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Home My WebLink AboutCO 780CONSERVATION ORDER 780 Docket Number: CO-19-014 1. ------------------------ Background Applications 2. June 13, 2019 Notice of hearing, affidavit of publication, email distribution, mailings 3. August 2, 2019 BlueCrest Energy application for Pool Rules for the Cosmopolitan Field, Hansen Oil Pool 4. August 13, 2019 Proof of Service to BOEM 5. August 13, 2019 Transcript, sign in sheet and presentation 6. August 21, 2019 Transcript and sign in sheet 7. August 30, 2019 BlueCrest Energy Second application for Pool Rules for the Cosmopolitan Field 8. September 5, 2019 Notice of hearing, affidavit of publication, email distribution, mailings 9. September 23, 2019 Letter from member of the public re: application 10. October 2, 2019 BOEM’s nonobjection Letter 11. October 10, 2019 Transcript, sign in sheet and presentation 12. October 11, 2019 Application revision 13. October 15, 2019 Requested 10-428 form 14. November 6, 2020 Water Well Survey 15. December 15, 2021 Application to extend GOR (CO780.001) ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF BlueCrest Alaska, ) Docket Number: CO -19-014 LLC to establish Pool Rules for develop- ) Conservation Order 780 ment and operation of the proposed Hansen ) Oil Pool. ) Cosmopolitan Unit Cosmopolitan Field Hansen Oil Pool Kenai Peninsula Borough, Alaska Dated: June 29, 2020 Nunc pro tunc November 25, 2019 IT APPEARING THAT: 1. Upon its own motion, the Alaska Oil and Gas Conservation Commission (AOGCC) scheduled a public hearing for August 13, 2019 to establish pool rules for development and operation of the Hansen Oil Pool. On June 7, 2019, the AOGCC published notice of that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list and mailed printed copies of the Notice of Public Hearing to all persons on the AOGCC's mailing distribution list. On June 13, 2019, the notice was published in the ANCHORAGE DAILY NEWS. 2. On August 2, 2019, BlueCrest Alaska, LLC (BlueCrest) as operator of the Cosmopolitan Unit (CU) submitted an application to the AOGCC. BlueCrest's application attempted to limit the boundaries of the Hansen Oil Pool to the boundaries of BlueCrest's state leases. 3. The hearing convened on August 13, 2019. BlueCrest conceded that the Hansen Oil Pool extended beyond its state leases onto acreage owned by the federal Bureau of Ocean Energy Management (BOEM) and that BlueCrest had not notified BOEM of its application for pool rules governing the Hansen Oil Pool accumulation. The hearing was continued to August 21, 2019 to allow BlueCrest to inform BOEM that the proposed pool may extend onto federal acreage and to allow BOEM an opportunity to comment via letter or attend the hearing. 4. On August 15, 2019, BlueCrest provided AOGCC proof that the application had been sent to BOEM via Certified Mail but did not advise BOEM that the Hansen Oil Pool extended under federal acreage. The hearing was continued again. 5. On August 21, 2019, the hearing reconvened. BOEM's representative testified BOEM had not been provided sufficient time to review BlueCrest's application and prepare questions or testimony. AOGCC directed BlueCrest to notify all potentially affected parties and reapply for pool rules. The hearing was adjourned and the record closed. 6. On September 3, 2019, BlueCrest filed a second application to establish pool rules for the Hansen Oil Pool. On September 4, 2019, the AOGCC scheduled a public hearing for October 10, 2019, published notice of that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the Notice of Public Hearing to all persons on the AOGCC's mailing distribution list. On September 5, 2019, the notice was published in the ANCHORAGE DAILY NEWS. 7. On September 25, 2019, the AOGCC received written comments from a member of the public. Conservation Order 780 June 29, 2020 Page 2 of 9 8. On October 2, 2019, BOEM notified the AOGCC by letter that it had no objection to the proposed pool rules. 9. The hearing convened as scheduled on October 10, 2019. Evidence was presented by BlueCrest, in support of its application, and by Peter Jensen, the owner of property adjacent to the Hansen drilling and production site. The hearing record was left open until October 21, 2019 for BlueCrest to respond to AOGCC's requests for additional information. 10. On October 14, 2019, BlueCrest submitted revised pages to be included with its non - confidential application. On October 15, 2019, BlueCrest submitted an Annual Reservoir Properties Report (AOGCC Form 10-428) for the Cosmopolitan Field. The hearing record closed. 11. BlueCrest's application, testimony, supplemental information, and AOGCC records provide sufficient information for AOGCC to make an informed decision. FINDINGS: 1. Operator and Owners: BlueCrest is the Operator and sole Working Interest Owner of the Cosmopolitan Unit, the Cosmopolitan Field, and the proposed Hansen Oil Pool. The State of Alaska, Department of Natural Resources and the U.S. Government are the landowners of the affected acreage, which is located offshore in the Cook Inlet, Kenai Peninsula Borough, southcentral Alaska. 2. Exploration and Development Drilling History: Within the Cosmopolitan Unit, hydrocarbons were discovered in 1967 in the Pennzoil Oil Starichkof State 1 well, drilled in Cook Inlet to a depth of 12,112 feet, offshore of the Kenai Peninsula Borough, in Section 33, T3S, R15W, Seward Meridian (SM). The oil was discovered within the informally named "Starichkof Sand" (Starichkof) lying within the lower Tyonek Formation (lower Tyonek) on the east flank of the Cosmopolitan anticlinal structure. Three drill stem tests recovered oil at a maximum flow rate of about 60 barrels of oil per day (BOPD). Pennzoil's second well, Starichkof State Unit 1, is located down -dip on the anticline and did not encounter significant shows of oil or gas. In 2001, Phillips Alaska, Inc. directionally drilled Hansen 1 from an onshore surface location to the offshore anticline. This well confirmed the presence of oil, testing 125 BOPD from the Starichkof and 380 BOPD from the underlying Hemlock Formation (Hemlock). In 2003, ConocoPhillips Alaska, Inc. (CPAI) drilled Hansen IA (a directional redrill of Hansen 1) to a separate location within the anticline. This well tested at rates up to 1,000 barrels per day of 24° to 27° API oil. In 2007, Pioneer Natural Resources Alaska Inc. (Pioneer) drilled the Hansen IALI well branch from Hansen IA. In 2010, Pioneer fracture -stimulated this well branch and conducted an extended flow test, which averaged 250 BOPD from the upper Starichkof. In 2013, Buccaneer Alaskan Operations, LLC—successor to CPAI as operator for the Cosmopolitan Unit—drilled offshore well Cosmopolitan State 1. This well encountered indications of oil within the lower Tyonek, Starichkof, and Hemlock. In January 2014, BlueCrest acquired 100% working interest ownership of all State of Alaska leases within the Cosmopolitan Unit. In 2017, BlueCrest began its current development program by drilling the Hansen H-14 and Hansen H-16 wells. These wells were fracture- Conservation Order 780 June 29, 2020 Page 3 of 9 stimulated, but subsequent production rates were low. As a result, BlueCrest developed the technique of drilling multiple "fish -bone" well branches upward through the reservoir from each primary well. To date, BlueCrest has drilled or redrilled three additional primary development oil wells, Hansen H-12, Hansen H -16A, and Hansen H-04, along with twenty supplementary well branches. Pool Identification: BlueCrest's application proposes defining the Hansen Oil Pool as the oil - and gas -bearing intervals that are common to, and correlate with, the interval between the measured depths (MD) of 6,538 and 7,312 feet in the Cosmopolitan State 1 well and asserts these intervals are all contained within the boundaries of the Cosmopolitan Unit. 4. Geolo : a. Stratigraphy: Sediments comprising BlueCrest's proposed Hansen Oil Pool encompass Oligocene- to Miocene -aged braided fluvial and lacustrine sediments—conglomeratic sands, silts, clays, and coals—that are assigned to the lower Tyonek, and underlying, Eocene- to Oligocene -aged, braided fluvial sediments assigned to the Hemlock. The Starichkof sand ranges in thickness from 274 to 365 feet thick in the Cosmopolitan State 1, Starichkof State 1, Starichkof State Unit 1, and Hansen 1 wells. The Hemlock ranges from 485 to 500 feet thick in the Starichkof State 1 and Cosmopolitan State 1 wells. Net Hemlock pay thickness ranges from 127 feet in Cosmopolitan State 1 to 146 feet in Hansen 1. b. Structure: The structure at the top of the proposed Hansen Oil Pool is a northeast - trending, asymmetrical, doubly plunging anticline that forms a four -way -closure. This closure measures about 4-1/2 miles long by 2 miles wide, and it is elongated in a north- northeast direction that is subparallel to the nearby coastline. This anticline is bound on the west by a north -northeast -trending, high -angle reverse fault. The anticline is also cut by one small, normal fault. The depth to the top of the Hansen Oil Pool is about -6,400 feet TVDSS.' The hydrocarbon accumulation within the Starichkof occupies about 6,000 acres and has a vertical closure of about 600 feet. The oil accumulation within the underlying Hemlock occupies a smaller area, and it is situated directly beneath the Starichkof accumulation. c. Reservoir and Fluid Properties: For the Hansen Oil Pool, reservoir thickness and net pay average 310 feet and 140 feet, respectively. Average porosity for the reservoir intervals is about 12 percent, and average permeability is about 17 millidarcies. Average water saturation is about 47 percent. Pressure -gradient plots constructed from Modular Formation Dynamics Tester (MDT) measurements indicate the Starichkof and Hemlock are in communication and have a common oil -water contact at about -7,048 feet TVDSS. Oil gravity measurements range from 23 to 25 degrees API, and oil density ranges from 0.908 to 0.952 grams per cubic centimeter. Original formation volume factor is 1.16 reservoir barrels per stock -tank barrel. Original reservoir pressure is 3,100 psi at the reference datum of 6,800 feet TVDSS. Bubble point measurements range from 2,275 to 2,800 psia. Gas -oil ratio ranges from about 350 to 400 standard cubic feet per stock -tank barrel. Reservoir temperature is 135 degrees F. Approximate pool top estimated from Cosmopolitan State 1 well logs, Permit to Drill Number 212-164. The depths presented represent true vertical depth below mean sea level (or subsea), the footage value is preceded by a minus sign and followed by the acronym TVDSS (e.g., 3,000 feet true vertical depth subsea will be depicted as -3,000 feet TVDSS). Conservation Order 780 June 29, 2020 Page 4 of 9 d. Faults: The anticline is bound on the west by a north-northeast trending, high -angle reverse fault. On the northern end of the anticline, the proposed Hansen Oil Pool is cut by one mapped normal fault. Vertical displacement along this fault ranges from about 10 to 50 feet. e. Trap Configuration and Seal: Well log and seismic information indicate that structural dip controls the hydrocarbon accumulation within the anticline. A 40 -foot thick layer of shale that contains some coal within the Tyonek forms the top seal for the pool. Shale and claystone layers within the Starichkof and Hemlock intervals may form localized top seals for discontinuous reservoir sands. f. Reservoir Compartmentalization: BlueCrest testified that, in general, the reservoir is highly compartmentalized and stratified as evidenced by: • discontinuous reservoir sediments deposited in braided, fluvial settings; • small increase in production rate following hydraulic fracture stimulation of the Hansen H-14 and Hansen H-16 extended -reach development wells; and • Hansen IALI and Hansen H -16A, which did not encounter the localized gas cap found in adjacent well Hansen H-12. 5. Well Spacing: To maximize resource recovery, BlueCrest is developing the Hansen Oil Pool with primary, extended -reach wells drilled within the lower portions of pool. Each primary well has, or will have, a large number of subsidiary well branches (currently projected to be as many as 24) that are drilled upward through the pool in a novel, "fish -bone" configuration. Reservoir modeling indicates optimum spacing between well and well branches is about 800 feet. BlueCrest will not drill wells closer than 500 feet to any lease boundary where landownership or ownership changes. 6. Reservoir Modeling: BlueCrest's reservoir model incorporates all wells drilled to date. History matching is ongoing and nearing completion for use in forecasting volumes, evaluating depletion options, and examining options for pressure maintenance. 7. Reservoir Development: BlueCrest intends to develop and produce the proposed Hansen Oil Pool using primary depletion from a single, 47 -acre onshore pad that contains well slots and processing facilities. Currently, production wells occupy 5 of 20 available slots. BlueCrest will evaluate enhanced recovery operations based on modeling and future drilling and production results. 8. Gas -Oil Ratio: BlueCrest requested waiver of the gas -oil ratio (GOR) requirements of 20 AAC 25.240. 9. Permits to Drill Requirements: BlueCrest requested simplification of the Permit to Drill requirements of 20 AAC 25.005 and 20 AAC 25.050 to reduce administrative burden. 10. BOP Tests: BlueCrest requested the requirement for regular BOP tests be increased from two- week increments to three-week increments while drilling the production sections of each well and well branch. 11. Testimony Provided by Peter Jensen: Mr. Jensen testified that noise, light pollution, and frequent flaring events adversely impact eleven subdivision lots that he owns—a total of about 30 acres—adjacent to the Hansen Production Facility Pad. Concern was also expressed regarding potential resource waste and potential impact from production and drilling operations on nearby shallow drinking water aquifers. Limitations on flaring were requested along with water well surveyance to ensure drinking water is not contaminated. Conservation Order 780 June 29, 2020 Page 5 of 9 12. Gas Flarine: By law operators must submit a monthly gas disposition report for each production facility. AOGCC reviews these reports to determine whether resources are being wasted. AOGCC's analysis of reports to date from the Hansen Oil Pool does not reveal waste or excessive flaring have occurred in the Hansen development. CONCLUSIONS: 1. Eliminating spacing requirements, except for a minimum set -back distance from lease boundaries where landownership or ownership changes, will improve ultimate recovery while protecting correlative rights. 2. BlueCrest's requested waiver of the GOR requirements of 20 AAC 25.240 is necessary to continue to gather data necessary to evaluate future development options and determine the viability of initiating an enhanced oil recovery project. 3. BlueCrest's request to increase the BOP test increment from two weeks to three weeks while drilling within the reservoir is not warranted. 4. BlueCrest's request to simplify the Permit to Drill requirements of 20 AAC 25.005 and 20 AAC 25.050 is warranted only for development well branches drilled within the Hansen Oil Pool. 5. BlueCrest's gas disposition reports indicate that the volumes being flared are not excessive. 6. Additional water well surveyance should be conducted to ensure drinking water aquifers remain free of contaminants. NOW, THEREFORE, IT IS ORDERED: In addition to statewide requirements under 20 AAC 25 (to the extent not superseded by these rules), the following rules govern development of the Hansen Oil Pool. Conservation Order 780 June 29, 2020 Page 6 of 9 Affected Area Seward Meridian Township and Range Sections T03-R15W Section 20: SE/4, SE/4 ofNE/4 Section 21: All Section 22: W/2, W/2 of SE/4, W/2 of NE/4 Section 27: W/2, W/2 of NEA, W/2 of SEA Section 28: All Section 29: All Section 30: E/2 of SE/4 Section 31: E/2 Section 32: All Section 33: All Section 34: NW/4, W/2 of SWA T04-R15W Section 04: W/2, NEA, NW/4 of SE/4 Section 05: All Section 06: E/2 Section 07: NEA Section 08: N/2 Section 09: NW/4 Rule 1 Definition of Pool The Hansen Oil Pool (Affected Area) is defined as the hydrocarbon accumulation that is common to, and correlative with, the accumulation found in Cosmopolitan State 1 well (Permit to Drill 212- 164) between 6,538 and 7,312 -feet MD within the Affected Area identified above. This reference log is depicted in Figure 1, below. Rule 2 Well Suacine There shall be no well spacing restrictions for the pool defined above, except that no oil well shall be completed within 500 feet of a lease boundary within the Affected Area where ownership or landownership changes. Conservation Order 780 June 29, 2020 Page 7 of 9 Figure 1. Cosmopolitan State 1: Reference Log for Hansen Oil Pool 508312004300 2121640 COSMOPOLITAN STATE 1 2084 FSL 614 FEL TWP" 3 S - Range15 W - Sec. 29 m.� w,MM de wa T461• w.MwN w�WN ® .Mo mww Mm e mw 3 c Starichkaj Sands euro Hansen Oil Pool moe Hemlock - -raw 100 mm -rwo y� i emo nm noo — ` fi >.eo s �J 1 Figure 1. Cosmopolitan State 1: Reference Log for Hansen Oil Pool Conservation Order 780 June 29, 2020 Page 8 of 9 Rule 3 Gas -Oil Ratio Waiver In accordance with 20 AAC 25.240(b)(3) the gas oil ratio limitations of 20 AAC 25.240(a) are waived through December 31, 2021, so that reservoir performance data may be gathered to evaluate the viability of implementing an enhanced oil recovery project in the Hansen Oil Pool. Prior to this expiration date the operator must submit an application either for an extension to the expiration date, for the initiation of an enhanced oil recovery injection project, or for a permanent waiver under 20 AAC 25.240(c) of the gas oil ratio limitations. Rule 4 Permit to Drill Application Requirements Permit to Drill applications for all new wells and redrilled wells to develop the Hansen Oil Pool must meet the requirements of 20 AAC 25.005 through 20 AAC 25.050. The Permit to Drill application for each subsequent fish -bone well branch drilled within the Hansen Oil Pool from a new or redrilled development well must comply with the following minimum requirements: 1. Completed Form 10-401; 2. Schematic drawing depicting the proposed well branch and the parent well; 3. Directional survey planning report; 4. Anti -collision analysis with accompanying map and vertical section views of the fishbone well branch that displays all nearby wells, wells branches, plugged back wellbore segments, lost wellbore segments, and pilot holes; and 5. Drilling hazards analysis with planned mitigation measures. Rule 5 Water Well Survevance By January 1, 2021, the operator shall obtain, analyze, and report the results for one water sample from each drinking water well within a one-half mile radius of the Hansen Production Facility Pad. Analyses conducted shall conform to the requirements specified in 20 AAC 25.283(a)(4) through 20 AAC 25.283(a)(4)(F). A copy of the analytical results shall be provided to the surface owner and to the AOGCC. If a surface owner denies permission for water sampling or for disclosure of the results, the operator must document the reasonable and good -faith efforts taken to secure that permission and report those efforts to the AOGCC. Rule 6 Administrative Approval Unless notice and public hearing is otherwise required, the AOGCC may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. Conservation Order 780 June 29, 2020 Page 9 of 9 DONE at Anchorage, Alaska and dated June 29, 2020, nun pro tunc November 25, 2019. Daniel T. Jeremy M. Po Daniel T. 5nmwnu,. Price Seamount, Jr.DI9,:a2'1'0 M]9 °"'°"°nm : Jeremy M. Price Daniel T. Seamount, Jr. Commissioner, Chair Commissioner As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days atter it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 2 Z U .�'j ) ) STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7t" Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF B1ueCrest Alaska, LLC to establish Pool Rules for develop- ment and operation of the proposed Hansen Oil Pool. IT APPEARING THAT: Docket Number: CO -19-014 Conservation Order 780 Cosmopolitan Unit Cosmopolitan Field Hansen Oil Pool Kenai Peninsula Borough, Alaska November 25, 2019 Upon its own motion, the Alaska Oil and Gas Conservation Commission (AOGCC) scheduled a public hearing for August 13, 2019 to establish pool rules for development and operation of the Hansen Oil Pool. On June 7, 2019, the AOGCC published notice of that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list and mailed printed copies of the Notice of Public Hearing to all persons on the AOGCC's mailing distribution list. On June 13, 2019, the notice was published in the ANCHORAGE DAILY NEWS. 2. On August 2, 2019, B1ueCrest Alaska, LLC (B1ueCrest) as operator of the Cosmopolitan Unit (CU) submitted an application to the AOGCC. B1ueCrest's application attempted to limit the boundaries of the Hansen Oil Pool to the boundaries of BlueCrest's state leases. The hearing convened on August 13, 2019. B1ueCrest conceded that the Hansen Oil Pool extended beyond its state leases onto acreage owned by the federal Bureau of Ocean Energy Management (BOEM) and that B1ueCrest had not notified BOEM of its application for pool rules governing the Hansen Oil Pool accumulation. The hearing was continued to August 21, 2019 to allow B1ueCrest to inform BOEM that the proposed pool may extend onto federal acreage and to allow BOEM an opportunity to comment via letter or attend the hearing. 4. On August 15, 2019, B1ueCrest provided AOGCC proof that the application had been sent to BOEM via Certified Mail but did not advise BOEM that the Hansen Oil Pool extended under federal acreage. The hearing was continued again. 5. On August 21, 2019, the hearing reconvened. BOEM's representative testified BOEM had not been provided sufficient time to review B1ueCrest's application and prepare questions or testimony. AOGCC directed B1ueCrest to notify all potentially affected parties and reapply for pool rules. The hearing was adjourned and the record closed. 6. On September 3, 2019, BlueCrest filed a second application to establish pool rules for the Hansen Oil Pool. On September 4, 2019, the AOGCC scheduled a public hearing for October 10, 2019, published notice of that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the Notice of Public Hearing to all persons on the AOGCC's mailing distribution list. On September 5, 2019, the notice was published in the ANCHORAGE DAILY NEWS. 7. On September 25, 2019, the AOGCC received written comments from a member of the public. Conservation Order 780 November 25, 2019 Page 2 of 9 On October 2, 2019, BOEM notified the AOGCC by letter that it had no objection to the proposed pool rules. 9. The hearing convened as scheduled on October 10, 2019. Evidence was presented by BlueCrest, in support of its application, and by Peter Jensen, the owner of property adjacent to the Hansen drilling and production site. The hearing record was left open until October 21, 2019 for BlueCrest to respond to AOGCC's requests for additional information. 10. On October 14, 2019, BlueCrest submitted revised pages to be included with its non - confidential application. On October 15, 2019, BlueCrest submitted an Annual Reservoir Properties Report (AOGCC Form 10-428) for the Cosmopolitan Field. The hearing record closed. 11. B1ueCrest's application, testimony, supplemental information, and AOGCC records provide sufficient information for AOGCC to make an informed decision. FINDINGS: Operator and Owners: BlueCrest is the Operator and sole Working Interest Owner of the Cosmopolitan Unit, the Cosmopolitan Field, and the proposed Hansen Oil Pool. The State of Alaska, Department of Natural Resources and the U.S. Government are the landowners of the affected acreage, which is located offshore in the Cook Inlet, Kenai Peninsula Borough, southcentral Alaska. 2. Exploration and Development DrillingHistory: Within the Cosmopolitan Unit, hydrocarbons were discovered in 1967 in the Pennzoil Oil Starichkof State 1 well, drilled in Cook Inlet to a depth of 12,112 feet, offshore of the Kenai Peninsula Borough, in Section 33, T3S, R15W, Seward Meridian (SM). The oil was discovered within the informally named "Starichkof Sand" (Starichkof) lying within the lower Tyonek Formation (lower Tyonek) on the east flank of the Cosmopolitan anticlinal structure. Three drill stem tests recovered oil at a maximum flow rate of about 60 barrels of oil per day (BOPD). Pennzoil's second well, Starichkof State Unit 1, is located down -dip on the anticline and did not encounter significant shows of oil or gas. In 2001, Phillips Alaska, Inc. directionally drilled Hansen 1 from an onshore surface location to the offshore anticline. This well confirmed the presence of oil, testing 125 BOPD from the Starichkof and 380 BOPD from the underlying Hemlock Formation (Hemlock). In 2003, ConocoPhillips Alaska, Inc. (CPAI) drilled Hansen IA (a directional redrill of Hansen 1) to a separate location within the anticline. This well tested at rates up to 1,000 barrels per day of 24° to 27° API oil. In 2007, Pioneer Natural Resources Alaska Inc. (Pioneer) drilled the Hansen IALI well branch from Hansen IA. In 2010, Pioneer fracture -stimulated this well branch and conducted an extended flow test, which averaged 250 BOPD from the upper Starichkof. In 2013, Buccaneer Alaskan Operations, LLC—successor to CPAI as operator for the Cosmopolitan Unit—drilled offshore well Cosmopolitan State 1. This well encountered indications of oil within the lower Tyonek, Starichkof, and Hemlock. In January 2014, BlueCrest acquired 100% working interest ownership of all State of Alaska leases within the Cosmopolitan Unit. In 2017, BlueCrest began its current development program by drilling the Hansen H-14 and Hansen H-16 wells. These wells were fracture- Conservation Order 780 November 25, 2019 Page 3 of 9 stimulated, but subsequent production rates were low. As a result, B1ueCrest developed the technique of drilling multiple "fish -bone" well branches upward through the reservoir from each primary well. To date, B1ueCrest has drilled or redrilled three additional primary development oil wells, Hansen H-12, Hansen H -16A, and Hansen H-04, along with twenty supplementary well branches. 3. Pool Identification: B1ueCrest's application proposes defining the Hansen Oil Pool as the oil - and gas -bearing intervals that are common to, and correlate with, the interval between the measured depths (MD) of 6,538 and 7,312 feet in the Cosmopolitan State 1 well and asserts these intervals are all contained within the boundaries of the Cosmopolitan Unit. 4. Geology: a. Stratigraphy: Sediments comprising B1ueCrest's proposed Hansen Oil Pool encompass Oligocene- to Miocene -aged braided fluvial and lacustrine sediments—conglomeratic sands, silts, clays, and coals—that are assigned to the lower Tyonek, and underlying, Eocene- to Oligocene -aged, braided fluvial sediments assigned to the Hemlock. The Starichkof sand ranges in thickness from 274 to 365 feet thick in the Cosmopolitan State 1, Starichkof State 1, Starichkof State Unit 1, and Hansen 1 wells. The Hemlock ranges from 485 to 500 feet thick in the Starichkof State 1 and Cosmopolitan State 1 wells. Net Hemlock pay thickness ranges from 127 feet in Cosmopolitan State 1 to 146 feet in Hansen 1. b. Structure: The structure at the top of the proposed Hansen Oil Pool is a northeast - trending, asymmetrical, doubly plunging anticline that forms a four -way -closure. This closure measures about 4-1/2 miles long by 2 miles wide, and it is elongated in a north- northeast direction that is subparallel to the nearby coastline. This anticline is bound on the west by a north -northeast -trending, high -angle reverse fault. The anticline is also cut by one small, normal fault. The depth to the top of the Hansen Oil Pool is about -6,400 feet TVDSS.1 The hydrocarbon accumulation within the Starichkof occupies about 6,000 acres and has a vertical closure of about 600 feet. The oil accumulation within the underlying Hemlock occupies a smaller area, and it is situated directly beneath the Starichkof accumulation. c. Reservoir and Fluid Properties: For the Hansen Oil Pool, reservoir thickness and net pay average 310 feet and 140 feet, respectively. Average porosity for the reservoir intervals is about 12 percent, and average permeability is about 17 millidarcies. Average water saturation is about 47 percent. Pressure -gradient plots constructed from Modular Formation Dynamics Tester (MDT) measurements indicate the Starichkof and Hemlock are in communication and have a common oil -water contact at about -7,048 feet TVDSS. Oil gravity measurements range from 23 to 25 degrees API, and oil density ranges from 0.908 to 0.952 grams per cubic centimeter. Original formation volume factor is 1.16 reservoir barrels per stock -tank barrel. Original reservoir pressure is 3,100 psi at the reference datum of 6,800 feet TVDSS. Bubble point measurements range from 2,275 to 2,800 psia. Gas -oil ratio ranges from about 350 to 400 standard cubic feet per stock -tank barrel. Reservoir temperature is 135 degrees F. Approximate pool top estimated from Cosmopolitan State 1 well logs, Permit to Drill Number 212-164. The depths presented represent true vertical depth below mean sea level (or subsea), the footage value is preceded by a minus sign and followed by the acronym TVDSS (e.g., 3,000 feet true vertical depth subsea will be depicted as -3,000 feet TVDSS). Conservation Order 780 November 25, 2019 Page 4 of 9 d. Faults: The anticline is bound on the west by a north-northeast trending, high -angle reverse fault. On the northern end of the anticline, the proposed Hansen Oil Pool is cut by one mapped normal fault. Vertical displacement along this fault ranges from about 10 to 50 feet. e. Trap Configuration and Seal: Well log and seismic information indicate that structural dip controls the hydrocarbon accumulation within the anticline. A 40 -foot thick layer of shale that contains some coal within the Tyonek forms the top seal for the pool. Shale and claystone layers within the Starichkof and Hemlock intervals may form localized top seals for discontinuous reservoir sands. £ Reservoir Compartmentalization: BlueCrest testified that, in general, the reservoir is highly compartmentalized and stratified as evidenced by: • discontinuous reservoir sediments deposited in braided, fluvial settings; • small increase in production rate following hydraulic fracture stimulation of the Hansen H-14 and Hansen H-16 extended -reach development wells; and • Hansen IAL1 and Hansen H -16A, which did not encounter the localized gas cap found in adjacent well Hansen H-12. 5. Well Spacing_ To maximize resource recovery, BlueCrest is developing the Hansen Oil Pool with primary, extended -reach wells drilled within the lower portions of pool. Each primary well has, or will have, a large number of subsidiary well branches (currently projected to be as many as 24) that are drilled upward through the pool in a novel, "fish -bone" configuration. Reservoir modeling indicates optimum spacing between well and well branches is about 800 feet. BlueCrest will not drill wells closer than 500 feet to any lease boundary where landownership or ownership changes. 6. Reservoir Modeling: BlueCrest's reservoir model incorporates all wells drilled to date. History matching is ongoing and nearing completion for use in forecasting volumes, evaluating depletion options, and examining options for pressure maintenance. 7. Reservoir Development: BlueCrest intends to develop and produce the proposed Hansen Oil Pool using primary depletion from a single, 47 -acre onshore pad that contains well slots and processing facilities. Currently, production wells occupy 5 of 20 available slots. BlueCrest will evaluate enhanced recovery operations based on modeling and future drilling and production results. 8. Gas -Oil Ratio: BlueCrest requested waiver of the gas -oil ratio (GOR) requirements of 20 AAC 25.240. 9. Permits to Drill Requirements: BlueCrest requested simplification of the Permit to Drill requirements of 20 AAC 25.005 and 20 AAC 25.050 to reduce administrative burden. 10. BOP Tests: BlueCrest requested the requirement for regular BOP tests be increased from two- week increments to three-week increments while drilling the production sections of each well and well branch. 11. Testimony Provided by Peter Jensen: Mr. Jensen testified that noise, light pollution, and frequent flaring events adversely impact eleven subdivision lots that he ownsa total of about 30 acres—adjacent to the Hansen Production Facility Pad. Concern was also expressed regarding potential resource waste and potential impact from production and drilling operations on nearby shallow drinking water aquifers. Limitations on flaring were requested along with water well surveyance to ensure drinking water is not contaminated. Conservation Order 780 November 25, 2019 Page 5 of 9 12. Gas Flaring: By law operators must submit a monthly gas disposition report for each production facility. AOGCC reviews these reports to determine whether resources are being wasted. AOGCC's analysis of reports to date from the Hansen Oil Pool does not reveal waste or excessive flaring have occurred in the Hansen development. CONCLUSIONS: 1. Eliminating spacing requirements, except for a minimum set -back distance from lease boundaries where landownership or ownership changes, will improve ultimate recovery while protecting correlative rights. 2. B1ueCrest's requested waiver of the GOR requirements of 20 AAC 25.240 is necessary to continue to gather data necessary to evaluate future development options and determine the viability of initiating an enhanced oil recovery project. 3. B1ueCrest's request to increase the BOP test increment from two weeks to three weeks while drilling within the reservoir is not warranted. 4. B1ueCrest's request to simplify the Permit to Drill requirements of 20 AAC 25.005 and 20 AAC 25.050 is warranted only for development well branches drilled within the Hansen Oil Pool. 5. B1ueCrest's gas disposition reports indicate that the volumes being flared are not excessive. 6. Additional water well surveyance should be conducted to ensure drinking water aquifers remain free of contaminants. NOW, THEREFORE, IT IS ORDERED: In addition to statewide requirements under 20 AAC 25 (to the extent not superseded by these rules), the following rules govern development of the Hansen Oil Pool. Conservation Order 780 November 25, 2019 Page 6 of 9 Affected Area Seward Meridian Township and Range Sections T03-R15W Section 20: SE/4, SE/4 ofNE/4 Section 21: All Section 22: W/2, W/2 of SE/4, W/2 of NE/4 Section 27: W/2, W/2 of NE/4, W/2 of SEA Section 28: All Section 29: All Section 30: E/2 of SEA Section 31: E/2 Section 32: All Section 33: All Section 34: NW/4, W/2 of SW/4 T04 -RI 5W Section 04: W/2, NE/4, NW/4 of SEA Section 05: All Section 06: E/2 Section 07: NEA Section 08: N/2 Section 09: NWA Rule 1 Definition of Pool The Hansen Oil Pool (Affected Area) is defined as the hydrocarbon accumulation that is common to, and correlative with, the accumulation found in Cosmopolitan State 1 well (Permit to Drill 212- 164) between 6,538 and 7,312 -feet MD within the Affected Area identified above. This reference log is depicted in Figure 1, below. Rule 2 Well Spacing There shall be no well spacing restrictions for the pool defined above, except that no oil well shall be completed within 500 feet of a lease boundary within the Affected Area where ownership or landownership changes. Conservation Order 780 November 25, 2019 Page 7 of 9 Figure 1. Cosmopolitan State 1: Reference Log for Hansen Oil Pool 508312004300 2121640 COSMOPOLITAN STATE 1 2084 FSL 614 FEL TWP: 3 S - Range: 15 W - Sec. 29 5 W, 15010 OR AR WO R»0 0" MW RNOB e6 OM('C 2. . OAS UM'm � 90 TVMS- %.MNA) NMf ) VN -MD N.3 , ow.1A 7aoolro DIMM Lir r 6900 5:3th� 6500 �� -6500 y'� -A50G -6500 Starichkof Sands 6700 ntw,- 6800 Hansen Oil Pool Hemlock 7000 Fes' -7000 7100)ws •7000 _.. 7700 7300 i ( 700 7500 W s Figure 1. Cosmopolitan State 1: Reference Log for Hansen Oil Pool Conservation Order 780 November 25, 2019 Page 8 of 9 Rule 3 Gas -Oil Ratio Waiver In accordance with 20 AAC 25.240(b)(3) the gas oil ratio limitations of 20 AAC 25.240(a) are waived through December 31, 2021, so that reservoir performance data may be gathered to evaluate the viability of implementing an enhanced oil recovery project in the Hansen Oil Pool. Prior to this expiration date the operator must submit an application either for an extension to the expiration date, for the initiation of an enhanced oil recovery injection project, or for a permanent waiver under 20 AAC 25.240(c) of the gas oil ratio limitations. Rule 4 Permit to Drill Application Requirements Permit to Drill applications for all new wells and redrilled wells to develop the Hansen Oil Pool must meet the requirements of 20 AAC 25.005 through 20 AAC 25.050. The Permit to Drill application for each subsequent fish -bone well branch drilled within the Hansen Oil Pool from a new or redrilled development well must comply with the following minimum requirements: 1. Completed Form 10-401; 2. Schematic drawing depicting the proposed well branch and the parent well; 3. Directional survey planning report; 4. Anti -collision analysis with accompanying map and vertical section views of the fishbone well branch that displays all nearby wells, wells branches, plugged back wellbore segments, lost wellbore segments, and pilot holes; and 5. Drilling hazards analysis with planned mitigation measures. Rule 5 Water Well Surveyance By January 1, 2021, the operator shall obtain, analyze, and report the results for one water sample from each drinking water well within a one-half mile radius of the Hansen Production Facility Pad. Analyses conducted shall conform to the requirements specified in 20 AAC 25.283(D) through 20 AAC 25.283(F). A copy of the analytical results shall be provided to the surface owner and to the AOGCC. If a surface owner denies permission for water sampling or for disclosure of the results, the operator must document the reasonable and good -faith efforts taken to secure that permission and report those efforts to the AOGCC. Rule 6 Administrative Approval Unless notice and public hearing is otherwise required, the AOGCC may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. Conservation Order 780 November 25, 2019 Page 9 of 9 DONE at Anchorage, Alaska and dated November 25, 2019. Oil crelhVIT4. Price Jes�ie L. Chmielowski ,x , s. sioner, Chair Ccgmmissioner.. RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Karl BernieBerRecycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 Carlisle, Samantha J (CED) From: Carlisle, Samantha J (CED) Sent: Tuesday, November 26, 2019 9:52 AM To: 'AOGCC-Public -Notices' Subject: Conservation Order 780 Attachments: co780.pdf THE APPLICATION OF BlueCrest Alaska, LLC to establish Pool Rules for development and operation of the proposed Hansen Oil Pool. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7"' Avenue Anchorage, AK 99501 (907) 793-1223 (tfwi czlc, tW k! 111 'I's �kAldffl 1 ec 1pwil (sl h�--, p io '.W— Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov ADMINISTRATIVE APPROVAL CONSERVATION ORDER 780.001 Mr. Dwight Warner Senior Production Engineer BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Re: Docket Number: CO-21-024 Request for Administrative Approval to extend the expiration date of Rule 3 of Conservation Order 780 for two years. Cosmopolitan Field, Hansen Oil Pool Dear Mr. Warner: By letter dated December 15, 2021, BlueCrest Alaska, LLC (BlueCrest) requested administrative approval to extend the expiration date in Rule 3 of Conservation Order 780 (CO 780) to December 31, 2023. In accordance with 20 AAC 25.556(d), the Alaska Oil and Gas Conservation Commission (AOGCC) hereby GRANTS, BlueCrest’s request. CO 780 was issued on November 25, 2019, and established pool rules for the Hansen Oil Pool (HOP) in the Cosmopolitan Unit (CU). Rule 3 of CO 780 granted a gas-oil ratio (GOR) waiver to the pool to allow for the collection of performance data to evaluate the feasibility of conducting an enhanced oil recovery (EOR) project in the pool. In its December 15, 2021, letter BlueCrest stated the GOR waiver extension is necessary to acquire reservoir performance and pressure data to help determine the potential for additional reservoir development. The letter also states that an EOR project does not appear to be economically viable at this time. The performance of the HOP, when it comes to producing GOR trends, is atypical. One would expect a pool that is producing without an EOR pressure maintenance project to exhibit increasing GOR as time goes by. Initially, the HOP did exhibit this type of behavior with the producing GOR increasing over the first three years of regular production, but since peaking in late 2018 the GOR has been generally decreasing and is now close to what it was when regular production began in March 2016. Based on producing GOR at this time a GOR waiver would appear to be unnecessary as the GOR is approximately the same as it was at field startup and less than the two times initial GOR limit specified in 20 AAC 25.240. CO 780.001 January 31, 2023 Page 2 of 3 News reports, however, indicate that BlueCrest has recently announced that drilling is expected to resume in the HOP this year.1 The proposed well is referred to as a Trident Fishbone well that will have three main horizontal wellbores with each one having multiple laterals branching off from them. It is uncertain how a well such as this would perform over time, so extending the GOR waiver to allow for the drilling and completion of the well and to allow for the gathering of further reservoir performance information is prudent. BlueCrest’s request for an extension of the expiration date in Rule 3 of CO 780 was timely filed with the AOGCC. On its own motion the AOGCC is rescinding Rule 2, which deals with well spacing, since state law has changed to eliminate the interwell spacing requirement, making Rule 2 unnecessary. Also, on its own motion the AOGCC is rescinding Rule 6, which deals with administrative approvals, since an administrative approval regulation, 20 AAC 25.566(d), is now in place and applies to all orders issued by the AOGCC, making Rule 6 superfluous. NOW THEREFORE IT IS ORDERED that CO 780 is revised as follows: Rule 2 Well Spacing (Rescinded CO 780.001) Rule 3 Gas-Oil Ratio Waiver (Revised CO 780.001) In accordance with 20 AAC 25.240(b)(3) the gas oil ratio limitations of 20 AAC 25.240(a) are waived through December 31, 2023, so that reservoir performance data may be gathered to evaluate the viability of implementing an enhanced oil recovery project in the Hansen Oil Pool. Prior to this expiration date the operator must submit an application either for an extension to the expiration date, for the initiation of an enhanced oil recovery injection project, or for a permanent waiver under 20 AAC 25.240(c) of the gas oil ratio limitations. Rule 6 Administrative Approval (Rescinded CO 780.001) DONE at Anchorage, Alaska and dated January 31, 2023. Brett W. Huber, Sr. Jessie L. Chmielowski Chair, Commissioner Commissioner GregRU\ C. Wilson Commissioner 1 Cashman, Kay. “BlueCrest Prepares for Drilling: First Well H10 Trident Fishbone.” Petroleum News, Week of January 1, 2023, p. 1+ Gregory Wilson Digitally signed by Gregory Wilson Date: 2023.01.30 15:55:43 -09'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2023.01.30 16:01:18 -09'00' Brett W. Huber. Sr. Digitally signed by Brett W. Huber. Sr. Date: 2023.01.30 16:07:31 -09'00' CO 780.001 January 31, 2023 Page 3 of 3 RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. 