 Re: OR! well abandonment obligations Dear Mr. Seamount: We are in receipt of your July 18, 20011etter~ and have discussed this matter with our client, GRI, Inc. Enclosed please find a letter that Paul Benetti emajled to me this morning, sununarizing GRI's plans for de~g with these issues. As set forth in. that letter, OR! agrees that it must complete the work necessary to plug and abandon the wells in question, as wen as carry out the necessary repair work to the access roads, and has taken steps to get bids for the completion of that work. While we are not in a position today to state the exact starting and completion dates, OR! hasev~ry intention offinaliziù.g contractor selection by the end of this month, and completing the work this season. . We therefore ask that the Commission extend the time for responding to the July 18, - 20011etter until September 15,200], so that we can present a detailed plan for complying with our lease obligations and address any concerns that the Commission may have. However, if the COD"unission is not inclined to grant this extension: then GRI respectfully requests an informal review of this matter. ' Very truly yours, PRESTON GATES & ELLIS LLP - ~ (' '~', (1uQ , B)) .~ C:t1;n . cc: Paul Benetti Dave Johnston Vicki Moore . A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUÞ"tG OTHER LIMITED LIABilITY ENTITIES 420 L STRIET SUITE 400 ANCHORAGE, AK 99501 TEL: {907} 271-1969 FAX: (907) 216.1315 -www.prestolg;tes.eom Anchorage Cotur d'Alene Ho"g Kong Los Angelea Or,ngc County Palo Alto Portland San Francisco SeaUfe Spokane Wuhlngton, OC O~IO~/Ol .FR! 12: 26 FAX 907 25P'"'-Q28 '-) PRESTON GATE S&ELL I S LLP.. ~ If!:.IUU", , . GR', Inc. 125Bdtø:t'~S:ri5Vafe¡CA9.n56 Te1:S31~ F8)C831439-S58S August3,2001 Jennifer M. Coughlin Partner Presto~ Gates Ellis 420 l Street Suite 400 Anchorage, AI< 99501 Dear Jennifer, Alaskan Oil and Gas Conservation Commission (AOGCC) Correspondence Further to your correspondence and OUf subsequent discussions regarding the above subject, I confirm the following infonnation that I provided: . . 1. We have authoriZed David Johnston to; 0 Dispose of the remaining wen assets located at the vañous wen sites; 0 Secure quoü\tions for the completion on the work necessary. to plug & abandon the wells on the leases in question and carry out the neœssaryj:reþair work to the access roads utilized in drilling the w~lls; and 0 Following the selection of a COntractOf, complete the work required of GRI under its leases. 2. It is our intention to have completed selection of a contractor prior to 31 August 2001 and have them commence work as soon as practicable after their appointment. thereby enabling us to have the matter resolved as soon as possible. 3. We are attempting to dose-out the required work prior to the return of the area to a state of inaccessibility due to the weather conditions. To this end, I confirm my instructions for you to discuss thismåtter with the AOGCC in light of their recent correspondence With a view to obtaining a delay in their action to enable us to fulfill our plans. Please feel free to contact me on 831-234..3693 to discuss any of the above. Sincerely, GRI, Inc. Paul R. Benetti Authoñsed Representative , . ,I-, '- '- .. :/';, ~,tKiAsIiA OIL AND GAS CONSERVAnONçO~SSION 333 W. 7TIi AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501.3539 PHONE (907) 279-1433 FAX (907) 276-7542 CERTIFIED MAIL NO. 7099 34000004 8967 1562 RETURN RECEIPT REQUESTED / / / / I TONY KNOWLES, GOVERNOR ~~!Æ~I :'1 !Æ~!Æ~~~[Æ . ,~~. ",-. .,. . GRI Inc. Paul Benetti, CEO 89-91 Burswood Road Victoria Park, WA 6100 Australia Dear Mr. Benetti: In correspondence dated January 26, 2001 from Matt Rader, Natural Resource Manager; Alaska Department of Natural Resources, to Paul Benetti, CEO GRI Inc., and copied to this office, you were notified that three of your leases (ADL 37135, ADL 388911, and ADL 381134) in the Houston, Alaska vicinity had terminated. . Each of the three leases has a different expiration date, as indicated in the letter. ADL 388911, containing the Houston #4 well expired July 6, 1998. ADL 374135, containing Houston wells #1, #2, and #3 expired September 30,2000. ADL 381134 containing Houston well #22 expired October 13,2000. The regulations of the Alaska Oil and Gas Conservation Commission, 20 AAC 25.l05(a), require wells on a leased property to be abandoned (i.e., plugged) before expiration of the lease. It would appear, therefore, that Houston #1, #2; #3, #4, and #22 wells are past due for plugging. Please advise us by March 73, 2001 as to your plans for expeditiously meeting your well abandonment oblig.ations. You should review, in particular, 20 AAC 25.1 05 (e), which requires submission and approval of an Application for Sundry Approvals authorizing abandonment work; 20 AAC 25.112, which sets out the substantive requirements for well plugging; 20 AAC 25.120, which addresses well abandonment markers; and 20 AAC 25.170, which addresses onshore location clearance. Please direct your communications in this matter to me. ~;el~/? -/ ðJ ~L4..~ Robert P. Crandall . Senior Petroleum Geologist cc Rob MintZ - Law Matt Rader - DNR Jennifer Coughlin - Preston, Gates & Ellis LLP ::t:t:: \0 If ," IN~ . 'jCE COMPANY OF NORTH P. '~(,)A Date: September 6, 2001 Obligee: Principal: Producer: State of Alaska Department of Natural Resources 3601 C Street, Suite 1080 Anchorage, AK 99503 Notice Of Cancellation Bond Type: License and Permit Bond Anlount: $200,000.00 We hereby cancel our Bond #K05880877 issued to GRI, Inc. in accordance with the terms and conditions of the Bond or Policy. You will, therefore, please take notice that as of 12:01 a.m., Standard Time on the 6th day of September 2001, the said bond will terminate. and cease to be in force, unless sooner terminated by you. INSURANCE COMPANY OF NORTH AMERICA Surety By L¡v¡ -'yìi~ Margaret McGruder Attorney-in-fact GRI, Inc. 4900 Sportsman Dr. Anchorage, AK 99502 WILLIS CORROON - ANCHORAGE 4220 B STREET ANCHORAGE AK 99503 ACE USA Bond Services Virginia Beach Sales and Service Center P.O. Box 2005 Virginia Beach, VA 23450-2005 Processed: 9/6/2001 mm Q Reply DireC?t Q Contact Me Q Retuni DIVISION/SECTION: ~ /1~ , ~IUJJIIJt: I'. .' . /.....i. aSh6réfishèrieslAciUatic Farming.,.,... a SouthcentraI Regfon ..' Q Technical Data & Support Unit a Mine Permitting. ... . CJ Minerai Property Mgt a Surface Coal Mfnlng a Darn Safety CHydroloQ1c Survey C Navigability a Water ~anagement SuDDort Services. . a Admin Support . a Financial Services a Human Resources a Land Records Information . a Mailroom. . a . Recorder's OffIce ' . C Uniform Commercial Code I:) Administration '. Q Fire . 0 Resource MHTI..:O< . Q Mental Hèalth Trust Land omce , ., OIl&,.Gås ' ; Q...PI~QrlDêþutY. A ..LíJ~Adri'tlnlstn:1t1on a I2êäS8SâJès<.. . . Q 9Øšóûrœ'EVâluation a~~l\Çcóuriting '-riles /dbks; nATa:. ':::~1iit . '.' ~ .. ";':'. ,:' ):;.~., -~'::~~2~~7i/f~;;~}.';,~'.~; ", Daily Mail- 2 to.3 day delÑeiYJ';):¡ Palmer.. - .:;:.~'.7,~:,'?r~i,}lX1~;'~~'. }~, a AgrièUftJiit C.G.' :V;:I::J~~i!}{;. ,> I:) Forestry-MatSu DI~est Area OffI~, ; '. ....::..:):;.,:aI\~~~>:'~' F8Irb~~~¥.':qt,:'~øC.. . C~m~þ~j'~C&~li /l~ i-k::Tj!.1~~). :. ",:~ :) ÞJ ~:ì i I mi1J.~ ,ir I 0320 0002 4947 ~ I!i SM ACE BOND SERVICES REFLECTIONS"' SUITE 250 2809 S. LYNN HAVEN ROAD VIRGINIA BEACH, VA 23452 /..'-" f ' 7001 NATU601 995032006 lBOO 06 09/25{01 NOTIFY SENDER OF NEW ADDRESS :SOA DNR FORESTRY 550 W 7TH AVE STE 1450 ANCHORAGE AX 99501-3561 ..--...-- .~_..- -- -:i'-oj =;: ij .~ t =;.. -oj q. { { -:: ~ t¡~~ ~I~~ /' !.~;~~ f>fr I11111111111111 11111111111111111111111 , 1...11.111111111111111 =+t: 00 f( ') f£~!Æ:1 ~1 !Æ~!Æ~~~!Æ AlASKA OIL AND GAS CONSERVATION COMMISSION 333 W. ]fH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 CERTIFIED MAIL NO. 70993400 0004 8967 1562 RETURN RECEIPT REQUESTED TONY KNOWLES, GOVERNOR April 2, 2001 GRI Inc. Paul Benetti, CEO 89-91 Burswood Road Victoria Park, W A 6100 Australia Dear Mr. Benetti: In correspondence dated January 26,2001 from Matt Rader, Natural Resource Manager, Alaska Department of Natural Resources, to Paul Benetti, CEO GRl Inc., and copied to this office, you were notified that three of your leases (ADL 37135, ADL 388911, and ADL 381134)in the Houston, Alaska vicinity had terminated. . Each of the three leases has a different expiration date, as indicated in the letter. ADL 388911, containing the Houston #4 well expired July 6, 1998. ADL 374135, containing Houston wells #1, #2, and #3 expired September 30,2000. ADL 381134 containing Houston well #22 expired October 13,2000. The regulations of the Alaska Oil and Gas Conservation Commission, 20 AAC 25.105(a), require wells on a leased property to be abandoned (i.e., plugged) before expiration of the lease. It would appear, therefore, that Houston #1, #2, #3, #4, and #22 wells are past due for plugging. Please advise us by March 23, 2001 as to your plans for expeditiously meeting your well abandonment obligations. You should review, in particular, 20 AAC 25.1 05(e), which requires submission and approval of an Application for Sundry Approvals authorizing abandonment work; 20 AAC 25.112, which sets out the substantive requirements for well plugging; 20 AAC 25.120, which addresses well abandonment markers; and 20 AAC 25.170, which addresses onshore location clearance. Please direct your communications in this matter to me. 7099 3400 0004 8967 1562 fF> "6(")C omen ~ :D . (I) "'tJ g:::!o s:"'~ ~ñi~ §>Ocn ~ ('þ ~. 3: ~ ~» (;', S--('þ sincerel~ ~:?dall Senior Petroleum Geologist 0.: SQ: ~ .,,¡ ~: ãI¡ 3 ~ C/,)I ~I CD m íiJ": ),,: ïJ - 1b¡ ~¡ æ ~ ~! ~j 85 g +. ':.1 ~ (I) ~: ~ ! ~ Qo : 1): () ~ : 0: êi) ( ) ¡ ~: ~ tn , ~' ::-<: : <:: ::::: (J7 ¡ 9¡ ~ : : 8 : ::3 ; : ~ :;.. .'-." ñì JJ 'm ~(!) :> a.cn a. @9: ~~ ~1t 3~ (!) a. 