1 Carlisle, Samantha J (OGC) From:Carlisle, Samantha J (OGC) <samantha.carlisle@alaska.gov> Sent:Tuesday, January 31, 2023 8:06 AM To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Conservation Order 780.001 (Cosmo Field) Attachments:co780.001.pdf Request for Administrative Approval to extend the expiration date of Rule 3 of Conservation Order 780 for two years. Cosmopolitan Field, Hansen Oil Pool Samantha Carlisle AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.carlisle@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.carlisle%40alaska.gov Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 mailed 1/31/23 15 BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 (907) 754-9550 December 15, 2021 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite #100 Anchorage, AK 99501 Request: Application to extend the gas oil ratio limitations of 20 AAC 25.240(a) due to the approval from the pool rules ending on December 31, 2021. Dear Commissioners, In accordance with 20 AAC 25.240(b)(3), BlueCrest Alaska Operation LLC (BlueCrest), as operator of the Cosmopolitan Unit and sole working interest owner of ADL’s 384403, 391902, 391903, 391904 and 18790, herby requests a waiver of the gas oil ratio limitations for all wells for continued reservoir evaluation program through December 31, 2023 to continue to acquire reservoir performance (gas, oil, and water trends) and pressure data to help determine the potential for additional reservoir development. With the state of drilling technology and the current price environment, it does not appear to be economically viable to pursue an enhanced recovery program at this time. All wells are tested twice on a quarterly basis and recently submitted a request to do semi- annual testing so BlueCrest can acquire its own separator in the future. The documentation sent previously for semi-annul testing shows that the wells GOR are not increasing excessively over time. BlueCrest has been utilizing Expro Incorporated to do two 6-hour tests per quarter on each well There are currently 5 wells on full time production H-1AL1, H-04, H-12, H-14 and H-16A. 100% ownership and producing just under a 900 bopd and 2 mmscfd gas. Bluecrest is making this request as wells H-1AL1, H-04, H-12, H-14 and H-16A are on-line at full open chokes. All wells are utilizing gas lift. The oil and gas rates fall off over a 3-week period due to the paraffin build up on the wells. BlueCrest started pumping Hot Oil jobs in March of 2020. Currently, all wells have these jobs completed every 3 weeks. The water rate is low and steady in the BlueCrest wells. However, the water test data for the wells is not consistent due to the emulsion in the oil which can’t be broken in the Expro unit. H-14 has the highest water rate and most closely matches the daily Bluecrest water meter. Received 12/15/21 BlueCrest Energy Inc. Page - 2 12/16/2021 Attached to this e-mail you will find all of the quarterly tests beginning January 2020 through October 2021 from the quarterly AOGCC reports Form 10-409. Please let me know if you have any additional questions as I can be reached at the numbers below. Senior Production Engineer Dwight Warner Cell: 907-440-0192 CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:dwarner@bluecrestenergy.com To:Roby, David S (OGC); Salazar, Grace (OGC) Subject:GOR Exemption Request (Letter & Data) Date:Wednesday, December 15, 2021 4:32:23 PM Attachments:Letter to AOGCC GOR extension.docx Form 10-409 Jan 2020 to October 2021.xlsx Dave, Here is the BlueCrest request asking to extend the GOR waiver for an additional 2 years. Attached please find the request letter and all of the well tests completed since January 2020 through October 2021 on your Form 10-409 that is turned in on a quarterly basis. If you have any questions please give me a call on my cell phone provided below. Dwight Warner Sr. Production Engineer BlueCrest Energy Inc. 3301 C Street, Suite 202 Anchorage, Alaska 99503 Dwarner@bluecrestenergy.com (cell) 907-440-0192 ell Name and NAPI Number 50-XXX-XXXXX-XX-XX Tubing Casing Separator Water Bbls. Gravity Oil Oil Bbls. Gravity Gas Gas MCFHansen 1A 50-231-20010-01No tests1 13 220 13 N/A N/A N/A 0 N/A 90 N/A Hansen 1A 50-231-20010-01No tests1 13 220 13 N/A N/A N/A 0 N/A 80 N/A 100 1250Hansen 1A 50-231-20010-018/27/20201 48 184 2 150 6 56 1 26.2 219 N/A 94 427Hansen 1A 50-231-20010-018/28/20201 48 254 7 162 6 58 5 25.4 320 N/A 150 467Hansen 1A 50-231-20010-019/26 to 10/151 34 45 550 N/A N/A N/A 6 N/A 282 N/A 192 683Hansen 1A 50-231-20010-01-001/23/20212 96 144 764 139 6 55 4 24.6 49 N/A 13 262Hansen 1A 50-231-20010-01-001/24/20212 96 140 799 137 6 54 2 25.2 56 N/A 11 204Hansen 1A 50-231-20010-01-004/22/20212 96 149 982 146 6 55 0 26.2 26 0.628 25 968Hansen 1A 50-231-20010-01-004/22/20212 96 151 897 147 6 61 0 25.6 24 0.628 52 2142Hansen 1A 50-231-20010-01-007/27/20212 96 149 905 146 6 67 0.6 24.6 21 0.628 65 3072Hansen 1A 50-231-20010-01-007/27/20212 96 148 926 145 6 73 0.2 24.6 23 0.619 21 914Hansen 1A 50-231-20010-01-0010/15/20212 96 150 808 146 6 62 0.0 26.3 14 0.622 8 594Hansen 1A 50-231-20010-01-0010/16/20212 96 152 876 147 24 64 0.2 25.6 86 0.619 139 1619Hansen 16A 50-231-20051-01-001/13/20202 128 165 776 153 6 59 3 23.9 348 0.602 397 1140Hansen 16A 50-231-20051-01-001/14/20202 128 162 787 152 6 55 1 32.5 379 0.602 430 1134Hansen 16A 50-231-20051-01-002/24/20202 128 174 909 163 6 56 6 25.3 366 0.603 393 1074Hansen 16A 50-231-20051-01-002/24/20202 128 161 897 153 6 53 20 22.4 349 0.604 462 1322Hansen 16A 50-231-20051-01-005/21/20202 128 165 867 151 6 55 2 20.2 262 0.604 585 2231Hansen 16A 50-231-20051-01-005/21/20202 128 164 933 148 6 55 2 20.6 279 0.604 526 1889Hansen 16A 50-231-20051-01-008/27/20202 128 166 776 150 6 58 7 21.6 72 0.604 208 2906Hansen 16A 50-231-20051-01-008/27/20202 128 170 780 150 6 59 19 21.8 75 0.604 190 2536Hansen 16A 50-231-20051-01-0011/18/20202 128 164 812 156 6 48 0 24.4 102 0.598 211 2066Hansen 16A 50-231-20051-01-0011/19/20202 128 164 792 158 6 43 0 24.1 77 0.598 202 2632Hansen 16A 50-231-20051-01-001/21/20212 128 177 873 152 6 66 0 22.1 59 N/A 257 4356Hansen 16A 50-231-20051-01-001/22/20212 128 175 880 154 6 66 0 22.1 75 0.604 276 3672Hansen 16A 50-231-20051-01-004/23/20212 128 162 1196 155 6 66 0.4 24.3 54 0.619 313 5790Hansen 16A 50-231-20051-01-004/24/20212 128 162 1205 156 6.5 64 2.8 24.3 59 0.619 367 3672Hansen 16A 50-231-20051-01-007/28/20212 128 154 812 150 6 67 2.5 23.6790.620 265 3354Hansen 16A 50-231-20051-01-007/29/20212 128 162 866 155 6 63 1.9 23.4 86 0.614 287 3348Hansen 16A 50-231-20051-01-0010/17/20212 128 155 875 149 6 62 3.6 23.5750.618 294 3926Hansen 16A 50-231-20051-01-0010/18/20212 128 155 876 149 6 60 7.5 25.4 71 0.616 306 4299Production During TestGas-Oil Ratio Cu. Ft./Bbl.Date of Test Method Choke Size Pressures Length of TestSeparator Temp, oF Hansen 14 50-231-20052-00-001/13/20201 96 176 842 154 6 60 104 23.7 188 0.600 1519 8061Hansen 14 50-231-20052-00-001/13/20201 90 178 860 153 6 64 128 24.7 231 0.598 1608 6944Hansen 14 50-231-20052-00-002/23/20201 96 167 860 151 6 59 115 24.2 196 0.596 1478 7543Hansen 14 50-231-20052-00-002/24/20201 96 166 859 152 6 61 138 23.6 193 0.596 1524 7915Hansen 14 50-231-20052-00-005/20/20201 96 159 1106 140 6 64 86 21.8 182 0.598 973 5360Hansen 14 50-231-20052-00-005/21/20201 96 159 1106 140 6 64 64 22.3 172 0.598 885 5132Hansen 14 50-231-20052-00-008/26/20202 96 182 979 160 6 62 22 21.1 52 0.598 264 5050Hansen 14 50-231-20052-00-008/27/20202 96 188 997 140 6 64 21 21.2 49 0.598 278 5623Hansen 14 50-231-20052-00-0011/17/20202 96 181 802 160 6 45 9 19 49 0.598 232 4776Hansen 14 50-231-20052-00-0011/18/20202 96 178 799 164 6 45 34 NR 41 0.598 248 6024Hansen 14 50-231-20052-00-001/22/20212 96 193 847 160 6 60 31 18 51 0.598 412 8139Hansen 14 50-231-20052-00-001/22/20212 96 188 850 158 6 60 39 21.4 42 0.598 356 8473Hansen 14 50-231-20052-00-003/13‐3/15/212 64 206 1079 138 40 60 96 23.4 202 N/A 972 4817Hansen 14 50-231-20052-00-003/15‐3/16/212 80 176 1067 129 24 52 80 23.6 66 0.603 583 8886Hansen 14 50-231-20052-00-003/16‐3/17/20212 128 154 1037 134 23.5 50 79 23.6 18 N/A 112 6160Hansen 14 50-231-20052-00-004/23/20212 96 168 899 151 6.5 54 22 24.1 36 0.611 253 7086Hansen 14 50-231-20052-00-004/23/20212 96 171 945 154 6.5 57 40 23.3 60 0.625 225 3731Hansen 14 50-231-20052-00-007/28/20212 96 171 801 151 6 64 19 24.7 33 0.617 394 11970Hansen 14 50-231-20052-00-007/28/20212 96 166 796 152 6 65 21 23.6 33 0.619 329 9871Hansen 14 50-231-20052-00-0010/16/20212 96 177 787 152 6 59 23 21.7 42 0.612 293 6902Hansen 14 50-231-20052-00-0010/17/20212 96 180 792 153 6 60 18 22.8 35 0.616 272 7868Hansen 12 50-231-20062-60-001/12/20201 88 206 676 168 6 64125.2 384 0.600 3016 7863Hansen 12 50-231-20062-60-001/12/20201 88 205 680 167 6 63 1 25.1 385 0.600 2967 7702Hansen 12 50-231-20062-60-002/23/20201 80 204 664 172 6 64 0 27 438 0.602 3613 8242Hansen 12 50-231-20062-60-002/23/20201 80 200 6674 169 6 62 3 26.1 369 0.601 2713 7358Hansen 12 50-231-20062-60-005/20/20202 128 176 984 150 6 64023.3 297 0.602 641 2157Hansen 12 50-231-20062-60-005/20/20202 128 173 985 150 6 63 1 25.1 300 0.602 657 2191Hansen 12 50-231-20062-60-008/26/20202 128 187 693 160 6 60023.9 82 0.603 489 5994Hansen 12 50-231-20062-60-008/26/20202 128 186 690 160 6 60 0 24.6 85 0.603 486 5717Hansen 12 50-231-20062-60-0011/17/20202 128 182 674 160 6 44025.5 94 0.603 416 4418Hansen 12 50-231-20062-60-0011/17/20202 128 179 678 148 6 45 0 25.1 99 0.603 399 4036 Hansen 12 50-231-20062-60-001/23/20212 128 182 699 158 6 61024.8 84 0.603 338 4010Hansen 12 50-231-20062-60-001/23/20212 128 182 671 160 6 61 0 24.8 97 0.603 349 3607Hansen 12 50-231-20062-60-004/22/20212 128 159 1192 151 6 580.124.1 67 0.615 323 4800Hansen 12 50-231-20062-60-004/23/20212 128 158 1190 153 6 57 0.3 24 84 0.615 348 4152Hansen 12 50-231-20062-60-007/27/20212 128 154 1340 146 6 620.224.1 60 0.612 295 4906Hansen 12 50-231-20062-60-007/28/20212 128 154 1345 146 6 57 0.2 24.1 74 0.610 304 4127Hansen 12 50-231-20062-60-0010/16/20212 128 155 591 147 6 600.624.7 72 0.619 264 3660Hansen 12 50-231-20062-60-0010/16/20212 128 155 592 147 6 57 0.9 26.5 106 0.612 284 2671 Hansen 04 50-231-20064-00-001/11/20202 128 164 918 156 6 59 1 25.1 305 0.602 356 1168Hansen 04 50-231-20064-00-001/12/20202 128 159 934 151 6 59 0 25.1 205 0.6032191067Hansen 04 50-231-20064-00-002/22/20202 128 169 773 161 6 60 3 25 296 0.603 291 982Hansen 04 50-231-20064-00-002/23/20202 128 171 793 157 6 59 0 25.1 378 0.607 384 1015Hansen 04 50-231-20064-00-005/19/20202 128 157 870 140 6 54 0 22.8 267 0.603 302 1129Hansen 04 50-231-20064-00-005/20/20202 128 160 1084 140 6 54 0 23.8 238 0.6032881210Hansen 04 50-231-20064-00-008/25/20202 128 158 703 148 6 61 8 25.2 74 0.603 39 526Hansen 04 50-231-20064-00-008/25/20202 128 158 717 140 6 63 0 24.4 71 0.60334480Hansen 04 50-231-20064-00-0011/16/20202 128 151 703 130 6 43 0 24.8 89 0.603 28 309Hansen 04 50-231-20064-00-0011/17/20202 128 154 715 125 6 41 0 25.1 95 0.60353557Hansen 04 50-231-20064-00-001/24/20212 128 161 703 151 6 61 0 24.4 56 0.60313240Hansen 04 50-231-20064-00-001/24/20212 128 157 717 153 6 63 0 24.4 61 0.60317276Hansen 04 50-231-20064-00-003/5‐3/6/20212 128 173 928 153 24 60 0 24.9 636N/A6601038Hansen 04 50-231-20064-00-003/6‐3/7/20212 128 153 765 147 23.5 60 0 25.2 322N/A320993Hansen 04 50-231-20064-00-003/7‐3/8/20212 128 152 756 145 23.5 62 0 24.2 274N/A256932Hansen 04 50-231-20064-00-004/21/20212 128 151 744 149 6 54 0.05 24.7 58 0.618 36 618Hansen 04 50-231-20064-00-004/22/20212 128 154 746 150 6 59 0.05 N/A 67 0.61825369Hansen 04 50-231-20064-00-007/26/20212 128 147 747 147 6 66 0.31 22.1 50 0.615 32 638Hansen 04 50-231-20064-00-007/27/20212 128 149 751 146 6 64 0.17 24.6 67 0.61828412Hansen 04 50-231-20064-00-0010/14/20212 128 153 679 145 6 61 0.33 24.5 79 0.618 72 915Hansen 04 50-231-20064-00-0010/15/20212 128 149 681 146 6 59 0.09 26.7 73 0.62058790 14 IBlueCrest Alaska Operating LLC lue eSt 3301 C Street, Suite 202 Energy Anchorage, AK 99503 November 2, 2020 RECEIVE® NOV 0 6 2020 State of Alaska Alaska Oil and Gas Conservation Commission AOGCG 333 West 71h Ave. Anchorage, AK 99501 RE: Hansen Oil Pool Rule number 5, Water Well Survey Pursuant to Commission Rule number 5 of AOGCC Conservation Order number 780 of November 25, 2019, please accept the attached water well survey results. Due to the large laboratory analysis report files, a memory stick with each of the sample reports is provided. Domestic well water samples were collected from resident wells within one half mile of BlueCrest Energy's Hansen Production facility. Seven of the fourteen wells within the specified area were sampled and analyzed. Because many of these residences are only occupied during the summer season, coupled with COVID-related travel restrictions and other considerations many residences were unoccupied or barred at the time of the sample collection. Of the wells not tested, either BlueCrest Energy was not granted permission to enter the premises, or, in one case, permission was granted but the residence was unoccupied, and electrical power to the water pump was turned off. Also enclosed are return receipts from our letter requesting property access. If necessary, BlueCrest Energy can provide copies of additional correspondence, and other records demonstrating our effort to secure permission to access homeowner property for sampling. Homeowner information was acquired from Kenai Peninsula Borough tax records since some properties had changed owners since the last well sampling effort in 2015. BlueCrest Energy is in the process of distributing these well test results to individual property owners, as directed. Please contact me via any of the methods below if you would like to discuss these sampling results or require additional information. Sincerely/ i Geoffrey T. Merrell Health, Safety, Security and Environment Manager BlueCrest Alaska Operating LLC Incl: Sample Result Reports Return receipt log and receipt copies Ir r9 M co S r 0 M 0 13 ErO M 0 O O RJ O N cenlnen Man feO c $ $3.c .`. 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ENJ L3 affil R(tctranlc) ❑CarIMM Ma1lflazMctea Dal'rvery _ ` Hale r o $0.00 _- C a- Ms. JoaAlBadgley _ Z_ P.O.Boxf7�?a0 07/10/2020 o Anchor Point, AK 99556 ED IU , 0 iV VV M1 0 0 M ANClP f9IW,!Alt 99�5,t rcanmaa Mall Fee $3.55' CerGnetl Mail Fee $ $3.55 0509 m 0 Extra Ices & Fee9lcMdbox, etl p ❑Hanml Hecewt(nmticvph $ _! (] ❑HeWmHacalpt(aamnlc) O ❑CarlMetl Mall PeaMdetl 0eP.a1' $.. L�I Mr. Thomas%kArod j�0j2020 0 Er Mr. Bai*1 Rite C3 P.O. Box ii N Z3 Anchor Point, AK 99556 ti , r 0 Do�aIAVaddell N 0 Hem 07/10/2020 m 0 m Domestic ail Only- ANOWRPOIW,jl4, 915? `� Y S CerGnetl Mail Fee $ $3.55 0509 m 0 Extra Servkes&Feeslcneck bar, aee ❑PaWm flewlDt PleNaaP0 E 2 ✓G ., �Q F p O C3OAaan ❑Hsban Pxalpt(elm ) 3P ❑Cxalrea had!Peebktetl Dellv9y E so 00 •V VS• n 0 Here 1 0 slPnmam Peaanetl s _ L�I Mr. Thomas%kArod j�0j2020 P.O. Box 657117,60 Here Anchor Point, AK 99556 paean sw.awre Paqulretl $_- _ ,a .n m m Domestic SUMER r NA 98$90 `� Y rcenlnetl Man Fe. $3.55 OSOL . Lr)CERTIFIED r $ E#2 Swim & Fear 1l b aU01ee ) ,_ C ❑ PeWm Ractlpt Oa Vwp» $ \, � 0 ❑R.. Haaalpt(&azlmNc) $��_ �meM p ❑ CatiNd Man flasbll Delmas $__�,0__0� Here p paean sw.awre Paqulretl $_- _ C3 caninetl Man Fee $3.55 , r °-Mr. Do�aIAVaddell 0 ON `\ 26 0 ❑PeWm PecNpt tMNwp» $ 07/10/2020 E3 P.O. Boi7L$0 Pa8111(a)i. N Sumner, WA 98390 0 M1 Postal O RECEIPT Lr)CERTIFIED r • - Domestic Mail Only m m ANC FOIrt AK 995`4 m caninetl Man Fee $3.55 1j --0504 Ex[re Servi6es&FBa6ldlackDaK adtl Re ) 0 ON `\ 26 (] ❑PeWm PecNpt tMNwp» $ 1 (] ❑Hahn R.IeI I.) $ _$0 go Pa8111(a)i. D ❑C MfW Mall HaMadad Wla $ ' Hera ED 0Atlun510aeWm Paqultad $_1p_pq�- , O iV VV AP! 0 M Ms. Jolalrie So Janda Y P 07/10/2020 E3 P.O. Bo*730 i rruu Anchor Point, AK 99556 li 0 M1 ru ANCi10R POIRt r 171 Certlfletl Mall Fee Extra Sery � &Fees (checkba., add lm nate) C3 ❑Ra,um fle alpt (hpNcppyj E E3 ❑RetumPamlpt(elecvmlc) $ $n nn C3 E 69 CiC4 O QAEpd EIPnaNre PegWretl E p Er Ms. LeSa -Pott C3 P.O.Bc671d83 ru Anchor Point, AK 99556 C3 r, N i ANC#IC)R PDIWT r`' AK X9558 Gamed Mail Fee $3.55 �$ E M SeNIM & Fees (ch&,JV cad, Aj al O❑Relum Racelp,(ta uup}) $rp O pRehm Re pt(eleeanlq E$0.•00-_ C3 ❑Cedieed Mal Rastncled O Nee' $ _$6.88 C3 ❑ Adult Slaruture Repulred EiV__�n_00 p VV o Mr. GeAeNiller M P.O. BoxftJ5 0 C3 Anchor Point, AK 99556 ruM F� M m •• a Cabled Mall Fee $3.55 M - ANG( 9ni re 3 $37 CE❑ eo$ #aMrAafdSedBrvMpiCWnea9[uF&reeF�(c7heck5 lees prA, e(tl$h C3 RetuatRclp.R) _5nn M R.M R.Ipl atl $0 Q ❑aE ved Pallewt ❑O gewhee g - O F 11 C3 ; Mr. Her Keith ED C3 P.O. Bo* -403 %, ° ru Anchor Point, AK 99556 E3 r- ' �'; 05026 Ir Cr.. p M -. BELID% C 815 Cabled Mall Fee $3.55 a Bale ery Ca9&FBB9 (PlMdk 4x. eee /eI F7 ❑flaium PecelP, Perd�pY) E— Poslmerk 0 ❑RaNmR 4ptltlacWnlcl E— O Here '; - p ❑Cenlfied MMIRMl.ide OeID E— Raaalptlelectronlc7 p ❑PiluX$IgneNre RepuVee22 5— p `E�A_G� n<k,am,,.,>.,.R.....b, O Er Mr. PeUF30nsen 07/10/2020 o Mr.James'Quinlan Anchorage, AK 99507 ru P.O. B0446W p E3 Belivue, CO 80512 r r;; 0509 '26 Pd r"% r Here o2t,i 07/10/2020 05,09 � "26 ��foahnarl(. Here 0 07/10/2020 Instructions z -" , 0509 ser i , 26 P 64PR k 0/ Ips I�aR 07/10/2020 to .. - E3 . Camfletl Mail Fee 53.55 _ f`CCI $ Extra Servlcae SFea9(check Gcx,add Ne ael p ❑Return RewiDtT 7- C3 ..O E in nn p ❑ R.. RecalPt(elacp M E- 0-199 . C3 ❑CeNfed MalRmNclad pEJdp(� p CIMOSIV--Raddre C3 VV o Terry A8& M 2185 N]DQwood Ct C3 N Wasilla, AK 99654 ID r� Ir ru I • - ra M ANC AIFY6fAK!'9p ^: Cerlilled Mail Fee 53.55 �$ , atee EDA Services pI Fees (cFecxbp.rm ❑Pe1um Raxlpt (haNwPY) E C3❑Rehm Raaalptlelectronlc7 ❑CertXIM McIIfleaWcted ONNery i$0�.V0� p `E�A_G� n<k,am,,.,>.,.R.....b, O Er Mr. PeUF30nsen 0 p 7700 PQft Wford Drive M Anchorage, AK 99507 ru p f� a 4 Q1Q�� 05026 I 07/10/2020 SENDER 1 ■ Complete items 1, 2, and 3. A. Signature ■ Print your name and address on the reverse X / (Fl3 gent so that we can return the card to you. V� ❑ Addressee r ■ Attach this card to the back of the mailpleee, B. Received by �rfr�tee' e) C. Datg gf Ll!?livery 1 1 A n to 1 �-1 I en - Terry Jordan D. Is delivery address different fi3m item 17 at -IM Domestic Return Receipt If YES, enter delivery address below: 0 No 2185 N. Dogwood Ct ❑RetumBeeetplfor 9590 9402 5383 9189 0173 90 Wasilla, AK 99654 ❑ Signature Confi me tori^ I D Signature Confimletlon 1 g . 2. Article Number (Fm..fer from service label) 7020 0090 0000 8748 3129 used Mall Restricted Delivery Restricted Delivery 3. Service Type D Priority Mall Express® III�III'II'II I�IIIIIII�IIII�I'IIII VIII IIIIIII ❑ Adult Signature !]Registered Mai! ,u 1WR, y�w�mv nwv� cry ❑ Certified Male D Adult Signature Restricted Delivery ❑ Reepplstered Mail Restricted 9590 9402 5383 9189 0174 06 ❑ Certified Male 0 Certified Mail Restricted Delivery D•Iivery ❑ Return Receipt for 1 D Collect on Delivery Merchantlise ❑ Collect on Delivery Restricted Delivery ID Signature Conflnnatlonw 9 A01H. N„mlva. lrna.,alar fmm cervI. khan 1 7020 0090 0000 8749 310 5 inured Mail cored Mail Restricted Delivery D Signature Confirmation Restdete l Delivery 1 t PS Form 3811, July 2015 PSN 7530-02-000.9053 Domestic Return Receipt 11111111oil 1111111011lel11M1lillmnnm 13=d ad Mane D Certified Mail Restricted Delivery I ❑RetumBeeetplfor 9590 9402 5383 9189 0173 90 D Conec on Delivery ❑ Collect on Delivery Restricted Delivery n Insured Mall ❑ Signature Confi me tori^ I D Signature Confimletlon 1 g . 2. Article Number (Fm..fer from service label) 7020 0090 0000 8748 3129 used Mall Restricted Delivery Restricted Delivery red Mail Signature Confirmalon [Iretl Restricted! Dellvgy Domestic Return Receipt PS Form 3811, July 2015 PSN 7530-02-0D0-9053 .. •n•n.,•nel•IMI III OII11111 ,u 1WR, y�w�mv nwv� cry ❑ Certified Male ❑Registered Mall Restricted Delivery I 9590 9402 5383 9189 0174 44 10 Certified Mail Restricted Delivery O Retu h Rdeceipt for I n Collect on Delivery Mem an se 2. Artiole Numherrra.^^r^``" Coliecton Delivery Restricted Delivery ❑SignatureConflrmation- 7020 0090 0000 8748 3075--iliauecS Restricted Delivery El Signature (over $500) Ps Form 3811, July 2015 PSN 7530-02-000-9053 Domestic Return Receipt oie�min mil�e/m�7ifun(IRi III 81111/11 ❑Certified Mall® — Delivery__..._...__..___., 9590 9402 5383 9189 0174 37 O Certified Mall Restricted Delivery ❑ Return Recelptior •- — — ....� fn,,.,,�dralatrali 7020 0090 O Collect on Delivery Ject on Delivery Restricted Delivery Merchandise O Signature Confirmation^" 0000 8748 3082 red Mail Signature Confirmalon [Iretl Restricted! 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Article Number (Transfer from sarglce label) ❑ Collect on Delivery Restricted Delivery D Signature COnn"atlonre. 7020 0090 0000 8748 3143 -cured Mal lured Mail Restricted Delivery 0 Signature Confirmation Restricted Delivery PS Form 3811, July 2015 PSN 7530-02-000.9053 Domeesttigic Return Receipt �I'II�I'I If��I�'��Il�l�lllell ll��I'III 111 Restrictetl Delivery Adult nature DDliveered Mall Restricted R�I 9590 9402 5383 9189 0173 52 ❑0 Certified Mahe I O OernIMed Mail Restricted oil" D Return Receipt for Merchandise 2. Arenb87148 3167 collect on Delivery ' ollect on Delivery Restricted Delivery El Signature Coldirmation' 0 Signature Confirmation 00900 _- - o uretl Mail Restricted Delivery _ _ 7020 _----__ - _ ❑ Insured Mail Restricted Delivery lul,.—es. Ps Form 3811, July 2015 PSN 7530-02.000-9053 Domestic Return Receipt ■ Complete Items 1, 2, and 3. ■ Print your name and address on the reverse so that we can return the card to you. Mr. Herff Keith P.O. Box 1096 Anchor Point, AK 99556 B. ecelve CWrl' Nsme1 c. Dat of Delivery 4 E( �( Ap D. Is delivery address different from item 17 0 Yas If YES, enter delivery address below: 0 No j PS Form 3811, July 2015 PSN 7530-02-000-9053 c, rtlaom ........_i 7020 Od90 0000 8748 3112 PS Form 3811, July 2015 P$N 7530-02-000.9053- 9590 9402 5383 9189 017482 7020 0090 0000 8748 31137 3. 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Article Number l7lunslar from serviee 1-M 7020 0090 0000 8748 3174 tired Mail Bred Mall Restricted Delivery Restricted Delivery tover$500) PS Form 3811, July 2015 PSN 7530.02-000-9053 Domestic Return Receipt 10 Collect on Delivery Merc lanes 2- Article Number (7ransler from service. labei) 10 Collect on Delivery Restricted Delivery 0 Signature Confirmation - need Mal! 0 Signature Confirmation 7020 0090 0000 8748 3150 fired Mail Restricted Delivery Restricted Delivery _'r$500)—_ PS Form 3811, July 2015 PSN 7530-02-000.9055 Domestic Return Receipt I INDEXES 13 Davies, Stephen F (CED) Subject: FW: 10-428 form for BlueCrest Energy - Signed From: Dwight Warner <dwarner@bluecrestenergy.com> Sent: Tuesday, October 15, 2019 9:34 AM To: Roby, David S (CED) <dave.roby@alaska.gov> Subject: 10-428 form for BlueCrest Energy - Signed Here is the 10-428 that was requested at the hearing. Do you need me to drop off a hard copy or is electronic ok Thanks, Dwight Warner Sr. Production Engineer BlueCrest Energy Inc 3301 C Street, Suite 202 Anchorage, AK 99503 Dwarner@bluecrestenergy.com (w) 907-754-9556 (c) 907- 440-0192 (f) 907-754-5997 Sigrature— Tile VP Alenia Printed Name Andrew Buchanan Deb, 70/162019 Fenn 1P426 Re, 0612017 INSTRUCTIONS ON REVERSE ROE STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION ANNUAL RESERVOIR PROPERTIES REPORT 1. Coamtor. BluaCmd LLC 2. Address: 3201 C Street Suite 202, Anchoreoe AK 7706 i3. Field srd Pool Code: iMOSS) 4. Pool Name 5. Refomnu 6. Temperature 7. Pomelly S. P—sabtiity Detum(6 (•F) (%) (md) 0. Swi (%) 10.011 11.00 12.Origlnel 13. Bubble 14. Cunard 15.011 16. Gas V, flys Vlsw.1tya Preeoure Poirier Dew Resorvok G.,ft spedOc Ork}nal Seturetbn (psi) Poki Pressure (•API) Grevlty (Air= Pressure Pressure (cp) pre >�re (psi) 1.0j (0P) (Pd) 17.R..—fr 16. Not Pay Thickness fl fl l) () 19.Origa191 20. BubblePaiM 21. Gas Famalbn Fomalbn Com ressibll P iY Vdume Fedor Volume Fedor Factor (Z) (RB/STB) (RB/STB) 22.Original GOR 23. Current (SCFlSTB) GOR (SCF/STB) C.—p,fiten Fbk! 6600 136 12fA.al 17 iAweoe, 47 A"mia;! 3.4 23 3100 22762800 2562 2325 0.6 310 1.sys e'- 140 osoea,e; 1.16 1.15 0.67 350-400 460D.eve ei I Thereby unify lhet the feregoingbWeend co�besl of myk� �' Sigrature— Tile VP Alenia Printed Name Andrew Buchanan Deb, 70/162019 Fenn 1P426 Re, 0612017 INSTRUCTIONS ON REVERSE ROE 12 BlueCrest Alaska Operating LLC lue eSt 3301 C Street, Suite 202 En orgy Anchorage, AK 99503 October 11, 2019 Jessie Chmielowski, Commissioner Dan Seamount, Commissioner Jeremy Price, Commissioner Alaska Oil and Gas Conservation Commission 333 W 7th AVE Anchorage, AK 99501 RE: BlueCrest Alaska Operating, LLC —Cosmopolitan Unit Pool Rules Application Revision Dear Commissioners, BlueCrest Alaska, LLC (BlueCrest) is submitting the enclosed pages extracted from its application for pool rules. The pages include sections 2.3, 2.4, 2.5, and 5.2 of the application. The information in these sections was previously considered to be confidential. BlueCrest has made one revision and now declares them to be non -confidential. If you have any questions regarding this submittal, please contact me at (907) 754-9563 or by email at ibuchanan@bluecrestenergV.com. Sincerely, Andrew Buchanan Vice President —Alaska BlueCrest Alaska Operating, LLC Enclosure IuNest Energy 2.3 Producible Reservoirs 2.3.1 Type Log Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules The Cosmopolitan State #1 well is used as a type log for the field and pool. Interval depths are measured log depths (MD) from the Cosmopolitan State #1 well unless otherwise indicated. 2.4 Hemlock Conglomerate 2.4.1 6,812 feet to 7,312 feet The Oligocene Hemlock Conglomerate is the oldest known hydrocarbon producible reservoir at Cosmopolitan. It lies unconformably on the Paleocene to Eocene age West Foreland, a dominantly volcaniclastic zone with common ash fall tuff beds and is conformably overlain by the Starichkof (Lower Tyonek) sand of probable Miocene age. The Hemlock is one of the major oil producing formations in the basin and is recognized in most wells throughout it. At Cosmopolitan, the Hemlock is easily correlated in the Cosmopolitan State #1, Starichkof State #1 and the Starichkof State Unit #1 (Figure 8). The Hemlock Conglomerate ranges from 500 feet thick in the Cosmopolitan State #1 to 485 feet in the Starichkof State #1. It is comprised of channelized sandstone and pebbly sandstone in the upper half and predominately shale with thin sandstone lenses in the lower half. Although correlating the top of the Hemlock is somewhat problematic, several internal correlations can be made with fair confidence which support general correlations in the upper section. Net Hemlock pay thickness of 127 feet in the Cosmopolitan State #1 is based on a combination of parameters including gamma ray, porosity and water saturation from log analysis, mudlog shows and lithology (Figure 9). The lowest known oil is estimated at -7,048 feet TVDSS in the Cosmopolitan State #1, although MDT pressure measurements taken by ConocoPhillips in the Hansen #1 indicated an oil/water contact at -7,048 TVDSS (Figure 10). Approximately 146 feet of pay is present in the Hansen #1 (corrected to true stratigraphic thickness). Based on 25 rotary cores from the Cosmopolitan State #1 analyzed by Schlumberger labs, the dominant rock type in the Hemlock is arkosic to subarkosic sandstone exhibiting good intergranular porosity. Chlorite grain coating is common and combined with kaolinite some porosity is occluded, although porosity and permeability values show that this is some of the better Hemlock reservoir in the basin. The average non-stressed (i.e., not in-situ) helium porosity measured in the rotary cores is 19.4% with average permeability of 83.2 millidarcies. See Section 5.2 for in-situ porosity and permeabilty estimates. Special drilling and completion fluids and cements are being studied to determine which are the least damaging to the formation and to optimize production. Although no test of the Hemlock was run in the Cosmopolitan State #1, the Hemlock had substantial amounts of reservoir quality sand with oil saturation in cores and is 45 feet structurally high to the highest take point in the Hansen #1A well, which tested water free oil at rates in excess of 1000 BOPD. Reservoir & Development Description Page 10 of 36 IuNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 2.5 Starichkof: 6,538 feet to 6,812 feet Conformably overlying the Hemlock Conglomerate is the Lower Tyonek Starichkof sand named informally by Pennzoil at the time of its discovery at Cosmopolitan. The Starichkof is 274 feet thick in the Cosmopolitan State #1 (Figure 11), 362 feet in the Starichkof State #1, 365 feet in the Starichkof State Unit #1 and 309 feet thick in the Hansen #1 (all corrected to true stratigraphic thickness). The top of the formation is easily correlated from well to well (Figure 12) as are some of the internal stratigraphic units. The Starichkof Sand in the Cosmopolitan State #1 was not tested because it is 240 feet structurally higher than in the Starichkof State #1 where it tested oil from the upper 150 feet of the formation. Also, it is structurally flat to the highest take point in Pioneer Hansen 1AL1 long lateral that was drilled across the crest of the anticline and produced water free oil. Pressure gradient plots of MDT pressures taken in the Hansen #1 indicate that the Starichkof and Hemlock are in pressure communication and have a common oil/water contact at approximately -7048 feet TVDSS. Closure up -structure to this contact is over 5,000 acres, which represents the aerially largest known hydrocarbon accumulation at Cosmopolitan (Figure 13). However, it is possible that the south plunge of the structure dips less than currently mapped and that this accumulation, as well as some of the shallow gas zones could extend south of the interpreted limit. The Starichkof consists primarily of fine to medium grained, subangular to subrounded arkosic and subarkosic sandstone. Volcanic and sedimentary rock fragments are common. Three rotary core samples taken in the Cosmopolitan State #1 had average non-stressed porosity of 18.1% with 74.6 and permeability. Again, see Section 5.2 for estimates of in-situ porosity and permeability. Based on log analysis by Wayne Campaign, Starichkof sandstones have high irreducible water saturations, but the calculated values are too high to be consistent with actual water -free production from the reservoir. In the Starichkof State #1 well the Spontaneous Potential (SP) log combined with the Neutron - Density logs indicate that most of the reservoir quality sandstone is in the upper 200 feet of the formation; resistivity is low and shows almost no response to the contained oil, so water saturation calculations using the standard Archie equation do not result in values common to producible hydrocarbon reservoirs, even though a considerable amount of oil has been tested from this formation. An abundance of chlorite within the matrix forms a barrier between framework grains and pore throats that inhibit fluid flow (from Schlumberger report). Reservoir & Development Description Page 14 of 36 llueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Bubble Point: 2275-2484 psia GOR: 389 — 426 SCF/STB Oil Density: 0.908 — 0.952 API: 19.14 — 25.22 5.2 Reservoir Modeling, Performance, and Properties The Cosmopolitan Field contains both gas and oil reservoirs throughout the stratigraphic column. The reservoir is a double plunging anticlinal structural trap. The oil reservoirs are contained in the Tertiary aged Starichkof and Hemlock Formations. A geo-cellular model was build and recently updated using the industry standard Petrel software. Model input includes seismic data, well log data from more than 20 wells, core data from 2 wells and MDT data. The Cosmopolitan -State 1 was selected as a "key" well because it had the most complete log suite and core data. A fine layer static model was constructed that integrated the well tops, initial fault and horizon interpretations with the core- and log -interpreted facies/depositional environments and properties (porosity, permeability and water saturation) calculated during the petrophysical analysis. The 60 million -cell static model consists of two formations/ units, the Starichkof and Hemlock. Table 1 summarizes OOIP and average petrophysical properties from the gross volume of the updated geocellular model. Zones Average Average Water )rosity (%) Saturation (%) StarichkofI 12 65 Hemlock 11 62 Table 1: Summary of OOIP and average petrophysical properties An early dynamic model was built using industry -standard software, Eclipse, and was history matched to early production data from four producers. Various depletion options, including hydraulic fracturing (fracing) the wells and a full field pressure maintenance via waterflooding, were investigated. The fracing and waterflooding development options have since been abandoned due to uneconomic production rates, the regional rock stress regime that made fracing difficult, the compartmentalization and clays in the rock that can swell in the presence of incompatible injection water. The geocellular model has recently been updated and the dynamic model will be updated in the near future. 5.2.1 Production History, Saturation Model, & Fluid and Gas Volumes Blue Crest began its development drilling with the spud of the H-16 well on November 29, 2016 from the Hansen Drilling Pad. The H-16 well was drilled as an extended reach well with an 18 - stage propped hydraulic fracture stimulation. The well began its flowback on May 19, 2017 and had an initial rate of 330 BOPD. A second well, H-14, was completed with a 12 -stage propped hydraulic fracture. The flowback began on November 17, 2017 with an initial production of approximately 1100 bbls/day. Beginning in May 2018 BlueCrest drilled the H-12 well as an extended reach multilateral "fishbone" well with 7 laterals extended from 150' above the presumed oil -water contact to the top of the reservoir. Upon completion, the well began its flowback on July 26, 2018 with an initial rate of approximately 900 bbls/day and 6.OMM scfpd of gas. With the positive results from the H-12 well, the decision was made to reconfigure H-16 into an 8 -leg multilateral. Well H -16A was Reservoir & Development Description Page 25 of 36 I I AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Application of ) BlueCrest Energy to Establish Pool Rules ) for the Hansen Undefined Oil Pool, ) Cosmopolitan Unit. ) Docket number: CO 19-014 PUBLIC HEARING October 10, 2019 10:00 o'clock a.m. BEFORE: Jeremy Price, Chair Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile(dgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahileCgci.net Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Seamount 03 3 Testimony by Andrew Buchanan 08 4 Testimony by Peter Jensen 32 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahileCgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 3 1 P R O C E E D I N G S 2 (On record - 10:00 a.m.) 3 COMMISSIONER SEAMOUNT: I'd like to call this 4 hearing to order. The date is October 10th, 2019. 5 We're located at -- the time is 10:02. We're located 6 at 333 West Seventh Avenue, Anchorage, Alaska. That's 7 the office of the Alaska Oil and Gas Conservation 8 Commission which we will call AOGCC from now on 9 throughout this hearing. I'd like to introduce the 10 bench. To my far right is Commissioner Jessie 11 Chmielowski, our engineering Commissioner. Our new 12 Commissioner and Chair is Jeremy Price and I believe 13 this is his first hearing so I'm doing this for him, 14 normally he'd be doing it and he's our public member. 15 And I'm Dan Seamount, I'm the geologic member. 16 This hearing is regarding docket number CO 19- 17 014, Hansen Oil Pool, Cosmopolitan Unit. That's a 18 continuation of public hearing for pool rules. 19 We'll give a little background to start. 20 Actually there's quite a bit of background compared to 21 other hearings, but I'll try to be as brief as 22 possible. The AOGCC on its own motion noticed a 23 hearing to establish pool rules for the Hansen Oil 24 Pool, Cosmopolitan Unit. On June 7th, 2019, the AOGCC 25 received from B1ueCrest Alaska Operating, LLC, 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., And. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10,1012019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 4 1 spacing exception formal applications regarding the 2 Hansen H-10 well and its fishbone lateral well branches 3 which are unique and creative. If B1ueCrest's request 4 would result in a total of 63 spacing exception orders 5 having been issued to BlueCrest for the Hansen wells. 6 BlueCrest has never sought pool rules for the 7 hydrocarbon accumulation within the Cosmopolitan Unit 8 which is informally referred to by AOGCC and BlueCrest 9 as the Hansen Undefined Pool. 10 The first hearing commenced on August 13th, 11 2019 and was continued due to the operator not serving 12 notice to the Bureau of Ocean Energy Management, 13 henceforth we'll call it BOEM. On August 21st, 2019 14 AOGCC requested BlueCrest refile their application and 15 provide service notice to BOEM and the record was 16 closed. A number of questions were asked from the 17 bench and BlueCrest was allowed 10 days to answer the 18 questions. The answers to the questions were included 19 in the refiled application. On August 15th, 2019 20 BlueCrest provided proof that the application had been 21 sent to BOEM via certified mail. On August 30th, 2019 22 BlueCrest refiled the application for pool rules. On 23 September 25th, 2019 AOGCC received public comments 24 from a member of the public dated September 23rd, 2019 25 and that will be incorporated into the record. On Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileCdgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 5 1 1 October 2nd, 2019 BOEM notified the AOGCC by letter 2 that it had no objection to the proposed rules. This 3 brings us to today where we will hear from B1ueCrest on 4 their proposed pool rules application. 5 Computer Matrix will be recording the 6 proceedings. You can get a copy of the transcript from 7 Computer Matrix Reporting. 8 I think that's all about the history of these 9 proceedings. This is our third hearing on this. And 10 I'm looking at the sign in sheet for those wanting to 11 testify and it looks like we have two people from 12 BlueCrest and nobody else. 13 Is there anybody else that wants to testify 14 today? 15 MR. JENSEN: (Indiscernible - away from 16 microphone)..... 17 COMMISSIONER SEAMOUNT: And you are? 18 MR. JENSEN: I'm Peter Jensen. 19 COMMISSIONER SEAMOUNT: Peter Jensen. Okay. 20 So you'd like to testify. 21 MR. JENSEN: (Indiscernible - away from 22 microphone)..... 23 COMMISSIONER SEAMOUNT: Well, you're welcome to 24 testify if you want to, if you have concerns and all. 25 We've got -- we've got your letter on the record and Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(wgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 6 1 we've looked at it. And we will be considering your 2 concerns where we have jurisdiction. 3 MR. JENSEN: (Indiscernible - away from 4 microphone)..... 5 COMMISSIONER SEAMOUNT: Okay. Thank you. So 6 you're not going to testify? 7 MR. JENSEN: If I could have three to five 8 minutes to make a point. 9 COMMISSIONER SEAMOUNT: Okay. Peter -- that 10 was Peter Jensen and he will be making comments. 11 All right. So it appears that BlueCrest and 12 Peter Jensen intend to testify. The Commissioners will 13 ask questions during testimony. We'll probably take a 14 number of recesses to consult with Staff to determine 15 whether additional information or clarifying questions 16 are necessary. If a member of the audience has a 17 question that he or she feels should be asked please 18 submit the question in writing to Jody Colombie who is 19 in the background raising her hand. There she is, 20 Jody. Okay. She'll provide the question to the 21 Commissioners and if we feel that asking the question 22 will assist us in making our determinations we will ask 23 it. 24 For those testifying please keep in mind that 25 you must speak into the microphone so that those in the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile(ugci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 7 1 audience and the court reporter can hear your 2 testimony. We have two microphones, they both need to 3 be turned on with the green -- green light on bright, 4 not dull, but bright. Also please remember to 5 reference your slides so that someone reading the 6 public record can follow along. For example refer to 7 the slides by their numbers if they're numbered and 8 their titles if not numbered. And if you submitted 9 written testimony you can refer to that and whatever it 10 is titled. 11 And I forget what yours was titled, Mr. Jensen, 12 but we'll get to that when you testify. 13 Okay. Here's a few ground rules on what is 14 allowed relative to testimony. First all testimony 15 must be relevant to the purposes of the hearing that I 16 outlined a few minutes ago and to the statutory 17 authority of the AOGCC. And most of the authority of 18 the AOGCC has to do with underground operations, well 19 operations and reservoir development. Anyone desiring 20 to testify may do so, but if the testimony drifts off 21 subject we will limit the testimony. Additionally 22 testimony may not take the form of cross examination. 23 As I said before the Commissioners will be asking the 24 questions and if you have a question submit it to Ms. 25 Colombie. And finally testimony that is disrespectful Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Arch. AK 99501 Fax: 907-243-1473 Email: sahileCgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 1 or inappropriate will not be tolerated. 2 Commissioners, do you have anything to add 3 before we start? 4 COMMISSIONER CHMIELOWSKI: No, thank you. 5 CHAIR PRICE: Nothing from me. 6 COMMISSIONER SEAMOUNT: Okay. I will now swear 7 in the witnesses. So let's start with BlueCrest. We 8 have Andrew Buchanan and Amitabh? 9 MR. GARG: (Indiscernible - away from 10 microphone)..... 11 COMMISSIONER SEAMOUNT: You're not testifying. 12 Okay. 13 So would you please raise your right hand. Are 14 you giving sworn testimony? 15 MR. BUCHANAN: Yes. 16 (Oath administered) 17 MR. BUCHANAN: I do. 18 ANDREW BUCHANAN 19 called as a witness on behalf of BlueCrest Energy, 20 testified as follows on: 21 DIRECT EXAMINATION 22 COMMISSIONER SEAMOUNT: Please state your name, 23 who you represent, whether you want to be an expert 24 witness, what the subject is or what you want to be an 25 expert witness in, then give your qualifications before Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Anch. AK 99501 Fax: 907-243-1473 Email: sahileLgci.net AOGCC 1 proceeding. 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 9 2 MR. BUCHANAN: I'm Andrew Buchanan, I am vice - 3 president of BlueCrest Alaska. I am giving testimony, 4 I'm going to present our prospect and give an overview 5 of the requested pool rules. And I will testify for 6 any questions that you may have. I do have a couple of 7 others in the room who I may consult with if need be. 8 COMMISSIONER SEAMOUNT: Okay. Mr. Buchanan, do 9 you want to be considered as an expert witness? 10 MR. BUCHANAN: Yes. I am a geologist. 11 COMMISSIONER SEAMOUNT: Okay. 12 COMMISSIONER CHMIELOWSKI: Can you state your 13 qualifications for us, please. 14 MR. BUCHANAN: I'm -- I've been a geologist for 15 a number of years. I have a degree from the University 16 of Saskatchewan. 17 COMMISSIONER SEAMOUNT: And what is your work 18 experience? 19 MR. BUCHANAN: I have worked through operations 20 as a well site consultant, a geological consultant in 21 many different capacities, operations geologist for ENI 22 as well as BlueCrest Energy and ConocoPhillips. And 23 currently I'm vice-president of the Alaska operations. 24 COMMISSIONER SEAMOUNT: Do any of the other 25 Commissioners have questions or objections? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Anch. AK 99501 Fax: 907-243-1473 Email sahile@ygci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 10 1 COMMISSIONER CHMIELOWSKI: No questions. 2 CHAIR PRICE: No. 3 COMMISSIONER SEAMOUNT: Okay. Mr. Buchanan, 4 you are designated as an expert witness in petroleum 5 geology. 6 MR. BUCHANAN: Thank you. 7 COMMISSIONER SEAMOUNT: Let's see, I had one 8 thing to ask. Let's see, you've -- BlueCrest submitted 9 a new application -- new applications, two copies, one 10 containing confidential information and one that was 11 public on August 30th. Except for the addition or 12 deletion of the confidential information on the public, 13 are they both the same basically? 14 MR. BUCHANAN: Yes. 15 COMMISSIONER SEAMOUNT: Okay. But I shouldn't 16 say basically. Are they both the same? 17 MR. BUCHANAN: They are the same with the 18 exception of the confidential material. 19 COMMISSIONER SEAMOUNT: Okay. Please proceed. 20 MR. BUCHANAN: Before we get started I do want 21 to point out there was a -- an error on the cover 22 letter attached to the application. Within the 23 application I removed the request for rule number 6 and 24 I did not remove it off the cover letter. So rule 25 number 6 on the cover letter is no longer in the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Arch. AK 99501 Fax: 907-243-1473 Email: sahile(a;gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 11 1 application and the subsequent numbering of the rules 2 in the cover letter are incorrect. 3 COMMISSIONER CHMIELOWSKI: So to be clear, was 4 that rule 6, wellbore surveys? 5 MR. BUCHANAN: Correct. 6 COMMISSIONER CHMIELOWSKI: Okay. 7 COMMISSIONER SEAMOUNT: Okay. That's X'd out 8 then, right? 9 MR. BUCHANAN: Correct. 10 COMMISSIONER SEAMOUNT: Okay. Okay. Gotcha. 11 MR. BUCHANAN: So good morning, Commissioners. 12 I am really just -- my intention is to give a very 13 brief overview of the project, where we are, what we 14 have learned from the reservoir so far and outline what 15 our rule requests are as well as what -- something 16 about our future plans. And I would then like to just 17 open it up to questions. I would like to keep my 18 presentation very brief. Okay? 19 COMMISSIONER SEAMOUNT: Sounds good. 20 MR. BUCHANAN: So the Cosmopolitan Unit is an 21 offshore development north of Anchor Point, Alaska in 22 the Cook Inlet Region. 23 COMMISSIONER SEAMOUNT: And which slide is 24 that? 25 MR. BUCHANAN: That -- oh, sorry. The Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(Tgci.net AOGCC 10./10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 12 1 Cosmopolitan Unit is the second slide. 2 COMMISSIONER SEAMOUNT: Okay. 3 MR. BUCHANAN: Slide number 3. Cosmopolitan 4 Unit Area 2019. The Cosmopolitan Unit is 100 percent 5 owned and operated by BlueCrest Energy. The unit 6 comprises four state leases with 13,314 acres of 7 offshore acreage. We have -- to date there have been 8 11 wells drilled with the addition of 20 sidetracks. 9 We have done a reasonable job of delineating the 10 reservoir at this point. 11 The Cosmopolitan Field History. The initial 12 discovery was in 1967 with two wells drilled by 13 Penzoil. The first well, the Starichkof State Unit 1 14 -- oh, this is the slide Cosmopolitan Field History. 15 The first drill was -- the first well was drilled off 16 structure, the Starichkof State Unit number 1 was 17 drilled off structure. They drilled a second well, the 18 Starichkof State number 1 on the flank of the structure 19 which encountered an oil zone. And at that time there 20 was no further work done on the reservoir. 21 ConocoPhillips took over the field and in 2017 22 they -- 2001 they drilled the Hansen 1, Hansen number 1 23 well which was a slant well drilled from shore through 24 the reservoir which intersected the Starichkof and 25 Hemlock formations, both of which confirmed oil. They Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileCagd.net AO -GCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 13 1 flow tested the well at rates up to a thousand barrels 2 per day. They subsequently sidetracked that well and 3 drilled the Hansen lA which was a short, lateral, 4 horizontal well through the Starichkof -- I mean, 5 through the Hemlock zone of the Cosmopolitan field and 6 also encountered oil at rates up to a thousand barrels 7 a day. 8 ConocoPhillips released that -- sold that 9 acreage to Pioneer Resources and Pioneer went in and 10 abandoned the lower portion of the well and drilled 11 another horizontal through the upper portion of the 12 reservoir intersecting the Hemlock and drilled out of 13 the top of the structure. They did initially produce 14 oil with rates up to 350 barrels a day. They then went 15 in and did a dynamic diversion hydraulic stimulation on 16 the well and it continued to produce. At that point 17 Pioneer discontinued developing the reservoir. 18 3D seismic was shot by Pioneer also in 2015 19 which has been reprocessed multiple times and with 20 varying degrees of success. The seismic quality is 21 poor with a gas cloud over the top of the reservoir 22 which interferes with any interpretation over the core 23 part of the reservoir. 24 In 2013 the Cosmopolitan State well was drilled 25 which discovered stacked gasses on top of the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 14 1 reservoir. It was drilled much closer to the crest of 2 the structure and encountered gas zones above the 3 Starichkof/Hemlock reservoir as well as drilled through 4 the reservoir and tested oil within the reservoir. And 5 it encountered over 700 foot of net pay and also gave 6 us another data point to tie into our seismic volume. 7 Geologic Summary. Is a northeast/southwest 8 trending double plunging anticlinal structure. It has 9 now been supported by our wellbores and the well tops 10 of the wells being drilled that tie into our seismic to 11 overcome the issues with the gas cloud over the 12 structure. The target is the Eocene -Oligocene Hemlock 13 formation and the Lower Tyonek formation. The seal is 14 a shale rich member of the Tyonek formation immediately 15 overlying the Starichkof reservoir is approximately a 16 40 foot thick shale with a coal overlying it and is the 17 marker for the zone that we term the Starichkof. It is 18 a braided fluvial depositional setting conglomeratic 19 sands, silts, clays and coals. The coals are less 20 predominate within the reservoir itself, but they still 21 do exist. And the one thing we have noticed from our 22 drilling is that there is compartmentalization within 23 this reservoir. 24 Cosmopolitan State number 1 Type Log. Just 25 showing the -- really what I wanted to emphasize with Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Anch. AK 99501 Fax: 907-243-1473 Email: sahile(agci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 15 1 this slide is to show the compartmentalization of the 2 zones within the -- within the Starichkof and Hemlock 3 unit. 4 Development History. So when BlueCrest took 5 over operatorship we have drilled four wells and 6 redrilled one well. So the H16 was drilled as a single 7 lateral across the reservoir which we hydraulically 8 stimulated. The results were not as expected. We then 9 upgraded -- we chose to drill the H14 well which was 10 1,600 foot distal and we also drilled as a single 11 lateral horizontal well through the reservoir and we 12 upgraded the equipment to hydraulically stimulate from 13 10,000 to 15,000K. We did stimulate that reservoir as 14 well and it did produce. We were able to put more 15 profit into the reservoir, but again the results were 16 not as expected. 17 COMMISSIONER SEAMOUNT: Mr. Buchanan, could you 18 go back to the type log for a second? 19 MR. BUCHANAN: Yes, sir. 20 COMMISSIONER SEAMOUNT: I don't see any tops on 21 there. Where would the tops of the pool be? 22 MR. BUCHANAN: Okay. So the red line on the 23 left is the top of the Starichkof..... 24 COMMISSIONER SEAMOUNT: Okay. 25 MR. BUCHANAN: .....and it goes down to the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax 907-243-1473 Email: sahile(qgdnet AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 16 1 green line at the bottom which is the top of the 2 Hemlock. On the right side is the top of the Hemlock 3 and it goes down and the blue line is the presumed 4 oil/water contact and the West Forelands is at the base 5 of the log. 6 COMMISSIONER SEAMOUNT: Okay. Okay. So I see 7 the Hemlock on there. Okay. Okay. So your pool goes 8 from the top of the Starichkof to the base of the 9 Hemlock? 10 MR. BUCHANAN: That is correct. 11 COMMISSIONER SEAMOUNT: Okay. Sorry about 12 that. 13 MR. BUCHANAN: That's okay. So in May, 2018 we 14 spudded the H12 well which was a seven leg multilateral 15 well drilling from approximately 150 foot above the 16 oil/water contact up to the top of the structure, to 17 the shale at the top of the -- above the Starichkof. 18 It was deemed a success and we reentered the -- we 19 abandoned the lower portion of the H16 well, we milled 20 a window in a casing and drilled a eight leg 21 multilateral out of the H16 well with the same well -- 22 more or less the same well design as the H12. We chose 23 not to drill all the way up to the top of the structure 24 in this well as it was close to the existing Hansen 25 1AL1 as well as we wanted to see if we could stay out Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahileCgci.net AOGCC 10, 1012019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 17 1 of the gas zones that were encountered in the H12 well. 2 Again it was deemed a success and then we decided to 3 move to the south and drill the H04 well which is 4 another eight leg multilateral well. We drilled it 5 four well spacings away from the existing wells to try 6 to help delineate the reservoir to the south and again 7 see if we could gain some more information on the 8 reservoir. 9 COMMISSIONER CHMIELOWSKI: Is B1ueCrest 10 planning to redrill H14? 11 MR. BUCHANAN: Not at this point. This is the 12 Starichkof Structure showing the faults within the 13 reservoir, the thrust fault to the northwest and there 14 is one significant fault within the reservoir itself 15 and then there's a couple of faults down to the south 16 which will not impact our development. 17 COMMISSIONER CHMIELOWSKI: Is the oil/water 18 contact in the Starichkof in this map? 19 MR. BUCHANAN: In this map it is. 20 COMMISSIONER CHMIELOWSKI: Okay. 21 MR. BUCHANAN: So this is the..... 22 COMMISSIONER CHMIELOWSKI: The outer most 23 boundary? 24 MR. BUCHANAN: The outer most boundary. The 25 Hemlock Structure Map with Faults and Oil/Water Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(agci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 18 1 Contact. Again this is the oil/water contact and it is 2 the intersection of the oil/water contact with the 3 Hemlock formation and the bounding fault. 4 The Facility Layout. We have a 47 acre pad 5 onshore, on the bluff of the Cook Inlet. And this is 6 the layout of the pad with well row in the top left, 7 the facilities in the central part of the base and -- 8 central part of the pad and our housing facility, 9 living quarters and stuff down to the bottom right and 10 the flare sack to the top right. 11 COMMISSIONER SEAMOUNT: How many slots do you 12 have for wells? 13 MR. BUCHANAN: We have 20 slots. 14 COMMISSIONER SEAMOUNT: Okay. And how many 15 slots have you used so far? 16 MR. BUCHANAN: Four. Well, five, the Hansen 17 1AL1 is in line with that. 18 COMMISSIONER SEAMOUNT: Okay. Thanks. 19 MR. BUCHANAN: Production History. Initial 20 production started with the Hansen 1AL1 and then in 21 March we turned on the H16 well. In the bottom part of 22 the water influx is the flowback of the hydraulic 23 stimulation fluid and the water drops off. Then in 24 September, 117, we drilled the H14 well and again 25 flowback of the water fluids. So at that point we no Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileCagci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 19 1 longer stimulated -- hydraulically stimulate our wells 2 and you'll notice that the water continues to decline. 3 As production -- as we have aggressively added wells 4 our production continues to increase. 5 So this is the Hansen 12 -- the H12 and the 6 Hansen 1AL1. I'm showing a vertical section of these 7 two wells and a planned section showing more or less 8 where they are. The H12 well is the one in the center 9 and then the Hansen 1AL1 is the one farthest to the 10 south. But I wanted to show this slide to show that we 11 drilled the H12 all the way up to the top of the 12 structure, intersecting similar zones that we 13 encountered in the Hansen 1AL1. And the key point to 14 this slide is the fact that we did not encounter free 15 gas in the Hansen 1AL1 that we encountered in the H12 16 well. So again this is to support the 17 compartmentalization of our reservoir. If this was 18 truly a gas cap we should have encountered gas in the 19 Hansen 1AL1. 20 The H16 and the Hansen 1AL1. This is our 21 second fishbone well that we drilled and this is the 22 one where we intentionally kept the lateral shorter to 23 keep them out of at that point what we presumed was a 24 gas cap. Again it was not encountered. And these two 25 wells are proximal, they're about 100 foot plan view, Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(iggci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 20 1 they're about 100 foot apart. So we did want to keep 2 the H16A below the reservoir which was being drained by 3 the Hansen 1AL1. 4 COMMISSIONER SEAMOUNT: Do you believe that 5 faulting is causing the noncommunication between the 6 wells? 7 MR. BUCHANAN: No, we have seen very little 8 evidence of any fracturing or faulting within our 9 reservoir, within the zones that we have drilled so I 10 do not believe so. 11 COMMISSIONER SEAMOUNT: Is it discontinuity? 12 MR. BUCHANAN: There is definitely 13 discontinuity, braided channels and everything else. 14 There's definitely discontinuity going on with the 15 reservoir. And we have seen it drilling the H16 well 16 and where, you know, the sands that we are following 17 just disappear, turn into shale, big shale section and 18 just -- there has been evidence of discontinuity. 19 Reservoir Modeling. We have updated the 20 reservoir model to incorporate all of the wells we have 21 drilled to date. History matching is ongoing and 22 nearing completion. So we need to continue the 23 reservoir modeling, we're at the point now where we are 24 starting to do some stimulations, to take a look at 25 forward forecasting and this -- get the model -- we're Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileCdgunet AOGCC 10/10,2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 21 1 still gc'ing the dynamic model. In the appraisal stage 2 so we're still trying to determine the magnitude of the 3 reservoirs, we're looking at depletion options, 4 potential sources and key volumes and key risks. We 5 are planning on doing some lab studies to look at 6 options for pressure maintenance within this reservoir. 7 we have concerns about introducing water into this 8 reservoir with the nature of the clays and the volume 9 of the clays that we do have in the reservoir, 10 especially within the sand zones, within our permeable 11 zones. So at this point we have not developed a 12 cohesive plan on what we are going to do for pressure 13 maintenance and pressure support, but we are evaluating 14 our options and will be doing so for the next couple of 15 years. So 2020 will be the appraisal, 2021 we'll start 16 developing and we hopefully will have a management -- a 17 reservoir management strategy and looking at options 18 for pressure maintenance as well as -- you know, 19 defining our cost and looking at a scope and see what 20 we can economically do within this reservoir. And, you 21 know, it will continue on, as we continue to drill 22 wells we will continue to investigate as well as 23 implement our recovery plan. 24 So some of the development options that we are 25 looking at are highlighted in green. You know, right Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileft6net AOGCC 10,10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 22 1 now we -- is primary depletion at this point. We are 2 looking at options for secondary recovery. Again we do 3 not believe that water is a particularly viable option 4 for this reservoir, but we are looking -- predominantly 5 at this moment we are looking at the potential of 6 injecting gas into our reservoir for pressure 7 maintenance. In the future we will be looking at some 8 tertiary recovery options including solvents and 9 miscible gas injection. So just we still need to 10 evaluate, do some testing to see what is going to be 11 the most effective in our reservoir. 12 COMMISSIONER SEAMOUNT: So when would you think 13 that you'd try reinjecting the produced gas? 14 MR. BUCHANAN: At this point we still have some 15 work to do to determine the feasibility and see how -- 16 what the effect is going to be. We have some lab 17 testing to do. We would need to upgrade our facility 18 as well, we currently do not have the compression 19 required to inject gas into our reservoir so it is not 20 going to be within the next year, it will be subsequent 21 to that. We are also looking to -- we would also need 22 to find additional sources of gas. 23 COMMISSIONER CHMIELOWSKI: Is the 24 incompatibility with water one of the reasons the multi 25 stage fracks weren't successful or is there something Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahileCugci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 23 1 else? 2 MR. BUCHANAN: We do believe that was part of 3 it. There -- there was also an emulsion issue and 4 difficult to determine whether that was entirely from 5 the water or whether it was also the nature of the 6 clays. So there were multiple issues with hydraulic 7 stimulations and water was certainly one of them as 8 well as the fact that we could not get any vertical 9 height growth out of them. So we were not able to 10 connect up the reservoir, we were not able to open up 11 the sands within the reservoir in the way that we had 12 envisioned. 13 The Next Producing Well -- Next Production Well 14 we are looking at, and this is where the 25 spacing 15 exceptions did come from, is that we are looking to 16 drill one intermediate -- one surface and intermediate 17 hole section and then drill three trident laterals off 18 of that single wellbore. So more or less tripling the 19 number of penetrations within our reservoir through a 20 single intermediate to increase the production and 21 increase the economic benefit from drilling these 22 wells. And again these ones are planned in the central 23 part of our reservoir and we'll drill from 24 approximately 150 foot above our oil/water contact to 25 the top of the reservoir. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 24 1 And so Future Development. The red is the next 2 planned well, again proximal to the existing wells that 3 we already have and the green lines are the wells that 4 are underground, the yellow wells are -- well -- 5 reservoir locations where we plan to drill future wells 6 at this point. There is still more reservoir to the 7 north and to the south and economic feasibility will 8 determine how far north and south we do develop this 9 reservoir. 10 So I just like to touch on the pool rules that 11 we have requested. Rule number 1, initial pool -- 12 initial field and pool rule area just define the pool 13 -- the pool area. Pool definition, define the pool. 14 Rule number 3, oil well spacing. And this is 15 probably one of the key rules that we are requesting to 16 waive any restrictions on wellbore spacing as 17 multilateral wells they are in conflict with each other 18 according to the regulations. We have no intentions of 19 drilling within 500 foot of a lease line so that is not 20 part of the exception we are looking for. 21 Rule number 4, administrative approval. Rule 22 number 5, the GOR waiver. The reservoir has a high 23 bubble point. From our reservoir samples the bubble 24 point is between 2,275 and 2,485 and when we induce 25 drawdown on this reservoir we are producing this Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileCgci.net AOGCC 10,10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 25 1 reservoir below bubble point and we don't believe that, 2 you know, pressure maintenance will get the pressure up 3 sufficient to -- for us to be able to produce below 4 bubble point. Compartmentalization also complicates 5 this issue with compartmentalized gas as well as the 6 individual compartments. We do not see any sort of 7 pressure maintenance being able to connect all of the 8 individual compartments within the reservoir. So the 9 pressure maintenance will provide pressure for the 10 sands in which it does encounter, but they are going to 11 be -- the sands are going to be bypassed on the 12 pressure support. And also, you know, the free gas 13 that has been encountered in the H12 well is, you know, 14 going to have us produce gas above our GOR limits. And 15 it's difficult to define what gas is coming from our 16 solution gas added to oil and what is coming from the 17 actual gas cap. We have no definitive way of 18 determining that. 19 Rule 6, the BOP test. We would like to request 20 a three week BOP cycle while drilling the production 21 section of our well. But of course with the exception 22 if we do change the pipe design or BHA design that will 23 automatically include a BOP test. With the reservoir 24 is normally pressure sands we have seen no anomalous 25 pressures within our reservoir. And with the length of Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax 907-243-1473 Email: sahileCygci.net AOGCC 10/10,2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 26 1 our wells, 15,000 feet to our intermediate casing point 2 and our extended drilling within a production zone, we 3 have been -- it takes us a long time to get in and out 4 of this hole. It takes two days to get in and because 5 of the design of our wells we are needing to back ream 6 out so it'll take two to three days which leaves us 7 only nine to 10 days of drilling which is -- which our 8 bits and our BHAs are designed to drill longer than 9 that. So we are -- we have had instances where we have 10 needed to come out of the hole prematurely to meet our 11 BOP operations while we still had functional bits and 12 tools within the hole. 13 We've also had two instances where we've needed 14 to start coming out of the hole for our BOP tests and 15 needed to -- before we could finish our last lateral 16 and because we had to pull back to a minimum of our 17 casing shoe and hang off the test BOPS it became 18 noneconomic to drill that last lateral. It was not 19 worth the value of that reservoir -- of that portion of 20 the reservoir was not deemed valuable enough to go back 21 in and spend the rig -- the money on the rig and 22 equipment to continue to drill that which means that we 23 do not drill that, we lose that production out of that 24 last lateral which will, you know, ultimately produce 25 waste for the reservoir. We're just not going to be Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(o gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 27 1 able to tap into that oil. 2 As well as the additional BOP testing 3 requirements we've had two wells now if we had gone to 4 a three week BOP cycle we could have had two less BOP 5 tests which also means that we would have that much 6 less pipe handling and that -- you know, less risk for 7 operations from a health, safety and environmental 8 standpoint as well. 9 COMMISSIONER CHMIELOWSKI: So to clarify is 10 your request related to the fishbone laterals only, not 11 to the parent well? 12 MR. BUCHANAN: We do not seek this in the 13 surface or intermediate sections, just in the 14 production section itself. 15 Rule number 7. Casing design for all future 16 wells will be as defined in the application. We just 17 seek this rule to ease the administrative burden on the 18 AOGCC and ourselves. 19 Well completions will be -- all future wells 20 will be completed as designed -- as defined in the 21 application. Again this is just to ease administrative 22 burden. If we plan to deviate from these things then 23 obviously we would -- we would add that component into 24 the application, but we're just seeking to put on the 25 record this is our -- these are our designs and they Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Anch. AK 99501 Fax: 907-243-1473 Email sahile@gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 2 8 1 1 will not vary moving forward. 2 Cement bond logs. WE request that the 3 requirement for cement bond logs be waived for the nine 4 and five-eighths inch casings. Future -- there will be 5 no more -- we will no longer by hydraulically 6 stimulating any of our wells and we do not have an 7 over -pressured reservoir. The high angle of our wells 8 and the length of our intermediate casing requires 9 logging tools for the nine and five-eighths casings be 10 deployed by tractor, coil or drill pipe. We cannot -- 11 gravity will not get us down far enough to log the 12 interval. 13 Rule 10, BOP rating. All wells will utilize 14 the 5,000 psi BOP equipment owned by B1ueCrest and 15 identified in this application. Again just to ease the 16 administrative burden on the AOGCC and BlueCrest. 17 Rule 11, casing pressure test. Both the 13 and 18 three -eights and nine and five-eighths intermediate 19 casing will be pressure tested to 3,500 psi as defined 20 in the application with the procedure in the 21 application. 22 Rule 12, safety valves. All wells will be 23 equipped with both a surface safety valve and a 24 subsurface safety valve and tested and -- and testing 25 will be as defined in the application. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 291 1 Rule 13, diverter waiver. We request a 2 diverter waiver for all future wells drills from the 3 Hansen pad. Future surface casing points lie within 4 sections previously drilled and we have not identified 5 any gas under -- we have not encountered any free gas 6 or encountered any abnormal pressure in any of the 7 surface casings that we have drilled to date. 8 Mud weights. Again because I want to -- just 9 to ease administrative burden the mud weight -- the 10 drilling fluids programs will be as outlined in the 11 application. We have no plans to change the mud 12 program at this point and if we do so we would 13 obviously make the appropriate change in the 14 application. 15 Rule 15, well monitoring. Future wells will be 16 equipped with instrumentation and monitored in real 17 time as defined in this application with the list of 18 sensors as defined in the application. 19 Description of the rig. All wells drilled from 20 the Hansen pad will utilize the B1ueCrest number 1 rig 21 owned by B1ueCrest as described in the application. 22 Again just to east the administrative burden on AOGCC 23 and BlueCrest. 24 Rule 17, leak off test, formation integrity 25 test. All wells drilled from the Hansen pad will Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@vgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 30 1 utilize the leak off test, formation integrity test 2 procedures defined in the application. 3 That is the end of my presentation. 4 COMMISSIONER SEAMOUNT: Okay. So you've got a 5 bunch off backup slides in here..... 6 MR. BUCHANAN: I do. 7 COMMISSIONER SEAMOUNT: .....and I'm wondering 8 if you consider some of them -- oh, okay. You've given 9 some reasons why you want confidentiality on some 10 things. 11 MR. BUCHANAN: Yes, I'd be happy to read that 12 into the record. 13 COMMISSIONER SEAMOUNT: Pardon me. 14 MR. BUCHANAN: I would be happy to read that 15 into the record. 16 COMMISSIONER SEAMOUNT: Well, should we take a 17 recess first or -- okay. Let's take a 15 minute 18 recess. I've -- we've looked at your confidential 19 version and some of it we might be -- we might have 20 some problems with. And so we may have to do -- have 21 some discussion on them. 22 MR. BUCHANAN: Certainly. 23 COMMISSIONER SEAMOUNT: So..... 24 COMMISSIONER CHMIELOWSKI: Commissioner 25 Seamount, do you want to do the final testimony first Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileC gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 31 1 or would you like to do that at the end? 2 COMMISSIONER SEAMOUNT: Why don't we do the 3 final testimony. Mr. Jensen, come on up. And then if 4 you don't feel like spending time listening to 5 arguments for or against confidentiality you're free to 6 leave. I don't think we'd need to call him back for 7 questions, would we? Well, let's hear what you have to 8 say. 9 MR. JENSEN: That you, Commissioner Seamount. 10 Thank you for the slide, it's helpful. 11 There's a cabin with a green roof on the lower 12 right side of that..... 13 COMMISSIONER CHMIELOWSKI: I'm sorry to 14 interrupt you, could you please state your name for the 15 record. 16 MR. JENSEN: My name is Peter Jensen, J -E -N -S- 17 E -N. 18 COMMISSIONER CHMIELOWSKI: Thank you. 19 COMMISSIONER SEAMOUNT: And would you..... 20 MR. JENSEN: I'm an adjoining landowner. 21 COMMISSIONER SEAMOUNT: And would you like to 22 give sworn testimony? That just -- that gives you more 23 credibility, both you don't have to give sworn 24 testimony. 25 MR. JENSEN: I'm willing to, sure. I'll give Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahileLgci.net AOGCC 1 sworn testimony. 1010%2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 32 2 COMMISSIONER SEAMOUNT: Okay. Please raise you 3 right hand. 4 (Oath administered) 5 MR. JENSEN: Yes. 6 PETER JENSEN 7 called as a witness on his own behalf, testified as 8 follows on: 9 DIRECT EXAMINATION 10 COMMISSIONER SEAMOUNT: And please state your 11 name and proceed. 12 MR. JENSEN: Peter A. Jensen. I own 11 lots 13 adjacent to the Cosmopolitan production pad. I have a 14 cabin next to the pad, you can see it in that picture 15 there. It's next to the ocean with the green roof. I 16 own 11 lots, about 26 to 30 acres depending on 17 including the platted roads on the subdivision. 18 On the AOGCC website there's a mission 19 statement that says that you try to look at people's 20 rights, you try to conserve, you consider safety and 21 you consider water aquifers. I wrote a letter before I 22 read the mission statement and I think that what I'm 23 asking for is included in your mission statement. 24 The production facilities are very noisy. And 25 they produce a lot of light. I'm asking for reasonable Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(a,gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECRESTENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 33 1 limits on how much noise and how much light is 2 produced. And they're based on what the EPA recommends 3 as far as hearing loss and annoyance in terms of noise. 4 There aren't good guidelines as far as light, what's 5 reasonable and what's not reasonable. 6 Another problem is flaring. It seems to occur 7 frequently. I was at my cabin yesterday and there was 8 flaring going on less than 36 hours ago. And that gets 9 to the conservation part of this. There's a lot of 10 BTUs going up in the air without being used and I'm 11 wondering why. There's an Enstar pipeline that runs 12 along the Sterling Highway. And if gas can be put in 13 that pipeline I'm wondering why it can't be put back 14 into the ground to maintain pressures. Either way it 15 seems like those two alternatives would be better than 16 burning the gas in the air which is very noisy, very 17 light and a big waste. 18 Before a permit was issued for B1ueCrest and 19 before a permit was issued for Pioneer Natural 20 Resources I had concerns about testing and flaring 21 based on appraisal wells done by ConocoPhillips. And I 22 was told that flaring wouldn't be occurring unless 23 there was an emergency. That essentially there would 24 be a flare stack, but it would be like a pilot light on 25 a gas stove, it would be there, but not used. That's Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileGgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 7 emergencies. 8 And then finally I and my neighbors get our 9 drinking water from water aquifers next to the 10 production pad. There were baseline samples taken of 11 water wells in the neighborhood, but nothing's been 12 done since then. As you can see there's a lot of 13 industrial activity going on and I'm wondering how much 14 drips down through the gravel into the water aquifer 15 where we get our water and I'm wondering if it would be 16 reasonable for surveyance of water wells to make sure 17 that what we're drinking isn't contaminated. 18 Thank you for your attention. 19 COMMISSIONER SEAMOUNT: Okay. Mr. Jensen, we 20 appreciate your comments and we welcome you to call our 21 Staff to discuss these issues. Some of them we don't 22 have jurisdiction over, some we may have jurisdiction, 23 we may be able to do something about that. But what 24 you ought to do is call our Staff and if we don't have 25 jurisdiction they can probably lead you to the right Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(2gci.net Page 34 1 not been the case and so I'm wondering what's the deal. 2 Are there a lot of emergencies or why is this gas being 3 wasted. 4 So if I was told honestly that flaring would 5 only occur during emergencies, I'm wondering what the 6 safety procedures are that's resulting in so many 7 emergencies. 8 And then finally I and my neighbors get our 9 drinking water from water aquifers next to the 10 production pad. There were baseline samples taken of 11 water wells in the neighborhood, but nothing's been 12 done since then. As you can see there's a lot of 13 industrial activity going on and I'm wondering how much 14 drips down through the gravel into the water aquifer 15 where we get our water and I'm wondering if it would be 16 reasonable for surveyance of water wells to make sure 17 that what we're drinking isn't contaminated. 18 Thank you for your attention. 19 COMMISSIONER SEAMOUNT: Okay. Mr. Jensen, we 20 appreciate your comments and we welcome you to call our 21 Staff to discuss these issues. Some of them we don't 22 have jurisdiction over, some we may have jurisdiction, 23 we may be able to do something about that. But what 24 you ought to do is call our Staff and if we don't have 25 jurisdiction they can probably lead you to the right Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(2gci.net AOGCC I0,10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 35 1 people that do have jurisdiction. Like I said in the 2 beginning most of our authority has to do with 3 underground operations. But you've touched on a few 4 things that we may be able to deal with and consider 5 that. 6 MR. JENSEN: It's not easy for someone like me 7 to navigate the different websites and the different 8 divisions within oil and gas in Alaska. When there's 9 been a public hearing announced I participated, I sent 10 written comments. I've talked to different people, 11 everyone's very polite, everyone's seemingly very 12 helpful, but nothing seems to happen. 13 COMMISSIONER SEAMOUNT: Right. That's why I 14 say you should give us a call and talk to our Staff and 15 they can outline a few steps that you may be able to 16 take for your concerns that we don't have jurisdiction 17 over. And they can probably tell you where we may have 18 jurisdiction. 19 MR. JENSEN: That sounds very reasonable and 20 this has been doing on for 20 years, I've been giving 21 comments for 20 years..... 22 COMMISSIONER SEAMOUNT: Okay. 23 MR. JENSEN: .....but I'll continue. 24 COMMISSIONER SEAMOUNT: Have you talked to us 25 over 20 years? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Arch. AK 99501 Fax: 907-243-1473 Email: sahile(a,gci.net AOGCC 10/10,2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 36 1 MR. JENSEN: I have. I have correspondence at 2 home dating -- I mean, dating back to before 2001 when 3 ConocoPhillips did their first appraisal well. 4 COMMISSIONER SEAMOUNT: Okay. I would 5 recommend you make a call and have some more 6 discussion. And I think the lead on this would be 7 David Roby; is that correct? Okay. He's a very 8 helpful person and he'll do some -- we'll do some 9 discussing, probably I'll find out what can be legally 10 done and what can't be legally done. Or the people 11 that he leads you to can tell you that. 12 MR. JENSEN: Thanks. I mean, I'll finish here 13 with one final comment. I'm not against development, 14 but I'm in -- I am for fairness, conservation, safety 15 and clean water aquifers for drinking. And I think 16 that's consistent with your mission statement. 17 COMMISSIONER SEAMOUNT: That's correct, yes. 18 Do the other Commissioners have any comments or 19 questions? 20 COMMISSIONER CHMIELOWSKI: No, thank you. 21 CHAIR PRICE: I just want to thank you for 22 coming in, I appreciate you sharing your concerns with 23 us. 24 MR. JENSEN: You're welcome. Thank you for 25 your time. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileGgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 37 1 COMMISSIONER SEAMOUNT: Okay. Thank you, Mr. 2 Jensen. 3 At this point we will take -- how many minutes 4 do we need? 5 COMMISSIONER CHMIELOWSKI: We'll just take 15. 6 COMMISSIONER SEAMOUNT: We'll try for 15 7 minutes. So right now the clock on the wall says what, 8 10:53. We'll try to be back by 12:10 unless is there 9 any reason..... 10 COMMISSIONER CHMIELOWSKI: 11:10. 11 COMMISSIONER SEAMOUNT: 11:10. Okay. Okay. 12 And if we go too long then we'll just have to break for 13 lunch probably. 14 Okay. We're breaking at 10:53. 15 (Off record - 10:53 a.m.) 16 (On record - 11:18 a.m.) 17 COMMISSIONER SEAMOUNT: Okay. We're back in 18 the hearing, the time is 11:18. 19 We have a few questions. I'm not sure we need 20 to go into a confidential session, but we will have 21 some questions about why things are confidential or 22 whether we even need them or not for the decision. 23 So do any of the Commissioners have questions? 24 CHAIR PRICE: I wanted to raise the issue that 25 the public witness raised, Mr. Buchanan. Can you give Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(u;gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 38 1 -- shed a little more light on the justification for 2 frequent flaring and kind of why that's occurring if it 3 is occurring? 4 MR. BUCHANAN: Well, I guess, you know, it is 5 what we call frequent flaring and, yes, there are -- we 6 do divert to the flare and it's predominantly as with 7 the case yesterday and as the previous one, mostly is 8 around the (indiscernible) shutdown. So we had to tie 9 in a new piece of equipment yesterday which required us 10 to turn off our power generation which means we could 11 not power our facilities. I mean, to -- I mean, it's a 12 safety issue, the gas has to go somewhere when we -- 13 and it was a temporary, I mean, it was down for a half 14 hour or 45 minutes while we had to tie in the new piece 15 of equipment to our electrical system. And so when it 16 shuts down the gas has to divert to a flare. So that 17 was -- and so the previous one was the same thing, it 18 was a planned facility shutdown in which we had to 19 evacuate all the lines because we were doing piping 20 work and everything else and tying in a new piece of 21 equipment. And so it required we have to divert -- we 22 have to evacuate all the gas lines and it goes to the 23 flare at that point. 24 CHAIR PRICE: I understand some of this can be 25 -- you may not have an expectation of what may come, Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileCgci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 391 1 but do you have some sense as to how frequent it's 2 going to occur in the future? 3 MR. BUCHANAN: In the future we're hoping with 4 the facility upgrades it will decrease, but, you know, 5 on average it's been -- well, I'm willing to say on 6 average, it's been one to four episodes a month over 7 the last -- so far this year. And so with the upgrades 8 that we have in place we think that facility will be 9 more stable and these shutdowns and bypasses will be 10 less frequent. 23 to like 11 CHAIR PRICE: Okay. any way? 12 COMMISSIONER SEAMOUNT: So it's only one to 13 four times a month..... 14 MR. BUCHANAN: Correct. 15 COMMISSIONER SEAMOUNT: .....for -- what's the 16 average duration for flaring? 17 MR. BUCHANAN: It varies. It's -- you know, if 18 we have a compressor go down and it's switching over to 19 the other compressor and restarting up it could be 15 20 minutes or it could be a couple of hours. 21 COMMISSIONER SEAMOUNT: Hmmm. Okay. 22 COMMISSIONER CHMIELOWSKI: Is any of it related 23 to like production slugging and will drilling more 24 wells assist that in any way? 25 MR. BUCHANAN: No. Computer Matrix. LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(&gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 40 1 COMMISSIONER CHMIELOWSKI: No. 2 MR. BUCHANAN: It's not really the slugging. 3 COMMISSIONER SEAMOUNT: Okay. Like I said I 4 don't think we need to go in camera, but I would like 5 to discuss some of the confidential version. And we 6 don't have to go to detail. I -- we -- I just had a 7 few questions and comments. 8 I'll go to page -- I guess the first one is 9 page 9 of 36. It is a TVD cross section through 10 Cosmopolitan field. That is an interpretive analyses 11 and I don't think it's necessary for the pool 12 rules..... 13 MR. BUCHANAN: Okay. 14 COMMISSIONER SEAMOUNT: .....for a decision. 15 So we can keep that confidential unless our assistant 16 attorney general disagrees. 17 (No comments) 18 COMMISSIONER SEAMOUNT: Okay. Then we go to 19 page 10 of 36. And it talks about porosity and 20 permeability. And those are reservoir properties which 21 generally we put into pool rules so I'm not sure it's 22 necessary. However we have a problem -- well, first of 23 all there are reservoir quality or petrophysical 24 information that is public now and one is the Buccaneer 25 Cosmopolitan number 1. And it's got Tyonek, Starichkof Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste, 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10.102019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 41 1 and Hemlock porosities and permeabilities, saturations. 2 So a lot of that stuff you want to keep confidential -- 3 maybe you've made interpretations based on other 4 information, but people still can get that information 5 on two wells and the other one is a Penzoil Starichkof 6 State Unit number 1 drilled in 1967. And it has 7 Starichkof and Hemlock, a lot of measured porosities, 8 permeabilities, net confining stress, densities. 9 Does that change your position on whether you 10 want to keep what you have sent confidential or not? 11 MR. BUCHANAN: I mean, the permeability and 12 porosity I would like to confer with my management. I 13 think that we..... 14 COMMISSIONER SEAMOUNT: Okay. We'll give you 15 10 days on that. 16 MR. BUCHANAN: Okay. 17 COMMISSIONER SEAMOUNT: However, we come to the 18 third problematic part of this and that is there is a 19 form and it's 10-428 and it requires once a year on all 20 producing well, it's annual reservoir properties report 21 and it has a number of columns. It has pool name, 22 porosity, permeability, water saturation, oil 23 viscosity, original pressure viscosity, all this stuff 24 you want to keep confidential, but it's required by 20 25 AAC 25.270(e). And it appears that you're out of Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile( gci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 42 1 compliance on that. This is a public document and 2 you've been producing for a number of years. Would you 3 like a copy of this? 4 MR. BUCHANAN: I'm -- I -- we just recently 5 seen a copy of this and that was prior for me..... 6 COMMISSIONER SEAMOUNT: Okay. So..... 7 MR. BUCHANAN: .....getting this position and 8 we will..... 9 COMMISSIONER SEAMOUNT: .....that kind of 10 makes..... 11 MR. BUCHANAN: .....rectify that. 12 COMMISSIONER SEAMOUNT: .....that kind of makes 13 this..... 14 MR. BUCHANAN: I agree. 15 COMMISSIONER SEAMOUNT: .....it makes all this 16 moot about what you want to keep confidential. 17 MR. BUCHANAN: I agree and I would just like to 18 confer with may management team before..... 19 COMMISSIONER SEAMOUNT: Okay. So we'll give 20 you 10 days to update that information. 21 We come to page 30 of 36, reservoir pressure 22 base case. I think that that regulatory form covers 23 that. 24 On page 31 of 36 there are four different 25 curves that show liquid viscosity against -- what's UG Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sal le(agci.net AOGCC 10/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 43 1 -- oh, liquid viscosity versus -- liquid viscosity CP 2 versus DLE liquid, but viscosity CP -- does the 3 engineer understand that? 4 COMMISSIONER CHMIELOWSKI: (Indiscernible)..... 5 MR. BUCHANAN: Viscosity change with pressure. 6 COMMISSIONER SEAMOUNT: I don't think we're 7 going to worry about that. I don't think we need that. 8 I think the form covers that. 9 And let's see, was there anything else. That's 10 it. So I don't think we have much of a problem here 11 other than a potential notice of violation if you don't 12 get that form filled out. 13 Any..... 14 MR. BUCHANAN: I would like to see that happen 15 as well. 16 COMMISSIONER SEAMOUNT: You would, huh? So 17 anymore comments from the other Commissioners? 18 COMMISSIONER CHMIELOWSKI: No further comments. 19 COMMISSIONER SEAMOUNT: Does the Staff have any 20 problems with us adjourning? 21 (No comments) 22 COMMISSIONER SEAMOUNT: Do I hear a motion to 23 adjourn? 24 COMMISSIONER CHMIELOWSKI: I so move. 25 COMMISSIONER SEAMOUNT: Do I hear a second? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahileCgci.net AOGCC 10/ 10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 4 4 1 1 CHAIR PRICE: Yes. 2 COMMISSIONER SEAMOUNT: And I agree so it's 3 unanimous. This hearing is adjourned and we would 4 thank you very much for your attendance, Mr. Buchanan, 5 and the rest of the B1ueCrest people and all the other 6 attendees. 7 MR. BUCHANAN: Thank you very much 8 Commissioners. 9 COMMISSIONER SEAMOUNT: We're done. 10 (Hearing adjourned - 10:42 a.m.) 11 (END OF PROCEEDINGS) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile(a�gci.net AOGCC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10,/10/2019 ITMO: APPLICATION OF BLUECREST ENERGY TO ESTABLISH POOL RULES Docket No. CO 19-014 Page 451 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 45 are a true, accurate, and complete transcript of proceedings in Docket number: CO 19-014, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(agci.net NAME jo STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: CO -19-014 October 10, 2019 AFFILIATION TESTIFYING YES OR NO -�� Vim l� X356 Al No 11 WAWA� Nollidmollul frilgi 6lueGreSt Rig 91 7; All MW ' V Back-Up Slides H-04 Production Section BOP TEST ... I...., r I 26 -Jan -19 44 31 15420 8.5 0 10.65 Test BOPE / MU BHA 5 for production section 0 27 -Jan -19 45 32 15420 8.5 0 10.2 RIH /test csgto 3500 OK/clean out shoe track 1 28_1an _19 29 -Jan -19 30 -Jan -19 46 47 48 33 34 35 - 15440 [ 16828 _16_445 85 _ 8.5 8.5 20 1388 767 93 9A 9.4 Swap mud systems / drill 20'/ run FITto 13.5 ppg EMW Drill 8-1/2" section to LOl / TD in LOl lateral / BROOH Trench& timedrill to L02 lateral 2 3 4 Drill LOl Lat Drill L02 Lat 1.01 _J. -19 49 36 I 18_230 -t 85 1775 9.5 TO in L021ateraI / BROOH 5 Drill L02 Lat� _L02 L02 1 -Feb -19 50 37 17957 8.5 1102 9.5 BROOH L02/Trench-ST-Drill L03 6 Drill L03 Lat L03 2 -Feb -19 51 38 19017 8.5 1060 9.5 TD in L03 lateral / BROOH / spot LCM pill 7 Drill L03 Lat LOB 3 -Feb -19 52 39 19017 8.5 0 9.5 BROOH to Inspect / chane BHA / chk Super Sliders 8 TF New Bit 1 4 -Feb -19 S3 40 19017 8.5 0 9.5 BROOH to ins ect change BHA / chk Super Sliders 9 TF New Bit 2 5 -Feb -19 54 41 19017 8.5 0 9.5 Inspect BHA / LDDP / remove worn out Super Sliders 1.0 TF New Bit 3 6 -Feb -19 55 42 19017 8.5 0 9.5 Manage drill pipe / test ROPE 11 TF New Bit 4 7 -Feb -19 56 43 19017 8.5 0 9.5 PU DP / MU BHA J RIH to drill L04 1 RIH 5 8 -Feb -19 57 44 17690 8.5 0 9.55 RIH / Circ and condition mud / Prep to drill L04 2 RIH /Circ 6 9 -Feb -19 58 45 17865 8.5 175 9.3 _ Trench & timedrill to L04 lateral / reduce MW 3 Drill L04 Lat L04 10 -Feb -19 59 46 19635 8.5 1770 9.2 Drill L04 lateral / seepage mud losses ongoing 4 Drill L04 Lat L04 11 -Feb -19 60 47 20094 8.5 459 9.2 Finish & Backream L04 / Trench & drill L05 lateral 5 Drill L05 Lat LOS 12 -Feb -19 61 48 19888 8.5 1338 9.25 Drill L05 lateral 6 Drill LOS Lat LOS 13 -Feb -19 62 49 20735 8.5 847 9.3 Drill LOS lateral / BROOH in LOS 7 Drill LOS Lat LOS 14 -Feb -19 63 so 19513 8.5 313 9.2 Drill L06 lateral 8 Drill L06 Lat L06 15 -Feb -19 64 51 20855 8.5 1342 9.2 Drill L06 lateral 9 Drill L06 Lat L06 16 -Feb -19 65 52 21358 8.5 503 9.2 Finish L06 / BROOH / Trench & ST to L07 30 Drill L07 Lat L07 17 -Feb -19 66 53 20872 8.5 812 9.2 Drill L07 lateral 11 Drill L07 Lat L07 18 -Feb -29 67 54 21830 8.5 958 9.2 Drill L07 lateral 12 Drill L07 Lat L07 J194b-19J68J55219J66B.S 203 9.2 Trench & ST to L08/ Drill L08 lateral partially / to drive issues / BROOH 13 Drill L08 Lat LOB TD of LOS Mother Bore is 20867' MD / BROOH to shoe 14 Hang Off &Test BOPE - 14 days / BROOH 15 NITIAL BOP TEST AFTER SETTING 9-5/8" "ripping / DP Mgmt "ripping/ DP Mgmt 'ripping/ DP Mgmt ;ECOND BOP TEST MID-FI$HRONE SECTION 'ripping/ DP Mgmt 'ripping / DP Mgmt 'HIRD HANG -OFF AND TEST ROPE END OF SECTION IF A 21 DAY TEST WAS DAYS FROM IF HANG ALLOWED INITIAL OFFAND AFTER BOP TEST TEST AFTER FIT HANGING OFF 0 1 2 0 0 3 1 1 4 2 2 5 3 3 6 4 4 7 5 5 8 6 6 9 7 7 10 8 8 11 9 9 12 10 10 13 11 11 14 12 12 15 13 13 16 14 14 17 15 15 18 16 16 19 17 17 20 18 18 21 19 19 22 20 20 23 21 21 24 22 0 25 23 1 2 Energy JA r% -- - -I - - - -L- = - - - A d ■ 5 -Jun_ -18 35 29 16281 12.25 0 6 -Jun -18 36 30 16281 1 8.5 0 7Aun-18 37 31 16301 8.5 20 8 -Jun -18 38 32 16301 8.5 0 9 -Jun -18 39. 8.8 BOP Test; RIHW/drilling BHA 6 16301 8.5 0_ 10 -Jun -18 40 �.�3'3 -� 34 16544 1 8.5 _ _ -243 11 -Jun -18 41 35 18426 8.5 1882 12 -Jun -18 42 36 18447 8.5 21 13 -Jun -18 43 37 18239 8.5 1166 14 -Jun -18 44 38 19501 8.5 1262 15 -Jun -18 45 39 19501 8.5 0 16 -Jun -18 46 4D 18239 8.5 439 17 -Jun -18 47 41 f 18239 8.5 0 18 -Jun -18 48 42 18239 8.5 0 19 -Jun -18 49 43 18239 8.5 0 20 -Jun -18 5o 44 18239 8.5 0 21 -Jun -18 51 45 18652 8.5 414 22 -Jun -18 52 46 20290 8.5 1638 23 -Jun -18 53 47 18597 8.5 12 24-Jur�-18 54 48 20424 8.5 1827 25 -tun -18 55 49 20968 8.5 544 26-1un-18 56 50 20968 8.5 0 27 -Jun -18 57 51 20968 8.5 0 28 -Jun -18 58 52 20968 8.5 0 29 -Jun -18 S9 53 20968 8.5 0 30 -Jun -18 60 54 20970 8.5 2 1 -Jul -18 61 55 20970 8.5 0 2 -Jul -18 62 56 20239 8.5 849 3 -Jul -18 63 57 21585 1346 4 -Jul -18 64 58 20895 _8.5 8.5 710 5-1ul-18 65 59 20895 8.5 0 6 -Jul -18 66 60 22990 8.5 2095 7 -Jul -18 67 61 20953 8.5 3 8 -Jul -18 68 62 21875 8.5 922 9 -Jul -18 69 63 22789 8.5 914 10 -Jul -18 70 64 22789 8.5 0 11 -Jul -18 71 65 22789 8.5 0 12 -Jul -18 72 66 22789 8.5 0 13 -Jul -18 73 67 22789 8.5 0 14 -Jul -18 74 68 22789 8.5 0 •v« Energy IF A21 DAY TEST WAS ALLOWED AFTER BOP W loperation TEST .. DAYCOUNT HANGING OFF 10.5 Test BOPE INITIAL BOP TEST AFTER SETTING 9-5/8" 0 10.5 MU clean out BHA 5/RIH 1 8.8 Test csg / FIT 12.5 ppg T 2 8.8 TOH for drilling BHA 6 3 8.8 BOP Test; RIHW/drilling BHA 6 SECOND BOP TEST AFTER DRILL OUT AND MUD SWAP 0 0 8.8 Drill production section BHA 6 1 1 9.0 Drill production L01 BHA 6 2 2 9.0 LVT in LO1/Start L02 3 3 9.0 Drill production L02 BHA 6 4 4 9.0 Drill production L02 BHA 6 / LVT -��..5 5 9.1 LVT in L02 / Start L03 - _ 6 6 9.0 7 7 9.0 Spot 10.2 mud cap / POOH BHA 6 8 8 10.2 TOH / DP Mgmt / Test BOPE / BHA 7 THIRD BOP TEST MID -FISHBONE SECTION 0 9 10.2 DP Mgmt / MU BHA 7 1 10 9.2 RIH BHA 7 2 11 9.2 RIH/Ream down / Drill L03BHA 7 3 12 9.2 Drill L03 BHA 7/Backream L03 4 13 9.0 LVT in L03 / ST for L04 BHA 7 5 14 9.0 Drill L04 BHA 7 6 15 9.0 7 16 10.2 SOOH / cap well / DP Mgmt 8 17 10.2 DP Mgmt 9 18 10.2 DP Mgmt 10 19 10.4 DP Mgmt / Test BOPE / MU BHA 8 FOURTH BOP TEST MID -FISHBONE SECTION 0 20 10.2 DP Mgmt / RIH BHA 8 1 21 9.1 Ream into L04 20 9.0 LVT in L04 / Drill L05 BHA 8 3 1 9.2 Drill LOS / Backream L05 4 2 9.1 5 3 9.0 Fix MPD Bearing / RIH BHA 8 6 4 9.0 Drill L06 BHA 8 75 9.0 Finish L06 / BROOH / LVT in L06 / Start L07 8 6 9.0 Drill L07 BHA 8 9 7 9.1 Finish L07 / BROOH to Shoe 10 8 9.1 BROOH to Shoe BHA 8 11 9 9.7 BROOH to shoe / hi vis pill / mud cap / TOH 12 10 10.1 TOH LDDP 13 11 10.1 TOH LOOP / LD BHA 8 / TEST BOPE F)FTH BOP TEST END OF SECTION 0 12 10.1 MU 5-1/2" slotted liner/ RIH 1. 13 Energy H=16A Production Section H16A Actual Drilling Recap Start Report Hole Daily I Date No. DFS De th Size Footage MW Operation �[ 21 -Oct -18 26 6 14582 8.s 9.2 POOH w/ mill BHA / Test BOP/ makeup motor BHA / RIH 22 -Oct -18 27 7 14622 8.5 40 9.2 RIH w/ motor BHA / drill new hole to 14622' MD 23 -Oct -18 28 8 14735 8.5 113 9.2 Drill new 8-1/2" hole to 14735' MD / pump out for RSS BHA 24 -Oct -18 29 9 14735 8.5 0 9.2 POOH w/ motor BHA / Test BOP / RIH w/ RSS BHA 25 -Oct -18 30 10 14795 8.5 60 9.2 RI H thru window and to TD / drill new hole to 14795' MD 26 -Oct -18 31 11 16336 8.5 1541 9.2 Drill w/ RSS BHA / hi torque add lubes / drill to 16336' MD 27 -Oct -18 32 12 17440 8.5 1104 9.2 Drill L01 lateral to 17440' MD / backream & trench for L02 28 -Oct -18 33 13 18214 8.5 774 9.2 Trench / sidetrack / drill L02 lateral to 18214' MD 29 -Oct -18 34 14 18390 8.5 176 9.2 Stuck pipe / backream / drill L02 to 18390' MD / trench to L03 30 -Oct -18 35 15 18592 8.5 202 9.2 Sidetrack & drill L03 to 18592' MD 31 -Oct -18 36 16 19268 8.5 676 9.2 Drill L03 to TD of 19268' MD. Backream and trench for L04 1 -Nov -18 37 17 18122 8.5 -1146 9.2 Drill L04 lateral to 18122' MD 2 -Nov -I8 38 18 20020 8.5 1898 9.2 Finish drilling L04 lateral to TO of 20020' MD and backream same 3 -Nov -18 39 19 20020 8.5 0 9.2 Backream to casing window / CBU / prep to TOH for new BHA 4 -Nov -18 40 20 20020 8.5 0 9.2 Backream to inside casing/ pump out of hole 5 -Nov -18 41 21 20020 8.5 0 9.2 Pump out / LDDP / DP management / inspect BHA 6 -Nov -18 42 22 20020 8.5 0 9.2 LD BHA O5 / Manage & LD DP for hard banding 7 -Nov -18 43 23 20020 8.5 0 9.2 BOP Test / manage DP / hardband / PU BHA 06 8 -Nov -18 44 24 20020 8.5 0 9.2 BOP Test / PU RSS BHA 06 / RIH on 5-1/2" DP 9 -Nov -18 45 25 20020 8.5 0 9.2 RIH BHA 06 managing DP, 5-1/2" x 4-1/2" x 5-1/2" design 30 -Nov -18 46 26 20020 8.5 0 9.2 RIH / circ well clean / RIH to window depth 11 -Nov -18 47 27 18860 8.5 -1160 9.2 RIH / search for L05 trench / drill ahead in L05 w/ RSS BHA 06 12 -Nov -18 48 28 20743 8.5 1883 9.2 Drill L05 lateral to TD of 20743' MD / C&C / BROOH for L06 13 -Nov -18 49 29 19881 8.5 -862 9.2 BR & trench for L06 lateral / drill L06 to 19881' MD 14 -Nov -18 50 30 20350 8.5 469 9.2 Drill & TD L06 / BROOH to trench for L07 15 -Nov -18 51 31 20925 8.5 575 9.2 Trench for L07 / Drill ahead to L07 KOP at 20925' MD 16 -Nov -18 52 32 21860 8.5 935 9.2 Drill L07 Lateral 17 -Nov -18 53 33 21850 8.5 -10 9.2 TO L07 Lateral; BROOH; Trench / Time Drill L08; Drill L08 Lateral 18 -Nov -18 54 34 22310 8.5 460 9.2 TD L08 Lateral; BROOH 19 -Nov -18 55 35 22310 8.5 0 9.2 BROOH; Check not re-entering L02 - OK 2D -Nov -18 56 36 22310 8.5 0 9.2 BROOH and into 9-5/8" shoe / pump out 21 -Nov -18 57 37 22310 8.5 0 9.2 Pump out and BROOH; LD BHA LD BHA / Test BOP / MU 4-1/2" Liner Run 4-1/2" Liner INITIAL BOP TEST AFTER SETTING 9-5/8" SECOND BOP TEST AFTER DRILL OUT AND PU RSS THIRD BOP TEST MID -FISHBONE SECTION FOURTH BOP TEST END OF SECTION BOP TEST IDAYCOUNTI 10 11 12 13 14 7 8 9 10 11 12 13 14 I F A 21 DAY TEST WAS ALLOWED AFTER HANGING OFF 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 0 1 2 3 4 Energy Proposed Rules • Rule 6: BOP test • Request three-week test duration while drilling the 3-1/2" reservoir section; unless drill pipe and BHA changes are made mid-section which would require a new test to be performed; i.e. add 5" and/or 4-1/2" ®P to string • the reservoir section at Cosmopolitan involves normally pressured sands • the length of the wells require 2 day to get to bottom and back reaming out requires 2-3 days leaving only 9-10 days to drill • BlueCrest has two instances where the last lateral was abandoned due to BOP test requirements resulting in lost production and promoting waste • Additional BOP tests require additional pipe handling increasing HSE risk �Ivw Proposed Rules • Rule 7: Surface Casing • The casing design for all future wells will be as defined in this application • Rule to ease administrative burden on the AOGCC and BlueCrest • Rule 8: Well Completion • Future well completions will be as defined in this application • Rule to ease administrative burden on the AOGCC and BlueCrest • Rule 9: Cement Bond Logs • Request that requirements for bond logs be waived for the 9-5/8" casing string • Future wells will not be hydraulically stimulated • High angle requires tools to be deployed by tractor, coil or drill pipe Energy Proposed Rules 0 Rule 10: BOP Rating • All wells will utilize the 5,000 psi BOP equipment owned by BlueCrest Identified in this application - .