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PIPEUNE AIRI'ORT/LANDINO STRIP HORIZONTAL CONTROL CONTROL MONUMENT &. ~ STATUS INFORMATION --- 11TI.ß UOUNI)AR Y CLASSIFICATION DISPOSAL MUNICIPAL RESTRlC110N ~1IDPJ!AL AC110N -'- ----- _..- .--.-- ¡:,. .:-<:1 MENTAL HEALTH TRUST [ ] ê 0 + x UMITS OF AC110N NAVIGATIONAl. AID CABIN PERMIT TRAl'PINO CABIN PERMIT TIWSPASS LOCATION VlCINTIY MAP 167"7")11 / 7 . 9 10-;-;;- / ,. 17 16 u-;--;; / ~2I~ / Jñï9-;-v 26 n / 31 32 3) )4 " 36 I-r-----;> ,I III /// /\/1 // / I~/ // /#/ ø- TOWNSHIP 18N RANGE 2W OF THE SEWARD MERIDIAN, ALASKA SCALE AN INDEX OF STA1VS PLAT ABBREVIATIONS IS INCLUDED wrrn I!ACII APERTURE CARD sur 01' STATE STATUS PLATS. ":" 11.Dcb;264QfoeI ~ ~III~ I~ ~ ~1'I!J!f 2? I? ~IIII~ J iDch . to dW8 'I? '? CIWHS ':' . 3 \'!!111m AI"'" 1.1,',,(Thu rtII . "'28:SO PIT IQO~ . " .,. . I I I I I I I I I I I I I I I I I I I I . I 1 :, 10 usEß: IIIO'1Y DATE; 18 .1J¡ 88 18:31:21 Tue" LAND ESTATE QIWIIuc Ol.US0ù\11œ1 ONLY, SmJKl'F. OOCl"IW1~ NI:.t.1t\1N '01Ii Ul1ftCIAL N,ß:OtU) THH ST,1TI-: OWNS AU I.AND UNWiN WATf..1iS TTJAT ARI:" NAV1GAHU:- /N-f"ltC1'. AJU:' SUlUliCT TO ml:' Hall AN/) fUJW or T/lH T/{)¡':S, OR ttR6 RIPARIAN ON UT10NAL ro (/PUNDS oWNHD J Y THl:: ~7ATf.'. I Yo£.- BASf:n ON: COOIWI/'lATI-;$: AlASKA STArn PlANH lON& . SE CORNf:J/. Of' TOWNSHIP: X 51iV)<'.2-I7 Y 27Tl101WIlI UT 61 36 00.318 N WHG 1<9 J2 19.009 W HY/JNOQRAPHY: USGS ANCHORAGI: tC7) ANI) (CIl) H1:VIS¡': ) BY HiM Jo"JlOM AERIAL HIGH ALTffUfJ/;' PIIOT(J(1JlAI'HY /978- IIJ$5 LANI) Nt.T: HIM PJl(1f'RAC11ON DIAGRAM $2-17: APPHOV/;I) 011/&1/959 USN£ 128/1a28 ACIŒS: ACCliPTW IIIINlI'J60 USR~ TRACT A. 8.586.96 ACRES. sam { 1/2 S¡:CfION [/, J20.oo ACR¡':s,. ACC/':PT1:."I1lH1U91J9ÕJ USH£ SUPPLEAff:NTAL PUT 0, SECTION 1J ; ACCfPTf2) 01~2I Y6j AS/Á' 19QIS.¡: FlU» QYl29/J980 ASl.:J' 790155: FILED 09129//980 f;V 2--/6,' nu:v UY}J/1978 tV 2-57; FlUiD 1MlfY1979 (7TI/Ek AcnoNS AfFECTING VISJ>OSAL OR USE Gf- STATIi lANDS: SIiE THt' u.s GlSEnLE ON ONIGINAL SOUNCf.' /JOCUMf:NTS f'ON AnnmONAL INfOl/MAT1QN: ENrlRliLr W/lN MATANUSKA-$USlTNA BlJ/lOUGH ENTIRJiLJ' W/lN PAlMHR RJ..'CORDJNG DIStRICT SUBJECT TO DECEI'110N CRt.EX LAND USE PlAN SUBJECT ro SUSffNA BASIN NEJ:REA11ON R/VFJIS MANAGF.J.(liNT PUN u.o JJ: ¡¡XCLUDES lANDS 200' ALONG EACH SIDE OF IffRf:AMS INDlC.4TED, WHICH ARF.A REMAINS SUOJECT ro MCO 250 A7TENTION: WATER FSTATE USb'RS WAT/iR ESTATE SUPPlEMENT IlLS FOR SECTIONS SOUTHE/o.ST 2), SOUTHWEST 23. NOKrHWEST 23, NORTHEAIff 34 SOUTHE/o.5T 36, NO/mIWEST J6 //AVE NO ACI10NS AND WERE NM CREATED. A1TENTJGN: MENTAL HliIILTH lAND JNFOJ/MATJON SHADED AReAS (SF.E LI::GEND) ARE DBS/GNATED MENTAL lIEAJ:JH TRUST WID PURSUANT ro SEmONS " AND $, CHAPTER I. SSSU. 1994. CONSULT LAS FOR FURTHliR INFORWoTION, ORIGINAL MENTAL HEALTH GRIINT' UNO (Mil) NDT SJWJED lIS MENTAL HEALTH mUIff UND IS RED('.ÇIGNATED AS GENIiJW. GRANT UND PURSUANT TO SECTIONS 6 IoND 7. CIW'l'ER " SSSU 1994. CONSULT lA.S FOR FURTHER iNFORMATiON. ATTENTION SfATUS PLAT USERS: ON 11ßS I'IAT, ALL STATUS UNES a.osë FOR ACI10NS TIfAT EXŒND INTO ADJACENT roWNSHIPS: 1liJS INCLUDES STATUS LINES SUCH AS DISPOSAL. MUNICIPAL. 1TI1.E. CLASSIFICATION. ETC. PLfASE REFER TO ADJACIJNf TOWNSHIPS OR IAS TO œœJ\M1NB II' AC110NS EXŒND DEYOND '!HE OOUNDi\RIlJS SHOWN ON TIilS PLAT, REMEMBER 'ITI1.E, CLASSIHCATION, AND RES'OOC"llON UNES ALWAYS CLOSE ON ALL PLATS. 8 A I'RODUCT 01' THE SI)\'11! OF ALASKA . OEl'AR'IMENT OF NATURAL RIJSOURCES LAND RECORDS INfORMA1l0N SEC'110N LE TWP 18N RNG 2W SM FU.T C1JIIRENT ro 0212111998, REFER TO ONR'S STA1VS PLAT TRACKING SYS'!EM (NI'45/NRi2) RIR OtHER ÆNDING AC"IIONS ON 1lIJS TOWNSIIII'/PIJ\T. CHæKI'.D BV: M f U"""'IO fC . 4 . 3 -. ;2 ::t:t:: .......:J STAT E ÓF ALASKA 'J TONY KNOWLES,.GOVERNOR ALASKA OIL AND GAS CONSERVATION COMMISSION 333 W. 7th Ave., Suite 100 Anchorage, AK99501 PHONE: (907) 279-1433 FAX: (907) 276-7542 December 15, 2000 GRI Inc. 320 Mariner Drive Anchorage, AK 99515 Attention: Mr. David Johnston, Geoscience Consultant Dear Mr. Johnston: I am writing to inform you of an important change in AOGCC guidelines regarding the submission of wire line log data. The current regulation (20 AAC 25.071 (b) (6» requires the submission of "a sepia and reproduced copy of all logs run .... .an electronic image file ina format acceptable to the commission may be substituted for the sepia." Commission policy regarding these materials is to encourage the submission of graphical files rather than sepias and bluelines. The graphical file format is generally less expensive and more useful than the hardcopy materials. We feel this change will benefit all.concerned. The Commission's position on the submission of these materials follows: Graphicalfilescan be submitted in lieu of the materials described in 20 MC 25. 0 71 (b) (6) (sepias and bluelines). The graphicalfiles must contain information equivalent to the hardcopy 1l1aterials and consist C?la separate file for each blueline or sepia. Vendors and operators supporting this option nlust supply the AOGCC with a publicly distributable viewer for the graphical fi Ie format. Public users access to these electronic images is required. Schlumberger has supplied the Commission with a publicly distributable viewer for the PDS graphical file format; AOGCC will now accept information in this format. Log information supplied in PFD file format, which is viewable using the publicly distributed Adobe Acrobat Reader, will also be accepted. Please contact me at (907) 793-1230 to arrange for additional formats. Sin... .c..-.e. rely, ~. ~-t' , ~:-' , ~~~.. - ~ cJ, Robert P. Crandall I) r1 Senior Petroleum Geologist ::t:t: 0\ - . .. .. . 8- . ". PrestonlGateslEllis LLP R E C E I-V E D NOV 2. 7 2000 - . November 27, 2000 DIVa OF O:L &. GA~ ... DrRECTOR'S OFFICE Mr. Kenneth A. Boyd, Director Alaska Division of Oil and Gas 550 West 7th Avenue, Suite 800 Anchorage, AK 99501 Re: Appeal of October 26, 2000 decision (rejection of ORI lease surrender application) Dear Mr. Boyd: As discussed below, the purpose of this letter is to appeal to your office the decision dated October 26, 2000. . 1. Case reference: This appeal relates to ADL 381134. 2. Decision being appealed: October 26, 2000 decision signed by Pirtle Bates, Jr., a copy of which is attached (herein "Decision"). 3. Remedy requested and grounds on which request is based: ORI respectfully submits that the rejection of its lease surrender was improper, and asks that the Decision be reversed, and that ORI's surrender ofADL 381134 be deemed to have been effective as of October 13, 2000 (the date the letter of surrender was received by the division). As set forth in the Decision, OR! Inc.' s attempt to surrender its rights under ADL 381134 (through a letter dated October 12, 2000 and ~igned by Paul R. Benetti) was rejected as beîng deficient for two reasons: 1) Mr. Benetti was not one of the persons previously designated by ORI, Inc. ("ORI") as an authorized representative; and 2) although the surrender letter correctly named the lease at issue as ADL 381134, it did not also provide a legal description of the land covered by that ADL. For the reasons set forth below, OR! submits that the rejection was the result of an improperly strict construction of the regulations, and that any technical violation is of the sort that the director has the power to excuse. A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES ..' 420 l STREET, SUITE 400 ANCHORAGE, AK9950 1-1937 TEl: {907} 276-1969 FAX: {907} 276-1365 www.prestongates.com Anchorage Coeur d' Alene Hong Kong Los Angeles Orange County Palo Alto Portland San Francisco Seattle Spokane Washington, DC . Mr. Kenneth A. Boyd, Direçtor November 27, 2000 Page 2 ~ A. The Failure To Designate Mr. Benetti As An "Authorized Person Is A Correctable Error. Under 11 AAC 82.205, a corporation is required to submit a list of the individuals authorized to act on its behalf. GRI admits that Mr. Benetti's name was not on the list of authorized individuals that it had previously provided. However, failure to have the letter signed by someone on the previously submitted list is not one of the five listed deficiencies in 11 AAC 88.120 that give an applican~ no priority. While the failure to amend the list and add Mr. Benetti was an error, it is an error of the type that the director may allow to be corrected if he determines that the omission or error is immaterial or due to excusable inadvertence. 11 AAC 88.120. GRI respectfully submits that its error should be seen as being of the "correctable" kind under this regulation. While John Teich had been the person with whom the Division had previously dealt, Mr. Teich had resigned as of September 6, 2000, and Mr. Benetti had taken on Mr. Teich's responsibilities at GRI. Mr. Benetti's letter indicated that if there were any questions, the Division could contact either him or David Johnston (with whom the Division had been dealing regarding GRl's matters), providing phone numbers for each. lfthe Division had called either Mr. Benetti or Mr. Johnston with a question regarding Mr. Benetti's authority, the necessary paperwork would have been provided on October 13. In the context of this appeal, GRI will be.providing proof within twenty calendar days of this filing, pursuant to 11 AAC 02.030, confirming that Mr. Benetti was in fact authorized to surrender ADL 38114 at the time that the October 12 letter was sent. Failure to file an amended list of authorized representatives was simply a paperwork error of the type that can (and should) be retroactively corrected. B. Reference To The ADL Number Was Sufficient To Identify the Land At Issue. As an additional grounds for rejecting GRI's surrender, the Decision also notes that under 11 AAC 88.1 05, an application must "describe the land affected by the application." Under 11 AAC 88.120, documents (including lease surrenders) are deficient if "the land description is insufficient to identify the land. . ." However, the regulations do not require a formal legal description: the regulation requires a description that is sufficient to "identify" the land, and only rejects documents where the description provided does not adequately indiCate the land in question. In the case of a new lease application (where no AD L number has been established), a complete legal description would presumably be required to indicate precisely what acreage was at issue. However, once an ADL number exists, the ADL number is plainly sufficient to identify the land in question. In the instant case, GRI's letter "identified the land" when it stated that it was surrendering "ADL 381134." There can be no dispute regarding the land that was being surrendered, and indeed, a letter surrendering "ADL 381134" provides more clarity of .. . I"~ ' . 