- .:•, • • - • • r • Rule 11: Casing Pressure Test Both 13-3/8" surface and 9-5/8" intermediate casings will be pressure tested t,,I., 3,500 psi as defined in this application • Rule to ease administrative burden on the AOGCC and BlueCrest 6 Rule 12: Safety Valves • All wells will be equipped with both Surface Safety Valves (SSV'S) and Subsurface Safety Valves (SSSV'S) and tested as defined in this application • Rule to ease administrative burden on the AOGCC and BlueCrest Proposed Rules • Rule 13: Diverter Waiver Request a diverter waiver for all future wells drilled from the Hansen Pad ° Future Surface casing points lie within sections previously drilled No abnormal pressure has been identified • o gas accumulation have been identified in the surface sections of existing wells • Rule to ease administrative burden on the AOGCC and BlueCrest S Rule 14: Mud Weights Mud weights will always exceed formation pressure. Mud program on future wells will be as defined in this application •Rule to ease administrative burden on the AOGCC and BlueCrest Energy Proposed Rules • Rule 15: Well Monitoring • Future wells will be equipped with instrumentation and monitored in real time as defined in this application • Rule to ease administrative burden on the AOGCC and BlueCrest • Rule 16: Description of Rig • All wells drilled from the Hansen Pad will utilize BlueCrest Rig #1 as described in this application • Rule to ease administrative burden on the AOGCC and BlueCrest • Rule 17: LOT/ FIT ® All wells drilled from the Hansen Pad will utilize the LOT / FIT procedures defined in this application Energy GOR from Samples Separator Recombined 403 Bottom Hole 327 18976 332 18961 367 17095 374 17080 Bottom Hole 290 5831 Why should reservoir data be Confidential OOIP, ultimate recovery and recovery factors are results of internal calculations and measurements As a small independent company, we are continuing to look for new investment partners and making those internal projections public could unfairly impede that process. Request for Waiver of 14 Day BOP Test Y 20 AAC 25.035 (e) 10 (A) requires BOPE to be tested every 14 days BlueCrest requests the proposed Pool Rules include a requirement for 21 -day BOPE tests in the 8-1/2" reservoir section; unless drill pipe and BHA changes are made mid-section which would require a new test to be performed; i.e. add 5" and/or 4-1/2" DP to string Reference Journal of Petroluem Technology, Aug 2019: Re -write of BSEE Well Control Rule in U.S. OCS requiring 21 -day BOPE tests Note that the U.K., Netherlands, Denmark and Brazil all allow 21 -day tests as per this article The reservoir section at Cosmopolitan involves normally pressured sands Due to the horizontal and inverted well designs in this section, back -reaming and pumping out of the hole are standard practice all the way back to approx 3500', which minimizes the potential of swabbing in kicks A 21 -day test duration would be of great benefit since, on the three fishbone mutilaterals drilled so far, (H12, H1 6A and H04) we have documented that the entire section could potentially be drilled within the 21 day period ERD drilling is becoming much more common in Alaska, and extending the test period to 21 days in the reservoir sections presumably would benefit the greater Alaskan oil industry in addition to BlueCrest �iIueCrest Enera Berg, 4 b 1 i' .. - -, �w: � . .. �� Cosmopolitan Unit Area - 2019 Cosmopolitan Project Area i STAR ST U1 • 100% owned and operated by BlueCrest • Unit comprises 4 state leases 2759 acres ` - 2560 acres • 13,314 acres offshore AD�3s,90 • 11 wells drilled to dataSM • Plus 20 sidetracks He - R15 ch ..135 S11SES. Y.'iS F,, .SEC JB, T]S.R15W,SM i i - , >Ec � us R,.vr sM ADL78 ZCG 4 RS•.v J., S'M SEC 7, T15. R15N,SM 3959 acres AD1391 4036 acres .. ,. .. ••� T49: R15W SM SEC IZ. 4S,M W, SM SEC 1 i Cosmopolitan Unit Development 0 2000 4000 0000 soon 10000RUs DM 12=/2019 c—P+Y BlueCrest Energy 1:65000 PETMM Energy Cosmopolitan Field History Starichkof State #1 (1967) Original Discovery Well 1 Oil Zone E -Logs, Mud Log, DST Cosmopolitan State #1 (2013) Discovery Well 4 New Off + 8 New Gas Zones E -Logs, Mud Log, DST Hansen #1A -L1 (2007) Lateral drill In Upper Starichkof only Produced 33,504 BO on test Avg. Rate 350 SOPO Currently Completed Awaiting Pacilities Hansen #1A (2003) Delineation Well Produced 14,851 80 on test Rates to 1000 BOPD Hemlock, Starichkof Oil Zones Hansen#1 (2001) Confirmation Well 1 New Oil Zone Hemlock, OWC, Star b - TN rApproximate areal extent of known productive reservoirs Starichkof State Unit#1 (1967) gDL891902 Dr/llod below 011 --Water Contact Cored Upper Tyonek and Star 8 / d�16 / g$e. ADL391903 / VI Cy' 9,sl9susa I � r ADL018790 8,969aares ' .ice- C . Onshore urface-Usj rO 4 Lease / ADL391904 38 acres/ I / p 4, 6W ACM& I 3-0 Seismic (2005) 40 square miles Coverage of all leases. Thorough structure definition on flanks, gas cloud on top of structure Energy Geologic Summary -Northeast-southwest-trending double plunging anticlinal structure -Supported by local 3-D seismic and 6 wellbores -Target Eocene -Oligocene Hemlock Formation and Lower Tyonek Formation -Seal is a shale -rich member of the Tyonek Formation immediately overlying the Starichkof -Braided fluvial depositional setting with conglomeratic sandstone -Comprised of interbedded conglomerate, sandstone, siltdtone, shale and occasional coal. -Compartmentalized OI X11101$1*]11vo1I1s-Iw:mmIVA6I:AWele NEE LRYY.Im.11111.911[111-- Development History.. Development History R15W, Stv1 H-16 November 2016 RI MVV. SM' ADI 384403, SEC T3S, 1544 -- Single Lateral — Hydraulic Stim. g y H12 SEC Z7. H-14 March 2017 H 'tan St 1 1 - Single Lateral — Hydraulic Stim. anse 12-L H1 -12-L H-12 May 2018 H18H1s -12-L 7 leg Multilateral Hi6 i2 -L H-16AOctober 2018 Hi -�. 8 Leg Multilateral Hi -L S we St 1 4 -LO _ H-04 December 2018 H -a4 -L St.' EC 33'! SM 8 Leg Multilateral H -04-L SEC 33. T, t 1 S 4,1 H -04 -LO H -04 -LO H -04 -LO M i 51A,, StO SEC 5. T4S, R1 5W. SM ADLi m SEC 4. T4S. R15W. SM SEC 3. T4S. R15W, SM SE -• SM S1 ADL39190 (-- Energy Starichkof Structure with Faults and OWC K ns. . ADL39190 Ic tL m m-. sr _ SEC Il n; 91YN. SM ucans.«WE, sM - SEC n, ns. R,wr. u \ � 1 SEC 19.73S. 0./)SEC M. I.,'1. T3 1 Y01 SEc SEC Y.'f1 gf lq n5. R1aW, 55' �F Aw owc aoLaeiso AOL384403 'SP (lff, )W, SFC Cosmopolitan Development scare Fred 1 doom C--pNim Prepa ldby.� Costa im b Junin 100 Date Surface name 2 010 9 2 01 9 STAHICHKOF WC m n5, SK SS T]S. Rt)W. SEC X. nS. «WY. Stl 1 / SEC V. M. 0.1N5, Stl Y01 4' uc s. ras. «sW. su ` �AD1.18'I SEC 1. us. 9,RY. so SEC S. TaS. «WI. SM T ` T*m SEC 14 "t «)W. m SEC i. US. «1W. SM A�C391 \ 5.9ffw >Jr CK�lf. «9w, SM SEC,t TAtRM.K i J/ SEC 44, 775, R,SW, SM SEC 13, Tay. «'AI, EII i SKKUS. RKY. SY i 0 2000 4000 6000 8000 10000ftUS 1:60000 0 lue st Energy Hemlock Structure with Faults and CWC AOL391 I" 1s. T.a, atsa. stl sec la. m,a+Wl. sr setons. Msw. s. s[c+s. ns. a1aw. sl • Sec u. n MaY.>~ ' TARST_U l HC », 136. MSW. SO Y076 SEC t0. nk // sec us.a � fsc sac... ns. assw.0 sEc +S, M. MtsT, sa ®A A l(� VVII / ADL39190 �I • ADOU40 r 5 sr 1. r s. M x.11 MSY1. su MM' SEC 31. TM M. SM �. s SEl. 11, 155. in f � � / 1 141. e0. > 0 st'. JS, n5. MSW, $EC x. T]5. Mla, Stl sEc n. ns,Mm.sr ' Cosmopolitan Devalo mant SceJeFm1d 1:60000 Cosmo ltm Pmparedby. Contovrinc aCUUlanan 100 DateSudeceneme 211062019 Hemlock 1 Y016srs.� .stl s, raS.Mxv. SH .ns. AD ft � SM •� ADL391 . i YC r�laSN ,m `\ e, TIL MSW. SN \ t5 Mp1Y. sy I 1 Yc u. Tlx M%Y. eY i I � , I SEC I. TIS, MSW. SH SEC0.T4S.Maa.Stl TISMSW SU SEC12,r45.1SWM sac T, ns. MaC+, stl atL sx. yl� ` - ADL391 v. ws• as,Msw. su sans us.MaY. sr s �sa, Tas, MSl1l. sx ' . YL U,LS MR'f.SY SK I0. TIS MAY. SM 0 2000 4000 6000 6000 10000ftUS 1:60000 La PE"M (lu sr Energy s;`' Drilling Rig r� Mud Plant s,a .�d Well Row Train "A" Oil Storage i LACT A /1 /. Waste Water Truck Loading Flare Future Expansion: Production Handling & Injection Production Control Room Living Facilities & Offices Security Gas Sales I., W�« Production History Hansen field Monthly Avg Oil Production iSo0 6 160C � 5 1400 m 120C 4 Z n a � o 0 1000 a 0 Soo 0 G �. 600 2 A i 3 S 400 L 200 Q � lufy-15 January -16 August -16 Marcn 17 Sevlemner-17 Apr$•18 October -18 May39 December -19 Hansen Field C70R & Water -Cut 16.000SO -GOR M Fcf(BO 14,000 7C ��Nlater•Cur percenr 12.O0O 16C 0 10,004 50 T JI J 8,000 40 U J 5 V 6.000 30 4.000 20 2,000 IC c o :a-uary-26 Aagust46 Marctr17 September -17 Aod-18 October -18 May -19 December -19 Energy H-12 and Hansen 1AL1 llueYst Energy oils piou Cosmopolitan OSS9 0 2508US �O 100 150 200 ON13.2019 Pfap-eby F -V .b.d... 9i;Coa 1:1678 llueYst Energy H -16A and Hansen 1AL1 Hansen 5000 5500 8000 6500 7000 "7500 8000 1 8500 8000 9500 10000 70500 11000 11500 • Pressure Data Does not indicate any communication between these wells Reservoir Modeling Currently updating Reservoir Model • History matching ongoing • 2019 — Conduct simulations to establish benchmark rates and reserves • Appraisal Stage — Magnitude of reserves, depletion options, potential sources and volumes, key risks • Lab studies and simulation studies • Waterflood — fluid types — effects on porosity and permeability • Miscible gas injection — determine composition for optimal recovery • Chemical EOR — Polymers — understand effect of polymer injection for improved mobility ratio of injected water • 2020 — Appraisal • Conduct further lab studies and simulations of short-listed secondary recovery and EOR • Identifying risk and uncertainty • 2021-2022 • Develop reservoir management strategy and range of potential performance • Refine costs, production downtime, effects of delayed injection • 2023-2025 • Execute development strategy • Establish strategy for acquiring data - well data, surveillance data • Identify subsurface uncertainties and risks and range of potential outcomes Energy Development ptions I Primary De Mol (FW*M- ► and ERD Wells) I Development Options I I Secondary Recovery I Tertiary Recovery (EOR) I ="-I Low Priority Not Feasible Waterflood-Aressuro Maintenance Pnxkaced Gas Ftood44vsaura Mak4munoa Losat Waterflood Emulsion Brightwater Chemical EOR Microbial Crestal CO2 Solvents bean Gau< to Thermal In-situ Combustion SAGO Alkaline Surfactant Surfactant Polymer Alkaline Polymer Alkaline Surfactant Polymer Development options are mainly dictated by reservoir geology (clays, compartmentalization), surface facilities limitations, economic feasibility of development. Next Production Well Tri -Multi Lateral Producer Future Development Wells Green Wells - Current Production Wells Red Wells — Next Planned Multilateral A" Future Development Wells Itan Development Map Cosmopolitan Unit Development aro Immig SU.C— E -w I ZOM 3000 4000 50OMS 1:]5000 Proposed Rules • Rule 1: Initial Field and Pool Rules Area • Define the Pool Area • Rule 2: Pool Definition • Define the Pool • Rule 3: Oil Well Spacing • Waive well to well spacing restrictions to reduce administrative burden and to allow multilateral wells • BlueCrest will not drill within 500' of a lease boundary • Rule 4: Administrative Approval • Acknowledge AOGCC's administrative approval Energy Proposed Rules • Rule 5: GOR Waiver • Reservoir has a high bubble point (2275-2484 psia) • Drawdown required to produce oil is below bubble point and produces above the GOR limits • Pressure maintenance will not effectively raise reservoir pressure above bubble point. • Compartmentalization will not allow for effective pressure maintenance • Compartmentalized free gas near top of reservoir is comingled with oil zones producing gas above oil GOR Enemy f[I] United States Department of the Interior BUREAU OF OCEAN ENERGY MANAGEMENT h 's Anchorage Alaska Office 3801 Centerpoint Drive, Suite 500 yggC" a Anchorage, Alaska 99503-5823 OCT 011019 Andrew Buchanan, Vice President - Alaska BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Dear Mr. Buchanan: The Bureau of Ocean Energy Management (BOEM) has reviewed BlueCrest Energy's August 30, 2019 request to the Alaska Oil and Gas Conservation Commission (AOGCC) to establish initial Field and Pool Rules for the Cosmopolitan Field, Hansen oil pool. Based on BOEM's review of B1ueCrest's proposed pool rules for the Cosmopolitan field, Hansen oil pool, BOEM is not currently seeking to petition AOGCC on any matter related to the impacts of BlueCrest's development on federal acreage. At the same time, BOEM does not currently maintain its own model of the federal acreage adjacent to the Cosmopolitan field, which would be necessary to put forth its own analysis of the reservoir dynamics of the area. BOEM reserves its right to petition AOGCC or seek other relief as necessary to protect its correlative rights if new information or analysis leads us to believe federal resources are impacted by development of the Cosmopolitan field. Sincerely, Patricia ram oise, Regional Supervisor, Leasing and Plans cc: Alaska Oil and Gas Conservation Commission Bureau of Safety and Environmental Enforcement E Peter A Jensen 7700 Port Orford Drive Anchorage, Alaska 99507 Alaska Oil and Gas Conservation Commission 333 West 7' Avenue Anchorage, Alaska 99501 September 23, 2019 Re: Docket Number: CO -19-014 Hansen Oil Pool Cosmopolitan Unit Public Hearing for Pool Rules Dear AOGCC Representatives, I hope to attend the October 10, 2019, meeting regarding initial Hansen Oil Pool rules. In case I'm unable to attend, and so that you have a chance to consider my concerns beforehand, here is what bothers me as a production pad adjoining landowner. This is the order of most bothersome to least bothersome: production pad noise, production pad lights, production pad gas flaring (extreme levels of noise and light), questionable safety, and possible water aquifer contamination. During the public comment periods before oil production began, I asked for measurable noise limits. My requests were based on my experiences during Cosmopolitan Unit appraisal well drilling and testing. DNR permit issuers were unwilling to set decibel limits, but DNR said it would require the producer to measure noise levels. On January 6, 2017, Beacon Occupational Health and Safety Services made a preannounced visit to the Cosmopolitan production pad and surrounding areas to measure noise levels. Since this visit was announced well in advance, it's reasonable to assume that pad noise during measurements was kept as low as possible. Measurements at my cabin porch were 67 dB(A). Noise levels at our shared property border were not included in the Beacon OHSS report. According to the Environmental Protection Agency, 70 dB(A) is the threshold below which there will not be measurable hearing loss. Likewise, levels below 55 decibels outdoors and 45 decibels indoors are the thresholds below which noise is not considered an annoyance. (https://archive.epa.gov/epa/aboutepa/epa-identifies- a noise-levels-affecting-health-and-welfare.html). Based on the measurements, if I sell my cabin, I will need to disclose that production pad noise is annoying. If I sell land closer to the production pad, and noise levels are above 70 dB(A), I will need to disclose that the noise is not only annoying, but it may permanently damage hearing. Why this is considered a reasonable requirement of a neighboring landowner has never officially been explained to me. My request is that pool rules address production pad noise levels in a meaningful way. How about limiting noise to less than 55 dB(A) at the production pad borders? That is, have a pool rule that limits noise to below what is considered annoying, as defined by the EPA. I also think that unannounced noise measurements should also be required periodically to verify compliance. Production pad lighting is intense. "Light trespass occurs when unwanted light enters one's property, for instance, by shining over a neighbor's fence." (https://en.wikipedia.org/wiki/Light_pollution). Production pad lighting illuminates the inside of my cabin unless I have blinds completely closed on the windows of my cabin facing the pad. I think that better light shielding could be used, that the height of light poles could be lowered, and that lights could be directed away from production pad borders. My request is that initial pool rules limit production pad lighting that leaves the pad. Natural gas flaring is extremely loud, bright, and frequent. During gas flaring, noise levels are significantly higher than baseline, higher to the point that I've had to wear ear plugs inside my cabin. Since production began, flaring has occurred at every time of the day and night, and it can last from hours to days. My request is that initial pool rules restrict gas flaring to emergencies. Prior to production, I was told that flaring would be limited to emergencies, and that flaring would occur rarely if ever. If it's claimed that flaring has only occurred during emergencies, then I think that production pad policies and procedures need to be revised, to be made safer. In other words, producers can't claim that frequent flaring only occurs during emergencies and at the same time claim that production facilities are safe. Claims of frequent emergencies and claims of safety are contradictory. The land that I own around my cabin is within a subdivision designed for single family homes and cabins. Currently my lots are vacant, except for the single lot on which my cabin is built, but that could change. Finally, I think that there needs to be ongoing surveillance of water aquifers around the production pad. It's possible that production pad activities have, or will, contaminate drinking water aquifers that production pad neighbors use. Unless there is periodic testing of well water, production pad contamination may not be detected. Tfia4 you, Peter Jensen pbl*.� Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Numbers: CO -19-014 Hansen Oil Pool, Cosmopolitan Unit Public Hearing for Pool Rules B1ueCrest Alaska Operating LLC (B1ueCrest), by application received August 30, 2019, requests the Alaska Oil and Gas Conservation Commission (AOGCC) establish initial pool rules for their proposed Hansen Oil Pool within the Cosmopolitan Unit. The AOGCC has scheduled a public hearing for October 10, 2019, at 10:00 a.m. at 333 West 7 1 Avenue, Anchorage, Alaska 99501. Written comments regarding this application may be submitted to the AOGCC, at 333 West 7 1 Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the October 10, 2019 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than October 5, 2019. Jessie L. Chmielowski Commissioner i STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER AO-20-002 FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O. AGENCY PHONE: 333 West 7th Avenue 9/4/2019 1(907) 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: (907) 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: `W LEGAL F DISPLAY 1� CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE CO-19-014 Initials of who prepared AO: Alaska Non -Taxable 92-600185 5UIINITT INfVbICE SHOWtNG:AriVERTISING ORDrLii N:O:; CRTI�IRii :A:FFttiAViT OF:: ::PUBLICA'I'Ib i' W:ITIi ATTACHTD COEY:O:F:: ':':AAVERTISItlEN7`TO::::::::::::::::::: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae 1 of I Total of All Pa-es $ REF Type Number Amount Date Comments I PVN VCO21795 2 Ao AO-20-002 3 4 FIN AMOUNT SY Act. Template PGM LGR Object FY DIST LIQ 1 20 A14100 3046 20 2 3 5 Purc i g N Title: Purchasing Authority's Signature Telephone Number 1. A O. # and receivin ag y name must appear on all invoices and documents relating to this purchase. 2. Tpe state is registered fo tax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for res e. DISTRIBUTIONi ::::::::::::::::::::....... Division FiscaUQriginal AO:::. ..........:::::::..::::::::::::::::::::::::::::::::::::............::::::::::::::::: ... .. ... Copies:: P4blhjxer (f4*e4.),:D.i" i6n Fiscal, Receiving Form: 02-901 Revised: 9/4/2019 Bernie Karl K&K Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Wednesday, September 4, 2019 10:10 AM To: megan.carr@boem.gov; Subject: Public Hearing Notice - BlueCrest Energy Attachments: CO -19-014 Public Hearing - Second Notice.pdf Re: Docket Numbers: CO -19-014 Hansen Oil Pool, Cosmopolitan Unit Public Hearing for Pool Rules Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue Anchorage, AK 99501 (907) 793-1221 Direct (90 7) 2 76- 7542 Fax Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Wednesday, September 4, 2019 10:12 AM To: joel.immaraj@boem.gov Subject: FW: Public Hearing Notice - BlueCrest Energy Attachments: CO -19-014 Public Hearing - Second Notice.pdf Re: Docket Numbers: CO -19-014 Hansen Oil Pool, Cosmopolitan Unit Public Hearing for Pool Rules Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7t1 Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 276-7542 Fax ANCHORAGE DAILY NEWS AFFIDAVIT OF PUBLICATION Account #: 270227 Order #: W0011431 Cost: $159.38 STATE OF ALASKA THIRD JUDICIAL DISTRICT Leilisi Misa being first duly sworn on oath deposes and says that she is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper September 5, 2019 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed Subscribed and sworn to before me this c�`?-;' day of oc In l q N tary Public in and for / The State of Alaska. Third Division Anchorage, Alaska MY CDMM IS9ION EXP ES Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Numbers: CO -19-014 Hansen Oil Pool, Cosmopolitan Unit Public Hearing for Pool Rules BlueCrest Alaska Operating LLC (BlueCrest), by application received August 30, 2019, requests the Alaska ppOil and Gas Conservation proposed Ha sen 011 Poo withinstheiCosmoipolitan Units for at 10:00 amhat 333 Westas d7th public enue, Ancfiorage Alaska 9ber 95019 Written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the October 10, 2019 hearing. if, because of a disability, special accommodations may be needed to co 3 no or atthan October 5, hearing,019 tact the AOGCC at (907) 3 //signature on file// Jessie L. Chmiel6wski Commissioner Published: September 5, 2019 PLASKq UX QJ� o Jada BlueCrest Alaska Operating LLC lIue&est 3301 C Street, Suite 202 Energy Anchorage, AK 99503 August 30, 2019 Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Jessie L. Chmielowski, Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: CO -19-014 Cosmopolitan Field, Hansen Oil Pool Initial Field and Pool Rules Application Dear Commissioners Seamount and Chmielowski: BlueCrest Alaska Operating LLC is a wholly owned subsidiary of BlueCrest Energy. BlueCrest (BlueCrest Energy Inc. and all wholly owned affiliates herein referred to as BlueCrest), as Operator of the Cosmopolitan Unit, herein submits the following information in support of the establishment of the initial Field and Pool Rules for the Cosmopolitan field, Hansen oil pool. Request for Pool -Specific Rules Rule 1: Initial Field and Pool Rules Area These rules apply to the combined area of the then current Cosmopolitan Unit boundary, located offshore of the Kenai Peninsula, Alaska. The current Cosmopolitan Unit is shown on Exhibit C-1. The Cosmopolitan field is defined by the area enclosed in the Cosmopolitan Unit area. The Hansen oil pool is defined as the Hemlock and Starichkof oil and gas bearing formations within the Cosmopolitan Unit area. Rule 2: Pool Definition: The field will be known as the Cosmopolitan Field and the Hemlock/Starichkof oil and gas accumulation subject to this application will be known as the Hansen oil pool. The Cosmopolitan field Hansen oil pool is defined as the oil and gas bearing intervals common to and correlating with the interval between the measured depths (MD) of 6538 feet and 7312 feet in the Cosmopolitan State #1 well and contained within the Cosmopolitan unit. Rule 3: Oil Well Spacing There shall be no oil well spacing restrictions as specified in 20 AAC 25.055 within the Hansen oil pool to accommodate horizontal, multilateral, and "fishbone style" wells, except that no oil BlueCrest Alaska Operating LLC Page 2 of 5 8/30/2019 well shall be completed less than 500 feet from the exterior boundary line of the then current Cosmopolitan Unit unless property ownership is the same on both sides of the Unit boundary line. Rule 4: Administrative Approval The Commission may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based upon sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. Rule 5: GOR Waiver In accordance with 20 AAC 25.240 sections (b)(3) and (c), the gas -oil ratio limitation in 20 AAC 25.240(a) is waived and wells producing from the Hansen oil pool are exempt from the producing gas -oil ratio restriction in 20 AAC 25.240(a). Rule 6: Wellbore Surveys BlueCrest requests that the wellbore survey requirements described in 20 AAC 25.050 (b) be waived for the proposed future Hansen wells to relieve administrative burden. In lieu of the requirements of 20 AAC 25.050(b), permit to drill applications for development wells shall include: 1. Completed Form 10-401 with Cover Letter 2. Directional Wellbore Plans with: • Plan View • Vertical Section • Close Approach Data • Directional Program Description and File Data Rule 7: BOP Tests BlueCrest requests Pool Rules which include the requirement for a three (3) week BOP test duration while drilling the production section of the well as opposed to the standard two (2) week test duration currently in place and practiced by the AOGCC statewide. Rule 8: Surface Casing Surface casing (13-3/8") will be set in a competent shale at approximately 3350' SS, and 9-5/8" intermediate casing will be set into the Starichkof sands at approximately 6900' SS. Both casing shoes will be tested to an equivalent mud weight (FIT) of at least 12.5 ppg. The surface casing (13-3/8" 72# L80 BTC or equivalent) shall be cemented to surface; while the intermediate casing (9-5/8" 47# P110 H563 or equivalent) shall be cemented with 1500 linear feet of cement as per the attached design. The surface casing cement job will be remediated for cement fall back by employing top jobs with visual confirmation that cement has reached the surface in a continuous column. BlueCrest Alaska Operating LLC Page 3 of 5 8/30/2019 Rule 9: Well Completion The fishbone multilateral wells will be completed barefoot with no liners or screens in the reservoir section. The upper completion will consist of 3-1/2" tubing, a 3-1/2" X 9-5/8" production packer, with gas lift mandrels, downhole gauges, downhole chemical injection, and a SSSV. Rule 10: Cement Bond Logs The requirement for a cement bond log of any type will be waived for the 9-5/8" casing string due primarily to the justification that none of the development wells will be hydraulically fracture stimulated. In addition, due to the high wellbore angles existing in these ERD wells, a cement bond log would need to be deployed by tractor, coil tubing, or drill pipe with side entry sub. Rule 11: BOP Rating 5,000 psi rated BOP equipment is adequate and approved for the development wells based on the MASP calculations attached. Rule 12: Casing Pressure Test Both the 13-3/8" surface casing and 9-5/8" intermediate casing will be pressure tested to 3,500 psi each prior to drilling out the shoe tracks. Rule 13: Subsurface Safety Valves BlueCrest / Hansen wells are and will be equipped with both Surface Safety Valves (SSV's) and Sub -Surface Safety Valves (SSSV's). Initial testing as well as periodic inspections and tests will be conducted following notification of the AOGCC consistent with the requirements of 20 AAC 25.265. Rule 14: Diverter Waiver BlueCrest Alaska Operating LLC hereby applies for a diverter waiver for all future wells to be drilled from the Hansen / Cosmopolitan Project drill site north of Anchor Point, Alaska. This waiver is requested under 20 AAC 25.035 (h)(2) of the AOGCC Regulations. More detailed justification for the request is included in the attached. Rule 15: Mud Weights Mud weights utilized will always exceed formation pressure as indicated in the attached Mud Program. Rule 16: Well Monitoring Wells are and will be equipped with instrumentation and monitored in real time in the Control Room. The following instrumentation is employed: 1. Tubing pressure and temperature 2. Inner Annulus (IA) pressure 3. Outer Annulus (OA) pressure 4. Bottomhole Pressure (BHP) in producer wells 5. Gas Lift Rate in producer wells, when utilized 6. Water/gas injection rates in injector wells, when drilled BlueCrest Alaska Operating LLC Page 4 of 5 8/30/2019 Rule 17: Description of Rig Detailed information describing BlueCrest Rig No.1 is included in the attached. This rig and the equipment described herein are approved for drilling all wells at this location. Rule 18: LOT/FIT Procedure The attached LOT / FIT Procedure is hereby approved for all wells drilled at this location. Rule 19: Wellhead and Christmas Tree Design The attached wellhead and Christmas tree designed for all wells at this location is hereby approved. A copy of this application has been sent by certified mail to the State of Alaska, Department of Natural Resources (DNR), Commissioner's Office. DNR is the offshore surface owner as well as the offshore owner of the oil and gas mineral estate. A detailed technical discussion of the Hemlock/Starichkof reservoir and the drilling and well construction programs are enclosed as well as the rational for the proposed rules. BlueCrest believes that the above described pool rules and development plan are prudent and consistent with good oil field practices. They are based on sound engineering practices and earth science principles and are in compliance with AOGCC statutes and regulations. BlueCrest would be pleased to schedule a technical meeting with AOGCC staff to provide additional information in support of this proposal. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at phone and email. Respectfully, Andrew Buchanan VP -Alaska 907-754-9563 abuchanan@bluecrestenergy.com Enclosures: Reservoir and Development Technical Report and Discussion with Exhibits Drilling and Well Construction Technical Report and Discussion with Exhibits BlueCrest Alaska Operating LLC Page 5 of 5 8/30/2019 +ka Cook Inlet Anchor Point e Exhibit C-1: Cosmopolitan Unit Location Map i� NinUchik Ninilchik Deep Creek Nikolaevsk Nikolaevsk 11�. _North Fork Cosmopolitan Unit, Hansen Oil Pool Application for Field and Pool Rules Reservoir and Development Description Technical Report and Discussion Prepared by BlueCrest Alaska Operating LLC July 31, 2019 llueNep�st Energy ZeNeplst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules TABLE OF CONTENTS 1.0 INTRODUCTION.................................................................................................................1 2.0 GEOSCIENCE AND RESERVOIR DESCRIPTION.................................................................... 7 2.1 Structure.........................................................................................................................7 2.2 Stratigraphy....................................................................................................................7 2.3 Producible Reservoirs..................................................................................................10 2.4 Hemlock Conglomerate................................................................................................10 2.5 Starichkof: 6,538 feet to 6,812 feet..............................................................................14 3.0 SEISMIC DATA AND INTERPRETATION.............................................................................18 4.0 EXPLORATION AND DELINEATION HISTORY......................................................................20 5.0 OIL AND GAS IN PLACE...................................................................................................21 5.1 Fluid Properties............................................................................................................21 5.2 Reservoir Modeling, Performance, and Properties......................................................22 6.0 RESERVOIR DEVELOPMENT PLAN...................................................................................29 6.1 Development History ....................................................................................................29 6.2 Future Development Plan.............................................................................................30 7.0 RESERVOIR SURVEILLANCE AND MONITORING................................................................30 8.0 SURFACE FACILITIES......................................................................................................30 8.1 Facilities Section..........................................................................................................30 8.2 Oil Export Measurement...............................................................................................30 8.3 Gas Export Measurement............................................................................................30 9.0 PRODUCTION MEASUREMENTS AND PRODUCTION ALLOCATION.......................................31 9.1 Well Testing.................................................................................................................31 9.2 Production Allocation....................................................................................................31 10.0 CONCLUSIONS...............................................................................................................31 10.1 Proposed Pool Rules....................................................................................................31 10.2 Summary ......................................................................................................................34 Reservoir & Development Description Page i IuNpst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules LIST OF FIGURES Figure 1: Exhibit C-1: Cosmopolitan Unit Location Map...............................................................................2 Figure 2: Cosmopolitan Unit Development Wells......................................................................................... 2 Figure 3: Cosmopolitan Unit Exploration and Development Wells............................................................... 3 Figure 4: Fishbone Well Illustration...............................................................................................................4 Figure 5: Cosmopolitan Unit Area and Leases............................................................................................. 5 Figure 6: Cosmopolitan Unit Leases.............................................................................................................6 Figure7. Confidential....................................................................................................................................9 Figure 8: Hemlock correlation section.........................................................................................................11 Figure 9: Detailed log of the Hemlock Conglomerate.................................................................................12 Figure 10: Hemlock Structure Map showing approximate Oil/Water Contact ............................................13 Figure 11: Detailed log section of Starichkof Sand.....................................................................................15 Figure 12: Starichkof correlation section.....................................................................................................16 Figure13: Starichkof Structure Map...........................................................................................................17 Figure14: Confidential................................................................................................................................19 Figure15: Confidential................................................................................................................................19 Figure16: Confidential................................................................................................................................19 Figure17: Confidential................................................................................................................................19 Figure 18: Production history of Hansen field............................................................................................. 24 Figure 19: Cumulative oil production versus producing GOR.....................................................................25 Figure20: Confidential................................................................................................................................27 Figure21: Confidential................................................................................................................................28 Figure 22: Summary of studied options to increase production from Cosmopolitan field ..........................29 LIST OF TABLES Table1: Confidential...................................................................................................................................22 Table2: Confidential...................................................................................................................................26 Reservoir & Development Description Page ii llueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 1.0 INTRODUCTION BlueCrest's proposed rules are designed to prevent waste, protect correlative rights and improve the ultimate recovery of remaining hydrocarbons throughout the Cosmopolitan Unit. They are also designed to reduce the administrative burdens on both BlueCrest and AOGCC staff. As the 100% working interest owner and sole operator of the field, BlueCrest's objective is to maximize and economically optimize the recovery of remaining hydrocarbons from the Hansen oil pool. The Cosmopolitan Unit currently includes ten (10) wells, of which four (4) are currently completed and online, one was permitted (permit recently canceled) but not drilled, and five (5) are plugged and abandoned. Listed below are the wells: Pennzoil Starichkof State Unit—P&A Pennzoil Starichkof State –P&A Cosmo State #1-- Temp P&A Hansen 1 -- P&A Hansen 1A -- P&A Hansen 1AL1 suspended (producing intermittently) H-04 -- Producing H-12 -- Producing H-13 – Permit canceled H-16 – Producing See Figurel for a general location map, Figure 2 for a map of the development wells and Figure 3 for a map of all wells. r s w j Cook Inlet Ninllchik Ninilchik i Reservoir & Development Description Page 1 of 36 'Deep Creek' - P)t— f I Mopolltan Nikolaevsk Nikolaevsk V, [North Anchor Point Fork s �- Reservoir & Development Description Page 1 of 36 llueNest Energy Figure 1: Exhibit C-1: Cosmopolitan Unit Location Map 75W, Sf 1 NULJ044V3 SEC ' . T35. t 5�. H12 � H 'tan S 1 anse 1 12-L Ht -12-L H1 -12-L H1 � Hi6 12-L Ht Ht -L aric St 04 -LO _ 15W SC' H -04-L EC 3 _ SM SEC 33. T f H -04-L _ 5W, SM / SEC 5. T45. R15W, Ski SEC 4. T4S, R15W SM / ADL39190 Figure 2: Cosmopolitan Unit Development Wells Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules ADL391903 SEC 27. T3S, RI5W. SM SEC 26. 73S, R15W. SM T3S. R15W. SAI SEC 35. T3S, R15W ADL18790 SEC 3, T45, R15W. SM SM Reservoir & Development Description Page 2 of 36 S 51 llueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Cosmopolitan Lease Map Cosmopolitan Unit Development o :ano soon 6000 scan ancanus (' 7 113"07.2319 SkwCrasl€ncrgy 15 ]3Q L -j Pr.TUkL Figure 3: Cosmopolitan Unit Exploration and Development Wells Reservoir & Development Description Page 3 of 36 llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules BlueCrest cannot efficiently drill new wells and produce remaining reserves under AOGCC's current well spacing rules; and it is an unnecesary administrative burden on both BlueCrest and the Commission to process the well spacing exceptions required for BlueCrest's complex multilateral "fishbone" well designs. An example of the "fishbone" well design is shown in figure 4. Spacing between the individual fishbones (or laterals) in a single well and laterals in adjacent wells is a nominal 800 feet resulting in the need for 7 or more spacing exceptions per "fishbone". H-12 Multilateral H-12 Multilateral Producer Z ScaleOofe 1 3 OWMQ019 Fje%d Signalure cmMopdiwn Andrew Bucharar Figure 4: Fishbone Well Illustration While existing statewide rules and procedures may have adequately protected correlative rights and prevented waste during the field's initial development, they are not applicable to the preferred well design and development effort necessary to produce the remaining hydrocarbon reserves. Requests for well spacing exceptions have been an administrative burden on both the Commission and BlueCrest Requests for well spacing exceptions are administratively burdensome and are unnecessary to protect correlative rights or prevent waste in this particular unit, where well designs and locations are simply being optimized to improve ultimate recovery. As discussed above, BlueCrest, as Operator, is sole working interest owner in the Cosmopolitan Unit. The unit is comprised of 13,313.77 acres covering four State of Alaska oil and gas leases labeled tracts 2, 3, 4 and 5 on the map marked Figure 5. The legal description of the leases is attached as Figure 6. BlueCrest is the holder of the leases. Reservoir & Development Description Page 4 of 36 ZueNerst Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules COOK INLET R ?I T35 R15W 14 AM,RIM 1 jS.R14 . W ADL -391903 ADL -384403:2.1 "A ADL -18790 41 Hary PW ADL -391904 '51) US RIVAI 15W T4F RWIV 73 �TTis ADL -391899 20 ADL -391900 xd .0 5,000 10,000 T Feet T5S,R15W IN Hansen Pad BLUECREST ENERGY, INC. EMCosmopolitan Unit COSMOPOLITAN UNIT Leases PLAT OF SUBJECT LANDS Roads Revised 09104201-, Traci RefimenceEXHIBIT FTD" NSU Ij SW�SP tate 411�e AI*94 I S JtKM IF—#:, IM , *N"' I $-.;I uwl.ftw, V.,etg -ij� B fhy,Af-ntlan K. ., Par m.ka Ow ROge NRC, 80001 I rnxd. W1117. Figure 5: Cosmopolitan Unit Area and Leases Reservoir & Development Description Page 5 of 36 lueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Cosmopolitan Unit Exhibit A Revised 2017-09-01 BlueCrest Alaska Operating LLC Page 1 of 1 Lewl Tract %' Mineral Owner ORRI % WoAdnc Merest Owner WPO % 2 736, R 15W, SK 20.723!3% ADL 354403 Svte ct Auska tCO9i 125CMf Rabat C. WaNten .1 B".ueCrest Ene�y arc. ' ]O% Sec. 20: Protracted All; 203.30 SPC. LLC 1.3333300% sac. 21: PmVxWd, al, ew.DD Eipas v. Numb 3. n5D0D16 Sec. 28: Protracted al; 840.0 Robes A ChAn 0.212MM Sec. 29: Pro xwd AS; 419.20 Darcy S. Davis 0,32(17300% Sea 32: Protracted. APC 535.59 Edon L Cmeth 0.1806865% See.33: Wlrl. 321.00 Fin6xk Yemaea LP 04033300% 2,758.69 Curse Morley Livep True 0.1750007% Bbdw lntsrosts. Ltd 0A910?00% Dinkel 0,0 6 Gas. LLC 0.12500oe% CWw Energy, LLC (CIE, 0.4375W0% C,omcePoiT4n Alakx. kid 20000020% BNaCrest Erwryy mc. O.MOOD% Cade Family N 0.3750000% 7.8124930% 3 733,R 15W, SIX 19.22821%ADL 391W3 Stm of Alaska 100% 1:50% Apabts Alaska Corpmw 3.5% SkreCrm Euipy;r.. ._., See. 22: Pmtracud M. 610.00 Seo. 23: Provamd All: 00,00 Set. 20: Slaveyed Framonsl Lots 2.4 11.13 Sea 28: Unwveyed. As tide and subneprc Ianas. 628.87 Sea 27: Pmuaead All. 840.00 2550.0 4 T3S, R 15W, SJ1L 29.7393% ADL IS79D Stalto1 Alaska 100% 1250% Osler C. Hutson 0.187500096 Bkw0ast S.Ity kx. 10D% Sec 33: E2 320.00 Metro Neoral Bank 0.375000% Sea 34: AS: 580.06 Nupem T. Sm", Jr. 0.187SOM See. 35: Fraaim. all shm1amls aW tdelands as may urxledie 479.99 Jany F. Brasher 0.1875000% the porbm a1 Suriski Creek ghat nns rhmugh hb sac0on Melanie Malys Cubiss-Gins 0.09375011% TIS, R15W, 5. M. Mar4n F. Mathis 0.093750% Sr- 2 Fraom. (tidelands arvJ submw* lands) 378.08 M3&ok Maths KrdpM OoW500% Sec 3: AIL O0.00 McHssa Lta0ks Card 0.037600% Sr- 4: A0: 610.0 Cm000Ph ", w- (I.I.W 0.50000% Sr- 10: At 640.D) Devon Eneryy ProdurJim Conperry, LP, 1400000% Sae. 11: Fraaen. (edelanas and sabmerped lanes, 220.39 E.=f N (%H, LLC) OA141170% 3.9559.38 JoAnne L. BM 0.187500 RaseemW Rnourds. nsa 0.496323016 EomnMDW(Mobil UP) 2025000% Ca =oINips Abska kc. 2000046 Olotler Sway, LLC (CE) 0.418760% DmW 008 Oa. LLC D./2500ON Bkocrad ENV In 0.87500% Cade F=4 61 0.375000% 9.9591870% 5 T4S, R 15W, S.M. 30.31234'x: ADL 391409 ^,•ate dALaska 100% 12.50% Apad,e AIaW Cwpmtw 3.51000% Bk*Cmt 9WIn, Inc 10% Sec, 5: Rmaaed, All We and suomer9etl lana 834.15 Set. 0: Pmtraaed, All tide and s&nwped led: 5273 Sr- 7: PmBaaed. A8 We and %& wiled land 255.35 Sr- 8: PrmaaM. At 04040 Sec 9: PmtracW, A8 640.00 Ste. 16: Prouaatd AS: 680.0 Set. 17 Protracted A0; 610.00 Set 18: Pmtraexd. N! Ede and kbrerpd land. MAO 4.035.72 Tc W: 4313.77 10.000% Figure 6: Cosmopolitan Unit Leases A participating area (PA) has been formed and aproved by the AK DNR Division of Oil and Gas. The PA includes a revenue and production sharing formula. In addition to reducing administrative burdens, the proposed well spacing order is designed to prevent economic and physical waste and improve the ultimate recovery of remaining hydrocarbons. By eliminating intra -pool spacing rules, BlueCrest will be able to target smaller, un- drained portions of the pool that cannot be reached/contacted by wells conforming to current statewide spacing restrictions. Elimination of all spacing requirements inside the pool will help to maximize recovery from otherwise bypassed pay, while allowing for continued production from established development wells. Eliminating spacing restrictions on wellbores within the Affected Area will increase the Operator's flexibility in placing wells as the pool is developed and will not adversley affect recovery, promote waste, jeopardize correlative rights, or result in an increased risk of fluid movement into freshwater aquifers. A well spacing or setback requirement will be maintained around the exterior perimeter of the unit. The Hemlock/Starichkof reservoir is compartmentalized and highly stratified. Communication between wells is believed to be very limited, and likewise communication between producing wells and any injection wells that might be drilled would also be very limited based on current reservoir Reservoir & Development Description Page 6 of 36 llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules understanding. The reservoir was initially above bubble point and it appears that there was a separate isolated free gas zone in the upper Starichkof sands. The gas -oil ratio (GOR) waiver is necessary in order to continue production in the pool. The reservoir is highly compartmentalized and stratified and the permeability of the reservoir rock is relatively low (in the 10 to 20 and range). The primary recovery mechanism is solution gas drive or depletion drive. Reservoir geology (low permeability and compartmentalization) does not currently appear conducive to pressure maintenance or gas reinjection from injection wells located too far away from production wells. Instead, close well spacing using the "fishbone" well design is envisioned to maximize recovery in each separate compartment. As reservoir pressure falls below the bubble point pressure of the in-situ oil, the pressure decline will slow due to a slowly evolving gas saturation in the pore spaces. Based on production well GOR performance data it appears that there is a small isolated free - gas accumulation in some of the upper -most Starichkof sand intervals. This free gas zone has only been encountered in the H-12 fishbone well. Other wellbores drilled at the same SSTVD have not encountered free gas. Providing further evidence of the compartmentalized nature of the reservoir. Ultimate recovery from the reservoir is expected to range from 10 to 15 percent of the original oil in place given the current depletion plan and understanding of the reservoir. Recovery could increase if some type of pressure maintenance process or secondary recovery process is initiated at a later date; but at this time no such processes are deemed technically and economically feasible. 2.0 GEOSCIENCE AND RESERVOIR DESCRIPTION 2.1 Structure The Cosmopolitan Field, Hansen Oil Pool (hereinafter referred to as Cosmopolitan or Cosmopolitan Project) structure is a NE/SW doubly plunging asymmetric anticline bounded along its west flank by a high angle reverse fault that strikes parallel to the structural axis. Associated tear faults with normal throw cut the northern and southern portions of the feature and one smaller fault was found in the Cosmopolitan State #1. This structure, which is four and one-half miles by 2 miles in size, has approximately 600 feet of vertical closure over an area of over 6,000 acres at the Starichkof sand (Lower Tyonek sandstone just above the Hemlock Conglomerate) above the oil/water contact. Structural control includes eleven wellbores, (three of these are vertical and penetrate the entire geological section on the structure, five are extended reach single lateral wells drilled from the Hansen drilling and production pad, and three are multi -lateral "fishbone" extended reach wells drilled from the Hansen drilling and production pad) 3D seismic acquired by Pioneer Resources in 2005, dip meter data in two of the vertical wells, and migrated 2D high resolution seismic data acquired by GeoTek Alaska, Inc. in 2013. 3D seismic data was used to tie all of the wells to generate several levels of structure maps (see the later discussion on seismic data and interpretation). Although there is a .3 to .5 second seafloor reverberation on the 3D data, the shallow high-resolution Geo -Hazard 2D seismic shows that the structure is typical of parallel folding. 2.2 Stratigraphy Approximately 8,600 feet of Tertiary age Kenai Group non -marine sedimentary rocks are present at Cosmopolitan. The Kenai Group is represented here by approximately 1,000 feet of the Beluga Formation (USGS unpublished data) characterized by thin bedded sandstones, coals, siltstone and silty shale intervals that were deposited in a braided stream environment. Based on estimates from seismic data and log correlation approximately 1,050 feet of Beluga was penetrated in the Reservoir & Development Description Page 7 of 36 nluest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Starichkof State Unit #1 well, about 500 feet was present in the Starichkof State #1 and it appears to be missing in the Cosmopolitan State #1 well. The difference in thickness in the Beluga across the Cosmopolitan structure is related to erosion and does not represent depositional thinning. The overlying Sterling Formation is not present and has also been removed by erosion. Unconformably underlying the Beluga sequence is 5,945 feet of Miocene age Tyonek Formation, a basin wide series of fluvial conglomerate, conglomeratic sandstone, sandstone, coal, siltstone and shale which represent deposition in meandering streams, associated fluvial sediments and lacustrine environments. It is a major producer of both biogenic natural gas and thermogenic oil throughout the basin and is charged with gas and oil at Cosmopolitan. BlueCrest has informally divided the Tyonek into an upper section that contains gas productive sandstones and a lower interval that is predominately oil prone. The two zones are separated by a laterally correlative shale section that is easily recognized in all of the existing wells. The lowest section of the Lower Tyonek, from 6,742 to 7,104 feet MD has been referred to as the "Starichkof" sand by ConocoPhillips, Pioneer Resources and by BlueCrest and is the oil discovery zone found in 1967 by Pennzoil in their Starichkof State #1 well. Immediately underlying the Starichkof sand (Lower Tyonek) is the Oligocene Hemlock Conglomerate. It was drill stem tested in the Starichkof State #1 well and recovered brackish water from two separate intervals beneath the oil/water contact at approximately -7048 ft. ConocoPhillips tested water -free oil in higher structural positions in both the Hansen 1 and Hansen 1A wells. The Hemlock generally consists of medium to coarse grained, thick bedded sandstone with substantial conglomeratic beds and lenses. In the Starichkof State #1 well it is 485 feet thick, and in the Cosmopolitan State #1 it is 500 feet thick. Underlying the Hemlock is the Paleocene to Eocene age West Foreland Formation, a 1,155 feet thick sequence of volcanic tuffs and volcaniclastic sandstone and siltstone devoid of oil or gas shows and without reservoir quality rocks. The West Foreland unconformably overlies the Upper Cretaceous marine Matanuska Formation that is at least 3,339 feet of shale containing an abundance of Inoceramus shell fragments. See Figure 7 for a TVD cross-section of the field. The reservoir is highly compartmentalized and stratified. The relative lack of production rate increase success in the traditional fraced wells is evidence of the highly stressed and stratified nature of the reservoir. Reservoir & Development Description Page 8 of 36 Zu est Energy Confidential Figure 7. Confidential Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Reservoir & Development Description Page 9 of 36 lueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 2.3 Producible Reservoirs 2.3.1 Type Log The Cosmopolitan State #1 well is used as a type log for the field and pool. Interval depths are measured log depths (MD) from the Cosmopolitan State #1 well unless otherwise indicated. 2.4 Hemlock Conglomerate 2.4.1 6,812 feet to 7,312 feet The Oligocene Hemlock Conglomerate is the oldest known hydrocarbon producible reservoir at Cosmopolitan. It lies unconformably on the Paleocene to Eocene age West Foreland, a dominantly volcaniclastic zone with common ash fall tuff beds and is conformably overlain by the Starichkof (Lower Tyonek) sand of probable Miocene age. The Hemlock is one of the major oil producing formations in the basin and is recognized in most wells throughout it. At Cosmopolitan, the Hemlock is easily correlated in the Cosmopolitan State #1, Starichkof State #1 and the Starichkof State Unit #1 (Figure 8). The Hemlock Conglomerate ranges from 500 feet thick in the Cosmopolitan State #1 to 485 feet in the Starichkof State #1. It is comprised of channelized sandstone and pebbly sandstone in the upper half and predominately shale with thin sandstone lenses in the lower half. Although correlating the top of the Hemlock is somewhat problematic, several internal correlations can be made with fair confidence which support general correlations in the upper section. Net Hemlock pay thickness of (Confidential) feet in the Cosmopolitan State #1 is based on a combination of parameters including gamma ray, porosity and water saturation from log analysis, mudlog shows and lithology (Figure 9). (Confidential). Based on 25 rotary cores from the Cosmopolitan State #1 analyzed by Schlumberger labs, the dominant rock type in the Hemlock is arkosic to subarkosic sandstone exhibiting good intergranular porosity. Chlorite grain coating is common and combined with kaolinite some porosity is occluded, although porosity and permeability values show that this is some of the better Hemlock reservoir in the basin. (Confidential). Special drilling and completion fluids and cements are being studied to determine which are the least damaging to the formation and to optimize production. Although no test of the Hemlock was run in the Cosmopolitan State #1, the Hemlock had substantial amounts of reservoir quality sand with oil saturation in cores and is 45 feet structurally high to the highest take point in the Hansen #1A well, which tested water free oil at rates in excess of 1000 BOPD. Reservoir & Development Description Page 10 of 36 Ilue"Nest Energy V.1 Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Figure 8: Hemlock correlation section Reservoir & Development Description Page 11 of 36 Ww"tom Zu est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Figure 10: Hemlock Structure Map showing approximate Oil/Water Contact Reservoir & Development Description Page 13 of 36 ZeNrst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 2.5 Starichkof: 6,538 feet to 6,812 feet Conformably overlying the Hemlock Conglomerate is the Lower Tyonek Starichkof sand named informally by Pennzoil at the time of its discovery at Cosmopolitan. The Starichkof is 274 feet thick in the Cosmopolitan State #1 (Figure 11), 362 feet in the Starichkof State #1, 365 feet in the Starichkof State Unit #1 and 309 feet thick in the Hansen #1 (all corrected to true stratigraphic thickness). The top of the formation is easily correlated from well to well (Figure 12) as are some of the internal stratigraphic units. The Starichkof Sand in the Cosmopolitan State #1 was not tested because it is 240 feet structurally higher than in the Starichkof State #1 where it tested oil from the upper 150 feet of the formation. Also, it is structurally flat to the highest take point in Pioneer Hansen 1AL1 long lateral that was drilled across the crest of the anticline and produced water free oil. (Confidential). Closure up -structure to this contact is over 5,000 acres, which represents the aerially largest known hydrocarbon accumulation at Cosmopolitan (Figure 13). However, it is possible that the south plunge of the structure dips less than currently mapped and that this accumulation, as well as some of the shallow gas zones could extend south of the interpreted limit. The Starichkof consists primarily of fine to medium grained, subangular to subrounded arkosic and subarkosic sandstone. Volcanic and sedimentary rock fragments are common. Three rotary core samples taken in the Cosmopolitan State #1 had average non-stressed porosity of (confidential) with (confidential) and permeability. Again, see Section 5.2 for estimates of in-situ porosity and permeability. Based on log analysis by Wayne Campaign, Starichkof sandstones have high irreducible water saturations, but the calculated values are too high to be consistent with actual water -free production from the reservoir. In the Starichkof State #1 well the Spontaneous Potential (SP) log combined with the Neutron - Density logs indicate that most of the reservoir quality sandstone is in the upper 200 feet of the formation; resistivity is low and shows almost no response to the contained oil, so water saturation calculations using the standard Archie equation do not result in values common to producible hydrocarbon reservoirs, even though a considerable amount of oil has been tested from this formation. An abundance of chlorite within the matrix forms a barrier between framework grains and pore throats that inhibit fluid flow (from Schlumberger report). Reservoir & Development Description Page 14 of 36 im Figure 12: Starichkof correlation section Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Reservoir & Development Description Page 16 of 36 .e,p..— per. F Reservoir & Development Description Page 16 of 36 .e,p..— per. llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Figure 13: Starichkof Structure Map Reservoir & Development Description Page 17 of 36 Zue)Ierst Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 3.0 SEISMIC DATA AND INTERPRETATION Pioneer Resources acquired approximately 39 square miles of 3D seismic data over the Cosmopolitan Unit in 2005 to earn an interest in the prospect from ConocoPhillips. The data quality is poor due to acquisition in the shallow water transition zone which commonly has 10-15 knot currents and a daily sea level change of 30 feet. Also affecting data quality is shallow gas that creates a "gas cloud" over the top of the structural closure creating a large time sag over the top of the anticline. In an effort to obtain the best results Pioneer Resources processed the data themselves using ProMax software and also had Hardin, Western, and CGG reprocess the volume. In a final effort to improve the data Western and CGG processed the data in depth, but this did not improve imaging or interpretability of the data. BlueCrest, along with its former partner Buccaneer Alaska, reprocessed the data with Crescent Geo using newer techniques. This volume and the Hardin version proved to be best for interpretation. All initial mapping was done on the Hardin version and both volumes were employed for later work. After the Buccaneer Cosmopolitan State #1 was drilled, a walk -away Vertical Seismic Profile (WVSP) was acquired in the well to verify the shallow gas cloud effect and eliminate the possibility of the presence of a vertically faulted graben. The WVSP dip line confirmed a low velocity zone due to gas as shallow as -800 feet TVDSS (Figure 14). The 3D was initially interpreted in time, honoring the velocity induced sag. A second interpretation was made where the horizon picks were projected through the sag. This was done on four horizons: the Upper Tyonek D Sand (Up_Ty_D — gold pick in time, red pick projected), Upper Tyonek H Sand (U_Ty_H - blue pick in time, purple pick projected), Lower Tyonek A Sand (Lw _Ty_A — gold pick in time, green pick projected), and the Hemlock Conglomerate (Hemlock — brown pick in time, light blue pick projected). The final Hemlock pick was moved up approximately 56 milliseconds to better match well ties and is shown by the dark blue pick on Figure 14. To test the validity of the projected horizons, an arbitrary line was created along the borehole path of the horizontally drilled Pioneer Hansen 1AL1 sidetrack with the Hansen #1 and #1A projected into the line (Figure 15). The Hansen 1AL1 was drilled in the Starichkof Sand, which is just above the Hemlock Conglomerate and seismically just above the Hemlock event shown in dark blue on Figure 15. Based on BlueCrest's geological interpretation, this well stayed in formation until the last 1,500' at which point it drilled into the overlying shale section. As can be seen in Figure 15, the inclination of the wellbore is less than the west dip of the Starichkof supporting the geological interpretation. The Hansen #1 and #1A also penetrated the Hemlock, supporting the interpretation. Figure 16 is a time structure map of the Upper Tyonek H Sand, and Figure 17 is the same horizon mapped using the projected picks. Based on the time map, the gas effect covers about three sections on top of the structure and terminates on the south end of the structure in Section 8, T4S-R15W. This is essentially the same place that the Upper Tyonek A and D Sand potential accumulations end, so it is possible that these two units are causing the seismic distortion. Reservoir & Development Description Page 18 of 36 Iue esc Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Figure 14: Confidential Confidential Figure 15: Confidential Confidential Figure 16: Confidential The figure above is also the Seismic Time Structure Map on Upper Tyonek H seismic event showing pronounced velocity sag along the crest of the Cosmopolitan anticline. Confidential Figure 17: Confidential Reservoir & Development Description Page 19 of 36 llyfeNest Endigy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 4.0 EXPLORATION AND DELINEATION HISTORY The Cosmopolitan field was initially discovery by the Pennzoil Oil Company in 1967 when they drilled their Starichkof State #1 well on State of Alaska lease # ADL384403, Sec 33, T3S, R1 5W in the Kenai Peninsula Borough. This well was drilled to a total depth of 12,112 feet and bottomed in the Upper Cretaceous marine Matanuska Shale. Although this well discovered oil in the Lower Tyonek, it was drilled in an off -structure position on the east flank leaving approximately 2,500 acres untested in all zones. Four drill stem tests were run in the upper 150 feet of Lower Tyonek "Starichkof" sand, three of which recovered water free oil at low flow rates with a maximum of about 60 barrels of oil per day. All testing was through perforations in casing, and the Hemlock was tested in two zones, the upper at 7,150 feet to 7,236 feet which yielded 98 barrels of brackish water with a show of gas and a lower zone from 7,410 feet to 7,420 feet that tested over 6,000 feet of water; open flow times were not reported. Up -hole from the Starichkof, Pennzoil attempted additional tests through perforations that resulted in inconclusive results due to either insufficient cement behind pipe or possibly no cement at all. They perforated the interval from 6,444 feet to 6,454 feet in what is now designated as the "Lower Tyonek E" sand and recovered oil cut mud. A significant gas show zone from 3,810 feet to 3,842 feet was also tested and recovered 126 feet of gas cut mud after cement squeeze and formation breakdown. Clearly this zone and the previous test interval did not have adequate cement behind pipe, so the results were not definitive. Pennzoil followed this well with their Starichkof State Unit #1 drilled on the north plunge of the Cosmopolitan anticline. Pennzoil's reasoning for choosing this location is not known, but the well was structurally more than 800 feet low at the Starichkof level and resulted in a dry hole without significant shows of oil or gas. Whole cores were taken in the approximate stratigraphic equivalent to the gas show zone (now designated as the Upper Tyonek H by BlueCrest) and also in the Starichkof interval. With the discovery of Prudhoe Bay in early 1968, major oil companies that were active in the Cook Inlet shut down exploration operations and redirected their efforts to the North Slope. Although production in the Cook Inlet continued to rise for a time, it started a long, continuous decline from 1970 to early this decade when Hilcorp began to revitalize the existing old oil fields in the Inlet. In the mid 1990's, ARCO began investigating the prospect, acquiring other working interests, and began an exploration effort which was later carried on by Phillips after its acquisition of ARCO Alaska. In 2001, Phillips formed the Cosmopolitan Unit, including seven individual State of Alaska leases and two federal offshore leases immediately west of the state leases. In the same year, Phillips also completed the Hansen #1 well, drilled directionally from an onshore drill site approximately 2.5 miles away from the target reservoirs. The Hansen #1 well reconfirmed the presence of producible oil in the previously discovered Starichkof zone, and it also confirmed productive sands in the Hemlock interval. Test rates were reported to be 380 BOPD from the Hemlock and 125 BOPD from the Starichkof. In 2003, ConocoPhillips drilled the Hansen #1A well (a sidetrack of the Hansen #1 well) providing a deviated penetration of the Starichkof sands and a lateral penetration of the Hemlock zone. The Hansen #1 A well was tested at rates up to 1000 BOPD and produced a cumulative total of 14,851 STB of medium -gravity (24-27 degrees API) sweet oil. In 2005, Pioneer Natural Resources ("Pioneer") joined with ConocoPhillips to obtain approximately 40 square miles of 3-D seismic data over the entire project area. The 3-D seismic provided a clear view of the perimeter flanks of the anticlinal structure, but the crestal view was obscured by a gas cloud rendering a conclusive image of the top of the structure impossible. In 2007, after acquiring ConocoPhillips' working interest in the Cosmopolitan unit, Pioneer proceeded to drill the Hansen #1AL1, another sidetrack of the original Hansen #1 well. The original Starichkof and Hemlock completion in the Hansen 1A well was temporarily plugged at the location of the sidetrack for the Hansen #1AL1. The Hansen #1AL1, a long reach undulating Reservoir & Development Description Page 20 of 36 lust Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules lateral well through the upper portion of the Starichkof sand, was tested at rates of approximately 300 BOPD. In 2010, Pioneer conducted a fracture stimulation attempt of the open interval along with an extended flow test of the well. From this test, the Hansen #1AL1 cumulatively produced in excess of 33,000 STB with average final rates of approximately 250 BOPD from the open interval in the upper Starichkof zone. Pioneer proposed a development plan for the Cosmopolitan Unit that consisted of extended reach oil production and water injection wells in the previously identified Hemlock and Starichkof zones drilled from the onshore drill site, but in late 2010 decided not to pursue completion of the plan. In February 2011, Pioneer disbanded the Cosmopolitan unit and retained leases ADL018790 and ADL384403 held by well. In June 2011, Apache Corporation successfully bid on leases ADI -391902, ADL391903, and ADL391904 (which had previously been included in the original Cosmopolitan Unit under different lease numbers) and agreed to provide a Plan of Exploration for those leases according to the terms approved by the state. Apache's initial Plan of Exploration was submitted to the Alaska Department of Natural Resources in February 2012 and approved by the state in March 2012. In March 2013, Apache provided a bi-annual report on their Plan of Exploration for the leases. In late 2010 and early 2011, Buccaneer Alaska, LLC and BlueCrest Energy began negotiations with Pioneer to jointly acquire leases ADL018790 and ADI -384403. In September 2011, Pioneer entered into a Letter of Intent with the two parties to continue negotiations eventually leading to a sale. In August 2012, sale of the two leases from Pioneer to Buccaneer Cosmopolitan, LLC ("Buccaneer Cosmopolitan") and BlueCrest Energy Inc. was concluded. Under the terms of the sale, Buccaneer Cosmopolitan acquired 25% working interest and BlueCrest obtained 75% working interest. Buccaneer Alaska Operations, LLC was the named operator of the leases. In 2012 and 2013, Buccaneer Cosmopolitan and BlueCrest conducted various reprocessing and analyses of the 2005 3-D seismic data previously obtained by Pioneer and ConocoPhillips. In the summer of 2013, Buccaneer Cosmopolitan and BlueCrest jointly drilled the Buccaneer Cosmopolitan State #1 (hereinafter referred to as the Cosmopolitan State #1) well from an offshore surface location, providing a vertical penetration of all zones from surface to a total depth of 7599 feet, penetrating the West Foreland formation. The Cosmopolitan State #1 well discovered numerous new oil and gas zones within the Upper and Lower Tyonek (above the previously known Starichkof and Hemlock zones), and a vertical seismic profile was conducted in the well to assist in interpretation of the previous seismic data. In August 2013, Apache assigned leases ADI -391902, ADI -391903, and ADL391904 to Buccaneer who, in turn, assigned 75% working interest to BlueCrest The assignment of the 75% working interest in the Apache leases from Buccaneer to BlueCrest was approved by the State of Alaska effective November 1, 2013 and was transmitted to BlueCrest on February 20, 2014. In January 2014, BlueCrest acquired Buccaneer Cosmopolitan, LLC and changed the name of "Buccaneer Cosmopolitan, LLC" to "BlueCrest Cosmopolitan, LLC", a wholly owned subsidiary of BlueCrest Energy Inc. Following the assignment of the former Apache leases to BlueCrest Energy Inc., BlueCrest was therefore provided with 100% working interest ownership of all the Cosmopolitan Project leases (ADL018790, ADI -384403, ADI -391902, ADI -391903, and ADL391904). In March 2014, the Alaska Oil and Gas Conservation Commission approved BlueCrest as the operator of the Cosmopolitan Project leases. 5.0 OIL AND GAS IN PLACE 5.1 Fluid Properties There were four (4) bottom hole samples acquired during in the Hansen 1A well drilled by ConocoPhillips in the Hemlock formation. The oil properties were: Confidential Reservoir & Development Description Page 21 of 36 lueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 5.2 Reservoir Modeling, Performance, and Properties The Cosmopolitan Field contains both gas and oil reservoirs throughout the stratigraphic column. The reservoir is a double plunging anticlinal structural trap. The oil reservoirs are contained in the Tertiary aged Starichkof and Hemlock Formations. A geo-cellular model was build and recently updated using the industry standard Petrel software. Model input includes seismic data, well log data from more than 20 wells, core data from 2 wells and MDT data. The Cosmopolitan -State 1 was selected as a "key" well because it had the most complete log suite and core data. A fine layer static model was constructed that integrated the well tops, initial fault and horizon interpretations with the core- and log -interpreted facies/depositional environments and properties (porosity, permeability and water saturation) calculated during the petrophysical analysis. The 60 million -cell static model consists of two formations/ units, the Starichkof and Hemlock. Table 1 summarizes OOIP and average petrophysical properties from the gross volume of the updated geocellular model. Confidential Table 1: Confidential An early dynamic model was built using industry -standard software, Eclipse, and was history matched to early production data from four producers. Various depletion options, including hydraulic fracturing (fracing) the wells and a full field pressure maintenance via waterflooding, were investigated. The fracing and waterflooding development options have since been abandoned due to uneconomic production rates, the regional rock stress regime that made fracing difficult, the compartmentalization and clays in the rock that can swell in the presence of incompatible injection water. The geocellular model has recently been updated and the dynamic model will be updated in the near future. 5.2.1 Production History, Saturation Model, & Fluid and Gas Volumes Blue Crest began its development drilling with the spud of the H-16 well on November 29, 2016 from the Hansen Drilling Pad. The H-16 well was drilled as an extended reach well with an 18 - stage propped hydraulic fracture stimulation. The well began its flowback on May 19, 2017 and had an initial rate of 330 BOPD. A second well, H-14, was completed with a 12 -stage propped hydraulic fracture. The flowback began on November 17, 2017 with an initial production of approximately 1100 bbls/day. Beginning in May 2018 BlueCrest drilled the H-12 well as an extended reach multilateral "fishbone" well with 7 laterals extended from 150' above the presumed oil -water contact to the top of the reservoir. Upon completion, the well began its flowback on July 26, 2018 with an initial rate of approximately 900 bbls/day and 6.OMM scfpd of gas. With the positive results from the H-12 well, the decision was made to reconfigure H-16 into an 8 -leg multilateral. Well H -16A was completed on December 18, 2018 with an initial rate of approximately 1200 bbls/day and 2.2MM scfpd. Following the success of the two multilaterals, BlueCrest decided to delineate the reservoir to the southwest with the H-04 multilateral. The well was spudded on December 27, 2018 and the flowback began on March 22, 2019 with an initial production rate of approximately 1270 bbls/day. The production history of the field is shown in the below Figure 18. As stated above, the performance of the H-12 and H -16A multi -leg laterals out -performed horizontal or hydraulically fractured wells. The water -cut has remained low. The producing GORs are stable in the wells Reservoir & Development Description Page 22 of 36 nue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules drilled in the oil zones. The H-12 well, which penetrated a gas zone at the top of the pool, initially produced at a high GOR. As shown in Figure 19, a plot of cumulative production versus GOR, the multi -lateral completion style limits the effects of the gas in the top of the reservoir on oil production, because the gas is at the end of the lateral and at the highest point in the wellbore. Thus, the gas zone has the highest flowing bottom hole pressure, instead of the lowest. The static reservoir model has been updated to included all the wells drilled to date. The dynamic model is currently being history matched. The timeline for the reservoir modeling is as follows: Reservoir & Development Description Page 23 of 36 ZuNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Hansen Field Monthly Avg Oil Production 1800 ti 1600 0 5 1400 m c 0 1200 4 — Id a O 0 1000 L d 3 � O 800 Q > 600 2 M c 400 z 1 200 0 0 Juty-15 January -16 August -16 March -l7 September -17 April -18 October -18 May -19 December -19 Hansen Field GOR & Water -Cut 16,000 80 1.—GOR M scf j80 14,000 70 + :"D Water -Cut Percent 12.000 60 O 10,000 50 no U 8,000 40 v v C7 6,000 30 4,000 20 2,000 10 0 0 July -15 January -16 Augu5t-16 March -17 September -17 April -18 October -18 May -19 December -19 Production history of Hansen field including average monthly oil rate, number of wells producing, producing GOR and water -cut. Figure 18: Production history of Hansen field Reservoir & Development Description Page 24 of 36 nue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Hansen Field Cum Field Production vs GOR zo Oil Zone Only and Field 18 --*—Field (all wells) --&—Soil Zone Wells (except H-121 16 14 Om 12 V 10 5 8 6 4 Most we -s shut -;n 2 unre,'iab'eGOR August 2018 0 G 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Cumulative Oil, BO Cumulative oil production versus producing GOR. The oil zone only wells have stable producing GORs and are segregated to show the effects of H-12, which includes a gas zone. H-12 GORs are declining. Figure 19: Cumulative oil production versus producing GOR The relative lack of production rate increase success in the traditional fraced wells is evidence of the highly stressed and stratified nature of the reservoir. The static reservoir model has been updated to included all the wells drilled to date. The dynamic model is currently being history matched. The timeline for the reservoir modeling is as follows: 2019 • Finalize history match • Conduct simulations to establish benchmark rates and reserves • Appraisal stage — Magnitude of reserves, depletion option, potential sources and volumes, determine key risks • Lab studies and simulation studies o Waterflood — fluid types and their effects on porosity and permeability o Miscible gas injections — determine optimal composition o Chemical EOR — understand the effects of polymer injection on mobility 2020 Reservoir & Development Description Page 25 of 36 Iue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules • Appraisal — conduct further lab studies and simulations of shortlisted secondary recovery and EOR • Identify risks and uncertainty 2021-2022 • Develop reservoir management strategy and range of potential performance • Refine costs, production downtime, effects of delayed injection 2023-2025 • Exicute development strategy • Establish strategy for acquiring data — well and surveillance • Identify subsurface uncertainties and risks and range of potential outcomes 5.2.2 Reservoir Data Below are reservoir data used to describe the average properties of the net pay zones within the producing oil zone. Confidential Table 2: Confidential The reservoir pressure was recently measured in a bottom hole gauge in the H-1AL1 well at 2785 psi (corrected to -6800" TVDSS), but it should be noted that the bottom hole pressure in the well was still building at approximately 1 psi per day. The well has been shut in since May 25, 2019. Due to the compartmentalization and stratification across the reservoir, it is anticipated that reservoir pressure will vary well to well. 5.2.3 Development Options Development options are mainly focused around increasing primary production, pressure support initiatives and secondary/tertiary recovery planning. Confidential Since decreasing reservoir pressure can cause a decrease in oil relative permeability and increased oil viscosity, various pressure maintenance options are being studied. Currently, options for secondary and tertiary recovery are limited due to geology and economic feasibility. As more wells are drilled, the dynamic model matures and the economics of secondary and tertiary recovery options are better understood, full field development options will be reavaluated. The highest oil rates to date were achieved using a fishbone well multi -lateral design. This type of well is planned for next year. The fishbone well makes it possible to contact greater KH across the reservoir via a single mother bore. Fracing the wells was a technical failure due to in-situ rock stress, and future wells will not be fraced. Reservoir & Development Description Page 26 of 36 Zst Cosmopolitan Unit, Hansen Oil Pool Eneigy Proposed Pool Rules Confidential Figure 20: Confidential Reservoir & Development Description Page 27 of 36 llueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Figure 21: Confidential A water injection case studied earlier was able to restore the reservoir to original pressure within one year assuming that there is good connectiveity across the reservoir. Using the old history matched reservoir model, various simulation cases were run for different injection timing and different well spacing to optimize well spacing and timing for field development planning. Moreover once the reservoir pressure is restored, the field will be producing at solution GOR till end of field life (EOFL). However, a water injection case may not be feasible at this time, because the water -sensitive clays in the reservoir may swell, causing a reduction in formation permeability. At the time of the original water injection study, it was believed that the reservoir was well connected. With the addition of wells and production data, we now understand this reservoir to be highly compartmentalized and statified. This would limit the effectiveness of the waterflood to only the compartments that the injector well contacts. An alternate scenario of gas injection is currently being investigated for reservoir pressure maintenance. Additional work would have to be done to conduct a feasibility study for enhanced oil recovery via a miscible flood (mainly CO2). In miscible gas flooding with CO2, key recovery mechanisms will include oil sweling and viscosity reduction. However, a more feasible gas injection option in Cosmopolitan field will be lean hydrocarbon gas injection mainly for pressure maintainenc&[BJ11. 5.2.4 Enhanced Oil Recovery Options Figure 22 summarizes options studied to increase production from the Cosmopolitan field. Secondary and EOR development options at Cosmopolitan field are severely limited by the geology of the reservoir. This includes compartmentalization, stratification, clay -swelling from water injection and economic feasibility of long -reach well development. All waterflood based processes (highlighted as purple) are currently deemed as low priority until the magnitude of formation damage from water injection can be evaluated. Those options highlighted in green are to be studied further. Options highlighted in red include thermal options and are deemed not feasible due to reservoir geology, oil viscosity and surface facilities. Gas injection based IOR/EOR options will be studied in detail. Reservoir & Development Description Page 28 of 36 llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Primary Depletion (Fishbone and ERD Wells) Waterflood-Pressure Maintenance Development Options - Secondary Recovery Produced Gas Flood -Pressure Maintenance Lo Sal Waterflood Emulsion Alkaline Surfactant Tertiary Recovery (EOR) 6rightwater Chemical EOR Surfactant Polymer Alkaline Polymer Microbial Alkaline Surfactant Polyme Crestal CO2 Irjecbon Solvents Loan Gas Injection HC Rich Gas Injection Possible Low Priority Steam Flood Thermal In-situ Combusbon Not Feasible SAGD Development options are mainly dictated by reservoir geology (clays, compartmentalization). surface facilities limitations. economic feasibility of development Figure 22: Summary of studied options to increase production from Cosmopolitan field 6.0 RESERVOIR DEVELOPMENT PLAN 6.1 Development History BlueCrest began its development drilling with the spud of H-16 well on November 29, 2016. from the Hansen Drilling Pad. The H-16 well was drilled as an extended reach producer. Once the well was completed, an 18 stage hydraulic stimulation was performed. The well began its flowback on May 19, 2017 and had an initial rate of 330 bbls/day. On March 22, 2017, BlueCrest spudded the H-14 well. Upon completion, a 12 -stage hydraulic stimulation was performed. The flowback for H- 14 began on November 17, 2017 with an initial production of approximately 1100 bbls/day. BlueCrest took a hiatus from drilling following the H-14 well to monitor the production and decline while determining the best path forward for the next drilling phase. On May 8, 2018 BlueCrest spudded the H-12 well. The H-12 well was designed as an extended reach multilateral "fishbone" well with 7 laterals extended from 150' above the presumed oil -water contact to the top of the reservoir. Upon completion, the well began its flowback on July 26, 2018 with and initial rate of approximately 900 bbls/day and 6.OMM scfpd of gas. With the positive results from the H-12 well, the decision was made to abandon the production portion of the H-16, mill a window and drill H - 16A, an 8 -leg multilateral. The whipstock was set and the window milled on October 17, 2018. Upon completion, the well began its flowback on December 18, 2018 initial rate of approximately 1200 bbls/day and 2.2MM scfpd. Following the success of the two multilaterals, BlueCrest decided to delineate the reservoir to the southwest with the H-04 multilateral. The well was spudded on December 27, 2018 and the flowback began on March 22, 2019 with an initial production rate of approximately 1270 bbls/day. Reservoir & Development Description Page 29 of 36 nluest Energy 6.2 Future Development Plan Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules BlueCrest plans to continue drilling utilizing multilateral "fishbone" wells to maximize the production from the reservoir. The next well (H-10) will drill to the north of the currently developed area continuing with the "fishbone" design drilling form the bottom of the reservoir and extending each lateral to the top of the reservoir to penetrate each productive sand within the reservoir. Following H-10, drilling will continue to develop the reservoir away from the currently developed area in the central portion of the structure to the economics limits of the reservoir. While drilling and production progresses, reservoir behavior will be monitored and options for secondary recovery and pressure maintenance will be evaluated to determine the most feasible and economic method to maximize the ultimate recovery for the Cosmopolitan Unit. 7.0 RESERVOIR SURVEILLANCE AND MONITORING The production wells are equiped with real-time bottom -hole pressure guages. 8.0 SURFACE FACILITIES 8.1 Facilities Section The Hansen Production Facility has 3-phase separation, gas processing, gas compression, power generation, product storage, and a custody transfer measurement while loading the trucks for transfer. 3-phase separation: The capacity is rated at 13,000 BPD liquid, 10,000 BPD water/oil and 15 mmscfd gas. Utilizing a HP 3-phase separator to separate bulk quantities of gas and water, and a 3-phase heater treater for final separation to meet contract specifications. Gas compression: The capacity is rated at 15 mmscfd. Utilizing 3 -stage reciprocating compressors driven by natural gas engines. These compressors also provide gas lift to the wells that require artificial lift. Gas processing: The capacity is rated at 15 mmscfd. Utilizing scrubbers, triethylene glycol dehydration, desiccant dehydration towers, mechanical refrigeration equipment, and coalescing filtration. Power generation: The capacity is rated at 1800 KW. Utilizing Capstone micro turbines. Product storage: The capacity is rated to 6,000 BBLS oil, 1,500 BBLS off -spec fluid, and 750 produced water. This is utilizing eight oil tanks, two off -spec tanks, and one produced water tank. 8.2 Oil Export Measurement Crude oil custody transfer measurement utilizes four, FMC Smith model E3 -S1, 5:1 gallon geared positive displacement meters. These meters accurately measure processed crude oil while being loaded into tanker trucks for transport to the Marathon Refinery in Nikiski. These meters are proved monthly with the use of a bi-directional prover loop that is on an annual water draw certification schedule. All associated instrumentation is calibrated quarterly. 8.3 Gas Export Measurement Natural gas custody transfer measurement utilizes a 4" S80 Daniel Senior orifice meter, with a Nuflo Scanner 2000 flow computer. Accurate measurement range is 500-18,850 MSCF/D. Reservoir & Development Description Page 30 of 36 lueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 9.0 PRODUCTION MEASUREMENTS AND PRODUCTION ALLOCATION 9.1 Well Testing Well testing is done on a monthly basis for all wells that are on-line. AOGCC requires two tests per month, and these are currently done back to back utilizing Expro as a contractor. Expro ties into the test header and cycles through each well. The oil, gas and water rates and volumes and recorded with a minimum of 6 -hour tests. BlueCrest is currently in the process of purchasing a two-phase separator which will eliminate the need for contract services. The two-phase separator will provide the opportunity to have longer tests as well as being able to test more than twice per month. The reason that a two-phase separator was chosen is due to the emulsion that is produced is very difficult to break out an accurate water cut while going through the separator, as it requires significant heat and long resonance time to break out the water. Currently, only one well produces some water. The water cuts while testing will be determined by heating the fluid sample and utilizing a centrifuge. 9.2 Production Allocation Allocations are completed each month for all wells that have been online at any time during the month. The oil, water and gas allocations are determined from the monthly tests. All of the wells have bottom hole pressure gauges and the PI is determined for each well from the monthly test data. The new PI is used to determine the daily flow rate based on the bottom hole pressure and the new PI. If the PI has changed significantly from the new test, then the data is extrapolated from the previous month to the recent test. A correction factor is applied to the daily oil, water and gas test to match the daily production as the final calculation for determining the daily rates. The total volume for oil, water, and gas is reported to AOGCC by the 20th of each month. 10.0 CONCLUSIONS 10.1 Proposed Pool Rules 10.1.1 Rule 1: Initial Field and Pool Rules Area These rules apply to the combined area of the then current Cosmopolitan Unit boundary, located offshore of the Kenai Peninsula, Alaska, The Cosmopolitan field is defined by the area enclosed in the Cosmopolitan Unit area. The Hansen oil pool is defined as the oil and gas bearing Hemlock and Starichkof formations within the Cosmopolitan Unit area. 10.1.2 Rule 2: Pool Definition: The field will be known as the Cosmopolitan Field, and the Hem lock/Starich kof oil accumulation subject to this application will be known as the Hansen oil pool. The Cosmopolitan field Hansen oil pool is defined as the oil and gas bearing intervals common to and correlating with the interval between the measured depths (MD) of 6,538 feet and 7,312 feet in the Cosmopolitan State #1 well and contained within the Cosmopolitan unit. 10.1.3 Rule 3: Oil Well Spacing There shall be no oil well spacing restrictions as specified in 20 AAC 25.055 within the Hansen oil pool to accommodate horizontal, multilateral, and "fishbone style' wells, except that no oil well Reservoir & Development Description Page 31 of 36 llue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules shall be completed less than 500 feet from the exterior boundary line of the then current Cosmopolitan Unit unless property ownership is the same on both sides of the Unit boundary line. 10.1.4 Rule 4: Administrative Approval The Commission may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based upon sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. 10.1.5 Rule 5: GOR Waiver In accordance with 20 AAC 25.240 sections (b)(3) and (c), the gas -oil ratio limitation in 20 AAC 25.240(a) is waived and wells producing from the Hansen oil pool are exempt from the producing gas -oil ratio restriction in 20 AAC 25.240(a) . 10.1.6 Rule 6: Wellbore Surveys BlueCrest requests that the wellbore survey requirements described in 20 AAC 25.050 (b) be waived for the proposed future Hansen wells to relieve administrative burden. In lieu of the requirements of 20 AAC 25.050(b), permit to drill applications for development wells shall include: 1. Completed Form 10-401 with Cover Letter 2. Directional Wellbore Plans with: a. Plan View b. Vertical Section c. Close Approach Data d. Directional Program Description and File Data 10.1.7 Rule 7: BOP Tests BlueCrest requests Pool Rules which include the requirement for a three (3) week BOP test duration while drilling the production portion of the well as opposed to the standard two (2) week test duration currently in place and practiced by the AOGCC statewide. 10.1.8 Rule 8: Surface Casing Surface casing (13-3/8") will be set in a competent shale at approximately 3350' SS, and 9-5/8" intermediate casing will be set into the Starichkof sands at approximately 6900' SS. Both casing shoes will be tested to an equivalent mud weight (FIT) of at least 12.5 ppg. The surface casing (13-3/8" 72# L80 BTC or equivalent) shall be cemented to surface; while the intermediate casing (9-5/8" 47# P110 H563 or equivalent) shall be cemented with 1500 linear feet of cement as per the attached design. The surface casing cement job will be remediated for cement fall back by employing top jobs with visual confirmation that cement has reached the surface in a continuous column. 10.1.9 Rule 9: Well Completion The fishbone multilateral wells will be completed barefoot with no liners or screens in the reservoir section. The upper completion will consist of 3-1/2" tubing, a 3-1/2" X 9-5/8" production packer, with gas lift mandrels, downhole gauges, downhole chemical injection, and a SSSV. Reservoir & Development Description Page 32 of 36 luN sc Cosmopolitan Unit, Hansen Oil Pool Ener Proposed Pool Rules SY 10.1.10 Rule 10: Cement Bond Logs The requirement for a cement bond log of any type will be waived for the 9-5/8" casing string due primarily to the justification that none of the development wells will be hydraulically fracture stimulated. In addition, due to the high wellbore angles existing in these ERD wells, a cement bond log would need to be deployed by tractor, coil tubing, or drill pipe with side entry sub. 10.1.11 Rule 11:130P Rating 5,000 psi rated BOP equipment is adequate and approved for the development wells based on the MASP calculations attached. 10.1.12 Rule 12: Casing Pressure Test Both the 13-3/8" surface casing and 9-5/8" intermediate casing will be pressure tested to 3,500 psi each prior to drilling out the shoe tracks. 10.1.13 Rule 13: Subsurface Safety Valves BlueCrest / Hansen wells are and will be equipped with both Surface Safety Valves (SSV's) and Subsurface Safety Valves (SSSV's). Initial testing as well as periodic inspections and tests will be conducted following notification of the AOGCC consistent with the requirements of 20 AAC 25.265. 10.1.14 Rule 14: Diverter Waiver BlueCrest Alaska Operating LLC hereby applies for a diverter waiver for all future wells to be drilled from the Hansen / Cosmopolitan Project drill site north of Anchor Point, Alaska. This waiver is requested under 20 AAC 25.035 (h)(2) of the AOGCC Regulations. More detailed justification for the request is included in the attached. 10.1.15 Rule 15: Mud Weights Mud weights utilized will always exceed formation pressure as indicated in the attached Mud Program. 10.1.16 Rule 16: Well Monitoring Wells are and will be equipped with instrumentation and monitored in real time in the Control Room. The following instrumentation is employed: a. Tubing pressure and temperature b. Inner Annulus (IA) pressure C. Outer Annulus (OA) pressure d. Bottomhole Pressure (BHP) in producer wells e. Gas Lift Rate in producer wells, when utilized f. Water/gas injection rates in injector wells, when drilled 10.1.17 Rule 17: Description of Rig Detailed information describing BlueCrest Rig No.1 is included in the attached. This rig and the equipment described herein are approved for drilling all wells at this location. 10.1.18 Rule 18: LOT/FIT Procedure The attached LOT / FIT Procedure is hereby approved for all wells drilled at this location. Reservoir & Development Description Page 33 of 36 Ist Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 10.1.19 Rule 19: Wellhead and Christmas Tree Design The attached wellhead and Christmas tree designed for all wells at this location is hereby approved. 