8' Mr. Kenneth A. Boyd, Director . November 27, 2000 Page 3 . . .~ .., identification than if GRI had announced that it was surrendering its lease rights solely by reference to a legal description (i.e. Tract 67A-W-134, T. 18 N., R. 3 W., Seward Meridian, Alaska, followed by a listing of the lots in the various sections). Under the circumstances, rejecting GRI's surrender for the absence of a "section, township, range" description was improper. 4. Address to which notice or decision should be sent: GRI requ~sts that all future correspondence regarding this appeal should be directed to the undersigned, at Preston Gates & Ellis LLP, 420 L. Street, Suite 400, Anchorage, Alaska 99501. Very truly yours, PRESTON GATES & ELLIS LLP B cc: Paul Benetti David Johnston , ~ CHAPTER 002 APPEALS 11 AAC 02.010 APPLICABILITY. (a) This chapter establishes the administrative procedure available to a person adversely affected by a decision of the department. If a different procedure is prescribed by statute or regulation with respect to a particular decision, that procedure must be followed when it conflicts with this chapter. (b) A person adversely affected by a decision made by an employee of a division without the written concurrence of the division's director may appeal to the division director. (c) A person adversely affected by a decision made by or with the concurrence of a division director, but without the written concurrence of the commissioner, may appeal to the commissioner. (d) A person adversely affected by a decision made by or with the written concurrence of the commissioner, which is the final administrative decision, may either (1) seek reconsideration in accordance with 11 AAC 02.020 , or (2) appeal to superior court in accordance with the rules of court and to the extent permitted by applicable law. Any right to a judicial appeal is not affected by the failure to seek reconsideration. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.020 RECONSIDERATION OF A CO:MMISSIONER DECISION. (a) A person adversely affected by a decision made by, or with the written concurrence of, the commissioner may request the commissioner to reconsider the decision if the person has new or additional information relevant to the decision. \ (b) A request foY: reconsideration must be received by the commissioner within 20 calendar days after the date of delivery of the decision, as determined under 11 AAC 02.040 (c) and (d). The request must meet the requirements of 11 AAC 02.030 (a)(l) -(a)(8). (c) The commissioner will, in his or her discretion, order or deny reconsideration within 30 calendar days after the date of delivery of the decision as determined under 11 AAC 02.040 (c) and (d). If the commissioner takes no action during the 30-day period, the request for. . reconsideration is considered denied. Denial of a request for reconsideration is the final administrative decision of the department for purposes of appeal to superior court. (d) If the commissioner timely orders reconsideration of the decision, the commissioner will, in his or her discretion, affirm the decision, issue a new or modified decision, or remand the matter to the director for further proceedings. The commissioner's decision, other than a remand decision, is the final administrative decision of ,the department for purposes of appeal to superior court. ' History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.030 FILING AN APPEAL. (a) An appeal under this chapter must (1) be in writing; (2) be signed by the appellant or the appellant's attorney; (3) be timely filed in accordance with 11 AAC 02.040 ; (4) specify the case reference number used by the department, if any; (5) specify the decision being appealed; (6) specify the remedy requested by the appellant and the grounds on which the request is based; . (7) state the address to which any notice or decision concerning the appeal is to be mailed; (8) identify any other affected agreement, contract, lease, permit, or application by case reference number, if any; . . (9) include a request for a hearing, if a hearing is desired, accompanied by a request for any special procedures to be used at the hearing and a description of the factual issues that need to be decided at the hearing. (b) At the time an appeal is filed, the appellant may submit additional written material in support of the appeal, including evidence or legal argument, or, if additional time is desired, the . appellant may file a notice of intent indicating that additional written material will be submitted. If a notice of intent to submit additional written material is filed, the additional.material must be received by the department within 20 calendar days after the filing of the appeal, unless the department, in its discretion, grants an extension of time. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.040 TIMELY Fll..ING; DELIVERY OF DECISION. (a) To be timely filed, an appeal must be received by the department within 30 calendar days after the date of deli very of the decision, as that date is determined under (c) or (d) of this section. If the 30th day falls on a day when the department is officially closed, the appeal must be filed by the next working day. (b) An appeal will not be accepted if it is not timely filed. (c) The department will, in its discretion, deliver a decision by personal service or by registered or certified mail, return receipt requested. Delivery by registered or certified mail occurs when the decision is signed for by the addressee or the addressee's agent. If the addressee neglects or refuses to sign for the registered or certified mail, or if the address that the addressee provided to the department is not correct, delivery by registered or certified mail occurs when the decision is deposited in a U.S. general or branch post office, enclosed in a postage-paid wrapper or envelope, addressed to the person's current address of record with the department. (d) If the appellant is a person to whom the department did not deliver a decision by personal service or registered or certified mail, the date of delivery is considered to be the first date the department gave public notice of the decision, or, if public notice was not given, the date the decision was signed. ) . . ") History - . Eff. 11/7/90, Register 116 'Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 , AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.050 HEARINGS. (a) The department will, in its discretion, hold a hearing when questions of fact must be resolved. (b) The hearing procedure will be determined by the department on a case-by-case basis. As provided in 11 AAC 02.030 (a)(9), any request for special procedures must be included with the request for a hearing. (c) In a hearing held under this section (1) formal rules of evidence need not apply; and (2) the hearing will be recorded, and may be transcribed at the request and expense of the party requesting the transcript. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 ( ) ~) ~ , AS 46.15.020 AS 46.17.030 11 AAC 02.060 STAYS. (a) Timely appealing a de~ision within the department in accordance with this chapter stays' the decision during the department's consideration of the appeal or request for reconsideration unless the director or commissioner, in his or her discretion, decides that the public interest requires that the decision or any part of it should take effect on the date stated in the decision or, if that date has passed,. on a date set by the director or commissioner. (b) The department will, in its discretion, stay the imposition of late payment penalty charges during consideration of an appeal. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.070 WAIVER OF PROCEDURAL VIOLATIONS. The commissioner will, in his or her discretion, and to the extent allowed by applicable law, waive a requirement of this chapter if the public interest or the interests of justice so require. History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 ) ~ , .) AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 11 AAC 02.080 DEFINITIONS. In this chapter' (1) "appeal" means a request to a director or the commissioner to review a subordinate's decision; (2) "commissioner" means the commissioner of the Department of Natural Resources; (3) "decision" means a written determination by the department specifying the details of the action taken; (4) "department" means, depending on the particular context in which the term is used, the Department of Natural Resources, or the commissioner, director, or other authorized employee of the Department of Natural Resources; (5) "director" means a director of a division within the Department of Natural Resources; (6) "division" means any division within the Department of Natural Resources; and (7) "request for reconsideration" means a request to the commissioner to review his or her original decision, or a decision in which he or she concurred, based on new or additional information. . History - Eff. 11/7/90, Register 116 Authority - AS 03.05.010 AS 03.10.020 AS 29.65.120 AS 38.04.900 AS 38.05.020 AS 38.08.110 AS 38.09.110 AS 38.50.160 AS 41.15.020 AS 41.17.055 AS 41.21.020 AS 46.15.020 AS 46.17.030 . . . . =+t: Ut ('\ 1..1 ..