10.2 Summary BlueCrest believes that the above described pool rules and development plan are prudent and consistent with good oil field practices. They are based on sound engineering practices and earth science principles, and are in compliance with AOGCC statutes and regulations. Reservoir & Development Description Page 34 of 36 Cosmopolitan Unit, Hansen Oil Pool Application for Field and Pool Rules Drilling & Well Construction Report Technical Considerations and Discussion July 31, 2019 Ilu est Energy Cosmopolitan Unit, Hansen Oil Pool Ilue est Proposed Pool Rules Energy TABLE OF CONTENTS 1.0 PERMIT TO DRILL APPLICATIONS.......................................................................................1 2.0 WELL SPACING: SURFACE SLOTS & DOWNHOLE RESERVOIR SPACING ..............................1 3.0 GENERAL DRILLING PROGRAM.........................................................................................2 4.0 FISHBONE MULTILATERAL WELL.......................................................................................2 5.0 CASING SETTING DEPTHS................................................................................................6 5.1 Casing and Cementing Program....................................................................................6 5.2 Surface Hole Section - Example H04............................................................................6 5.3 Intermediate Hole Section - Example H04....................................................................7 5.4 Cementing Program.......................................................................................................7 5.5 Top Jobs on Surface Casing.......................................................................................... 7 5.6 Cement Bond Logging Waiver....................................................................................... 7 5.7 Casing Design, MASP & Safety Factors........................................................................8 5.8 Casing Pressure Tests.................................................................................................11 6.0 MUD PROGRAM AND MUD WEIGHTS...............................................................................11 6.1 Drilling Fluid Program - H04 Example.........................................................................11 7.0 WELL INTEGRITY............................................................................................................11 7.1 Surface Safety Valves..................................................................................................11 7.2 Well Instrumentation and Monitoring............................................................................12 8.0 DIVERTER SYSTEM INFORMATION...................................................................................12 8.1 Diverter Waiver Request..............................................................................................12 8.2 Diverter Waiver Discussion..........................................................................................12 9.0 BOP TEST FREQUENCY................................................................................................. 13 9.1 Rig Information.............................................................................................................13 9.2 Rig Circulating and Pit System.....................................................................................14 9.3 Blowout Prevention Equipment Information.................................................................16 10.0 FIT/ LOT PROCEDURE..................................................................................................20 10.1 Procedure for Conducting Formation Integrity Tests....................................................20 11.0 WELLHEAD ASSEMBLY...................................................................................................21 12.0 SHALLOW GAS AND DRILLING HAZARDS..........................................................................22 12.1 Drilling Hazards Information.........................................................................................22 12.2 Drilling Hazards Summary ............................................................................................24 13.0 ARTIFICIAL LIFT - GAS LIFT............................................................................................ 25 14.0 ABNORMALLY PRESSURED FORMATION INFORMATION.....................................................25 15.0 SEISMIC ANALYSIS.........................................................................................................25 16.0 SEABED CONDITION ANALYSIS.......................................................................................25 17.0 EVIDENCE OF BONDING..................................................................................................25 18.0 DISCUSSION OF MUD AND CUTTINGS DISPOSAL AND ANNULAR DISPOSAL ........................25 19.0 EXHIBIT 1: DRILLING & COMPLETION DRAFT WELL PLAN H04 ........................................26 Drilling & Well Construction Report Page i ^Uest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules LIST OF FIGURES Figure 1: Example Fishbone Wellbore Schematics...................................................................................... 3 Figure 2: H04 Fishbone Production Well......................................................................................................4 Figure 3: H04 Lower Lateral Completion...................................................................................................... 5 Figure 4: Mud System Suction Piping Schematic.......................................................................................15 Figure5: BOP 10k Stack.............................................................................................................................16 Figure6: Choke Manifold............................................................................................................................17 Figure7: Hydril............................................................................................................................................18 Figure8: Well Row Schematic....................................................................................................................19 Figure 9: Wellhead Assembly and Tree Schematic....................................................................................21 Figure 10: Drilling Pressure Model..............................................................................................................23 LIST OF TABLES Table 1: Casing/cementing design for the future wells.................................................................................6 Table 2: Drilling Fluids and properties for intervals.....................................................................................11 Table 3: BlueCrest #1 — Tank Volumes......................................................................................................14 Table 4: Drilling Hazard Summary ..............................................................................................................24 Drilling & Well Construction Report Page ii Cosmopolitan Unit, Hansen Oil Pool En est Proposed Pool Rules Energy 1.0 PERMIT TO DRILL APPLICATIONS Notional wells for future development have been planned, but further development will be based on information gathered during the initial development and following the confirmation of the viability of the fishbone producer design. BlueCrest requests that the requirements described in 20 AAC 25.050 (b) be waived for the proposed future Hansen wells to relieve administrative burden. In lieu of the requirements of 20 AAC 25.050(b), permit to drill applications for development wells shall include: Completed Form 10-401 Directional Wellbore Plans • Plan View • Vertical Section • Close Approach Data • Directional Program Description and File Data BlueCrest expects to develop this reservoir using fishbone style multilateral wells with either barefoot or slotted (un -cemented) liner completions. Producer wells will be completed with 3- 1/2" tubing to minimize hydraulic friction for the predicted well producing flow rates. Producers will be equipped for gas lift operations, but other artificial lift mechanisms may be used as the field matures to optimize drawdown and production. BlueCrest does not intend to hydraulically fracture stimulate future wells. BlueCrest will use its own Rig No.1 for all drilling and completion operations. 20" conductors are drilled into the ground to the point of refusal by using Kraxberger's conductor setting machine. Surface casing is set in a competent shale between the Beluga and Tyonek formations and is described as 13-3/8" 72# L80 BTC casing. The surface casing is cemented back to surface in one stage. The 9-5/8" intermediate casing is set into the Hemlock reservoir formation at the heel of the production interval and is cemented with 1500' linear feet of cement up from the shoe. Multilateral fishbone style wellbores in the 8-1/2" section are drilled below the 9-5/8" casing shoe, using rotary steerable BHA's and PDC bits. Oil Base mud with calcium carbonate is used in the production section to provide for a very non -damaging drilling fluid to minimize formation damage. The planned logging for the wells includes GR/Resistivity for the surface hole section, and LWD GR/Resistivity logs in the intermediate and pay zone section. All logging data will be obtained by MWD/LWD as no wireline logging is planned or feasible. 2.0 WELL SPACING: SURFACE SLOTS & DOWNHOLE RESERVOIR SPACING All development wells will be drilled from the BlueCrest onshore drilling and production site located north of Anchor Point. Spacing restrictions of 20 AAC 25.055 are requested to be waived for development wells in the proposed Unit to accommodate horizontal, multilateral, and fishbone style wells as have been previously drilled, i.e., H12, H16A, and H04. The spacing waiver is also requested to maximize recovery from this compartmentalized, highly stratified reservoir. Drilling & Well Construction Report Pagel of 81 ZeNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Without prior approval, development wells will not be completed any closer than 500 feet from any external unit boundary where ownership and/or land ownership changes. Eliminating spacing restrictions on wellbores within the Affected Area will increase the Operator's flexibility in placing wells as the pool is developed and will not affect recovery, promote waste, jeopardize correlative rights, or result in an increased risk of fluid movement into freshwater aquifers. 3.0 GENERAL DRILLING PROGRAM See Well H04 Example --Complete Well Plan in Section 19. Exhibit D-1. 4.0 FISHBONE MULTILATERAL WELL Example of Skeleton Procedure for Drilling Reservoir Section A notional seven (7) ribs of the fishbone production section will be drilled in the following sequence using a 8.8-9.4 ppg low -solids OBM starting mud weight: • Drill the first fishbone rib "101" up into the Hemlock and Starichkof pay sands as per the APD and directional plan for L01. • Circulate cuttings to a point past the BHA. • Backream L01 rib back to mainbore. Circulate hole clean. • Once back in the mainbore, position the bit and RSS BHA at the open hole sidetrack depth for L02 as directed by the Operations Geologist. • Trench and open hole sidetrack the mainbore to the low side and drill ahead to the kickoff point for the L02 rib. • Repeat the L01 drilling procedure above to drill the L02 rib, and the subsequent ribs L03, L04, L05, L06 and L07. • The last rib could be designated as L08 which will simply be a continuation to TD of the mainbore to be drilled under the Mainbore APD. • NOTE: more than one bit run is expected to be required to drill the multiple ribs, and the AOGCC BOP test frequency will also need to be factored into and incorporated into the Daily Operations Plan. • Drill the mainbore to TD, and circulate the well clean. • Backream to the 9-5/8" shoe. • Circulate hole clean and cap well as required • Prepare to POOH for the 4-1/2" slotted liner. • Backream / POOH on elevators, and lay down BHA. • NOTE: a barefoot completion with no liner is the planned completion design. The next three figures illustrate the fishbone well design. Drilling & Well Construction Report Page 2 of 81 Cosmopolitan Unit, Hansen Oil Pool Energy lluNpst Proposed Pool Rules E 2400 3200 4000 4800 500a 640 7100 e00o swo 9 ')4(1) aQ S' S ^5 - `I 2400 3200 4000 4800 5000 Glop 1100 6000 saw Mw 10400 11200 H04 Multi -Lateral D 5W 1000 ,sap 2000 2WMJs 5104, rim MMM +'rAo 10,47014 112500 zsean Ewparoanr W r� ccn•ws.Kor, 4�1/Ml Figure 1: Example Fishbone Wellbore Schematics Drilling & Well Construction Report Page 3 of 81 lIueI.ICS[ Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Last Updated: TWM, 03 Oct 2018 H04 Fishbone Production Well RSS: Xceed 675 (Main Bore ILow er Lateral Starichkof I Hemlock Primary Target) '193' MDITVD LWO: GeoSphere Open Hole Drilled In adnVISION 20" 0. 500" Wall A252 ERW Cement Mud I Deviation Bit: 17-112" PDC Bit 12.0 ppg Lead + RSS: PDX6 715bb1s WBM MWD: PowerPulse ______________ 25Y Excess .8-10.0 ppg Spud Muc LWD: arcVISION (GRIRES) 1742" Top of Tail 4,623' MD Open Hole 15.8 ppg Class G Tail 167 b61s 25% Excess L Incl 63 deg 5,623' MD 13,531' TVD 13-318" 72# N80 BTC Azkn 286 dea Bit: 12-114" PDC RSS: Xceed 675 12-114" MWD: PowerPulse Open Hole LWD: arcVISION (GRIRES) 15,481' MD 17,067' TVD (Lower Lat) Bit: 8-112" PDC RSS: Xceed 675 MWD: Telescope 8-112" LWO: GeoSphere Open Hole adnVISION 342" Production Tubing to Surface - GLM's1SSSV1DHGaugeslCIM --------------- TOC @ 13,981' MD 15.6 ppg Class G 132 bbls 50% Excess pqLiner Hgr & Liner Top Packer ell I 9-518"4701101-1563 I I I I I I I I 1 I I I 4-112" 15.2# P110 H563 Slotted Liner Un -Cemented Slotted Liner Completion 22,122' MD 17,063' TVD Total Depth in Maii Figure 2: H04 Fishbone Production Well OEM 10.5 ppg VersaPro Incl 77 deg OEM Un -cemented 8.8-9.7 ppg Slotted Liner No Frac's Max Incl 115 deg Azim 302.4 dec Drilling & Well Construction Report Page 4 of 81 Cosmopolitan Unit, Hansen Oil Pool Enlu"ergy p sr Pro osed Pool Rules En H04 Lower lateral Completion with 20" Conductor Slotted Liner in Mainbore and Seven to be set CW 152' BGL (7) Open Hole Fishbone Ribs 13-3/8" 72# 1.80 BTC 0 5623' MD 3-%"9.3# IBT-MOD Production Tubing llue est Energy Fishbone ribs are 8-%" open holes spaced approx every 800' with 4-%" slotted liner run in the mainbore after the seven ribs are drilled; ribs are drilled in order from L01 to L07 using open hole sidetracks to initiate each rib; ribs penetrate all layers of Starichkof and Hemlock pay sands 4-%" x 9-5/8" 1.01 L02 L03 L04 LOS L06 L07 Liner Hanger & Liner Top Packer T. McKay, 285ept2018 Figure 3: H04 Lower Lateral Completion 9-5/8" 47.0/53.5# N80/P110 H563 15481' MD --I 4-X" 15.2# H563 Slotted liner CED 22122' MD Drilling & Well Construction Report Page 5 of 81 11UNPIst Energy 5.0 CASING SETTING DEPTHS 5.1 Casing and Cementing Program Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Requirements of 20 AAC 25.005(c)(6) An application for a Permit to Drill must be accompanied by each of the following items, except for an item already on file with the commission and identified in the application: (6) a complete proposed casing and cementing program as required by 20 AAC 25.030, and a description of any slotted liner, pre -perforated liner, or screen to be installed, Shown below is the casing/cementing design for the future wells. Casing and Cementing Program — H04 Well Example Csg/ Tbg Hole weight Length Top Btm OD Size /,b/f ( ) Grade Conn (ft) MD/TVD MD/TVD Cement Program (in) (ft) (ft) in 20" N/A .5001 Wal A525 Weld 152' 41'/41' 1937 193' N/A 882 TOTAL BBLS 5,6237 LEAD: 572 bbls 12.00 ppg 13-3/8' 17-1/2" 72 L-80 BTC 5,583' 40'/40' 3,531' Kenai Lead TAIL: 167 bbls 15.8 ppg Class "G" 132 TOTAL BBLS 9-5/8" 12-1/4" 47 P-110 Hydril 15,443' 38'/38' 15,481'/ TAIL:132 bbls 15.8 ppg 563 7,067' Class "G" TOC: 13,981' MD/ 6,546' 4-1/2" TVD OPTIO 8-1/2" 15.2 P-110 Hydril 6,741' 15,381'/ 22,122'/ No cement required NAL 563 7042' , 7,063' Slotted liner completion 100' liner la Table 1: Casing/cementing design for the future wells Please see Casing Design Calculations in section 5.7. NOTE: Due to the high inclination at the 9-5/8" intermediate shoe, a tractor would be required to run a CBL/USIT log on this shoe. In addition, since the future wells are not to be hydraulically fracture stimulated, it is requested that the AOGCC waive the CBL/USIT requirement on the 9- 5/8" cement job on the future wells. 5.2 Surface Hole Section — Example H04 The surface hole section will be drilled out of the 20" conductor and drilled to a measured depth of 5,621' MD (3,530.5' TVD; -3,350.0' TVDSS) utilizing MWD/LWD with GR -Res -Dir -PWD. The kickoff point is at 400' MD and has a build rate of 2.5°/100'. The surface hole will be drilled through the Beluga Formation and reach total depth within the Tyonek Formation. The surface casing point will be below the marker coal Identified at 5,227' MD; -3,420' TVDSS in the H16 well within a competent shale. This marker will be confirmed by drill cuttings samples and/or MWD Logs. The casing shoe depth will be determined by the BlueCrest company man to fit the casing tally below the coal in competent shale. Drilling & Well Construction Report Page 6 of 81 IlueCosmopolitan Unit, Hansen Oil Pool est Proposed Pool Rules Energy 5.3 Intermediate Hole Section — Example H04 The intermediate hole section will be drilled with a MWD/LWD tool string containing Schlumberger arcVISION (GR -Res) and Telescope (Dir—PWD) 400' MD into the Starichkof Sand. The intermediate hole section will drill through the Upper and Lower Tyonek Formation before encountering the Starichkof Sands. The intermediate casing point is to be picked 400' MD below the Marker Coal prognosed at 15,088' MD (-6,765' TVDSS). The Marker Coal and the pick for Intermediate Casing Point are to be confirmed on logs and drill cuttings then verified by the Operations Geologist prior to calling TD. The intermediate casing shoe is planned for 15,481' MD (-6,886' TVDSS). Adjustments will need to be made during the drilling of the intermediate hole section in order to land the well as planned. Adjustment can be made in the field to land the well 400' MD below the Starichkof Coal Marker provided that well will hit the target and not jeopardize running the casing. The limitations for adjustments are as follows: 1. The intermediate casing point will be reached within the agreed tolerance of the directional plan, for the current well that is a 50' departure from the path. 2. At landing point, the wellbore inclination will be between 760 - 800 . 3. The maximum planned dogleg is less than the maximum tolerable for the well plan; for this well, the maximum allowable dogleg is 3.0°/100'. If this is exceeded or needs to be exceeded, the Operations Geologist must be notified and the decision to proceed, will come from the Geologist. • The exception to this is the initial build for each lateral to ensure a good KOP. For the first 200' MD departure from the main wellbore, doglegs in excess of 3°/100' are acceptable. 4. At no time will the well path drill below -7,000' TVDSS (+/- 5') 5.4 Cementing Program See above. 5.5 Top Jobs on Surface Casing Cement fall back has been observed on previous surface casing cement jobs. Top jobs have been successfully used to supplement the cement column and bring same back to surface in the 13-3/8" x 20" annulus. Small diameter piping or other means are used to positively locate and tag the top of cement below the well cellar. The small diameter pipe is then used to fill the void space with cement back to the well cellar. A slot can be cut with a torch in the side of the 20" conductor in the well cellar. One -inch pipe or other devices can be run through the slot cut and down into the 13-3/8" x 20" annulus. One or more top jobs can be performed in this manner to "top up" the cement job to surface. 5.6 Cement Bond Logging Waiver Since the future wells are not planned to be hydraulically fracture stimulated, and since the lower portion of the 9-5/8" intermediate casing is set in such a configuration that bond logs would need to be run on a wireline conveyed tractor or by coil tubing, BlueCrest hereby requests no cement bond logging will be required on the intermediate casings for all future fishbone style producer wells. Drilling & Well Construction Report Page 7 of 81 nue est Energy 5.7 Casing Design, MASP & Safety Factors Example from H04 Well: Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H04 Fishbone Well; Maximum Anticipated Surface Pressure (MASP): 17.5" Hole Section This hole section will be drilled with a diverter only, no BOPE. While MASP will equal the formation pore pressure at the surface casing shoe depth of 3,350' TVDss less a gas gradient to the surface, it cannot be shut In, only diverted. However, since no shallow gas in the surface section has been encountered in the first two offset wells on the pad (H14 and H16), as well as the recently drilled H12, a diverter waiver for H04 has been requested. Offset well information indicates that the pore pressure at 3,350' TVDss will be a maximum of 9.0 ppg (0.468 psi/ft). Calculation for MASP (17.5" hole) = (3,350') x (0.468-0.10) =1,233 psi. 12.25" Hole Section The MASP for 12.25" hole section will be the formation pore pressure (less a full gas column to the surface) at 15,022' MD/ 6,900' TVDss Offset well information indicates that pore pressure at 6,900' TVDss will be a maximum of 9.66 ppg (0.502 psi/ft). Calculation for MASP (12.25" hole) = (6,900') x (0.502-0.10) = 2,776 psi. 8.5" Hole Section The MASP for the 8.5" hole section will be the formation pore pressure (less a full gas column to the surface) at 22,122' MD/ 6,883' TVDss. Offset well information indicates that pore pressure at 6,900' TVDss will be a maximum of 9.0 ppg (0.468 psi/ft). Calculation for MASP (8.5" hole) = (6,883) x (0.468 - 0.10) = 2,533 psi. With MASP in the 8.5" open hole section calculated to be 2,533 psi, the 5,000 psi BOPE system to be used will be adequate. Drilling & Well Construction Report Page 8 of 81 llue*C est Energy Casing Design Verification: H04 Planned Casing program: Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules API Casing Design Factors Design factors are essentially "safety factors" that allow the design of safe, reliable casing strings. Each operator may have his own set of design factors based on his experience and the condition of the pipe. Here we use the operator's recommended design factors. Design Factors: Tensile Joint Strength: Collapse (from external pressure): Burst (from internal pressure): Nt = 1.8 SF Nc= 1.125 5F Ni =1.25 SF The pore pressures and fracture gradients used here are those derived from studies of offsetting Cosmopolitan 1, Hansen 1 and Hansen IA. Hao Casing Design Factor Calculations: Burst Requirements Use maximum anticipated surface pressures (MASP) for each casing string. For each casing string MASP is the formation pressure at the next casing point less a gas column to surface. 13.375", 72#, L-80, BTC Surface Casing: MASP at 12.25" hole section TVDss of 6,886': MASP = (6,886') x ((10.5 ppg x 0.052)-0.10 psi/ft) = 3,071 psi (burst stress) DFs,,,,, = burst strength / burst stress = 5,380psi / 3,071 psi = 1.75 vs minimum SF of 1.25. 9.625", 47# - P-110. Hirdril 563. Intermediate Casing: MASP at 8.5" hole section TVDss of 6,883': MASP = (6,883') ((10,0 ppg x 0.052)-0.10 psi/ft) =2,891 psi (burst stress) DFB„ ,$r = burst strength / burst stress = 9,440 psi / 2,891 psi = 3.27 vs minimum SF of 1.25. Drilling & Well Construction Report Page 9 of 81 13.375" Surface Casing 9.625" Intermediate Casing Depth (MD) 5,623' 15,481' Depth (TVDss) 3,531' 7,067' Hole size 17.5" 12.25" Weight (ppf) 72 47 Grade L-80 P-110 Connection BTC Hydril 563 Nominal ID (in) 12.347" 8.681" API Casing Design Factors Design factors are essentially "safety factors" that allow the design of safe, reliable casing strings. Each operator may have his own set of design factors based on his experience and the condition of the pipe. Here we use the operator's recommended design factors. Design Factors: Tensile Joint Strength: Collapse (from external pressure): Burst (from internal pressure): Nt = 1.8 SF Nc= 1.125 5F Ni =1.25 SF The pore pressures and fracture gradients used here are those derived from studies of offsetting Cosmopolitan 1, Hansen 1 and Hansen IA. Hao Casing Design Factor Calculations: Burst Requirements Use maximum anticipated surface pressures (MASP) for each casing string. For each casing string MASP is the formation pressure at the next casing point less a gas column to surface. 13.375", 72#, L-80, BTC Surface Casing: MASP at 12.25" hole section TVDss of 6,886': MASP = (6,886') x ((10.5 ppg x 0.052)-0.10 psi/ft) = 3,071 psi (burst stress) DFs,,,,, = burst strength / burst stress = 5,380psi / 3,071 psi = 1.75 vs minimum SF of 1.25. 9.625", 47# - P-110. Hirdril 563. Intermediate Casing: MASP at 8.5" hole section TVDss of 6,883': MASP = (6,883') ((10,0 ppg x 0.052)-0.10 psi/ft) =2,891 psi (burst stress) DFB„ ,$r = burst strength / burst stress = 9,440 psi / 2,891 psi = 3.27 vs minimum SF of 1.25. Drilling & Well Construction Report Page 9 of 81 llueNestCosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Collapse Requirements Use an external pressure consisting of the formation pore pressure at the casing shoe and an internal pressure of a gas column to surface. 13.375", 72#, L-80, BTC Surface Casino: External pore pressure = 9.0 x 0.052 x 3,350' = 1,568 psi Internal pressure w/gas only = 0.10 x 3,350'= 335 psi Collapse stress = 1,568 psi - 335 psi = 1,233 psi. DFc.i,,a, = collapse rating/ collapse stress = 2,670 / 1,233 = 2.17 vs minimum 5F of 1.125. 9.625", 47#, P-110, Hydril 563 Intermediate Casino: External pore pressure = 9.66 x 0.052 x 6,886'= 3,459 psi Internal pressure w/gas only = 0.10 x 6,886'= 689 psi Collapse stress = 3,459 psi -- 689 psi = 2,770 psi DFcoiiap,, = collapse rating/collapse stress = 5,300 psi/ 2,770 psi =1.91 vs minimum SF of 1.125. Axial Requirements 13.375" 7211 L-80 BTC Surface Casing: Weight in air= 5,623' x 72 Ib/ft = 404,856 lbs. Pipe weight in mud = Pipe wt (in air) x Buoyancy Factor (BF) BF for 9.6 ppg mud = (65.5-9.6)/ 65.5 = 0.8534 Pipe weight in mud = 404,856 lbs x 0.8534 = 345,504 lbs. DFmij,1= body tensile strength / buoyed wt. =1,661,000 lbs. / 345,504 lbs. = 4.81 vs minimum SF of 1.8. 9.625",47#, P-110, Hydril 563 Intermediate Casing. Weight in air = (15,481'x 47 Ib/ft) = 727,607 lbs. Pipe weight in mud = Pipe wt. (in air) x Buoyancy Factor (BF) BF for 10.5 ppg, mud = (65.5-10.5) / 65.5 = 0.8397 Pipe weight in fluid = 727,607 lbs. x 0.8397 = 610,972 lbs. DFAx;,1=joint tensile strength/ buoyed wt = 1,493,000 lbs,/610,972 Ibs. = 2.44 vs minimum SF of 1.8. Drilling & Well Construction Report Page 10 of 81 /nest Energy 5.8 Casing Pressure Tests Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules The 13-3/8" surface casing and 9-5/8" intermediate casings will both be tested to 3500 psi applied surface pressure before drilling out. 6.0 MUD PROGRAM AND MUD WEIGHTS 6.1 Drilling Fluid Program — H04 Example Requirements of 20 AAC 25.005(c)(8) (8) a drilling fluid program, including a diagram and description of the drilling fluid system, as required by 20 AAC 25.033; Drilling fluid practices will be in accordance with appropriate regulations stated in 20 AAC 25.033. Drilling will be done with drilling fluids having the following properties over the listed intervals in the following Table. NOTE: the base case drilling fluid program is to drill the surface section with a fresh water conventional barite based system. The intermediate section will be drilled with an oil based conventional barite mud system. However, based on the results seen in the H14 and H12 flowback production test histories, it is planned to drill the H04 production section using a solids free oil based mud system with no barite, using only salt and calcium carbonate for weighting and bridging material, in order to minimize near wellbore formation damage in the reservoir section. Since the well design does not allow for any type of well stimulation or acid clean up after completion, it is vital for well productivity to drill the reservoir with as light a mud weight as possible, and with as few solids as possible, in an effort to minimize formation damage. Parameter Surface Intermediate Production Type WBM OBM OBM Name Spud Mud VersaPro VersaPro Density (ppg) 9.8 10.5 8.8-9.7 Oil:Water Ratio N/A 80:20 75:25 6/3 RPM 17-20 12-14 8-10 PV (lbs/100ft2) <28 <28 API Fluid Loss (cc/30min) NC HTHP Fluid Loss (cc/30min) <5.0 <5.0 Electric Stability (mlVolts) >600 >600 pH 8.5-9.5 Chlorides <2,000 Table 2: Drilling Fluids and properties for intervals 7.0 WELL INTEGRITY Outer Annulus Testing and Monitoring Subsurface Safety Valves 7.1 Surface Safety Valves Wells are and will be equipped with Surface Safety Valves (SSV's). Initial testing as well as periodic inspections and tests will be conducted following notification of the AOGCC consistent with the requirements of 20 AAC 25.265. Drilling & Well Construction Report Page 11 of 81 Cosmopolitan Unit, Hansen Oil Pool ZuNesrnergy Proposed Pool Rules En 7.2 Well Instrumentation and Monitoring Wells are and will be equipped with instrumentation and monitored in real time in the Control Room. The following instrumentation is employed: • Tubing pressure and temperature • Inner Annulus (IA) pressure • Outer Annulus (OA) pressure • Bottomhole Pressure (BHP) in producer wells • Gas Lift Rate in producer wells, when utilized • Water injection rates in injector wells, when drilled 8.0 DIVERTER SYSTEM INFORMATION Requirements of 20 AAC 25.005(c)(7) (7) a diagram and description of the diverter system as required by 20 AAC 25.035, unless this requirement is waived by the commission under 20 AAC 25.035(h)(2); Please see 9.3 Blowout Prevention Equipment - Schematics: BOP and Choke Manifold Configuration (Figures 5: BOP Stack, Figures 6: Choke Manifold, and Figure 7: Hydril). 8.1 Diverter Waiver Request BlueCrest hereby applies for a diverter waiver for all future wells to be drilled from the Hansen / Cosmopolitan Project drill site north of Anchor Point, Alaska. This waiver is requested under 20 AAC 25.035 (h)(2) of the AOGCC Regulations. Based on the lack of shallow gas observed in the offset wells (H-1, H16, H14, H12 and H04) in the immediate vicinity of the surface locations, BlueCrest requests a variance from the AOGCC to waive the requirement for a diverter on the surface section of all future wells, as the presence of shallow gas has been proven to be non-existent on the initial drilling operations in the near vicinity of this drilling location, as per 20 AAC 25.035 (h)(2). Five (5) wells have been drilled from this drilling pad adjacent to the remaining surface slots, those being H1, H04, H12, H14 and H16 (aka Hansen 02), and all these wells did not penetrate or expose any recordable volumes of shallow gas in the surface section. (see Figure 8: Well Row Schematic). 8.2 Diverter Waiver Discussion 8.2.1 Surface Section There have been five (5) wells drilled from the Hansen Drilling and Production Pad; the Hansen 1, H12, H16, H14 and H04. The surface sections these wells and all future development wells are completely contained within Section 2, Township 4 S, Range 15 W, SM. The five (5) wells successfully drilled the surface sections of the wells with no evidence of gas accumulations or over pressure. The wells were drilled with spud mud ranging from 9.0-10.0 ppg. All future development wells are being planned with the surface casing shoe set at similar depth as the H14, H12 and H04 wells within the same stratigraphic interval. The Formations penetrated are the overlying surface sediments, Beluga and Upper Tyonek Formations. Drilling & Well Construction Report Page 12 of 81 llue)est Energy 8.2.2 Lithology Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules The surface sediments consist of sand, gravel, silt and occasional clays. The Beluga Formation is made up of thin bedded sandstones, coals, siltstones and silty shale intervals deposited in a braided stream environment. The Upper Tyonek Formation consists of fluvial conglomerate, comglomeratic sandstone, sandstone, siltstone and shale deposited in meandering streams, associated fluvial sediments and lacustrine environments. 8.2.3 Shallow Hydrocarbon Accumulations There is no evidence of any significant accumulations of hydrocarbons in the shallow sands of Hansen Drill Pad location. No oil or gas accumulations were encountered in the shallow sands of Hansen 1 well drilled from the Hansen drill pad. Mudlogs from the Hansen 1, H12, H16, H14 and H04 wells showed the presence of minor gas associated with the degassing of coals as they were circulated out of the well, the maximum reading for Hansen 1 was 1083 units at -3,010' TVDSS; 70 units at -2702' TVDSS in the H16 well 194 units at -2704' TVDSS in the H14 well. Once the coal cuttings were circulated out of the hole, the ditch gas readings returned to background levels. 9.0 BOP TEST FREQUENCY For future fishbone style multilateral development wells, BlueCrest requests a waiver to allow for a three (3) week BOP test frequency, as opposed to the two (2) week frequency currently required by the AOGCC. 9.1 Rig Information BlueCrest owns Rig No.1 and has hired All American Oilfield to operate the rig. BlueCrest hires independent and experienced Drilling Supervisors to oversee all drilling and completion operations at the onshore drilling location. Drilling & Well Construction Report Page 13 of 81 IuNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 9.2 Rig Circulating and Pit System BlueCrest #1- Tank Volumes Estimated - -90% of Tank Capacity Working Volume (bbls) Active Tank Capacity Working Fluid E Shaker Tank 580 510 Mud d V Intermediate Tank #1 600 520 Mud Intermediate Mix Tank #2 600 520 Mud Suction Tank 600 520 Mud Q Pill Pit 88 SO Mud Fuel Tank #1 214 190 Diesel Estimated - -90% of Tank Capacity Working Volume (bbls) Active Tank Capacity Working Fluid y Reserve Tank #1 580 510 Mud m Reserve Tank #2 580 510 Mud Water Tank #1 400 360 Water Water Tank #2 400 360 1 Water Fuel Tank #1 214 190 Diesel Fuel Tank #2 214 190 Diesel Estimated - -90% of Tank Capacity Working Volume (bbls) Active Reserve Mud 2150 1020 Water 720 Fuel 1 380 Table 3: BlueCrest #1 — Tank Volumes See Table 3 above for rig tank volumes and Figue 4 below for a schematic of the mud system. Drilling & Well Construction Report Page 14 of 81 1111�')SIII3III9 °ii:p-- = �r-Ei•"r11111111!� ff 7�11[IIinM H=nnrow Ifesi un�r = �IIIIIIIII111111111 .wmmfi&L� � Cosmopolitan Unit, Hansen Oil Pool Energy Srg y Proposed Pool Rules E 9.3 Blowout Prevention Equipment Information Requirements of 20 AAC 25.005(c)(3) and 25.035 (3) a diagram and description of the blowout prevention equipment (BOPS) as required by 20 AA 25.035, 20 AA 25.036, or 20 AA 25.037, as applicable; Please see Schematics: Figure 5: BOP, and Figure 6: Choke Manifold Configuration. i 1I 1 49 3/32h FLANGE 66 5/8" 27 3/4' 41 11/16' 13 15/8" 1OK# CAMERON BOP STACK ._�PYJ'�yBY7CE'Yetit't1� i=-- Figure 5: BOP 10k Stack cu Ln x �n BLUECREST ENERGY ` '` i3 5J8iL�01t C11Q�11f ��QP �li�K AcBCiJ�.: s - Drilling & Well Construction Report Page 16 of 81 /IuNest Energy M01 Mill. SIX ;1Y Figure 6: Choke Manifold Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Ula[ iROV Klu t S V ,I omty+_� p ,C � �+GG.7K, SWER Lff Pkic UV£ KPOOR " DEGkW CAMERON 3 1/16 X ".OK C& K MANIFOLD a winwK .M "a, Y^ M#�Ar Qwrv42vie f!MR.Mww + Ku rmt om S Ilse inn t im I wwut AAM WM 04W4 teras awr tm T 111"" 3tod tS f Yif l�+► UI004 2 I JIG" X 'LQ Etlu;F 10ltirJif WK ;'MC UNE R1 UNREST ENERGY 7 _._ ._ x-Imc 4: It WWOU Drilling & Well Construction Report Page 17 of 81 ZeNst Energy ' OPENING PORT J U CLOSING PORT G FLANGED Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules M AS CAST rJ O K L AS CAST t E AS CAST (L U P CD AS CAST I F CLAMP HUB Nominal Dimensions—inches—with 2000 psi Bottom Connections A 8 Hub 15 C D 12Ti E 23% F Ht 18 G 71i H Om J 27% K 45% L 513A M 582A N 52Vi 0 50 P� 1V4 524 Hub 16 Hub 1 54V4j 501/a7 .. 121A 2341 $V4 6Vu 2741 45% 5174 SO% 52% j 50 M � 50y2 5)a Nominal Dimensions—inches—with 3000 psi Bottom Connections A! 13 1 C I D E i F G H' J K L M N O P Hub HuSbla 1 54V4j 501/a7 .. 121A 2341 $V4 6Vu 2741 45% 5174 SO% 52% j 50 M � Figure 7: Hydril Drilling & Well Construction Report Page 18 of 81 J. 10GN) k am MN e Im�.l6 MIL09 E7Q1 Haji N. 71401I•7 '~ 7 .13UNIN14&-W Mu g i eE]` 14i�A k 1 MM / o Ixmtam RLL in FIJj#�}.L EIf.1E 116A NIM LEN E 1371170.14 FI:IL g IA! 1113 N ENL916 k x e Is®ae FILN 10661 N HIAi�BZ1 +C! e 1300Y1Ii MLL w• 6At ULM N 0/41/161 I�L, E 13MIZ7 YHL NL'! 11654 It 21 Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 111NEN 449 NFWEm PWLI VMLJE 7 EIkV. - Il.Vff mQAMtiFB 16ANS p Y JL rn N s48N. G we. 644. 170 y We w MP76 (Ol0) MKIWLIL9 1 e 1444411{4E MU N4Ei1, eQ! "977 cum; - w n a� N9JM3 R LI r1 W NRR 4.L7QNRi[S r1 N: 937, L• 17aw, M. W..76' 1 1r NT U%= RMiFi k 71118150, E: 440 AIF N p313E10� INry NRS DETAIL NMIL 1'-1C WELL ROW COCRDINATE PLAN se -LE V=81 L i0ift'MI'L EMCK"MME o -a11. 1C 19AI" RALE NNL = 4 b N W --w rYd 1NiN-rr4. OA71111! NANT N1Y119 YW9 47.70 FT Figure 8: Well Row Schematic am k Ei 76N KLLV�44 E! P 14ILM k RH1571 N F1ER 10[44 C 170m77.10 ser 1611 tame e116n �'�� xtlS7d Ran. .flan DETAIL q ger. f -IR Fwmear EneNcv YN")_st F. «rvy CCBN7PRLITAH oNSHRRE FACNTY Mu ON MLYW 7WR rY1 wa-Nq�: ORNDIt1 O47E PLAN mom MIL /• N 7 e I71®MBIE P NWaL 417 ALR 110.44 . qqW%= 131NL 0110 UNN6 4411 /�g N 111011rJ1 j e 1W .T 6FY. 1%75 y+ r k EIMffi16 _ 1 + a WMUEX 6M IMNN { YUL N7 Y E1d1Na7aE; Womft an moo N: 45&1 IN, E IM Bile. 14M M R 9101 J. 10GN) k am MN e Im�.l6 MIL09 E7Q1 Haji N. 71401I•7 '~ 7 .13UNIN14&-W Mu g i eE]` 14i�A k 1 MM / o Ixmtam RLL in FIJj#�}.L EIf.1E 116A NIM LEN E 1371170.14 FI:IL g IA! 1113 N ENL916 k x e Is®ae FILN 10661 N HIAi�BZ1 +C! e 1300Y1Ii MLL w• 6At ULM N 0/41/161 I�L, E 13MIZ7 YHL NL'! 11654 It 21 Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 111NEN 449 NFWEm PWLI VMLJE 7 EIkV. - Il.Vff mQAMtiFB 16ANS p Y JL rn N s48N. G we. 644. 170 y We w MP76 (Ol0) MKIWLIL9 1 e 1444411{4E MU N4Ei1, eQ! "977 cum; - w n a� N9JM3 R LI r1 W NRR 4.L7QNRi[S r1 N: 937, L• 17aw, M. W..76' 1 1r NT U%= RMiFi k 71118150, E: 440 AIF N p313E10� INry NRS DETAIL NMIL 1'-1C WELL ROW COCRDINATE PLAN se -LE V=81 L i0ift'MI'L EMCK"MME o -a11. 1C 19AI" RALE NNL = 4 b N W --w rYd 1NiN-rr4. OA71111! NANT N1Y119 YW9 47.70 FT Figure 8: Well Row Schematic am k Ei 76N KLLV�44 E! P 14ILM k RH1571 N F1ER 10[44 C 170m77.10 ser 1611 tame e116n �'�� xtlS7d Ran. .flan DETAIL q ger. f -IR Fwmear EneNcv YN")_st F. «rvy CCBN7PRLITAH oNSHRRE FACNTY WCHM PDHT, &WA uCil1NN. YRl.I MW ORNDIt1 O47E PLAN mom Drilling & Well Construction Report Page 19 of 81 IlyI.I�S[ Energy 10.0 FIT/ LOT PROCEDURE Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 10.1 Procedure for Conducting Formation Integrity Tests Requirements of 20 AAC 25.005 (c)(5) (5) a description of the procedure for conducting formation integrity tests, as required under 20 AAC 25.030(f); BlueCrest LOT/FIT Procedure 1. Drill out the shoe track and clean out any rat hole from the previous hole section below the shoe. From this depth, drill an additional 20 ft (minimum) to SO ft (maximum) of new hole. 2. Circulate the wellbore clean and ensure MW in = MW out. Record this value. Line up one mud pump on the kill line. Isolate the other pump(s). 3. Turn on the pump to flood the kill line and to ensure the hole is full and that no air is present in the circulating system. 4. While pumping, ensure that the pump pressure gauge and the gauge on the chart recorder are reading the same pressure. 5. Shut down the pump, position a tool joint at the rig floor and close the upper pipe rams. 6. Bring the mud pump online slowly at X - % bbl per minute and watch for pressure to start increasing. 7. Verify no fluid is leaking past the closed pipe rams. Record the pressure from the chart recorder vs strokes pumped every 2 or 3 strokes pumped. The pressure should increase in a linear fashion vs strokes (Volume) pumped. 8. To perform a LOT (Leak -off Test), continue pumping and recording pressure vs strokes until the pressure deviates from a straight line trend. Obtain two additional readings to confirm this deviation from linearity. 9. Shut down the pump and continue to record pressure vs time, initially every 30 seconds for 2 minutes and then every minute for an additional 8 minutes. 10. Plot the points for the pressure build up vs volume pumped on one chart and the pressure drop vs time on a second chart. 11. By looking at the chart of pressure vs volume pumped, the leak -off pressure is the point at which the curve deviates from a straight-line trend. 12. Use the formula: MW _ Mw+PressureLeak off Equivalent — TVDShoe x 0.052 13. Report using the format below: • XX.XX ppg EMW FIT/LOT w/ XXX psi and XX.XX ppg MW @ X,XXX' TVD 14. The FIT follows the same operational steps as previously described, except that the pressure is increased to a pre -determined value previously calculated, where the plot of pressure vs volume pumped does not deviate from a straight line. Using the same formula, the FIT value is obtained. If, however, deviation from a straight line does occur, do not keep pumping. The leak off pressure has been reached and additional pumping may cause the formation to break down. 15. The final step is to bleed off the pressure from the test and measure the volume of fluid returned to a small pit such as the trip tank or small pill pit. Depending on well design and depth, this volume bled back could be small — maybe no more than 1 bbl. Drilling & Well Construction Report Page 20 of 81 llueNest Energy 11.0 WELLHEAD ASSEMBLY Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Shown below in Figure 9 is the Wellhead assembly and Tree Schematic — 5K. I �I aysi ff®C yr a 1} fi S.Pdtl1^i w ` f 1xYt'°Al1H !•Sa Nlo ]_ i �-LYf•S/mXNiV 1 J i I ,i. u swi,. mi MMp.F. +HW I.L� TI I l� i I I , I { �d! ni f dw f. RQ it sa-0ccw- WE Ow �{ !I! s'!S Kf711'.I} rs71tC[t Figure 9: Wellhead Assembly and Tree Schematic Drilling & Well Construction Report Page 21 of 81 nue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 12.0 SHALLOW GAS AND DRILLING HAZARDS 12.1 Drilling Hazards Information Requirements of 20 AAC 25.005 (c)(4) (4) information on drilling hazards, including (A) the maximum downhole pressure that may be encountered, criteria used to determine it, and maximum potential surface pressure based on a methane gradient, The expected reservoir pressure in the Starichkof / Hemlock Sands is -0.472 psi/ft, or 9.07 ppg EMW at 6,951' TVDss taken per MDT's on Cosmopolitan 1. See Figure 10 below. The maximum known pressure in the upper Kenai sands is 9.66 ppg @ 3,841' TVDss per MDT's taken on Cosmopolitan 1. To be conservative, the highest pressure gradient of 9.66 ppg or 0.502 psi/ft will be used to determine MPSP at the production interval of 6,900' TVDss. The maximum potential surface pressure (MPSP) based on the above maximum pressure gradient, a methane gradient (0.10), and the planned vertical depth of the Starichkof / Hemlock formation is: MPSP=(6,900TVDss) (0.502 - 0.1 psi/ft) =2,774 psi MPSP=(7,070TVD) (0.502 — 0.1 psi/ft) =2,842 psi (using TVD instead of TVDss for this calculation) MAX BHP=(7,070TVD) (0.502 psi/ft) =3,549 psi (using TVD instead of TVDss for this calculation) (n3) data on potential gas zones; The Sterling, Beluga and Tyonek sands within the Kenai group have been known to contain gas. The intermediate section will be drilled with a minimum mud weight of 10.5 ppg, the maximum known pressure through these sections is 9.66 ppg @ 3,841' TVDss per MDT's taken on Cosmopolitan 1. (C) data concerning potential causes of hole problems such as abnormally geo-pressured strata, lost circulation zones, and zones that have a propensity for differential sticking, Please see discussion of the Drilling Hazards Overview below. Drilling & Well Construction Report Page 22 of 81 llueNest Energy 111 11/ 111 .-. 4000 IA N t p 5000 •111 111 Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Pressure Model (EMW) Upper Tyonek, 3292.44 Lower Tyonek, 6059.01 Starichkof, 6874.84 Hemlock, 6902.77 8 9 10 11 12 13 14 15 16 17 18 19 20 EMW (PPG) Lithostatic Stress • MDT Data Frac Gradient Moving Average —Planned Mud Weight Figure 10: Drilling Pressure Model Drilling & Well Construction Report Page 23 of 81 c =moi/ Ise-- - �Ml Iwo 7 � Nor- LEr Nor_M�_ maw 'Nil IIII Upper Tyonek, 3292.44 Lower Tyonek, 6059.01 Starichkof, 6874.84 Hemlock, 6902.77 8 9 10 11 12 13 14 15 16 17 18 19 20 EMW (PPG) Lithostatic Stress • MDT Data Frac Gradient Moving Average —Planned Mud Weight Figure 10: Drilling Pressure Model Drilling & Well Construction Report Page 23 of 81 nuest Energy 12.2 Drilling Hazards Summary 16" or 17-%" Hole Section / 13-%" Casino Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Event Risk Level Mitigation Strategy Clay Balling Medium Maintain planned mud parameters, increase mud weight, use Lost Circulation Low weighted sweeps, reduce fluid viscosity, control ROP. Abnormal Pressure in rheology, Pre -planned LCM pills, lost circulation material. Surface Formations Low Diverter drills, increased mud weight. Directional Control Medium BHA design, on -sight geologic review, avoid "drilling the line". Lost Circulation Low Reduced pump rates, mud rheology, lost circulation material, Sloughing Coals, Tight Low use of low-density cement slurries, control running speeds. 12-'/4" Hole Section / 9-%" Casina Event Risk Level Mitigation Strategy Reduced pump rates, reduced trip speeds, real time Lost Circulation Low equivalent circulating density (ECD) monitoring, mud rheology, Pre -planned LCM pills, lost circulation material. Reduced trip speeds, mud properties, proper hole filling, real Hole swabbing on trips Low time equivalent circulating density (ECD) monitoring, weighted sweeps. Sloughing Coals, Tight Low Increased mud density and fluid composition according to Hole Medium plan, controlled trip speeds, ECD monitoring, optimized Hydrogen Sulfide Gas Low hydraulics for hole cleaning. Abnormal Reservoir Pressure Low Well control drills, increased mud weight. Hydrogen Sulfide Gas Low H2S drills, detection systems, alarms, standard well control practices, mud scavengers. 8-%" Hole Section / Barefoot or 4-1/2" or 5-%" Slotted Liner Lower Comnletions Event Risk Level Mitigation Strategy Fluid density according to plan, reduced pump rates, reduced Lost Circulation Low trip speeds, real time equivalent circulating density (ECD) monitoring, mud rheology, lost circulation material. Reduced trip speeds, mud properties, proper hole filling, real Hole swabbing on trips Low time equivalent circulating density (ECD) monitoring, weighted sweeps. Directional Control Low BHA design, on -sight geologic review. Abnormal Reservoir Pressure Low Well control drills, increased mud weight. Hydrogen Sulfide Gas Low H2S drills, detection systems, alarms, standard well control practices, mud scavengers. Table 4: Drilling Hazard Summary Drilling & Well Construction Report Page 24 of 81 nue est Energy 13.0 ARTIFICIAL LIFT — GAS LIFT Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Gas lift mandrels downhole, and surface equipment is installed to provide artificial lift for the initial kick off and to maintain the targetedbottom hole pressure. 14.0 ABNORMALLY PRESSURED FORMATION INFORMATION Requirements of 20 AAC 25.005 (c)(9) (9) for an exploratory or stratigraphic test well, a tabulation setting out the depths of predicted abnormally geo-pressured strata as required by 20 AAC 25.033(0; Not applicable: Wells are not exploratory or stratigraphic test wells. 15.0 SEISMIC ANALYSIS Requirements of 20 AAC 25.005 (c)(10) (10) for an exploratory or stratigraphic test well, a seismic refraction or reflection analysis as required by 20 AAC 25.061(a); Not applicable: Wells are not exploratory or stratigraphic test wells. 16.0 SEABED CONDITION ANALYSIS Requirements of 20 AAC 25.005 (c)(11) (11) for a well drilled from an offshore platform, mobile bottom -founded structure, jack-up rig, or floating drilling vessel, an analysis of seabed conditions as required by 20 AAC 25.061(b); Not applicable: Wells are not offshore wells. 17.0 EVIDENCE OF BONDING Requirements of 20 AAC 25.005 (c)(12) (12) evidence showing that the requirements of 20 AAC 25.025 {Bonding)have been met, Evidence of bonding for BlueCrest Alaska Operating LLC is on file with the AOGCC. 18.0 DISCUSSION OF MUD AND CUTTINGS DISPOSAL AND ANNULAR DISPOSAL Requirements of 20 AAC 25.005 (c)(14) (14) a general description of how the operator plans to dispose of drilling mud and cuttings and a statement of whether the operator intends to request authorization under 20 AAC 25.080 for an annular disposal operation in the well. Solid and liquid wastes generated during the drilling process will be disposed of at Hilcorp Alaska, LLC's Kenai Gas Field (KFG) Grind & Injection (G&I) Facility, AIMM Technologies' (hydrokinetics) facility in Kenai or other approved site. Dried water base cuttings from the surface section are planned to be properly disposed of in a local landfill after being tested using the filter paint test. No annular disposal is planned for the future wells at this time. Drilling & Well Construction Report Page 25 of 81 nuest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 19.0 EXHIBIT 1: DRILLING & COMPLETION DRAFT WELL PLAN H04 BlueCrest Energy Drilling and Completion DRAFT Well Plan H04 MAINBORE &FISHBONE LOWER LATERAL Tom McKay David Ross david.ross@BiueCrestEnergy.com 1IPage Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool IlueNst Proposed Pool Rules Energy H-04 Well Plan Table of Contents WELLPLAN SUMMARY....................................................................................................................4 14 General..................................................................................................................................... 5 Signageand Documentation................................................................................................................ 5 Close Approach and Offset Well Interception Risks............................................................................ 5 SurveyProgram & Procedures............................................................................................................. 5 Casing/Liner/Tubing/DP/HWDP Drifts.................................................................................................. 6 PipeDope.............................................................................................................................................6 PROJECTOVERVIEW.......................................................................................................................7 18 Structure...................................................................................................................................7 Stratigraphy............................................................................................................................... 7 WELLOVERVIEW............................................................................................................................9 20 WellSchematic.......................................................................................................................10 SectionReview.......................................................................................................................11 GeologicHazards...................................................................................................................12 23 PRE -RIG OPERATIONS.................................................................................................................. 13 Conductor/ Cellar Installation (will be completed for H04 slot)................................................14 23 Operations.......................................................................................................................................... 14 i.v................................................................................................................ 14 MIRU...............................................................................................................15 MIRUOperations....................................................................................................................16 DiverterInstallation.................................................................................................................16 (NOTE: A Diverter Waiver has been requested from the AOGCC) ..................................16 DRILLING................................................................................................................17 Surface....................................................................................................................................18 GeneralNotes.................................................................................................................................... 18 Drilling Procedure (17-1/2" Surface Section).....................................................................................19 CasingProgram..................................................................................................................................20 CasingRunning Notes....................................................................................................................... 20 RunningProcedure.............................................................................................................................21 CentralizerPlacement........................................................................................................................21 Cementing.......................................................................................................................................... 23 CementingNotes................................................................................................................................23 CementingProcedure........................................................................................................................ 23 Intermediate............................................................................................................................25 Overview............................................................................................................................................. 25 GeneralNotes.................................................................................................................................... 25 Drill Out Procedure (13-3/8" Casing).................................................................................................. 26 Drilling Procedure (12-1/4" Section)...................................................................................................27 CasingProgram.................................................................................................................................. 29 CasingRunning Notes....................................................................................................................... 29 CasingRunning Order........................................................................................................................30 CentralizerPlacement........................................................................................................................30 Pre-Run.............................................................................................................................................. 30 RunningProcedure.............................................................................................................................32 Cementing.......................................................................................................................................... 33 CementingNotes................................................................................................................................ 33 CementingProcedure........................................................................................................................ 33 2 1 P a g e Drilling & Well Construction Report lueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Priorto Lifting The BOP Stack........................................................................................................... 34 While Lifting the BOP Stack and Setting the Emergency Slips (optional step if casing is stuck off the intended setting depth using the mandrel hanger)............................................................................. 34 Overview............................................................................................................................................. 35 GeneralNotes.................................................................................................................................... 35 DrillOut Procedure............................................................................................................................. 36 COMPLETION: LOWER LATERAL.....................................................................................................40 SlottedLiner Run(4-1/2")........................................................................................................41 Overview............................................................................................................................................. 41 GeneralNotes.................................................................................................................................... 41 Operational Specifics & Preparation.................................................................................................. 42 Liner Running Order (subject to change when run in well)................................................................43 ConnectionSpecifications..................................................................................................................44 Running4-1/2" Slotted Liner: ............................................................................................................. 44 Settingthe Liner Hanger.................................................................................................................... 46 ReleaseCRT Running Tool...............................................................................................................47 Settingthe Liner Top Packer.............................................................................................................. 47 General Liner Equipment Information................................................................................................ 49 UPPERCOMPLETION.....................................................................................................................51 3-1/2" Production Tubing String......................................................................................................... 51 Run and Land the 3-1/2" Completion String....................................................................................... 51 SIMOPSStatus: ................................................................................................................................. 51 Objective: ............................................................................................................................................ 51 Safety: ................................................................................................................................................ 52 OperationalProcedures: .................................................................................................................... 52 ND BOP & NU Production Tree Procedure........................................................................................ 54 SIMOPSStatus: ................................................................................................................................. 54 Objective: ............................................................................................................................................ 54 Safety: ................................................................................................................................................ 54 OperationalProcedures: .................................................................................................................... 55 11. Bleed off the test pressure...........................................................................................55 12. Remove the tree cap and needle valve from the swab valve.......................................55 13. Rig up BHGE to retrieve the TWC in the tubing hanger...............................................55 SealStack.......................................................................................................................................... 56 3 1 P a g e Drilling & Well Construction Report llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Well Plan Summary Rig BlueCrest Rig #1 Well Type Multilateral Fishbone Design Producer Well Design 13-3/8" Surface x 9-5/8" Intermediate x 4-1/2" Slotted Liner Lower 4-1/2" 15.2# P110 H563 Slotted Liner Lateral Completion Upper N/A Design Lateral Tubing 3-1/2" 9.3# L80 IBT-MOD Production Tubing String String AFE TBD PTD Lower TBA by AOGCC Lateral API # TBA by AOGCC PTD Upper Will be issued later under a subsequent APD Lateral API # Will be issued later under a subsequent APD 4 1 P a g e Drilling & Well Construction Report nue est Energy General Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Signage and Documentation 1. Ensure that all well signage is on location and displayed properly. ■ Well Sign • "On Diverter" Signage (unless Diverter Waiver request is approved by AOGCC) 2. Ensure the following documents are stored TOGETHER in the company man's office: ■ Application for Permit to Drill (APD 10-401) -> Display in Doghouse as well; include H04 mainbore APD plus seven (7) rib lateral APD's ■ Onshore ODPCP ■ SPCC Plan ■ Air Permit ■ FAA obstruction determination ■ Lease Operations Plan LO/CI 14-007 Close Approach and Offset Well Interception Risks It is important to stay as close as practical to the planned directional program. The directional program and a summary of close approaches can be found in the attachments. These close approaches will be in conformance with the minimum well separation criteria detailed by the Drilling Anti -Collision Analysis and Close Approach Guidelines. It is the responsibility of the Directional Driller and the Drilling Supervisor to ensure that the directional plan is executed as planned, that the position of the well as it is drilled is monitored on an anti -collision diagram and that no tolerance line for close approach wells is crossed. It is important that the well bore remains close to the planned well path as any major deviations from the profile may adversely affect the ability to drill future wells and still adhere to the current close crossing guidelines. Survey Program & Procedures Take MWD surveys as frequently as needed, but no less than every 100 ft. Carefully review the anticipated close crossings with existing wellbores and future well paths. Make sure that directional drillers are aware of all drilling close crossing issues, hard lines and no-go lines. If a no-go or hard line has been or will be crossed, stop drilling immediately and contact the Drilling Superintendent to discuss options. NOTE: 1. Directional Drillers are to be continuously monitoring upcoming potential crossings. 2. It is the Directional Drillers responsibility to keep the drilling team aware of any and all potential issues concerning anti -collision issues. 5 1 P a g e Drilling & Well Construction Report llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Casing/Liner/Tubing/DP/HWDP Drifts Ensure the following drifts are on location and stored properly, in one spot, on the rig. Pipe Dope Ensure that the following pipe dopes are on location upon rig up. 3. Drill Pipe/ HWDP: ■ ZN-50 -i *All XT-## Drill Pipe and HWDP Connections 4. API Casing Threads: ■ Jet Lube Run and Seal Arctic 4 Surface Casing: 72# L80 Buttress Casing Only Shipped from the mill with Kendex Storage Compound on the pin end, wipe this off thoroughly prior to applying Just Lube Run and Seal Arctic 5. Hydril Threads: ■ Jet Lube Seal Guard ECF 4 All Hydril Casing, Liner and Tubing Threads Hydril connections are shipped with Jet Lube Seal Guard ECF already applied and are "Rig Ready". Wipe the box ends down with a clean cloth prior to running. 61 Drilling & Well Construction Report M1-771—I77Sii>t?T Casing 12.250" Nylon Solid ' Casing 8.500" Nylon Solid ' Liner 3.701" Nylon Solid Tubing 2.867" Nylon Solid Drill Pipe 3.750" Nylon Solid Drill Pipe 3.875" Steel Hollow Drill Pipe 3.875" Steel Hollow HWDP 3.000" Steel Hollow Pipe Dope Ensure that the following pipe dopes are on location upon rig up. 3. Drill Pipe/ HWDP: ■ ZN-50 -i *All XT-## Drill Pipe and HWDP Connections 4. API Casing Threads: ■ Jet Lube Run and Seal Arctic 4 Surface Casing: 72# L80 Buttress Casing Only Shipped from the mill with Kendex Storage Compound on the pin end, wipe this off thoroughly prior to applying Just Lube Run and Seal Arctic 5. Hydril Threads: ■ Jet Lube Seal Guard ECF 4 All Hydril Casing, Liner and Tubing Threads Hydril connections are shipped with Jet Lube Seal Guard ECF already applied and are "Rig Ready". Wipe the box ends down with a clean cloth prior to running. 61 Drilling & Well Construction Report nluest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Project Overview Structure The Hansen Field (hereinafter referred to as Cosmopolitan or Cosmopolitan project) structure is a NE/SW doubly plunging asymmetric anticline bounded along its west flank by a high angle reverse fault that strikes parallel to the structural axis. Associated tear faults with normal throw cut the northern and southern portions of the feature and one smaller fault was found in the Cosmopolitan State #1. This structure, which is four and one-half miles by 2 miles in size, has approximately 600 feet of vertical closure over an area of over 6,000 acres at the Starichkof sand (Lower Tyonek sandstone just above the Hemlock Conglomerate). Structural control includes six wellbores, (three of these are vertical and penetrate the entire geological section on the structure and three are extended reach wells drilled from the Hansen shore -side drilling pad) 3D seismic acquired by Pioneer Resources in 2005, dip meter data in two of the vertical wells, and migrated 2D high resolution seismic data acquired by GeoTek Alaska, Inc. in 2013. 3D seismic data was used to tie all of the wells to generate several levels of structure maps (see the following discussion on seismic data and interpretation). Although there is a .3 to .5 second seafloor reverberation on the 3D data, the shallow high-resolution Geo -Hazard 2D seismic shows that the structure is typical of parallel folding. Stratigraphy Approximately 8,600 feet of Tertiary age Kenai Group non -marine sedimentary rocks are present at Cosmopolitan. The Kenai Group is represented here by approximately 1,000 feet of the Beluga Formation (USGS unpublished data) characterized by thin bedded sandstones, coals, siltstone and silty shale intervals that were deposited in a braided stream environment. Based on estimates from seismic data and log correlation approximately 1,050 feet of Beluga was penetrated in the Starichkof State Unit #1 well, about 500 feet was present in the Starichkof State #1 and it appears to be missing in the Cosmopolitan State #1 well. The difference in thickness in the Beluga across the Cosmopolitan structure is related to erosion and does not represent depositional thinning. The overlying Sterling Formation is not present and has also been removed by erosion. Unconformity underlying the Beluga sequence is 5,945 feet of Miocene age Tyonek Formation, a basin wide series of fluvial conglomerate, conglomeratic sandstone, sandstone, coal, siltstone and shale which represent deposition in meandering streams, associated fluvial sediments and lacustrine environments. It is a major producer of both biogenic natural gas and thermogenic oil throughout the basin and is charged with gas and oil at Cosmopolitan. BlueCrest has informally divided the Tyonek into an upper section that contains gas productive sandstones and a lower interval that is predominately oil prone. The two zones are separated by a laterally correlative shale section that is easily recognized in all of the existing wells. The lowest section of the Lower Tyonek, from 6,742 to 7,104 feet MD has been referred to as the "Starichkof' sand by Conoco/Phillips, Pioneer Resources and by BlueCrest. and is the oil discovery zone found in 1967 by Pennzoil in their Starichkof State #1 well. Immediately underlying the Starichkof sand (Lower Tyonek) is the Oligocene Hemlock Conglomerate. It was drill stem tested in the Starichkof State #1 well and recovered brackish water from two separate intervals beneath the oil/water contact at approximately -7030 ft. 7 1 P a g e Drilling & Well Construction Report 'Nest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Conoco/Phillips tested water free oil in higher structural positions in both the Hansen 1 and Hansen 1A wells. The Hemlock generally consists of medium to coarse grained, thick bedded sandstone with substantial conglomeratic beds and lenses. In the Starichkof State #1 well it is 485 feet thick, and in the Cosmopolitan State #1 it is 500 feet thick. Underlying the Hemlock is the Paleocene to Eocene age West Foreland Formation, a 1,155 feet thick sequence of volcanic tuffs and volcanoclastic sandstone and siltstone devoid of oil or gas shows and without reservoir quality rocks. The West Foreland unconformably overlies the Upper Cretaceous marine Matanuska Formation that is at least 3,339 feet of shale containing an abundance of Inoceramus shell fragments. 8 1 P a g e Drilling & Well Construction Report nluest Energy Well Overview 9 1 P a g e Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Well Schematic Section Review Geologic Hazards 0 Cn 0 0 0 T. McKay, 285ept2018 Hoo lower lateral Completion with 20" Conductor Slotted liner in Mainbore and Seven to be set LM152' ML (7) Open Hole Fishbone Ribs 23-3/8" 72a LBO UTC @ 5683' MD 3-Y" 9.3fi IBT-MOD Production Tubing 4-%' x 9-5/8" Liner Hanger & Liner Top Packer a� 9-5/8" 47.0/53.5# N80/P110 H563 9_b 15481' Ma Ylue est Energy Fishbone ribs are 8-%" open holes spaced approx every 800' with 4-%" slotted liner run In the mainbore after the seven ribs are drilled; ribs are drilled in order from 1.01 to L07 using open hale sidetracks to initiate each rib; ribs penetrate all layers of Starichkof and Hemlock pay sands L01 Lal L03 1.04 J LOS L06 L07 4-%w 15.2# NS63 Slotted Liner @ 221.Z2' MD 3 15,481' MD 17,067' TVD (Lower Lat) I I Bit: 8.112" PDC Cosmopolitan Unit, Hansen Oil Pool Ilue(:�est Proposed Pool Rules Energy H-04 Well Plan Section Review RSS: Xceed 675 Last Updated: TWM, 03 Oct 2018 H04 Fishbone Production Well MWD: Telescope 8-112" i (Main Bore I Lower Lateral I Starichkof I Hemlock Primary Target) 193' MDITVD LWD: GeoSphere Open Hole I I Drilled InFL adnVISION I I 20" 0.500" Wall A252 ER1 Cement Mud I Deviation Bit: 17.112" PDC Bit 12.0 ppg Lead tf' RSS: PDX6 715 bbls WBM MWD: PowerPulse _ _ _ _ _ _ _ _ _ _ _ 25%Excess 9.8-10.0 ppg Spud Mu LWD: arcVISIONGRfRES 17.112" ( ) Top of Tail 4,623' M11 Open Hole 15.8 ppg Class G Tail 167 bbls 25% Excess Incl 99deg 5,623' MD 13,531' TVD 13-318" 72# N80 BTC Azim 286 de 3.112" Production Tubing to Surface GLM's I SSSV I DH Gauges I CIIV Bit: 12-114" POC OBM RSS: Xceed 675 12.14" 10.5 ppg VersaPro MWD: PowerPulse Open Hole _ _ _ TOC @ 13,981' MD LVD: arcVISION(GRIRES) _ _ _ _ _ _ _ _ _ 15.8 ppg Class G 132 bbIs ff 50%Excess d 15,481' MD 17,067' TVD (Lower Lat) I I Bit: 8.112" PDC Liner Hgr & Liner Top Packer 9.518" 47# P110 H563 Incl 77 deg Azim 291 de RSS: Xceed 675 OBM MWD: Telescope 8-112" i Un -cemented 8.8.9.7 ppg VersaP LWD: GeoSphere Open Hole I I Slotted Liner adnVISION I I No Frac's JINX' 15.2# P110 H563 Slotted Liner Un -Cemented Slotted Liner Completion Max Incl 104 deg 22,122' MD f 7,063' TVD Total Depth in Mainbore I Azim 302.4 deg Drilling & Well Construction Report ZuNest Energy Geologic Hazards 17-Y2" Hole Section 13-%" Casing Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Event Risk Level Mitigation Strategy Clay Balling Maintain planned mud parameters, increase mud weight, use Lost Circulation Low weighted sweeps, reduce fluid viscosity, control ROP. Abnormal Pressure in Surface Formations Low Diverter drills, increased mud weight. Directional Control BHA design, on -sight geologic review, avoid "drilling the line". Lost Circulation Low Reduced pump rates, mud rheology, lost circulation material, use of low-density cement slurries, control running speeds. 12-%" Hole Section / 9-%" Casing Event Risk Level Mitigation Strategy Reduced pump rates, reduced trip speeds, real time Lost Circulation Low equivalent circulating density (ECD) monitoring, mud rheology, Pre -planned LCM pills, lost circulation material. Hole swabbing on Reduced trip speeds, mud properties, proper hole filling, real trips Low time equivalent circulating density (ECD) monitoring, weighted sweeps. Sloughing Coals, Low Increased mud density and fluid composition according to Tight Hole Low plan, controlled trip speeds, ECD monitoring, optimized Hydrogen Sulfide Low hydraulics for hole cleaning. Abnormal Reservoir Pressure Low Well control drills, increased mud weight. Hydrogen Sulfide Low H2S drills, detection systems, alarms, standard well control Gas practices, mud scavengers. 8-%" Hole Section / 4-Y2" Slotted Liner Event Risk Level Mitigation Strategy Fluid density according to plan, reduced pump rates, reduced Lost Circulation Low trip speeds, real time equivalent circulating density (ECD) monitoring, mud rheology, lost circulation material. Hole swabbing on Reduced trip speeds, mud properties, proper hole filling, real trips Low time equivalent circulating density (ECD) monitoring, weighted sweeps. Directional Control Low BHA design, on -sight geologic review. Abnormal Reservoir Pressure Low Well control drills, increased mud weight. Hydrogen Sulfide Low H2S drills, detection systems, alarms, standard well control Gas practices, mud scavengers. 121Page Drilling & Well Construction Report llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Pre -Rig Operations Conductor & Cellar Installation 131Page Drilling & Well Construction Report llueNst Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Conductor/ Cellar Installation (will be completed for H04 slot) Pipe Section Conducto 20.000 19.000 .500" A252 ERW Welded 19.00 61,000 1. 20" Conductor will be preset via Kraxberger Drilling via their dual rotary drilling rig to a depth of 152' BGL Conductor Pipe: 20", 0.500" Wall, A252 ERW Welded The conductor is NOT cemented to surface Cut off at 1' above ground level 2. Confirm that the identification markings on the conductor match the planned surface location with the "as -built survey." If identification markings are not present on the conductor, contact the Drilling Supt. prior to moving the rig onto the well. ■ Each conductor is to be marked with a common pad elevation survey mark by the surveyors. Surveyors to also mark each conductor with a degree of angle to set each tree. 3. A 10' x 10' x 8' well cellar was installed and the 20" conductor cut off 60" below ground level. The additional stick up is to allow GE Oil & Gas to make a clean cut on the conductor prior to installing the 20" landing ring -) Final top of conductor to be 71-1/4" BGL. Verify that the access ladder is located to the South. Ensure the conductor plate is installed and welded around the 20" conductor. 4. Verify that two 3" threaded nipples have been welded on the conductor on opposite sides. Include ball valves and Cam -Lock male fittings on each nipple. Ensure threaded ball valves can be installed without running into the OD of the diverter head. Nipples are to be used as follows: Assist in washing out surface casing hanger on cement jobs Take returns to Vac trucks while cementing Provide access to annulus for top job through small diameter tubing If these valves are not currently installed contact GE Oil & Gas Representative to have them installed 4 Kevin Krause — Lead Service Manager Kevin.Krause@ge.com Cell: 907-398-9995 141 a, Drilling &Well Construction Report tueNest Energy MIRU 151Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan MIRU Operations Diverter Installation llueNest Energy MIRU Operations Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 5. MIRU BlueCrest #1 over preinstalled 20" conductor casing set at —152' BGL. 6. Move in and rig up. Record move distance and rig floor distance to pad and sea level in Daily Report and on IADC reports. Ensure all concerned parties (Directional Drillers, MWD Operators, and Geologists) are using the same rig floor elevation. 7. Post drilling permit in the rig office and company office. Diverter Installation (NOTE: A Diverter Waiver has been requested from the AOGCQ 8. Secure 13-3/8" landing ring on 20" conductor with lock down screws. 20" Landing Ring ID: 17.62" 9. Nipple up VetcoGray starter head and test the lower seals. DO NOT Exceed 500 psi. 10. Install 21-1/4"x 2000 psi diverter and riser equipment with 18" outlet line. Ensure diverter is run in accordance with the specified diverter diagrams attached. The 18" line extends straight out 80 feet from well center. 11. Place slop tank under the end of the diverter line. 12. Function test the diverter to verify the valve on the diverter line opens BEFORE the annular fully closes. Give AOGCC 48-hour notice to witness test. The diverter control system must open the side outlet valve and close the diverter element within 45 seconds for this size of diverter. Fill diverter & riser with water to check for leaks. Record on IADC drilling report. Hold diverter and rig abandonment drill prior to drilling surface hole. 13. Make sure the 3" outlets on the 20" conductor have valves and connections for taking mud returns. Diverter lines to be as straight as possible. Ensure "Warning Zone - ON DIVERTER" and rig well signs are spotted correctly on location. 161Page Drilling & Well Construction Report IlueC:;�`est Energy Drilling 171Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Surface Intermediate Production llueNest Energy Surface Overview 9.8- 10.0 Fluids Spud Mud RSS Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan ��_� Min Max RSS 8.25" PD X6 PowerPulse GR/Res 600 1200 Bites Smith PDC MSi 619 6 x 12, 3 x 13 1.052 General Notes ■ Prior to spud, a safety meeting will be held with the rig crews to discuss open hole drilling procedures. Suggested topics include: o Conductor broaching operations and contingencies o Well control procedures and rig evacuation procedures o Flow rates and hole cleaning ■ The area around the conductor should be continuously monitored during drilling, circulating, and cementing operations. o If broaching occurs, stop drilling immediately. Contact the AOGCC field inspector and the Drilling Superintendent to inform them of the broach. ■ Efforts should be made to minimize high doglegs in surface hole. o Inform the Drilling Engineer of any doglegs over 5 degrees per hundred. ■ Ported float valves are required in all hole sections. ■ Conduct 13-3/8" Casing dummy run prior to drilling out conductor. 181Page Drilling & Well Construction Report Iu est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Drilling Procedure (17-1/2" Surface Section) 1. Ensure 13-3/8" Casing dummy run has been conducted prior to drilling out conductor. 2. Pick up and drift all DP, HWDP, and DC's for surface section to confirm free of debris. 3. PU BHA Bit: 17 %" Smith PDC Re -Run from H14 and H12 4 TFA: 1.052 (3 x 18, 1 x 20) --> PD 1100 X6 4. Directionally drill 17-1/2" surface hole: Drilling Parameters: Flow Rate: 850+ GPM Rotary: 120+ RPM Lower flow rates of 450-600 GPM will help avoid anti -collision boundaries by minimizing hole washout and optimize dog leg capability in the build section. Keep in mind that lower flow rates below the tool threshold may pose difficulty steering. A backup motor is on location in the event that steering becomes an issue. Avoid anti -collision boundaries Take MWD surveys as frequently as needed. Carefully review the anticipated close crossings with existing wellbores. Make sure that directional drillers are aware of all drilling close crossing issues, hardlines and no-go lines. If a no-go or hardline has been or will be crossed, stop drilling immediately and contact the Drilling Engineer to discuss options. S. Hole conditions will always determine final mud properties. 6. Surface casing point: Land in good shale found between 3,115'— 3,350' TVDss. Circulate bottom hole samples to verify shale, confirm with wellsite geologist. ? s: "' CYC- set in coal, if coal is encountered drill another 20' MD. Drill the hole to fit casing, if possible, to reduce pup joints in the string. Leave approx. 10' rathole. 7. Circulate the hole clean per K&M and POOH on elevators. 8. If BROOH is required, contact Drilling Engineer prior to commencing: Ir Circulate until shakers are clean per K&M. Backream one (1) stand per bottoms up very slowly. 900+ G P M 120+ RPM ■ BROOH at full drilling parameters, 3-5 min per stand. NOTE: ■ Backreaming speed will be dictated by hole conditions. Consult with K&M prior to increasing pulling speed. Decrease backreaming speed as torque and pump pressure dictate. Once backreaming in the open hole has been started, 0 stop backreaming until the HWDP. ■ DO Nil attempt to pull out on elevators once backreaming has started. 191Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 9. If shakers/mud return system becomes overloaded and flow rate is cut to handle the issue, DO NOT continue to backream until the parameters are brought back to full backreaming rate. 10. Once the HWDP is reached, circulate until hole is clean per K&M 11. Pull and lay down BHA. 12. Perform a dummy hanger run before running casing, if not already conducted. Casing Program 12.347 72 L-80 BTC 12.25 2,670 5,380 1,661,000 Make Up Operational Limit in. in. in. ft -lbs. ft -lbs. ft -lbs. ft -lbs. ft -lbs. - 12.335 10.825 Average 10 to the Diamond Casing Running Notes Perform dummy run prior to running casing, if not already conducted. Surface casing will be set on mandrel hanger. Any packing off while running casing, should be treated as a very serious problem if major returns are lost. o It is preferable to pull casing out until circulation can be re-established rather than risk not getting cement to surface. Contact the Drilling Superintendent if the casing packs off high for discussion of the options. Have Vetco representative verify the correct casing hanger is on location prior to running surface casing. Torque values for the BTC casing are determined at the rig by making up the connection to the make-up mark (base of triangle). Record torque values for the first 10 connections made up in this manner and average. This average will be used as the make-up torque for the remainder of the string. Utilize Volant Casing Running tool for make-up and fill up. 201Page Drilling & Well Construction Report nluest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Running Procedure 1. Inspect and drift all surface casing to 12.25". 2. While RIH with the Casing: ■ Obtain SO Weights per K&M every joint ■ DO NOT take PU weights ■ IF IT IS NECESSARY TO PICK UP THE STRING ENSURE THAT THE PUMPS ARE ON TO REDUCE SWAB LOADS 3. Run the surface casing as follows: © Float shoe BakerLok © 2 joints 13-3/8" 72# L-80 BTC casing BakerLok © Float Collar BakerLok 13-3/8" 72# L-80 BTC casing © 13-3/8" 72# L-80 BTC casing to hanger VetcoGray 13-3/8" mandrel hanger 13-3/8" landing joint Centralizer Placement +/-18 211Page Drilling & Well Construction Report Note 13-3/8" x 17-1/2" VariForm Weatherford nue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 13-3/8" x 17-1/2" VariForm Centralizer 1. One (1) — 5' Above Float Shoe 2. One (1) — 8' Above Float Shoe 3. No Centralization on 2"d Joint QQ 4. One (1) —10' Above the Float Collar 5. From 3rd Joint Through Tail Slurry (500') o One (1) Each per Joint o Center of Joint 6. Two (2) — Center of Joint Inside Conductor ALL CENTRALIZERS TO BE RUN ON STOP COLLARS 4 O O 22 , Drilling & Well Construction Report Cementing Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Excess Mud Push II 80 bbl. Density: 11.0 N/A ppg Density: 12.0 13-3/8" Kenai Surface Lead 715 bbl. pg Yieldp2.44 25% ft3/s k Kenai Surface Tail Density: 15.8 Top of Tail @ 4,623' 167 bbl. ppg 25% Yield: 1.22 MD ft3/sk Cementing Notes Obtain and review the Test Report from the cementing lab on the job blend prior to pumping the cement. DO NOT pump cement if there are any doubts as to cement quality, quantities, pumping times, or thickening times. ■ Ensure that enough cement retarder is built to keep cement from setting up prior to disposal. ■ OUTLINE CEMENTING TRUCKS NEEDED, TYPE OF RETARDER, ETC... Cementing Procedure 1. After reaching bottom, rig up and circulate with casing on bottom at if possible, without losing returns. Reduce mud viscosity prior to pumping cement if necessary. To help ensure good cement to surface after running the casing, and if practical for existing hole conditions, condition mud to YP < 20 Ib/100ft' prior to cementing the casing but after the casing is on bottom. Have adequate supply of cold water on hand to ensure the desired rheologies can be achieved. 2. Rig up to cement and pressure test cement lines. 3. Pump Mud Push Spacer. Shut down and drop bottom plug. 4. Pump cement job per the Schlumberger cementing plan. Cement volumes are based on excess since too much cement was pumped on the H16 and H14 surface casing cement jobs. Report the number of bbls of cement returned to surface: Task one person to be in charge of monitoring for cement returns and volume of cement returns Recommend that a dye or small amount of cello -flake be added to the wash or spacer to give an indication of top of cement. 6. Drop top plug after the tail slurry. 7. Pump displacement at 8.5 bpm maximum. 8. Drop circulation rate 3 BPM for last 20 i,,r, ;+4 of displacement prior to bumping plug. 9. Pump until the plug bumps and then pressure up to 500 psi above Final Circulating Pressure (FCP) to ensure the plug has landed. If floats do not hold, maintain FCP on casing and shut in cement head for a minimum of i before rechecking. 231Page Drilling & Well Construction Report 1 ue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan ■ Do not over displace the cement (Pump NO MORE than % the shoe joint volume). ■ Watch for signs of packing -off during pumping operations and closely monitor the cellar area for mud or cement returns around the conductor. ■ AOGCC and Drilling Superintendent must be contacted prior to beginning a top job using 1" pipe. Do not proceed with top job without AOGCC approval. ■ Establish circulation and continue until pumping secondary cement job through 1" pipe. ■ Pump top cement job until cement is seen at surface. ■ Cut off and leave 1" pipe in well. 10. Drain and wash cement from riser. Nipple down riser and flush all lines. 11. Nipple up Vetco Gray Well Head, orienting the well head valves as indicated on the conductor markings. ■ If there is any doubt about the proper orientation, call the Drilling Superintendent. ■ Ensure that the seal between the casing hanger and well head is tested to 5,000 psi for 10 minutes. ■ Measure the distance from the rig floor to the top flange of the well head and record on the IADC and Daily Report. Complete the Rig Elevation Record, send to Drilling Engineer, and place it in the electronic well folder. 12. Nipple up the 13-5/8" 10M BOP stack, and test per the AOGCC Permit to Drill (attached). ■ Notify AOGCC 24 hours prior to performing BOP test. • Do not test BOPE against casing. ■ Test rams and choke manifold components to 3500 psi high / 250 psi low ■ Test annular preventer to 2500 psi high / 250 psi low PERMIT TO DRILL BOP testing frequency: Every 14 days unless noted otherwise by AOGCC 241Page Drilling & Well Construction Report llueNest Energy Intermediate Overview Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan ® 9.625 RSS PDC ACTIMUL RD 10.50 15,481' 7,067' 770 Fluids BHA 0: RSS Bit PP9 10.50 From 5,623' To 15,481' 13-15 8.25" PD Xceed TeleScope arcVISION Smith PDC X716 ml/30 min <5 80:20 mlVolts >600 Min Max 600 1200 10 x 14 1.503 General Notes • Shallow test MWD tools. ■ Monitor hole conditions carefully. Be alert for early signs of lost circulation and differential sticking. If any of these problems are observed immediately notify the Drilling Supervisor or Toolpusher (attempt to keep the pipe moving and circulation established). ■ If cavings are noted at surface pictures shall be taken to clearly identify cavings structure and geometry. ■ Ensure that all team members are communicating with each other on any observed drilling trends and that everyone understands the potential risks. • Good drilling and tripping practices are vital for avoidance of differential sticking. Make every effort to keep the drill string moving whenever possible and avoid stopping with the BHA across the sand or coal sections for any extended period of time. ■ Keep shut down times to a minimum during connections. ■ Swab / Surge: Make "easy on, easy off" slips a standard practice ■ Ensure the Top Drive Torque Limit is set below the lowest make up torque in the string. Do not run the risk of further make up downhole while drilling. ■ Contact the Drilling Engineer prior to commencing back reaming at any point while drilling the well. 251Page Drilling & Well Construction Report lueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Drill Out Procedure (13-3/8" Casing) 13. Install wear bushing 14. Pick up and drift all DP, HWDP, and DC's for surface section to confirm free of debris. 15. PU drill out BHA ■ Bit: 12-1/4" Mill Tooth TFA: 0.994 (4 x 18) -� Dumb Iron Assembly 4 NOTE: Discuss with Office omitting this step and drill out with PDC bit and BHA to be used to drill the 12-1/4" section. 16. TIH to top of float equipment and pressure test surface casing to 3,000 psi for 30 min. Chart and record same. ■ Plot casing pressure test on LOT form and submit to Drilling Engineer ■ Verify the test indicates a linear line and there is no air entrained in the mud. Repeat casing pressure test if needed to achieve a linear line plot. 17. Drill out float collar and shoe. ■ Take note of any green cement or lack of necessary WOB to drill out shoe track. ■ If no cement or green cement is encountered DO NOT drill out the shoe. 4 Call drilling superintendent prior to continuing operations. 18. Clean out rat hole and POOH on elevators & LD drill out BHA. 19. PU Drilling BHA ■ 12-1/4" X716 PDC • TFA: 1.503 (10 x 14) • PD Xceed RSS BHA 20. Shallow test MWD/LWD tools. RIH to TD. 21. Displace new hole to 10.50 ppg VersaPro OBM. 22. Drill 20' of new formation, below the rat hole, with VersaPro OBM. Circulate OBM until hole clean and balanced. NOTE: discuss with office the option to conduct the FIT before swapping to the OBM. 23. POOH to surface casing shoe and perform FIT per AOGCC requirements following the attached LOT procedure: ■ Required FIT: 13.00 ppg EMW -� Recorded LOT/FIT pressures shall follow the format below: I. EMW = pSurface0.052=(TVD) + MW II. 13.0 ppg EMW FIT/LOT w/ 459 psi and 10.5 ppg MW @ 3,531' TVD 4 Offset Hansen 1: 13.00 ppg EMW FIT w/ 540 psi and 9.9 ppg MW @ 3,349' TVD ■ All data shall be recorded on the provided "BlueCrest Casing/FIT/LOT Form". ■ Pressure test is to be taken to leak off but not to exceed 1,000 psi surface pressure. ■ If LOT is below 13.00 ppg EMW, contact Drilling Superintended prior to drilling ahead. ■ NOTE: casing pressure test linear line and FIT pressure test line should be closely parallel to each other. ■ NOTE: Notify AOGCC if any aspect of the FIT is considered to be unusual or not as expected. 261Page Drilling & Well Construction Report nueest Energy Drilling Procedure (12-1/4" Section) 1. Directionally drill intermediate hole: ■ Drilling Parameters: --> Flow Rate: 900+ GPM Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan -> Rotary: 120+ RPM ■ PU and Slack -off Weights will be taken EVERY stand Per K&M ■ Follow Recommended Connection Practices ■ Avoid anti -collision boundaries ■ Take MWD surveys as frequently as needed maintaining at least 1 survey per stand. Carefully review the anticipated close crossings with existing wellbores. Make sure that directional drillers are aware of all drilling close crossing issues, hardlines and no-go lines. 4 If a no-go or hardline has been or will be crossed, stop drilling immediately and contact the Drilling Superintendent to discuss options. NOTE: COAL DRILLING PRACTICES ■ Drill coal seams slowly to avoid allowing large chunks from entering the wellbore Stop, Drop & Roll ■ Monitor ROP, torque and pump pressure for signs of drilling into a • Stop — When coming new seam. out of the hole if o Coals tend to drill fast with low WOB and low torque overpull is o Torque spikes may indicate sticking pipe and the bit encountered o Drill 1'-3', pick up off bottom above coal DO NOT KICK PUMPS o Circulate/rotate above the coal before continuing to drill ON! o Continue drilling at 2'-5' intervals, pulling above to • Drop — Run back into circulate the hole 3-5 stands or area where the pipe ■ Use ECD management techniques to minimize cycling the was last free. formation • Roll — Initiate rotation o Use high angle tripping practices (STOP, DROP & ROLL) to and bring the pump avoid packing off up slowly to full o Slowly bring pumps on after connections or breaking circulating rate. circulation. Rotate first to break gel strength. Stage into Clean the hole at full the hold to shear gels. Control trip speeds to manage rotary and circulating surge/swab loads. rate prior to o Maintain "thin" low end rheology and gels commencing tripping o DO NOT PUMP SWEEPS operations. o DO NOT CONDUCT WIPER TRIPS • CHECK — Pull back throuah area of ■ Maintain a broad particle size distribution (PSD) of bridging agents in the mud o Increasing mud weight will prevent coals from destabilizing, but only if the mud is able to seal the fractures. 271Page Drilling & Well Construction Report llueNest Energy 2. Intermediate casing point: Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Land within the Starichkof Sand, as directed and confirmed by Operations Geologist. TD will be a minimum of 400' past the base of the shale marker (Top of Starichkof) -> This well may be sidetracked in the future, enough room needs to be made for the rathole (-15'), liner overlap (-150') and whipstock offset (-150') while remaining below the coal above the Starichkof. 3. Circulate until shakers are clean per K&M. Backream one (1) stand per bottoms up very slowly while circulating clean at full drilling parameters. -> 900+ GPM 4 120+ RPM 4. Attempt to POOH on elevators. 5. If tight hole is encountered, TIH 3 stands and circulate shakers clean. Attempt to trip back through depth of tight hole: If tight hole is still encountered, ream the section clean, and confirm it is free of obstruction prior to continuing to POOH. If area is free continue to POOH on elevators making sure monitor drag trends for signs of excessive over pull. 6. If the hole is swabbing or reoccurring issues are encountered while POOH, BROOH to the surface casing shoe. ■ Contact Drilling Engineer prior to commencing back reaming operations at any point in the well BROOH at full drilling parameters 4 900+ G P M 4 120+ RPM NOTE: ■ Backreaming speed will be dictated by hole conditions. Consult with K&M prior to increasing pulling speed. ■ Decrease backreaming speed as torque and pump pressure dictate. Once backreaming in the open hole has been started, DO NOT stop backreaming until the surface casing shoe. ■ DO N01 attempt to pull out on elevators once backreaming has started until the shoe has been reached and sufficiently cleaned. If shakers/mud return system becomes overloaded and flow rate needs to be reduced, DO NOT continue to BROOH until the parameters are brought back to full backreaming rate. 7. Circulate the hole clean per K&M 8. POOH on elevators. 9. Pull and lay down BHA. 10. Perform a dummy hanger run before running casing, if not already completed. 