-:1 '\ \ f, "-' I I ¡ ~ ~ ,~..)'-. ;.1 /./.',\ ! r I' . . ;; \. f'; .; L:' '; , .~\ \ f "\. ""--:'\ (1 n r-' ! ~ \ (( '. 1 / / i i \ ! /.'; ~ \,,"-... I r.\ I'~. ,II '.:' .: \",.' . ,( 'jJNY KNOWLES, GOVERNOR DEPARTMENT OF NATURAL Rþ DIVISION OF o/ér-.::~~, ~~.Ëfr~_. H ENG_- CERTIFIED MAIL 700005200015 6552 9249 r~t~~ ~- - --~ w,~ RETURN RECEIPT REQUESTED 3R. GEOL . ~ C3EOL .. ~)J? Neãðð£;ST - .' .:.'-.'TA1::-;:¡:r-£fi'J ,)! ; 1.",.v,-1 ,--- TItlItCH - - ~ ~ -~J.~-~. . I ... : ~:---~.."'.. 550 WEST 7TH A VENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3560 PHONE: (907) 269-8800 FAX: (907) 269-8938 October 2, 2000 OR! Inc. Attn: John Teich 4900 Sportsman Drive Anchorage, AK 99502-4169 Oil & Gas Lease ADL 374135 LEASE EXPIRED State of Alaska oil and gas lease ADL 374135 was issued with an April 1, 1991 effective date and seven-year primary term. The division extended the lease term by decision dated April 24, 1998, as drilling operations were commenced on the lease before expiration and continued through the end of the primary term. Pursuant to lease paragraph 4(c)(1), AS 38.05.180(m) and 11 AAC 83.125 the lease term was extended "until 90 days after cessation of that drilling." The date of cessation of drilling was to be determined by the examination of reports and other relevant information. In a letter dated June 14, 2000, the division notified you that it had determined that drilling was not continuing "with reasonable diligence" as required under lease paragraph 4( c)( 1) and that it had established a new expiration date for ADL 374135 of September 30, 2000. The division has received no revised Plan of Operations or evidence that new drilling operations have commenced. Consequently, ADL 374135 expired effective 11:59 p.m. on September 30, 2000 under its own terms. (_/.._-_._..._..._---~ ,--(i---~" ---.. "~_..~". Pirtle Bates, J r. ' Natural Resource Manager~~.__. nr.r 1 0 2000 CC: AOGCC Jennifer Coughlin, Preston Gates & Ellis LLP David Johnston, Consultant Paul Bennetti, GRI Inc. Matt Rader, DO&G & PBJ/pbj/374135 Lease Expired Notice.doc "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." =+t: ..þ.. / 1\ :: ('1/,1 r-¡ q þ, : /,/ f'>.\ /~ ', ::,::,;0\"", :U:': ,,' ", ,,it/:' ....' ... . , ;", ; I': i.';. , ~ ."':. ~ . . :' . , i I '; I ,/ ..1 ~.i. DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS CERTIFIED MAIL 70000520001565528983 RETURN RECEIPT REQUESTED NOTICE ORI Inc. Attn: John Teich, Pres. 4900 Sportsman Drive Anchorage, AK 99502-4169 CEIV:ED SEP 2 1 20:00 \! " ì~NY KNOWLES, GOVERNOR " ~",f~2ri~~i~\~.IL- I COMM --,'^ II'...~ 550 WEST 7TH A VENŒS7ffil1J1TE 8m:r-"I~ ANCHORAGE, ALASK~FfJ~~r" PHONE: (907) 269-886~'š'ï~r:JG~--'.~ FAX: (907) 269-89fÆ"E~~-Ö"-.ì ... ,;: ì\I G,.~.--- ' ., '9,,, NRO W"", Septembe~~~OOO iflc: G~QL : 0~OL ÃSST 1-' :)T.A,T TEefl -¡-- STATTEqi-L-= Oil ~. G~ Le~e f ADL~~.8JJ34 ',' Alasita Œi & Gas Cm13, Commission Anchorage DRILLING OPERATIONS NOT PROCEEDING WITH DUE DILIGENCE LEASE EXPIRATION DATE SET The State of Alaska issued oil and gas lease ADL 381134 effective April 1, 1993 with an expiration date of March 31, 2000. Drilling operations, as defined in paragraph 34(4) of the lease, commenced on this lease before expiration and continued through the end of the primary term. Pursuant to paragraph 4( c)( 1) of the lease, AS 38.05.180(m) and 11 AAC 83.125 the lease term was extended "until 90 days after cessation of that drilling." The,division was informed that drilling operations ceased on April 18, 2000. On May 3, 2000, the division extended the lease until July 17, 2000. On July 14, 2000, GRI Inc. attempted to log the Houston #22 well. Consistent with guidance provided in a meeting with Mr. Johnston on April 25, 2000, the new expiration date of ADL 381124 is October 13, 2000 as a result of the well logging. However, obstructions within the well bore prevented complete logging of the well and no other drilling or drilling related activities are known to have occurred since that time. Drilling is not continuing with reasonable diligence. Significant new and continuous activity, such as the spudding of a new well, is required to further extend the lease under paragraph 4( c)( 1). Plugging and abandonment of the existing hole without explicit demonstrated intent to commence a new well will not result in further extension. Before beginning operations that you believe might entitle you to another lease extension, I recommend you meet with division staff to discuss what operations might qualify and the possibility of another lease extension being granted. In any event, you must inform the division immediately of any changes in lease operations which you consider as having an effect on the term of the lease. "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." " ) 09/20/00 381134 Failure to Exercise Due Diligence Decision.doc Page 2 of2 The decision dated April 7, 2000 and the notice dated May 3, 2000 were sent certified mail to the notification address of record in accordance with paragraphs 24 and 25 of the lease. In both instances, the documents were returned as undeliverable as addressed. This decision is being sent certified mail to the same notification address, with additional courtesy copies being sent to other parties that we believe are associated with this lease. The division is under no obligation to send multiple copies of notices to ensure lessee's receipt of the notice. Failure of the lessee to receive a notice sent to the notification address of record is not grounds to excuse failing to comply with or respond to any future notices. . This action has been included in the records of the department. If you have any questions concerning this notice, please call me at (907) 269-8810. ( , ~. \r. .T-cs.'1'. ",,- '-.' - t)"-."/ --- -'. ... ) N'I'--. Pi~i~ ~~~es, Jr. " -. Natural Resource Officer CC: AOGCC Jennifer Coughlin, Preston Gates & Ellis LLP David Johnston, Consultant Paul Bennetti, GRI Inc. Matt Rader, DO&G PBJ/pbj/381134 Failure to Exercise Due Diligence Decision.doc Phone: (907) 345-2629 D . d W J h t e-mail: dwjohnston(éi;micwnct.net aVl . 0 ns on 320MarinerDåve,Anchorage,A1aska 99515 Oil and Gas Conservation and Environmental Assessment, Regulatory Complianæ, and Permit Acquisition May 30, 2000 . E:;!IIE! ('Q\ F: ø. I -, '. :'ffl~!f' J!f~.ft t r~.m ~ Daniel T. Seamount, Jr. Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 f;/¡t\y :3 1 2000 !}ijsska 0\1 & Gas Cons. Commission Anchorage Dear Mr. Seamount: Jennifer Coughlin has asked me to respond to your letter to her dated May 23, 2000. Thank you for informing us that Mr. Wondzell's e-mail titled ''Notice of Violation" is not considered by the Commission to be a notice of violation or enforcement under 20 AAC 25.535. I hope that we have now put an end to these issues, and can continue to move forward in a productive manner. In response to your solicitation of suggestions to improve the process, I would recommend that you revise the Commission's standard approval letter and specifically designate Mr. Wondzell as the Commission representative who must be notified before drilling operations commence, if the Commission really wants a single point of contact. As written, the approval letter . simply states that "notice may be given by contacting the Commission at 279-1433." Please be assured that in future I will contact Mr. Wondzell directly before undertaking further work with Houston #22 or any other wells that OR! may decide to drill or reenter. With regard to the compliance issues set forth in your letter, I am somewhat confused regarding the basis for your belief that ORI is not presently in compliance with the three Commission regulations you discuss. I am aware that a spacing exception will be required for Houston #22 if GRI decides to test the well, and that certain information must be submitted to the Commission within 30 days after its completion, suspension or abandonment. However, since OR! has not yet completed, suspended or abandoned the well, or decided to conduct testing operations, I fail to see how Houston #22 can be out of compliance with either 20 AAC 25.055 or 20 AAC 25.071 at this time. Currently, the well has been temporarily shut down in accordance with 20 AAC 25.072. Mr. Christenson approved GRI's request for shut down on May 9, 2000. Because the approved Form 10-403 required only a written notice of startup and not a Form 10-404 as a condition of approval, I assumed the Commission had waived the requirement for the Form 10-404 in accordance with 20 AAC 25.072(b). If the , . .\ Commission has now changed its position, I will be pleased to submit the appropriate form. I appreciate your desire to conduct Commission affairs in a professional, businesslike manner, aside from personal agenda, and appreciate the Commission giving the original permit application expedited review so that drilling operations could begin prior to GRI's lease expiration date of March 31. It was never my intention to bypass Mr. W ondzell in this process, and it is unfortunate that "miscommunication" has marred what began as a positive relationship between the Commission and me. ------ cc. Jennifer Coughlin, Preston, Gates and Ellis, LLP Blair Wondzell, Senior Petroleum Engineer Camille Oechsli Taylor, Commissioner Robert Christenson, Commissioner ==It: w -..- -.. .--------- ') @~&~~ Qß &~@~ ) 1.o~ Il DIVISION OF OIL AND GAS / TONY KNOWLES, GOVERNOR DEPARTMENT OF NATURAL RESOURCES 550 WEST 7TH A VENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3510 PHONE: (907) 269-8800 FAX: (907) 269-8938 June 14, 2000 GRI Inc. þ....ttn: John Teich, Pres. 4900 Sportsman Drive Anchorage, Alaska 99502-4169 Certified Z 548 827 698 Re: Houston #3 Well Cessation of Drilling ADL 374135 LOICI 95-07 Dear Mr. Teich: On April 1, 1998 the above lease was extended because ORI was in the process of drilling the Houston #3 coal bed methane well. The Director's Decision of April 24 extended the lease under lease term 4(c)(1). This term provides that the lease continue for 90 days after cessation of drilling and for so long as oil or gas is produced in paying quantities. Two years have passed since testing began. Test results do not show the well capable of production in paying quantities nor do they demonstrate satisfactory progress toward that conclusion. The well must be de-watered before gas can be produced and tested. Failure to de-water the well is, by default, a failure of the production test. However, given that there is more than one way to complete and de- water the well, an operator acting with reasonable diligence would by this time either 1) accept the failure to de-water as a failure of the production test and abandon the well, or 2) try something different. For purposes of extending the lease, we consider that drilling and testing has ceased as of the date of this letter and the lease will expire at 11 :59 p.m. on September 30, 2000. If you intend to commence activities that might extend the lease you must present your plans by June 30, 2000. Division-approved activities must be underway before the lease expires. A revised completion and/or testing program for the Houston #3 would have to include measures to overcome the technological and geological obstacles that are preventing de-watering the well. Should you decide to abandon this lease, plans for plugging and abandoning the Houston #1, #2, and #3 Wells and rehabilitating the sites are required. RECEIVED .n It 03 2000 AlaSa Oil & Gas Coos. Commission "Develop, Conserve, and Enhance Natural Resources for Present and Futu~ag:ns." ) , ) J If you have any questions please give me a caII at 907 269-8776, fax at 269-8943, or e-mail to Matt_Rader@dnr.state.ak..us. Sincerely, ;m dBP,L- Matt Rader Natural Resource Manager cc Bill Van Dyke - DOG Jim Haynes - DOG Pirtle Bates - DOG Blair W ondzeIl - AOGCC John Teich - GR! California GRI Inc. - 420 L Street #400 Dave Johnston - Consultant RECEIVED ,JUt 03 2000 Alaska OIf & Gas Cons. Commission A1kritOTaAc ::f:t: N ) ~~&~~ Q ß &~~ j[jA DIVISION OF OIL AND GAS ') } TONY KNOWLES, GOVERNOR DEPARTMENT OF NATURAL RESOURCES 550 WEST 7TH AVENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3510 PHONE: (907) 269-8800 FAX: (907) 269-8938 June 14, 2000 GRI Inc. Attn: John Teich, Pres. 4900 Sportsman Drive Anchorage, Alaska 99502-4169 Certified Z 548 827 697 Re: Houston #4 Well Abandonment ADL 388911 Expired LO/CI 95-07 Dear Mr. Teich: Your letter of March 28, 2000 stated you plan to plug and abandon the Houston #4 Well and rehabilitate the site by the end of the summer. Please submit a work plan and schedule that proposes to complete this work by September 30, 2000. The site should be rehabilitated to approximate pre-existing conditions. Any garbage or debris should be removed and properly disposed of. The area surrounding the wellhead has been used in the past to store logs that have been harvested from adjacent state lands. The well should be abandoned to meet all AOGCC requirements using the marker plate method so as not to interfere with this use in the future. If you have any questions please give me a call at 907 269-8776, fax at 269-8943, or e-mail to Matt_Rader@dnr.state.ak.us. Sincerely, ~~ Matt Rader Natural Resource Manager cc Bill Van Dyke - DOG Jim Haynes - DOG Pirtle Bates - DOG Blair W ondzell- AOGCC John Teich - GRI California GRI Inc. 420 L Street #400 Dave Johnston - Consultant RECEIVED \JU\ 03 2000 Ataska Oil & Gas Coos. Commi8sion And'torage "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." ::t:t:: I---à t 1 @ ~ ~ ~Lr, .\~. @ -, r~ @-,f!@ 7.) @ ~ ¡ru -J J: ~ J w~¡ru@ ~~¡ru TONY KNOWLES, GOVERNOR ALASIiA. OIL A.lÐ) GA.S / CONSERVA.TION COMMISSION' . 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 May 23, 2000 GRI Inc. Ms. Jennifer Coughlin- Agent Preston, Gates, and Ellis, LLP 420 L Street, Ste 400 Anchorage,AJ< 99501 Dear Ms. Coughlin: We wish to clarify recent correspondence from Mr. Blair Wondzell (of the Commission staff) to Mr. David Johnston (GRI's designated contact for the Houston #22 Well) dated May 12, 2000. The e-mail titled "Notice of Violation" is not to be considered a notice of violation or enforcement under 20 AAC 25.535. The purpose of the e-mail was to communicate Mr. W ondzell' s frustration at being unable to witness the operation of drilling equipment with which the Commission has limited practical experience. Also, the Commission wishes to alert you of some compliance issues. which should be fairly easy to address. Houston #22 Permit to Drill GRI made a number of special requests with respect to the Application for Permit to Drill the Houston #22 Well. Please note that this was not a routine application for a permit to drill : . GRI's proposed location requires a spacing exception based on close proximity to a change of lease ownership. This was stated on the approval letter attached to the permit to drill. GRI requested a waiver of essentially all well-control requirements (including waivers for blowout prevention equipment diverter, and drilling fluid). GRI's operations involved a drilling technique that is unusual for gas exploitation in Alaska. GRl's drilling contractor \-vas unknown to the Commission. GRI requested expedited review and emphasized to the Commission that drilling operations must begin before March 31, 2000 in order to hold the lease. . . . . GRI's application received in1mediate and prioritized attention by numerous members of the Commission. We provided specialized assistance to Mr. Johnston including advice on properly locating the well on the lease, assessing the potential for shallow gas hazards, I , Jennifer Coughlin GR!, Inc. ) 2 May 23, 2000 and ensuring safe operations. The permit to drill was approved within the requested time frame, enabling the drilling of the well, which may have preserved GRI's lease. In light of the unusual nature of the Houston #22 operation, Mr. Wondzell requested that he be notified in sufficient time to witness initiation of drilling operations. This request was clearly made in most of the meetings with Mr. Johnston and on the approval letter for the permit to drill. Perhaps the approval letter should have been more specific concerning the procedures for contacting the Commission. Nonetheless, in our experience, all other operators understand that they are to contact the senior petroleum engineer (Mr. Wondzell) or one of his inspectors regarding drilling matters. A possible solution to GR!' s and the Commission's current "miscommunication" would be to formally specify dates, times, contact persons, and other conditions in the approval of a GRI application to the Commission. However, we are hesitant to do this because of resulting encumbrances on the efficiencies of both GRI and the Commission. We are in receipt of a letter from Mr. Johnston (attached). In this letter, he alludes to his long experience with the Commission. His experience should have sharpened his awareness of the intent ofMr. Wondzell's requests (to witness the operation) and the Commission's stipulations in the approval letter. For example, informally stating that drilling may commence within the "next 24 to 48 hours" during a conversation with a Commission staff member who is not responsible for drilling operations does not constitute a proper notice of commencement of drilling. Also of concern is a statement in Mr. Johnston's letter insinuating that Mr. Wondzell practiced unprofessional conduct by stating "I suspect that if I did not have a prior relationship with the Commission, Blair (Mr. Wondzell) would not be taking this aggressive stance." The Commission would like to emphasize that Mr. Wondzell has no personal agenda in this matter. If he had, he could have held up the evaluation and approval process. In reality, Mr. Wondzell strongly influenced the staff and the commissioners to evaluate and approve the permit to drill ensuring that the well was spud on time. Comvliance Issues GRI is currently out of compliance with three Commission regulations regarding the Houston #22 Well: . Application for spacing exception (20 AAC 25.055). The regulations have specific and clear requirements. Description of GRI' s plans to evaluate (well logs ) (20 AAC 25.071) and complete the well (20 AAC 25,072). Sundry notices are required whenever well operations are suspended and re-started (Forms 10-403 and 10-404). . .,. Jennifer Coughlin GRI, Inc. ) 3 May 23, 2000 Compliance with these regulations is required before testing the Houston #22 and also to classi fy it as a gas well. Sunlnlarv The Commission is very interested in the development of coal bed methane and is aware and appreciative of the huge potential benefit to the State of Alaska if GRI' s project is successful. It is, however, a new technology to Alaska, and we must proceed with caution. The regulations governing oil and gas operations in Alaska protect health, safety, the environment, and correlative rights while minimizing waste. Commission conditions on oil and gas operations must be treated in a professional, businesslike manner, aside from personal agenda. As stated above, it is not our intent to invoke the violation section of our regulation 20 AAC 25.535, but to solicit your help and cooperation in the conduct of our mutual business. We welcome your suggestions in making this process beneficial to both parties. Sincerely, Daniel T. Séamount, Jr. Commissioner Attachment (1 ) cc: Robert Christenson - (wlaut attachment) Cammy Oechsli- Taylor - (w/out attachment) Blair Wondzell - (wi out attachment) Robert Crandall - (w/out attachment) David Johnston - (w/out attachment) LAw OFFICES OF WALLACE B. ,( ,DAMS A PROFESSIONAL CORPORATION III SANTA ROSA AVENUE, SU)TE 405 SANTA POSA, CALIFORNIA SS464 Y_iaL_Ea«szznil�.S.�,Mail June 3, 2003 Robert Crandall Alaska Oil and Gras Conservation Commission 333 W. 7th Ave. Suite 100 Anchorage, Alaska 99501 Re: Principal: GRI, Inc. Obligee: State of Alaska Bond No: K.06880877 Claim No.: 340 B 167603-7 Surety: Insurance Company of North America Dear Mr. Crandall: TELEPHONE (707) 545.0300 FACSI M I LK (707) S45,0399 FILE NO• 15223 In furtherance of our telephone conversation, enclosed is a copy of the Fairweather E&P Services Inc.'s Proposal For Well Abandonment as well as their revised quote. We understand that your department received a copy of the Hoefler Consulting Group's Request for Proposals on which the Fairweathez bid was based and that the work set forth in the Request For Proposals was acceptable to the AOGCC. In that regard, the Fairweather bid proposes an alternative cementing procedure for wells No. 2 and 3 (see last paragraph, page 3 of Fairweather bid). We would appreciate the AOGCC reviewing the Fairweather proposal and Revised Quote and advising us if the work and method proposed by Fairweather is acceptable to the AOGCC. Mr. David Johnston of Hoefler Consulting has reconuneuded that water samples be obtained from the reserve pit to determine if it is contaminated or not. If it is not contaminated it would not be necessary to transport the water for disposal and would :result in a savings of $18,000, It is still INA's intention to negotiate a contact for the completion of the work as well as negotiating a contract with Hoefler to assist and oversee the completion of the work. This is taking Ionger that expected, but we are attempting to obtain a firm, fixed price for the work and consulting to the extent possible as well as arrange for performance of the work this summer. U/Z ' d H WON RVGV 0 30H11VA d0 S30I d30 AV] Wd89: Z 1 SON ' £ ' unr Robert Crandall June 3, 2003 Page 2 We will advise of our progress and await your advice regarding approval of the Fairweather proposal. Very truly yours, LAW OFLFIOF ALLACE B. AMS allace B. Adams 8 l/8 ' d H TON SNVCV 8 30d11NM 30 S30I d30 W Wd8g: N HE ' 8 �flIR�EBIN�� E & P SERVICES, INC. September 17, 2002 Mr. David Johnston Project Manager Hoefler Consulting Group 701 Sesame Street, Suite 200 Anchorage, AK 99503 Imo: Revised Quote, Abandonment of GRI Houston Coal Bed Methane Wells_ Dear Mr. Johnston, This letter is in response to a phone conversation we had on the 16"' of September, 2002. Per your request, we have reviewed our price schedule for the GRI well abandonment work. The $161,000 quote for this project was inclusive of all water transportation for disposal ($18,000), hauling in gravel for backfiilling pit (calculated at --- $6000), as well as equipment charges for excavating and leveling etc. This left a total of $137,000. If it indeed turned out we did not have to assume responsibility for transporting the pit water for disposal (Vac trucks are expensive) than you would not be charged for same. And if it turned out we did not have to haul gravel to backfill the pit, or if it turned out there wasn't some residual contamination below the pit liner that needed to be hauled away, again, you would not be charged. As you know, there are certain fixed costs which must be covered, not the least of which are cementing equipment and cement, drilling rig or boom truck as needed, personnel, insurance, fuel, BOPS (required), excavating equipment, mob/demob etc. Fairweather prepared this quote based research and a comprehensive knowledge of the miscellaneous materials and equipment requirements that go into performing these procedures in a safe and environmentally sound manner. Whale there were some uncertainties involved in putting together the quote, Fairweather was quite confident in the accuracy of the numbers used and in the fact that these wells would be P&A'd properly at the suggested cost without getting into the netherworld of change orders and associated paperwork. Fairweather can appreciate your concerns about cost containment, however, the best we can do is drop our package price to $153,000. Here again, should water disposal not be an issue, the $18,000 hauling fee would be dismissed, and if it is not necessary to haul in gravel to backfill the reserve pit, $6000 would be deducted as well, for a final price of $129,000. These costs, which as you know are variable and depend on rain, contamination, salvageable gravels etc., would be pro -rated to reflect the actual amount of water or gravel hauled. This cost could range from nothing to fairly close to our quote. If you wish, we will provide the water removal and gravel hauling services at cost + 22% to cover supervisory and reporting duties. There will still be a charge though for transport and disposal of the cement rinsate generated during the P&A and equipment wash down 715 L Street • Anchorage, Alaska 99501 • (907) 258-3446 • FAX (907) 258-6557 650 North Sam Houston Parkway East, Suite 505 + Houston, Texas 77060 • (281) 445-5711 • FAX (281) 445-3388 8 I/t ' d l8 It' ON SOP 9 10'd11NM d0 S30I dd0 W Wd80: Z l 800Z 1 ' un0 procedures. We feel confident the remainder of the work can be performed as described without any adjustment to cost. In the event you do not wish to use our services to P&,A these well's, Fairweather would still be interested in providing an on site representative to Hoefler Consulting Group to monitor the well work activities on behalf of Hoefler and ACE USA. Fairweather has a wealth of experience in performing P&A.. procedures as well supervising all types of oil- field and construction projects for companies in Alaska, California and Texas_ Please give me a call you if you think you might be interested in this service_ I appreciated the phone call yesterday and I thank you for your consideration in this matter, please contact the undersigned at 258-3446 if you have any questions or quire additional infoation_ Sincerely, F A.THER E SERVICES, INC. Duane H. Vaagen Project Engineer Attachment cc: Bill Penrose - Fairweather 1/9 1d H W ON SWHOV 8 30b'11HM 30 S30I3d0 W Mg:9 1 £ON 1 T t U� E& P SERVICES, INC September 6, 2002 Mr. David Johnston Project Manager kloefler Consulting Group 701 Sesame Street, Suit 200 Anchorage, AID 99503 RE: Abandonment of GRI Houston Coal fled Methane Wells No. 1, 2, 3, 4, and 22. Dear Mr. Johnston: Thank you for providing Fairweather E&P Services, Inc. the opportunity to review and ,respond to your Request for Proposal to plug and abandon the Houston coal bed methane wells drilled by the former Growth Resources International. After reviewing the information presented in the RFP, performing an on -site investigation and other research, we have prepared for your consideration the attached proposal for the permanent plugging and abandonment work requested. The proposal is broken out in tasks as requested, with a discussion of each task, the procedures used and subtasks as necessary. This proposal is submitted based on the premise that work will start shortly after award of a contract in mid -September and before significant snowfall and winter conditions set in. In the event the contract award is let later, the costs must be adjusted accordingly to allow for work during winter weather conditions. The total estimated cost for all tasks and subtasks in the attached proposal is $161,000. This cost is based on Fairweather receiving all of the work associated with the Hoefler / GRI RFP received. There are certain costs, such as equipment rental, mob/demob, trucking, personnel, etc. that are spread over all the tasks, which if done individually, would increase the cost per task. The attached document "Proposal for Well Abandonment" contains individual task costs that do not reflect true stand-alone charges if the tasks are awarded individually. This proposal is based on information provided by the floefler Consulting Group and Fairweather's investigation of the sites. It also draws on insight Fairweather has gained in performing these procedures in the past for a number of clients. We submit this proposal on the good -faith assumption that the data provided to Fairweather is accurate and there are no unidentified problems areas that will result in large changes to the work scope. The only well file that the AOGCC allowed Fairweather to view was that for the 715 L Street Anchorage, Alaska 99501 (907) 258-3446 FAX (907) 258-5557 H8 t' nN Rvcv 9 30H11dM 30 S30I330 W Mg:g l HN I ' unr M. Pd.. •. �_rv-:4ISi:M!. No. 3 well and, while the file was helpful, there is still a question as to the exact completion equipment downhole. By way of experience, Fairweather has performed well plugging and abandonment services for numerous clients, both onshore and offshore, from Prudhoe Bay to Ecuador. We are confident that the work required to abandon and close out these wells and associated sites does not pose any insurmountable technical challenges and that the costs projected for the work as proposed will remain as stated. In the event that a significant unexpected condition is encountered, Fairweather will work closely with the Hoefler Group to ensure that any additional repair or rernediation costs are minimized as practically and efficiently as possible. Thank you for your consideration in this matter. Please contact the undersigned at 258- 3446 if you have any questions or require additional information. Sincerely, FAIRWE,A,THER E&P SERVICES, INC. l Jr Duane H. Vaagen Project Engineer Attachment CC'. Bill Penrose - Fairweather 81/L 'd [81t'ON MOM 9 30v]1Vd 30 S301330 W H 00:1 800Z FAIRWEATHER E&P SERVICES, INC. PROPOSAL FOR WELL ABANDONMENT For HOEFLER CONSULTING GROUP GRI's COAL BED METHANE WFLLS HOUSTON, ALASRA. September 6, 2002 1.0 INTRODUCTION & HISTORY The well plugging and abandonment program described herein, covers the permanent P&A work and site clearance program. for GRI's Houston well No.'s 1, 2, 3, 4,. and 22 wells. These wells were drilled in anticipation of developing a coalbed methane gas field in an area of the 1V4atanuska-Susitna Borough, north of Houston, Alaska. The wells were permitted and drilled during the years 1997 — 2000, The operator, Growth Resources International Inc. (an Australian company) failed to complete the field as planned when the cost of development coupled with a disillusioned investment community forced GRI to .forfeit them investment, The leases were dropped and the properties became the responsibility of their bonding company, ACE USA. Hoefler Consulting Group, working on behalf of GRI through ACE USA, is at this time requesting bid proposals for the permanent abandonment and site clean-up of the wells drilled by GRI. 2.0 PROJECT ORGANIZATION AND MANAGEMENT 2.1 Project Organization: Fairweather will utilize local contractors in performing the well work. All work will be under the immediate supervision of a Fairweather supervisor, experienced in well operations and P&A procedures. Contractors will be interviewed and materials will be examined to be fit -for purpose in meeting the objectives of this Fairweather E&P Services, Inc_ Page 1 of 10 Houston Well Abandonment Program 9/6/02 1/8 ' d H lt' ON SNVCV 0 33Vdl VA 30 S301330 0U00:I COE '8 'unr 2.2 Project Schedule: Fairweather intends to begin well plugging and abandonment operations as soon as is practical after award of a contract. The prices in this proposal assume that the work will be awarded promptly so that operations will be able to commence in mid September and can be completed before winter sets in. Due to location and logistical considerations, the Houston No. 4 and the Houston No. 22, will be P&A'd first (Tasks 4 and 5 below). The reason for this is two- fold_ First, of the five well sites requiring P&A work, these sites are the only ones that do not appear to have a sufficient gravel pad for heavy equipment. These wells are located in areas that would require road maintenance should it rain excessively or heavy snowfall occur. This should also minimize the amount of surface damage in the immediate vicinity of the well caused by heavy equipment. Immediately after finishing well operations, the sites will be cleared of all debris and graded as necessary to blend in with the surrounding natural grade. Following the work on wells No. 4 and No_ 22, the equipment will be mobilized to the vicinity of the No. 1, 2, and 3 wells. These wells are located in a sparsely populated area with access through private property. Well's No. 1 and 2 are located directly on property owned by Mr. Mike Mikkelson and are within 1/4 mile of his residence. Access appears to be good with gravel road to all three sites. Fairweather intends to P&A these wells in sequence, perform the casing cuts, P&A marker installation and finish grading after all wells have been P&A'd. This will minimize cost and time requirements to perform the work. The draining and close-out of the reserve pit will be left until last. It is planned to use some of the fluid for well work and as mix water for cementing purposes. This will minimize the amount of fluid that needs to be hauled away. Water analysis of the pit water by Hoefler is pending and transport of pit fluids for disposal cannot occur until the results are known- Attachment I provides a timeline for completing all tasks. 2.3 Responsibilities Fairweather E&P Services, Inc, will directly supervise all well P&A and site retnediation operations. The RFP submitted to Fairweather for bid purposes indicated all permitting operations will be handled by Hoefler Consulting Group. Fairweather will ensure that all procedures performed follow AOGCC guidelines for well P&A work as described in 20 AAC 25.112 [Well Plugging Requirements], 20 AAC 25.120 [Well Abandonment Marker] and 20 AAC 25.170 [Onshore Location Clearance]. Fairweather will keep a record of all work performed, inspection results and correspondence related to well work operations. Upon completion of the project, Fairweather will submit a detailed report containing all information pertinent to operations for Hoefler's use in filing Form 10-407 requited for each well. Fairweather E&P Services, Inc. Page 2 of 10 Houston Well Abandonment Program 9/6/02 81/6 'd HWON RVGV 8 30VIIVM d0 S]N dd0 W Wd00: l HE 1 Cu F The RFP indicates that any materials discovered that are unsuitable for disposal in the Matanuska-Susitna Borough landfill should be handled separately. Fairweather will report any findings of materials that are unsuitable for normal disposal directly to Hoefler Consulting Group and will aid in finding an economic and efficient means of disposal if requested. At present, the only known material which may qualify for special disposal procedures is a small amount of diesel - contaminated gravel on the Houston No. 3 well -site. This material, approximately l cubic yard, was pointed out by former GRI well operator Mike Mikkelson. Apparently, a generator that is no longer on site developed a fuel leak, resulting in the contamination. 3.0 Well Abandonment Procedures by Task As requested by Hoefler Consulting Group, the proposal is being broken out in the following tasks as described in the RFP. Task No_ Work To .Be Performed 1 P&A Houston No. 1 2 P&A Houston No. 2 3 P&A Houston No. 3 4 P&A Houston No. 4 5 P&A Houston No. 22 6 Closure of Reserve Pit and Reclamation Sub -task's performed in completing the main task, will be noted as ('Task n-n). Again, it should be noted that the following tasks and procedures are based on information that was provided to Fairweather. Fairweather does not have access to all of the original well files for research. The only well file that was available as public record was for the completed well Houston No. 3 and the file was incomplete at that. The fallowing procedures are submitted as good faith efforts by Fairweather to P&A the wells in as efficient a manner as possible based on good oilfield practices following regulations as spelled out in 20 AAC 25. The cementing procedures given here for Wells No. 2 and 3 do not follow the exact bid guidelines requested in the RFP. Fairweather is of the opinion that the procedures recommended in this proposal follow sound oil field practices and will ultimately exceed requirement's mandated for P&A cementing procedures as outlined in 20 AAC 25,112. The cementing procedures recommended here have been chosen for the simplicity and economics they afford for cementing these wells. That being noted, a price is included for cementing procedures that fellow the RFP guidelines as well for comparison. Fairweather E&P Services, Inc. Houston Well Abandonment Program Page 3 of 10 9/6/02 1/01 'd lE WO N SWdab 8 30d11dM d0 S301dd0 W Wd[0:1 HE 1 'unr E' 9 "0711 WIM i y! 3.1 Task 1: P&A Houston No. I Houston No. 1 is completed with a 10" Conductor driven to 36', a T' surface casing set at 492' and cemented to surface, and 1680' of 4 %2" casing cemented from TD to surface. Information indicates a cement plug was placed in the well from 240' — 840'. There is no record of the well ever being perforated, or having the shoe drilled out for production or testing purposes. The following are the sub - tasks to be undertaken - Sub -Task No. Procedure 1.1 Verify all permit paperwork is in place and give A,,QGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 1.2 Open valves at surface to verify well is dead, install gauges as needed for monitoring. 1.3 Remove blind flange. 1.4 RU boom truck and RIH with 2-3/8" tubing and with A.OGCC witness if required, tag and verify TOC at —2407. 1.5 RU and begin cementing, using displacement method, while pulling tubing out of the hole. Cement with Class "A" cement until clean cement is observed at surface. WOC. 1.6 Clean equipment, and store rinsate in onsite storage tank used to capture displaced well fluids. 1.7 Excavate to —5', out off casing strings a minimum of 3' below grade level and weld on well ID marker plate. Sackfill and grade to blend with surroundings. (This task to be performed after 'Wells No. 1, 2 and 3 have all been P&,A'd.) Total Estimated Cost, Task No. 1: $19,000 3.2 Task 2. P&A Houston No. 2 Houston No. 2 is completed with 7" casing set at 462' and cemented back to surface, 4-'/2" casing set and cemented back to surface from 1662', and the shoe drilled out for a Final TD of (-L2100'?). While not in the records, the well was completed at one time with tubing and a submersible pump (according to interviews of persons familiar with the project). The pump was used to de -water Fairweather E&P Services, Inc. Page 4 of 10 Houston Well Abandonment Program 9/6/02 8 l/ l l ' d l8 W ON SNVOV 0 13V11VM d0 S301 dd0 AV] Wd l0 : l CON 1 the well for gas production but, due to excessive water production, attempts at doing so were abandoned and the pump and tubing were removed. Sub -Task No. Procedure 2.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 2.2 Well is currently completed with flange at surface. Open valves to verify well is dead. Install gauges as necessary for monitoring_ 2.3 RU cementing equipment, initiate injection test for bullheading cement into place using pit water. When infectivity is verified (2 casing volumes or 56 barrels of water minimum), insert rubber wiper plug to provide a clean cement / water interface. Displace 28 bbls of Class "A" cement to fill casing from TD to surface. WOC. 2.4 RD cementing equipment and clean up, catching rinsate in storage tank. 2.5 Excavate to —5', cut off casing strings a minimum of 3' below grade level and weld on well ID marker plate. Backfill and grade to blend with surroundings. (This task to be performed after Wells No. 1, 2 and 3 have all been P&A'd.) Total Estimated Cost, Task No. 2: $28,000 Bullhead Cementing ,Method $32,000 Displacement Method 3.3 Task 3: P&A Houston No. 3 Houston No. 3 is completed with 7" surface casing set and cemented from 505' to surface. A 4-%a" production casing string was run, set and cemented back to surface from 20027. A CBL indicates cementing to only be partially effective, with good bonding evident from 2002' — 1000', and from 760' — surface. The interval from 760' -- 1000' does not appear to be cemented. The well was perforated with a series of five (5) sets of perforations from 1338' — 1856'. The records are sketchy on the exact completion scheme, but it appears the shoe was drilled out, a packer was set at--1900' and a progressive cavity pump was hung off in the packer_ Records indicate a tubing -less completion. It appears that centralized reverse threaded sucker rod was run from surface to the pump as a drive shaft. The scheme was to dewater the coals in the perforated zones and Fairweather E&P Services, Inc. Page 5 of 10 Houston Well Abandonment Program 9/6/02 81/Zl I l£[ti'0N SNVCV 0 30VllYA d0 S301330 MV] NZO: l £OOZ ' £ of •� � 5;119 pump them for disposal into a Tyonek sandstone member penetrated by the wellbore below the shoe. The packet set at 1900' was intended to be the sealing element to prevent water from loading up the gas producing interval represented by the perforations. The well has been shut in for 2 years, and the latest readings, indicate — 50 psi on the wellhead. A discussion with Mike Mikkelson, who worked for GRl as a well operator, revealed diesel -contaminated gravel near the well house that is covered by a blue tarp_ It appears that approximately 1 cubic yard of material will have to be disposed of. Evidently the generator, which has since been removed, sprung a fuel leak. The leak was reported and the gravel was dug up and stockpiled for later disposal - Sub -Task No, Procedure 3.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 3.2 RU boom truck and remove well -house, surface production equipment, electrical equipment and surface mounted KUDU Progressive Cavity Pump drive unit. 3.3 - Inspect gauges for pressure. NOTE: Because of lack of detail in well records, the following Procedure is based on inferences made while reviewing the well file and other information revealed during the course ofresearch. 3.4 Kill well with pit water. Well currently has 50 psi at wellhead, records indicate maximum pressure at between 50 and 100 psi. Well has been shut in 2 years and has no doubt received some inflow of water into the wellbore. With top of perforations at ---1338 feet, an 8.33 ppg kill fluid (fresh water) would exert 580 psi at the top perforations, which exceeds by a factor of 5 any pressures indicated in original records. 15 Loosen packing nut on polished rod, and pull rod and pump assembly. If tubing is present, pump may not come out in this step. 3.6 If tubing is present, alter pulling sucker rod, ensure well is killed and fluid level in well is stable and install backpressure valve. Remove remaining valves above tubing hanger and install BOP system. Test BOP system to 500 psi. If no tubing is present, install packer at surface to isolate wellbore while installing BOP. Faiuweather E&P Services, Inc_ Houston Well .Abandonment Program Page 6 of 10 9/6/02 IM 'd [NtION SW V 8 33Hllvm A S33I330 W WdZO:I £OOZ '£ A NOTE: BOP system will consist of 7" 5M single gate with blind rams and an annular preventor. 3.7 Pull backpressure valve, PU pup joint of tubing and proceed to pull the tubing out of the well. (Note: this step applies only if tubing is in fact present). While pulling tubing, ensure well is kept full of fluid to account for displacement of tubing. 3.8 After the tubing has been pulled, close blind rams and connect pump to tubing / casing annulus valve, RU pump and initiate injectivity test with pit water. Pump a minimum of 2 casing volumes (64 bbls). 3.9 When injectivity is verified, check wellhead for pressures, open blind rams and insert 4-%" rubber wiper plug into 4-'/2" casing. Close blind rams and displace well full of cement from top to bottom with —32 bbls of Class "A" cement. WOC. 3.10 RD cementing equipment and clean up, catching rinsate in storage tank. 3.11 Excavate to —5', cut off casing strings a minimum of 3' below grade level and weld on well ID marker plate. Backhll and grade to blend with surroundings. (This task to be performed after Wells No. 1, 2 and 3 have all been P&A'd.) Total Estimated Cost, 'Task No. 3: $37,000 Bullhead Cementing Method $42,000 Displacement Method 3.4 Task 4: P&A Houston No. 4 Houston No. 4 was completed with an 8" conductor driven to 28'. The hole was then drilled to 478' when the project was abandoned due to the unfavorable lithology encountered. The well at the surface appears from reports to consist of just the 8" conductor sticking up with a plastic bucket covering it. Fairweather was not able to inspect this site since it could not be found. Sub -Task No. Procedure 4.1 "Verify all permit paperwork is in place and give ,A.OGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. Fairweather E&P Services, Inc. Page 7 of 10 Houston Well Abandonment Program 9/6/02 81/Vl 'd [Clt'ON SNVCV 9 30H11HM d0 S30Idd0 mvN M o:O CON '8 'unr • • RU boom truck, remove cover (reportedly a plastic bucket) from top of casing and IZIH with tubing to TD. RU and pump dole full of cement from TD to surface while pulling tubing. Clean equipment and WOC. 4.5 Excavate to —5', cut off casing strings a minimum of 3' below grade level and weld on well ID marker plate_ Backfill and grade to blend with surroundings. Due to the remoteness of this well with relationship to others in project, complete site clearance will be performed immediately after P&A operations. Total Estimated Cost, Task No. 4: $15,000 3.5 Task 5. P&A Houston No. 22 Houston No_ 22 is completed with 10" conductor driven to 76' and 8-5/8" production casing set at 513'. The well was Dot perforated or completed. An obstruction was discovered at ---220' when an attempt was made to run wireline logs. No information is presented as to what may be in the hole. There is no wellhead on the well; only a steel plate welded over the top of the 8-5/8" casing. Subtask No. Procedure 5.1 Verify all permit paperwork is in place and give AOGCC 24 hour notice of intent to begin well work operations and intent to cement well and give chance to witness same. 5.2 Cut off steel cover plate. 5.3 RU boom truck and RIH with tubing to top of obstruction. 5.3 Displace hole to cement from top of obstruction to surface (220'). 5.4 Clean equipment and WOC. 5.5 Excavate to —5', cut off casing strings minimum of 3' below grade level and weld on well ID marker plate. Backfill and grade to blend with surroundings. (This task to be performed after Wells No. 1, 2 and 3 have all been F&AU) Total Estimated Cost, Task No. S= $2 AO Fairweather E&P Services, Inc. Page 8 of 10 Houston Well Abandonment Program 9/6/02 81/91 'd INV'ON SPOV 0 30v'1 Vm A S301dd0 W Wd£O:1 CON '£ W; (.!'.- 1 i. 3.6 Task 6: ].reserve Pit Closure The -reserve pit is located on Mike Mikkelson's property at the end of an airstrip, near Houston No. 1. The pit, as indicated in the RFP, is approximately 75' X 100' X 5'. Inspection revealed the pit to be lined and in good condition. The pit is currently '1/2 full. Water in the pit appeared to be clear with some sediment on the bottom. No analysis has been made yet on the salinity of the waters stored in the pit. Subtask Pro. Procedu ire 6.1 Pump and dispose of remaining water as per instructions provided by Hoefler Consulting Group after ,results of water analysis have been made. Ensure manifests are properly filled out if water is trucked off site. (Depending on salinity and orders from Hoeflcr, this procedure may be as simple as pumping out the pit to a nearby ravine.) 6.2 Remove silt from pit liner and dispose of silt and finer as recommended by Hoefler. 6.3 Backfill pit with berm maternal originally used to build pit and haul in fill material sufficient to blend site with natural grade of surrounding terrain. 6A Ensure all debris is removed as pit is currently located at end of runway. 6.5 Request inspection by AOGCC for final site clearance. Total Estimated Cost, Task No. 6: $30,000 Tracking/Disposal/Closure $12,000 Pumping Empty and Closure 3.7 Task 7: Removal of all debris and materials The Houston well sites No. 1, 2, and 3 have numerous items that need to be removed, including a pallet of bentonite, a pallet of barite, sucker rods, well tubing, casing, wellheads, plastic line pipe and assorted objects. All will be removed for disposal or salvage as applicable. Also to be disposed of will be the wellbore fluids displaced during cementing operations- and the cement rinsate generated during equipment clean up after cementing jobs. Total Estimated Cost, Task No. 7: $10,000 Trucking and waste disposal fees. Fairweather E&P Services, Inc. Houston Well Abandonment Program Page 9 of 10 9/6/02 1/9l 'd I C l V ' 0 N SNVOV 0 lov11VM A SDIdd0 W NRO:l £OOz I 'unr Summary of Houston (GPJ) Wells Project Cost (Using procedures recommended by Fairweather as discussed above) Task 1 $19,000 Task 2 $28100 Task 3 $37,000 Task 4 $15,000 Task 5 $22,000 Task 6 $30,000 Task 7 10,000 Total: Fairweather E&P Services, Inc. Page 10 of 10 $161,000 Houston Well Abandonment Program 9/6/02 8l/Ll 'd H lt'ON MOV 9 13Vd1 VA d0 S10Id:10 W Wd80:1 800Z '8 M 0 z Fairweather E&P Services, Inc, RI I Houston Well P&A Program I —Tasks I Day 1 I Day 2 I Day 3 I Day d j Day e I Day 8 I Day 7 I Day 8 I Day 9 I Day1O Day 11 Day 12 Day 13 J Day U Day i s Houston No. 1 �� Houston No, 2No. 2 Hous31 on No 3 Houston No. 4 Houston No. 22 Reserve Pit cbm aid Site CleanlQ Attachment I #31