281Page Drilling & Well Construction Report llueNest Energy Casing Program Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan psi lbs. 9,440 1,493,000 Operational Limit k Running Method: Conventional — Volan i .63 Casing Running Notes Perform dummy run prior to running casing o A slick landing joint will be utilized. Intermediate casing will be landed on emergency casing slips. o Verify the modified wear ring is installed prior to running casing. Have Vetco representative verify the correct emergency slips are on location prior to running in the hole. Utilize Volant CRTi Tool for running, fill up and circulation. Have a spare shoe track on location prior to running casing. Ensure the casing run is modeled with actual wellbore conditions (i.e. actual survey, active mud weights, depths, etc.) Surge modeling shall be agreed upon by K&M and Drilling Engineer to determine safe running speeds to prevent/ minimize potential losses. Have an assortment of 9-5/" pup joints available for space out when setting casing on depth Ensure that a copy of the LWD logs with details of known tight spots, problem areas, doglegs, KOP's, and a theoretical drag chart with potential decision points identified for the casing run, is available on the rig floor. 291Page Drilling & Well Construction Report nest t En-e(rgy Casing Running Order Float shoe 2 joints 9-5/8" 47# P-110 Hydril 563 Casing Float Collar 9-5/8" 47# P-110 Hydril 563 Casing to surface 9-5/8" landing joint Centralizer Placement +/-38 Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan BakerLok BakerLok BakerLok Take note that this is 47# P-110 Hydril 563 Slick landing joint 9-5/8" x 12" VariForm Weatherford Pre -Run 1. Confirm 12" OD (slightly less than the 12-1/4" gauge hole) Weatherford Variform centralizers are on location and attached to pipe prior to loading the in the shed. 2. Inspect and ,tai`: all surface casing to )� ,1,r" This is to be done rA1 s � N centralizers are crimped to casing. 4 The crimping tool can affect the inner diameter. 3. Pull wear bushing. Install test plug. Then install 9-5/8" casing rams and test same. Pull test plug. 4. Install modified wear ring. To protect hangers if casing needs to be rotated while running. Wear bushing is short enough to not extend past studs when the wellhead is broken when emergency slips are set. ID should be the same as the actual drilling wear bushing. 5. Perform dummy run with 9-5/8" slick landing joint, confirm and record length to break. Casing will be set on emergency slips. 6. Ensure a spare float shoe and collar made up with centralizers is on location as backup. 7. Ensure the 9-5/8" floor valve or "kill sub", comprised of a TIW valve crossed over to 9-5/8" Hydril 563 is on the rig floor. Function valve and leave in the open position. 301 Page Drilling & Well Construction Report lu est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 9-5/8" x 12" Weatherford Variform Centralizer 1. One (1) — 5' Above Float Shoe o Floating between stop collar and float shoe 2. No Centralization on 2nd Joint 3' 3. One (1) —10' Above the Float Collar o Floating Between Stop Collar and i Float Collar 4. From 3rd Joint Through Top of Cement o One (1) Each per Joint o Crimped +/- 3' From Pin End t OO _ 10, ALL CENTRALIZERS WITH STOP RING +/- 3' l FROM PIN END UNLESS STATED OTHERWISE Fc O 5' FS ` 31 1' Drilling &Well Construction Report IuNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Running Procedure 1. Bring Volant CRTi Tool to the rig floor and rig up same. 2. Pick up the shoe track and make up by hand using chain tongs until enough weight is in the slips to prevent cross threading. ■ The shoe track is to be BakerLok'd ■ Inspect the float valves as the shoe track is picked up 3. Run the shoe track into the well and confirm the floats are holding negative pressure. 4. Run the first 10 joints using chain tongs. 5. Continue running in the hole utilizing the Volant CRTi Tool. While TIH with Casing: ■ Fill every joint. ■ Obtain SO Weights Every Joint per K&M ■ DO NOT take PU weights. DO NOT POOH without the pumps on. ■ This data shall be plotted against theoretical curves in real-time to determine SO friction factors (SOFF's) and allow pro -active decisions to be made. ■ If there are distinct divergences from theoretical lines or changes in the friction factor, an attempt should be made to document the causes (e.g. ledges, change in formation, doglegs, etc.) ■ If the casing will not pass an obstruction, rotation should be discussed in an attempt to work the string down o DO NOT attempt to rotate the casing until the expected torque values are modeled to determine is casing rotation is possible as the string will be full. ■ Contact Drilling Engineer immediately if problems are encountered while TIH. 6. Prepare to land the casing on bottom ■ Ensure adequate rathole is allowed below shoe and free pickup weight of casing is observed. ■ 10' rathole 7. Makeup slick Landing Joint 8. Open 350 ton air slips and slide them out of the way. 9. Slack off and land casing using the hand slips. ■ Leave 4'-5' of casing stick up above hand slips. ■ Use rotary hand slips and bushings type: Bushings API #2 and Slips CMS XL. ■ Take care to ensure that there are no couplings across the casing rams once the casing is on depth. 10. Break circulation at % bpm assessing losses if any, this will allow any "clabbered up" or cold mud to be circulated out prior to stepping up the rate. 11. After at % bpm without any issues/ losses, then step up the rate gradually to 8 bpm. ■ If losses are encountered contact the Drilling Engineer immediately. 12. CBU 3.5 (estimate Final YP < 20) ■ If needed, circulate and thin mud to properties slightly as outlined in CemCADE and Mud plan summary prior to pumping cement. 321Page Drilling & Well Construction Report ZuNest Energy NOTE: Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan As a reminder, the following aspects of the cement job will be "different" than a normal job: ■ The casing will not be reciprocated or rotated once at TD. • After cementing the casing, the pipe will be pulled into tension and then landed using the mandrel hanger. Cementing Mud Push II 9-5/8" Class "G" Top of Cement @ 13,981' MD Cementing Notes 100 bbl. Density: 11.8 ppg N/A 132 bbl. Density: 15.8 ppg 50% Yield: 1.16 ft3/sk Obtain and review the UCA Compressive Strength Test Report on the job blend from the cementing lab at least 24 hours prior to pumping the cement. DO NOT pump cement if there are any doubts as to cement quality, quantities, pumping times, or thickening times. ■ DO NOT over displace more than half the shoe track volume if plugs do not bump on strokes. ■ Perform rig pump efficiency check prior to pumping and displacing cement. - Check cement calculations with SLB and Drilling Engineer. Cementing Procedure I. Rig up to cement and pressure test cement lines per Schlumberger. 2. Pump Mud Push Spacer. Shut down and drop bottom plug. 3. Pump cement job per the attached Schlumberger cementing plan. Cement volumes are based on ;- excess and at least 500' TVD above the intermediate casing shoe. 4. Drop top plug and cleanup on top. Ensure to capture cleanup volumes when calculating necessary displacement volumes. 5. Pump displacement at 8.0 bpm maximum. Drop circulation rate to 3 BPM for last 20 bbls of displacement prior to bumping plug. 6. Bump plugs and pressure up to 500 psi above Final Circulating Pressure (FCP) to ensure the plug has landed. If floats do not hold, maintain FCP on casing and shut in cement head for a minimum of °- before rechecking. Do not over displace Pump NO MORE than %2 the shoe track volume if plugs do not bump on calculated strokes. 7. Wait on cement to setup per Schlumberger UCA minimum required compressive strength time requirement prior to nippling down BOPE and setting emergency slips. 500 psi compressive strength minimum. 331" ; ,, Drilling & Well Construction Report nuest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Prior to Lifting the BOP Stack 1. P/U 1 stand of 5" drill pipe make up 8' pup and floor valve (closed). Run stand inside casing all the way down to the elevators, this will displace the mud from the casing down to the wellhead then pull the stand and rack it back. This allows for a "dry" casing cut saving time and eliminating having to clean mud out of the well bay. 2. Remove the flow line and choke & kill lines. 3. Radio communication is required for those in the cellar and on the rig floor. Also ensure that radio channel is clear to only those involved in the cellar, rig floor, and sub- base. 4. Ensure that Vetco Gray/ and one floor hand is in the cellar with a radio prior to lifting the stack to measure amount of travel to provide enough room to install the emergency slips and casing cutting tool. While Lifting the BOP Stack and Setting the Emergency Slips (optional step if casing is stuck off the intended setting depth using the mandrel hanger) 1. Upon lifting the Stack and multi -bowl: ■ DO NOT LOWER THE STACK FOR ANY REASON UNTIL ALL PARTIES ARE NOTIFIED PRIOR TO LOWERING THE STACK. • Caution: When the stack is raised, the casing and multi -bowl can become un -centralized and if lowered the multi -bowl seal area can become compromised 2. Confirm with Vetco Gray hand in the cellar that there is enough room to set the emergency slips. 3. Set emergency slips with casing in Tension Pull approximately 100K over string block weight and set emergency slips. Slack off and allow casing weight to be transferred to the slips. Record weight transferred to the slips on Daily Report. 4. Prior to cutting the casing ENSURE THAT ALL WEIGHT IS SLACKED OFF. 5. Once the slips are set and the casing is cut be sure that there is radio communication between those in the cellar and rig floor prior to pulling the casing in the event that the stack has to be slightly lowered. 6. Remove and lay down the cut casing 7. Install Vetco Gray Packoff assembly. 8. Re -Install the Vetco Gray Multibowl and BOP's with RCD Test wellhead connection to 5000 psi Radio communication is necessary for all parties involved when lowering the stack 9. Pressure test pack off per Vetco Gray. Do not exceed 80% of intermediate casing collapse Record test on IADC report and Daily Report 10. Install rams and test per the AOGCC Permit to Drill (attached) Test rams and choke manifold components to 3500 psi high / 250 psi low Test annular preventer to 2500 psi high / 250 psi low ■ Do not test BOPE against casing. ■ Notify AOGCC 24 hours prior to performing BOP test. 341Page Drilling & Well Construction Report llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan PERMIT TO DRILL requires BOP testing frequency every 14 days unless notified otherwise by AOGCC 11. Install wear bushing. 12. Clean mud pits in preparation to receive production OBM. Production — Lower Lateral Overview 4.5 RSS PDC ACTIMUL RD 8.8-9.4 22,122' 7,063' 1150 Fluids =I From 15,481' To 22,122' 7-11 ml/30 min <5.0 80:20 mlVolts >600 Min Max RSS 6.75" Xceed675 Telescope/ GeoSphere/ 300 600 PWD/ MVC EcoScope Bit Smith PDC XS616 7 x 12 0.773 General Notes ■ A combination string of 5-1/2" and 5" drill pipe will be utilized. ■ The 9-5/8" Intermediate String will NOT require a CBL as per AOGCC Regulations prior to drilling out since no hydraulic fracturing is planned for this well. ■ Shallow test MWD tools. • Monitor hole conditions carefully. Be alert for early signs of lost circulation and differential sticking. If any of these problems are observed immediately notify the Drilling Supervisor or Toolpusher (attempt to keep the pipe moving and circulation established). ■ If cavings are noted at surface, pictures shall be taken to clearly identify cavings structure and geometry. ■ Ensure that all team members are communicating with each other on any observed drilling trends and that everyone understands the potential risks. 351Page Drilling & Well Construction Report IlueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan ■ Good drilling and tripping practices are vital for avoidance of differential sticking. Make every effort to keep the drill string moving whenever possible and avoid stopping with the BHA across the sand or coal sections for any extended period of time. Keep shut down times to a minimum during connections. ■ Swab / Surge: Make "easy on, easy off' slips a standard practice Ensure the Top Drive Torque Limit is set below the lowest make up torque in the string. Do not run the risk of further make up downhole while drilling. Cement Bond Log (NOT REQUIRED BY REGULATION UNLESS WELL IS TO BE FRAC'D) 13. Rig up Schlumberger wireline and cement evaluation tool with tractor assist highly likely 14. Trip in the hole per Schlumberger requirements Acquire CBL per Schlumberger (tractor assist to get log to TD will likely be required) 15. POOH and download the data for processing. Notify Drilling Engineer as soon as tools are on the bank to expedite future drill out. Drill Out Procedure 16. Install wear bushing 17. Pick up and drift all DP, HWDP, and DC's for surface section to confirm free of debris. 18. PU drill out BHA ■ Bit: 8-1/2" XR+ 4 TFA: 0.994 (4 x 18) -> Dumb Iron Assembly 4 NOTE: discuss with office the option of omitting this step and drilling out with the PDC and RSS BHA. 19. TIH on 5" XT50 and 5-1/2" XT54 Drill Pipe. 20. TIH to top of float equipment and pressure test intermediate casing to 3,500 psi for 30 min. Chart and record same. Plot casing pressure test on LOT form and submit to Drilling Engineer Verify the test indicates a linear line and there is no air entrained in the mud. Repeat casing pressure test if needed to obtain a linear line plot. 21. Bleed off pressure. 22. Drill out float collar and shoe. Take note of any green cement or lack of necessary WOB to drill out shoe track. If no cement or if green cement is encountered DO NOT drill out the shoe. —> Call Drilling Superintendent prior to continuing operations. 23. Clean out rat hole and POOH on elevators & LD drill out BHA. 24. PLI Drilling BHA ■ Bit: 8-1/2" Z716 PDC 4 TFA: 0.773 (7 x 12) -> PD Xceed 900 RSS BHA 25. TIH to TD on 5" XT50 and 5-1/2" XT54 Drill Pipe. 26. Displace to new 9.5 ppg Versa Pro OBM. 27. Drill 20' of new formation, below the rat hole. 361Page Drilling & Well Construction Report nluest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 28. POOH to intermediate casing shoe and perform FIT per AOGCC requirements following the attached LOT procedure. Required FIT: 13.50 ppg EMW 4 Recorded LOT/FIT pressures shall follow the format below: I. EMW = pSurface + MW 0.052*(TVD) II. 13.5 ppg EMW FIT/LOT w/ 1,470 psi and 9.5 ppg MW @ 7,067' TVD Offset Hansen 1: 12.80 ppg EMW FIT (Depth, MW and pressure not recorded) All data shall be recorded on the provided "BlueCrest Casing/FIT/LOT Form". If LOT is below 12.50 ppg EMW, contact Drilling Superintendent prior to drilling ahead. RSS BHA & Procedure for Drilling 8-1/2" Production Section: PU Rotary Steerable Drilling BHA ■ Bit: 8-1/2" XS616 PDC 4 TFA: 0.773 (7 x 12) -� PD Xceed 900 RSS BHA with EcoScope LWD TIH on 5-1/2" XT54 x 5" XT50 DP to 9-5/8" shoe depth; circulate bottoms up. Wash down to previous TD. Directionally drill production hole: - Drilling Parameters: --) Flow Rate: +500 GPM -> Rotary: +120 RPM ■ PU and Slack -off Weights will be taken EVERY stand Per K&M Avoid anti -collision boundaries Take MWD surveys as frequently as needed. Carefully review the anticipated close crossings with existing wellbores. Make sure that directional drillers are aware of all drilling close crossing issues, hardlines and no-go lines. If a no-go or hardline has been or will be crossed, stop drilling immediately and contact the Drilling Superintendent to discuss options. 7. The seven (7) ribs of the fishbone production section will be drilled in the following sequence using a 8.8-9.4 ppg low solids CaCO3 OBM starting mud weight with no barite: o Drill the first fishbone rib "101" up into the Hemlock and Starichkof pay sands at 115 degrees inclination, as per the APD and directional plan for H12 -L01. o Circulate the rib clean, and backream L01 rib back to mainbore. o Once back in the mainbore, pull out to an open hole sidetrack depth as directed by the Operations Geologist. o Sidetrack the mainbore to the low side and drill ahead to the kickoff point for the L02 rib. o Repeat the procedure above to drill the L02 rib, and the subsequent ribs L03, L04, L05, L06, and L07. o The last rib could be designated as L08 which will simply be a continuation to TD of the mainbore to be drilled under the H04 APD. 371Page Drilling & Well Construction Report /ue)erst Energy NOTE: Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan o NOTE: more than one bit run is expected to be required to drill the multiple ribs, and the AOGCC BOP test frequency will also need to be incorporated into the Daily Operations Plan. o Drill the H04 mainbore to TD, and circulate the well clean. o Backream to the 9-5/8" shoe. o Cap well with 9.5 ppg to 10.2 ppg weighted OBM depending on the actual reservoir pressure and well balance point that is encountered. o POOH and lay down BHA. Rig up to run 4-1/2" slotted liner lower completion. o Rig up and run 4-1/2" slotted liner with Volant Hydroform rigid blade centralizers crimped on at one per joint, and run in to 9-5/8" shoe. ■ Backreaming speed will be dictated by hole conditions. Consult with K&M prior to increasing pulling speed. Decrease backreaming speed as torque and pump pressure dictate. Once backreaming in the open hole has been started, DO NOT stop backreaming until inside the intermediate casing shoe. ■ DO NOT attempt to pull out on elevators once backreaming has started until the shoe has been reached and sufficiently cleaned. If shakers/mud return system becomes overloaded and flow rate needs to be reduced, DO NOT continue to BROOH until the parameters are brought back to full backreaming rate. 8 Drop 2" hollow DP rabbit once bit is above the 9-5/8" intermediate shoe, POOH on elevators taking SLM and LD BHA. Ensure a wireline tail longer than the longest stand is attached. NOTE: Hard Banding ■ AT NO TIME SHOULD THE TRIP OUT OF THE HOLE BE CONDUCTED WITHOUT TAKING PROPER RECORDS ON STRING LOCATION OF WORN DP HARD BANDING. ■ ADDITIONALLY, BE SURE TO TRACK TOTAL ROTATING HOURS, BOTH DRILLING AND BROOH, OF ALL TRIPS TO ATTEMPT TO MAKE A CORRELATION BETWEEN HARD BANDING WEAR AND DP REVOLUTIONS ■ Take note of any joints that show hard banding wear, using the attached hard banding check sheet provided. It is imperative that we track where in the string we are seeing the most hard band wear for future planning purposes. 381Page Drilling & Well Construction Report Ilue rNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Production Section Drilling BHA (SLB example from H12): Schlumberger BHA # 7 (1-03) J'obil 17.MACC15 Dmfn 211 -Jun -18 C?a0a019llniBSho B U. Custanow BIueCRL: Ew2Y Tkne in 1:011 TNtto Out Hole Sect PTo&rtDn WetJ "1f2 Depot fn 1 B,23B Depw Out ON Type R-3 u Hold Cas -cm Ilan Unrt 69 TVD fn 7,0no Out M" BRT RV eluecres. Rig id DrV Mrs Drip FT Avg ROP AFS 0 01=18 Sade Mrs Sfkb FT Sfkfe ROP DD,j 3caC Levad TIm P nDle RO !; Rot Ft RW ROP Co- Mat Mark Astirs Hemp Mrs Robts % Slfde % RSS RuR 0 4 BU Sth Tam on Flow 35D yam kwfn 89.52 Az Jn 301.33 BX:+Srvy ..66 RSS BIH Deer. CU &11 MJn. DrAV 4011 ypm for 1out Az Out TSF Ca+r Na RSS S&v 675 Cc &1A Max. OM 57D ypm AV Y.Id Max DOS Fun DJs 3.0 Mutt Typo Ac11mji I'L EMI Mud IN 5 So" % RPM 130 GPM 5oc SPP on BHT PV.YP Sovdt % CN To WOB SPP Off Abuja vwm*w IVN DO 10 9110 00 r M 809kM Conn Lanylb Cm Lwwa In ! w axoo Top cam 1 XB616 Smnh j+w= E.E7 602 D 85 D.E5 Tr.►:=~ac mn -1Ataai 41 Rep Pm ., %reed 675 SLB Mr,4 E.E3 TOG 8.38 12.18 41.2 Refit Box 25,50 2EA5 ` •tan�rlrA'it 5 1 ^ =F ECx 3 Eco2cope 675 SLID Ali E.E6 ToG 5:.25 E Is 5 1.2 am Fin 26.35 52.Eo 'IIA S- I 5 1'T =I. Bc-I 4 LZ Reamer -Mab SMM 3720TK 7.E-9 Too ESB 3C 5 12 am Fin CAD 5920 5 V2 =1- BCI 5 Telescope 675 SLB .413411 1.17 Too 2 cc 5 1.2 =1i Fin 27.60 81:17 A 12 1F Eox B k1.+=orry M SLID 6560--10 7.25 2.75 4 1-2 IF Pin 10.09 9f E9 4121FB02 i ReameN'tat Srllffh 37204K f.75 2.75 5 8.3 8 2 33 1 4 IF Pin f.49 103.3$ 4 1,2 IF box 8 1JM Flex DC SO OD 54196 6.86x1 2'5 5.3C 4 1.2 IF Pin 30.83 134.21 4 t!2 IF Box 9 Ficat Out SLID -151-01-0B 7.32 3$3 A 1�2IF Pin 250 136.71 'MrIp. fto 1771 4 12 IF Box 110 Fscat Out SLID T151-cl-12 7.31 3,53 4 121F Pin 247 139.18 `I1"'.ow", I5 . 1562 1 4 12 IF 96x 11, 3 M 5' WADP IDC SIWADP.3 503 3,D7 4 112 1F Pn 93.57 232.75 4 1 ^ IF Box 12 «Iydraurc Jar. $11 SLE 414-1E 1,E+3 2.75 4.6: A 1,2 IF Pin 31.95 264.70 4 1!2 IF Box 1 =lr� 5 M'NDP BC 5 F'hDP2 °.C7 3.117 4 121E Pn 6+1.21 324.51 4 1!2 IF Bo. 14 Dar. Gatceet Churchf GC.A.81C033 f.93 2.75 63 4 IC IF Pn 11 51 33f A2 4 t2 IF Box 1!1 crc sib Churchl D4BACC56 19= 2.07 24C 4 1,7 IF Pin 7 15 34327 41:IFSell 1 ¢ KvPR50 I- CtWMhl =IL250112 5.4,3 2.75 1 3e 4 V2 IF Pin 2.70 346.27 4 12 1F Bow j 7 WjPREC UPW ChLIMhI -11.125hDD2 "I D3 2,715 c 34 4 1u IF Po .70 341 S7 4 12 IF Box 15 Xo warm+C 22 77 7.39 303 _ 45 4 1�2 IF Pn .183 352.17 FT55 Box 1'r 216 J1. 5 E' D� ;"r-"Fj; BC _ = -v` 1a;,In: ; E. E,3 4.17 h755 Pin f950.43 7303.23 I -TEE Box _:J xc BC scl14 71-3 407 f755 PM 1.99 730522 X-54 Bax 2 5.5' DP s3 -Y 354 IDC FAD= 5.57 4.78 X754 PIn 730522 X-54 Box BHA and Run OAOCM Fln sn LC2, si MCO, dni LrA a Lc5 am MOM Tool Ills. An MIs. out Exper" DLC 'z 6"10.1 Brr,' MT Z. -'sr W`Aooar..Ws 6,82E Fi'1 Be.Yw ,hT's 17'-S4 am, Mt 24034 mcwann Y15 AT -10,144 i4.BC X REE C.0 D.0 Poc'uX „'4,s 63.5 63.5 A'S &T to ox It Revs 3r�e -:-AM-se.'1? SMAwW fto *"on fy00J1(CotH10tNla an 'C�iJ?Z u4}T: Y.fi44y+incl 391Page Drilling & Well Construction Report llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Completion: Lower Lateral Lower Lateral - Liner Run 401Page Drilling & Well Construction Report nue est Energy Slotted Liner Run (4-1/2") Overview ACTIMUL RD Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 9.00-9.80 20,865 3.826 15.2 P-110 TSH -563 3.701 14,350 14,420 485,000 Make Up I Operational Limit in. in. I ft4bs. 'ft -lbs. ft=lbg. " I ft -lbs. ft -lbs. - 3.826 4.093 I 5,100 6,100 8,900 I 21,000 25,000 General Notes PJSM: Include all company, rig and service personnel. ■ Discuss: • Dropped objects • Trapped pressure --) Handling of the non-standard length equipment about to be handled. 4 Anyone may stop the job for HSE issues. Well Control: Discuss with DSM prior to liner running operation. ■ Ensure VBR's installed will cover 4-1/2" liner and 5-1/2" DP. Pressure requirements: ■ Schlumberger must agree that pressure setting requirements and limitations are understood and compatible. Liner String: ■ The majority of the liner will consist of 4-1/2" 15.2# P-110 TSH -563 pipe with slots cut in every other joint. ■ This will be crossed over to the bottom of a 17', 4.75" ID Seal Bore Receptacle and a 7" x 9- 5/8" liner hanger/ liner top packer assembly. The assembly will then be RIH on 5" drill pipe as required. ■ A WWT Flex joint assembly will be run on the toe of the liner to give the best chance of success for the liner to stay in the mother -bore of the well. ■ The first two joints of liner above the flex joint assembly will be non -centralized. 411Page Drilling & Well Construction Report l est Energy Operational Specifics & Preparation Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 29. Inspect all equipment for possible damage during shipment before use. 30. Identify all equipment and check against shipping manifest and Job Ticket. 31. Caliper all liner equipment and verify against inspection drawing. Record all dimensions for future reference. 32. Check hanger shear screws for any damage, and check all other accessible shear screws on the assembly for correct installation. 33. Verify that all connections are correct and will make up properly with the running string. 34. Be sure any x -overs used in running string do NOT have sharp internal edges / shoulders. 35. Sort, inspect, and verify correctness of all safety subs, lift plugs, and drill pipe rabbits. 36. All drillpipe /collars/x-overs used in the running string for the liner must be drifted to min. 2.50 in. 37. Drop drill pipe rabbit on last trip out of hole with drill pipe. Lay down any joints that do not drift. 38. Lay down all stands of drill pipe not required to run the liner. 39. Verify all required component setting pressures, torsional shears, and axial shears before running liner and record on inspection drawing. 40. Ensure the liner setting ball is of correct size and material and passes through minimum ID of the complete system. 41. Ensure the correct size elevators are available for lifting the liner assembly. 42. Follow the Tenaris and GBR reps running procedures and recommendations for the TSH -563. 43. Use Jet Lube Seal Guard ECF on TSH -563 Connections. 44. Utilize GBR/torque turn equipment w/record provided to BlueCrest rep at end of liner installation. 45. RIH speed: Not to exceed 30'/min. 46. Circulation pressure: Not to exceed 1,013 psi (=75% of Liner Hanger shear value of 1,351 psi) 47. Circulation rate: Not to exceed 15 bbl/min 421Page Drilling & Well Construction Report Ilue(.%st Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Liner Running Order (subject to change when run in well) MBoIideShoe 4.5", 15.2# TSH -563 15.2 P-110 TSH -563 Baker -Lock Linerjoint(s) as required 15.2 P-110 TSH -563 Slotted Liner joint(s) as required 15.2 P-110 Crossover 5.5", 17# TSH -521 Box 15.2 4140 x 4.5", 15.2# TSH -563 Pin 4.75" ID Seal Bore Receptacle (17' length) 5.5" 17# TSH -521 Box 17.0 125 KSI x VAM TOP HT Pin Crossover 7" 26# VAM TOP HT Box x 5.5",17# TSH -521 Pin 26.0 4140 7" x 9-5/8" Hydraulic Set Liner Hanger 7" 26# VAM TOP HT Pin x 26.0 125 KSI Pin Coupling 7" 29# VAM TOP HT Box x Box 29.0 125 KSI 7" x 9-5/8" Liner Top Packer with 10' Tie Back Receptacle 7" 29# 29.0 125 KSI VAM TOP HT Pin 7" Collet Running Tool -CRT Drill Pipe 431Page Drilling & Well Construction Report TSH -563 TSH -521 TSH -563 TSH -521 VAM TOP HT VAM TOP HT TSH -521 VAM TOP 158' Liner Lap HT 944,000# Tensile VAM TOP HT VAM TOP 764,000# Tensile HT 125 KSI NC -50 750,000# Tensile 50,000 ft. lbs. Torque To surface nlue st Energy Connection Specifications a, yo Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan or psi psi Ibf. In 100% 14,430 14,420 485,000 3.826 80% 5,984 8,512 310,412 3.701 drift 100% 7,890 12,090 620,000 4.892 80% 6,312 9,672 496,000 4.767 drift ft -lbs. Min: 5100 Optimum: 6100 Max: 8900 Make Up Loss: 4.093" Min: 5200 Optimum: 6200 Max: 9100 Make Up Loss: 3.620" Min: 16,300 100% 9,110 12,750 1,056,000 6.184 Optimum: 18,100 Max: 19,900 80% 7,288 10,200 844,800 6.059 Make Up Loss: 4.776" drift Min: 13,700 100% 6,450 11,310 944,000 6.276 Optimum: 15,200 Max: 16,700 80% 5,160 9,048 755,200 6.151 Make Up Loss: 4.776" drift Running 4-1/2" Slotted Liner: 1. Make sure the running string will provide enough weight to fully set the packer. The packing element needs up to 60,000 lbs compression at the packer. 2. Centralization: One 4-1/2" x 8-1/4" Volant crimped on centralizer per joint. 3. Baker -lock the shoe joint. 4. K&M/SLB will provide "Broomstick" T&D chart. Pay attention to weight loss trends and FF trends. 5. Rotation is expected to be required during the running the liner. 6. The liner string should not be rotated any faster than 5-15 RPM. 441Page Drilling & Well Construction Report llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 7. Circulating pressures should be kept below 1,013 psi or 75% of the shear pressure of the Liner hanger at tool. Ensure that the liner is held in tension when pressure is applied to the string to negate any buckling forces that may be acting on the pipe. 8. Follow Schlumberger equipment limitation recommendations. 9. Monitor pick-up and slack -off weights while running. Record PU and SO weights. Maximum pull is 80% of pipe yield or 80% of the weakest component of the LH assembly. 10. Set slips on the last joint of liner. 11. Make-up the 17 ft PBR with the crossover; 5-1/2" TSH -521 Box x 4-1/2" TSH -563 Pin to the joint hanging in the slips. 12. Carefully, pick up the liner assembly. Assemble the inline tubing assembly to the slick joint in the following order: 3-1/2" NU Box x 2-3/8" EU Pin 3.25 " OD with 1/2" Holes 120 deg 1ft long 2-3/8" EUE BOX / PIN TUBING SWIVEL 5-1/2" X 2-3/8" (17.0-20.0#) GV 2 -CUP PACKER, L-80 Ball Seat sub 2-3/8" EUE Box x 2-7/8" EUE Pin 13. Pick up the liner assembly & inner string and insert the inline tubing assembly into the top of the PBR in the rotary and slowly lower until liner assembly pin connection is at top of PBR box connection 14. Make up the liner hanger system to the slotted liner casing. When making the hanger assembly up to the liner, makeup first 2-3 threads using a chain tong. Ensure during the torque up of liner hanger assembly connection that the handling sub is free to rotate in the elevator and that the setting tool rotates with liner hanger assembly. 15. Pick-up liner hanger assembly three to four feet without removing slips to ensure integrity of the running string, liner hanger and the casing. 16. Pull casing slips out and lower the liner hanger assembly until the junk bonnet (1BT) is at waist level. Do not place slips on tie -back receptacle (TBR). Take appropriate preventative measures to ensure no dropped parts or tools enter the wellbore during the following step. 17. MU the JBT to the TBR as per Schlumberger procedures. 18. After liner is fully made up, note weight of liner in mud. 19. Make up the drill pipe stand and lower the liner hanger assembly carefully through the BOP stack and well head. 20. Circulate to ensure RCB is holding. Circulating pressures should be below 75% of minimum setting pressures of the tools in Liner Hanger assembly. 21. RIH with liner on drill pipe no faster than 30 ft/min while in cased hole. Watch displacement carefully and adjust running speed accordingly. Slowly in and out of slips. 451; Drilling & Well Construction Report llueNpst Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 22. Establish rotating parameters above the shoe and every 2000' while running to open hole. Confirm torque specifications prior to rotating. DO NOT exceed the torque specifications for the weakest liner component. Ensure that the string is in tension when performing the torque check and stay below the torque limit previously calculated. 23. When running in open hole, reduce running speed to 15- 30 ft/min, be aware of any potential problems that may have been encountered when drilling the hole or performing the wiper trips. 24. Particular care should be taken if attempting to work the string to bottom using rotation. The Liner threads could be damaged due to excessive torque should the string becomes fixed in open hole. 25. Record PU, SO and ROB weights prior to exiting the shoe and lock in cased hole friction factors. 26. Before entering the open hole, break circulation and ensure no air is trapped in the system. Circulating pressures should be below 75% of minimum setting pressures of the tools in Liner Hanger assembly. 27. Record circulating pressures. Record the string weight before entering the open hole. 28. Slack off slowly out of the 9-5/8" window looking for any abnormal resistance. 29. Continue in the hole looking for set down at the main wellbore liner hanger/packer setting depth. If tight spots or dog legs are encountered, the liner can be rotated to work through the tight spots keeping in mind backlash when releasing your torque 30. Tag up on bottom and pull back up to position the shoe 2' off bottom. 31. Check the tally and ensure that the total depth (TD) is correct. Setting the Liner Hanger 1. With the liner shoe positioned at the correct depth, mark drill pipe at the rotary table. Pull stretch out of pipe, once free travel is indicated mark pipe and pick up 2' off bottom. Ensure last movement of the string is an upstroke motion so all squat and stretch has been accounted for. 2. Drop the setting ball into the drill pipe. Circulate the ball down to BCS ball seat in the running string at no more than approximately 1-3 barrels per minute. Reduce pump rate when ball is expected to seat. 3. Pressure up to 200 psi over setting pressure of liner hanger. This pressure acts through the setting ports of the hanger body and sets the slips on to the casing. Shear out of hanger piston will not indicate on surface gauges. 461 , Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool nluest Proposed Pool Rules Energy H-04 Well Plan 4. While holding pressure slack off liner string. A loss of weight may be indicated on the weight gauge as the second mark on drill pipe approaches the rotary table. Continue slacking off and set down 20- 30,000 lbs onto liner hanger to set slips. 5. If a loss of weight is not indicated, the liner hanger did not set. Steps 1 through 4 should be repeated. DO NOT increase pressure more than 250 PSI over original shear pressure. 6. A loss of liner weight will be indicated on the weight gauge as the liner hanger sets. 7. The running tool is ready for release once liner hanger is set. Release CRT Running Tool 1. Maintain your slack -off on the CRT to ensure it is in compression. 2. Pressure up to 200 psi over CRT release pressure and hold for 2 mins. 3. Pressure up to shear the ball seat. It is critical that the CRT remain in compression during this step. 4. Pick up the string to check for release. The entire liner string weight will be lost when setting tool is released. Picking up more than the length indicated in the inspection sheet could result in the Rotating Dog Assembly (RDA) leaving the tieback receptacle (TBR) and may cause the cementing bushing (RCB) or pack -off to disengage. 5. Proceed to set the liner top packer. 6. In case the CRT running tool is not released after the ball seat is sheared, two options are available. The recommended option is to perform a secondary mechanical release as per the Schlumberger procedures. Setting the Liner Top Packer 1. Raise the running string to neutral then pick up as per the length specified in the inspection sheet to pull the packer setting dog assembly (RDA) out of the tie -back receptacle (TBR) and slack off the specified work string weight at the tool to set the Packer. Note. The two shears for the Packer setting 18K and 48K will usually be seen on the weight indicator. For effective transfer of weight to the liner top Rotating Dog Assembly (RDA), it will require rotation of the work string. 2. Test the liner top packer by applying 2,500 annular test pressure. Hold pressure and monitor for pressure loss. No leakage indicates a properly set packer. 3. If the annulus pressure test is not successful, increase the slack -off weight and retest. 471Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool llueNest Proposed Pool Rules Energy H-04 Well Plan 4. After a successful pressure test pick up to raise the work string and un -stab from the cementing bushing. 5. Perform a 10 -minute well flow check and monitor for losses. This will act as a baseline for future trouble shooting. 6. After the flow check pump the following spacer train ahead of 9.2 ppg KCI/NaCl brine at +/- 15 BPM. Transition spacer - ■ 100 bbl of 9.2 ppg KCI/NaCl brine + 2.5 ppg Duovis + 5% v/v Deepclean Cleaning spacer - ■ 10 bbl of 9.2 ppg KCI/NaCl brine + 10% v/v Deepclean High Vis spacer - ■ 50 bbl of 9.2 ppg KCI/NaCl brine + 2.5 ppb Duovis Completion Brine - ■ 1300 bbls 9.2 ppg KCI/NaCl brine Capture the returning 9.3 Actimul mud and send to the mud plant for storage. 7. Prior to shutting down catch a sample of returning brine and measure the NTUs and total solids content and record on the daily mud report. 8. TOH laying down the 5-1/2" DP and CRT assembly. Do not rotate while retrieving the running tool assembly out of the well. 9. Prepare to run the 3-1/2" completion string. 10. Check the running string for any visible damages before shipping it to shop. Liner Equipment Shear Settings 3 1,351 1,300 Psi 6 1,995 2,010 Psi 1 1,621 1,621 Ft -lbs 8 52,000 52,000 lbs 16 48,000 48,000 Lbs 5 3,050 3,050 Psi 481Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Energy est H-04 Well Plan En General Liner Equipment Information 8.326 inch 1.380 inch (BCS Ball seat) 307min in cased hole 15-30'/min in open hole 300F k 2,000 psi i' 10,000 psi 15 BPM 5-1/2"; 17#, 125 Ksi TSH -521 Max Operating Torque 24,000 ft -lbs 491Page Drilling & Well Construction Report Ilue r� fest Energy Liner Equipment Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Schlumberger 57 UP 9UB - SAM, EUE Bw 9412• N9d.1511 Pl. OD. 4 Sirtf to.2 062' Ilaool"4 )l TE BACK RECEPTACLE, 7 502 x 6.270, %V" 740! SA box, TBR, C7 0/10 X01,.625159 5 AND LIGHTER, 16FT. 1"S S BI..L 1t,d00 C.O" .. t0.em w� 00. 02SD• 10.7 502• i IWU110 PV] WBdIT SE/ Ul9ER lOH•ACKER, 07.00/8 x OD eSu9 S-69 5, YAM TOP M Pik, MODEL71RTiCR1 , 600 NN8R ELEMENT, RCB 126M Bw.L 11.200 ql C.IIw- 10,700 wi 00.ly 126- PUP JOINT 3-V2" My" 511 10. e. 159' 2$74 TDp Jt —1 {30 i!) Mn DP:9416e6 PN Pup Jt —1 (x 1lea) xo arYl7 OD- 3 -SW COUPLNO, 07 0021, YAM TOP N) BU:e x Box- 124KIM Bu1M: 6.118 P.1 lLe2 R Ctltrpr 12.750 PII j 00.7 eP4 1D a 118• i i nrtsr,z1uv 160 i HYDRAULIC UNERNANDER, 07.0072! X 06.69/0]-44, YAN TOP MT MN X MN, 1200.1500 PBI 6MEAF 124KSI Bvt: L,7d0 w Ctllxp..:12,770 w. 00. a 290' 10. 6 for XO, RSB YAMTOP MT BOX k 6-M 176 TSH 521 PIN } 00. 7 546• FM 4 602• XO - SAW Hydr 611 Bok X 4.5" 61 L PIN U0.4 Seo' 110.2 462' PSR, IS LU SEAL BORE. tJ84NO SEAL ASSNMSLY. 01750 00, 5-11' /717Bs1 int BOk x MN. 125K61 a SETS 4 YJIKO. N.06ftS.t BTL SOk. 0D. 6000' 2.87 126KIN ID. 4 750• 0U..75C• ID. S 7x66` k0 - Nl�Aa. BOk a 9-V2'Mydd1491 MN MWER -S- 176 TRN 521801.. x' j OD.<7o IID.2441 4 1a' 1431 MYD 469 PIN 61. I.M., J.1n641 I i <1a'1536MYD 9d9 B.P I1 Lhs Jd •� i t a14'15244HYD 669 IkP Q.Nr SNN• 4 W is 26 "YO 4m B. - Liner Top to Top of PBR )D = xk.kx ft Liner Top to Sm of NOR ID = —ft - No W Btm of --Aa = 1a.xx h a' a"• Tomi liner Any Length Totsl SPzI Assy length ft 50 1 P i c, -, Drilling &Well Construction Report Ilue(.'i<esr Energy Upper Completion 3-1/2" Production Tubing String Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 2.992 9.3 L80 IBT-M 2.867 10,540 10,160 207,000 Make Up I Operational Limit in. in. in. ft -lbs. ""R41511177" ft -lbs. ft -lbs. ft -lbs. _ 2.942 3.38 2,350 3,130 3,910 TBD TBD Run and Land the 3-1/2" Completion String SIMOPS Status: • The 3-1/2" completion tubing has been strapped and drifted to 2.867" • The completion assemblies have been bucked -up, pressure tested and transported to location. • A Top Loading Plug and Prong have been installed in the upper most X -Profile below the SO valve. Objective: • No HSE incidents. • TIH with the 3'/2" completion string. • Space out and land the tubing hanger with +/- 10k Ibf in compression. • Test the annulus and top side of the production seals to 2,000 psi with completion fluid. • Shear out the SO valve and establish circulation from the annulus to the tubing. • Close the SCSSSV and test to 1,500 psi via the annulus and SO valve. • Perform an equalization test on the SCSSSV. • Terminate the injection line, control line and TEC wire above the tubing hanger. • N/D the BOP and N/U the 5K production tree. • Rig -up slick -line to retrieve the Top Loading plug and change out the SO valve and dummies to GLVs. • Turn well over to production for tie-in. 51 JPage Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool llueNest Proposed Pool Rules Energy H-04 Well Plan r-; fpf,; Hold a safety meeting with the rig crews and all contractors to ensure the driller and rig hands understand the order of installation and the specific pick-up, make-up, pressure testing and running procedures for the completion assemblies and the risks involved. Ensure all personnel understand the spooling and clamping procedures for running the 3/8" chemical injection line, the %" TEC wire and the %4" control line that will be required. Ensure all the lifting equipment i.e. elevators, slips, dog collars required to P/U the completion assemblies are on the rig floor and double checked that they are the correct size. Ensure the proper tongs and dies are available for making up all of the completion assemblies. Ensure the appropriate rig floor safety valves are on the rig floor. Operational Procedures: 1. Rabbit any 3-1/2" tubing that has not already been drifted with a 2.867" Teflon drift. 2. Verify that all completion assemblies and components have been function and pressure tested as appropriate. Ensure dimensions of each component are recorded on the tally. The principal completion components have been bucked up to pup joints, pressure tested and drifted to 2.867" at the Schlumberger shop in Deadhorse prior to being delivered to location 3. Load the completion assemblies in the pipe shed in the order they will be run. 4. The following table lists the principal completion string components required and the estimated measured depth for each based on the completion tally 5. The SO valve has been set for the following burst/operational pressures. Hydrostatic Operating Plan Assembly Length TVD Seal Assembly 15246.07 15240.79 40.88 (psi) 3-1/2 TSH -511 Jt 15240.79 15208.39 3197.00 Locator Sub 15208.39 15207.08 1,800 3-1/2,9.30,SGM 15123.31 15116.80 38.85 6952.00 X -Nipple l 14459.87 14458.39 30.94 6717.00 GLM -1, 3-1/2 MMG, Dummy w RK Latch 14297.30 14288.48 37.84 6656.00 3-1/2,DCIN ASSEMBLY 13598.73 13596.87 31.28 6409.00 GLM -2,3-1/2 MMG, Dummy w RK Latch 10670.70 10661.89 37.89 5346.00 X -Nipple 2 5099.22 5097.74 30.90 3340.00 GLM -3, 3-1/2 MMG 1.5" SOV 2500 psi w RKP Latch 4707.17 4698.36 1 38.26 3197.00 3-1/2 TRMAXX-5E 5K SSSV 492.41 488.14 33.70 488.00 5. The SO valve has been set for the following burst/operational pressures. 52 1 Drilling & Well Construction Report Hydrostatic Operating Plan Op Min Op Max Component 7VD (psi) (psi) (psi) (psi) GLM -3,3-1/2 MMG 1.5" SOV 2000 psi w RKP Latch 3197.00 0.00 2,000 1,800 2,200 52 1 Drilling & Well Construction Report lue est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan 6. Position the Schlumberger injection / control line and TEC wire spoolers on the East side of the rig in preparation to run the completion. Rig up the control line sheaves in the derrick using appropriately rated slings. 7. Ensure all control line, TEC wire connection components and clamps are on site. 8. The completion tally is to be agreed upon by the Drilling Supervisor, Completion Engineer and Schlumberger completion representatives prior to picking up the tools. 9. Begin TIH with the completion string as per the Completion Tally. No te: A Schlumberger completion specialist should be present on the rig floor during the pick-up and make-up of any Schlumberger assemblies. Ensure the rig hands use slings in good condition and two tag lines when picking up completion assemblies. Note: GBR will provide tong services to makeup each connection to the manufacturer's recommendations. Note: Make up and run the X" TEC line to the DH gauge as per the Schlumberger completion representative's make up and running specifications. Note: Makeup and run the 3/8" chemical injection line to the HPCI as per the Schlumberger completion representative's make up and running specifications. Note: Make up and run the 1/4" control line to the TRMAXX SCSSSV as per the Schlumberger completion representative's make up and running specifications. Note: Cannon clamps will be installed on everyjoint to secure the injection/control lines and TEC wire. 10. While TIH partially fill each joint with completion brine. Stop every +/- 1,000' to completely fill the pipe before proceeding in the hole. 11. TIH to a depth +/- 90' above the top of the seal bore, take and record pick-up and slack - off weights. 12. Continue to trip in slowly while observing a loss in weight as the seals enter the seal bore. 13. Continue to trip in slowly until the locator on the seal assembly tags out on the top of the tie -back receptacle. 14. Space out the tubing with space out pups and make-up the tubing hanger, landing joint and pass through terminations for the TEC wire and injection/control lines. Note: Cut the TEC wire and injection/control lines at the rig floor as per the Schlumberger representative's procedures. 15. When the DSM, Completion Engineer and Schlumberger completion supervisor agree the completion string has been spaced out correctly, slack -off to land the tubing hanger with +/- 1 OK Ibf before running in the lock down screws. 16. Test the tubing hanger seals to 5,000 psi for 10 minutes. 531Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules lue est H-04 Well Plan Energy Note: Prior to testing the seals, insure the 9-5/8" casing valve is open to prevent any pressure being applied to the annulus if the bottom seals fail. 17. Rig up the rig pumps to the 9-5/8" casing valve and pressure test the line to 3,000 psi. 18. Open the casing valve and proceed to pressure test the 9-5/8" x 3-1/2" annulus and top of the production seals to 1,700 psi for 10 minutes, Record and chart the pressure test. Note: DO NOT EXCEED 1,800 psi to ensure the pressure stays below the SO valve minimum rupture pressure. 19. Fill the tubing and pressure test the tubing against the Top Loading plug to 2,500 psi for 10 minutes. Record and chart the pressure test. Bleed pressure off to 0 psi. 20. Following a successful pressure test, proceed to pressure up on the annulus to shear out the SO valve and establish communication from the annulus to the tubing. 21. Close the SCSSSV as per the Schlumberger representative's procedures. 22. Pressure up on the annulus to 1,500 psi to ensure the SCSSSV is holding pressure from below. Record and chart the test for 10 minutes. 23. Perform an equalization test on the SCSSSV. ND BOP & NU Production Tree Procedure SIMOPS Status: • The completion string has been spaced out and the tubing hanger landed. • The hanger seals have been tested to 5,000 psi. • The inner annulus has been pressure tested to 1,700 psi and the tubing tested to 2,500 psi. • The chemical injection line, SCSSSV control line and TEC wire have been passed through the tubing hanger and terminated and are ready to feed through the tubing head bonnet. Objective: • No HSE incidents. • Install a BPV in the tubing hanger. • N/D the BOPs and N/U the 5K production tree and test same. • Rig up slick -line to retrieve Top Loading plug and change out the SO and dummy valves to GLVs • Turn the well over to production for tie-in. Safety; • Hold a safety meeting with the rig crew, BHGE crew and all contractors to ensure the driller and workers understand the sequence of events and the risks involved. 54Page Drilling & Well Construction Report Cosmopolitan Unit, Hansen Oil Pool nluest Proposed Pool Rules Energy H-04 Well Plan Operational Procedures: 1. Break out the landing joint from the tubing hanger and install a BPV (H Profile) in the tubing hanger. 2. After the Drilling Supervisor has verified the following barriers are present and conditions met, N/D the BOP. • Kill weight fluid in tubing • Kill weight fluid in the inner annulus • Tubing hanger seals tested to 5,000 psi from above • 9-5/8" casing pressure tested to 2,500 psi (After Setting Liner Top Packer) • BPV installed in the tubing hanger Note: Cut the TEC wire and contrail injection lines below the BOP stack as per the Schlumberger and BHGE representative's procedures. 3. Terminate the TEC wire and injection/control lines through the tubing head bonnet as per the Schlumberger & BHGE procedures. 4. Splice, run and connect the TEC wire to the Schlumberger DAU and ensure the gauge is function before proceeding. 5. N/U the 5K tubing head bonnet, adapter flange and master valve. 6. N/U the master valve, surface safety valve, wing valve, swab valve and tree cap. 7. Following a successful void test, rig up BHGE to replace the BPV in the tubing hanger with a two-way check valve (TWC). 8. Rig up the rig test pump line to a 2" 1502 connection with a V NPT connection on the wing valve. 9. Open the wing valve and load the tree with completion fluid while taking returns through the swab valve and needle valve. 10. When the tree has been loaded, close the swab valve and pressure test the tree to 250 psi low for 5 minutes and 5,000 psi high for 10 minutes against the TWC, chart same. 11. Bleed off the test pressure. 12. Remove the tree cap and needle valve from the swab valve. 13. Rig up BHGE to retrieve the TWC in the tubing hanger. 14. Replace the tree cap. 15. Rig -up slick -line and RIH to retrieve the Top Loading plug below the SO valve and change out the SO valve and dummy valves with (2) IPO valves and an orifice valve. 16. Turn the well over to production for tie-in. Note: After kicking off the well with gas lift and stable flow has been achieved, rig up to pump a corrosion inhibitor treatment with Congor303a down the 3-1/2" x 9-5/8" annulus. 551Page Drilling & Well Construction Report llueNest Energy Seal Stack Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules H-04 Well Plan Schlumberger sv w• a9N _S.ca'E11E Bt3x 1 O8• a &ttt" Mpnl 5tl 01. 00. a Act ito+701]Y-0G: TENS SACKCEPTACM, 7 50 x 0.270 K4^1 74D 6 SA box, T&i, 97 we X9a Q25Y.5 5 AND WCNTER WT. 12SKSI Br4L tc,ero aI f C.040"to.wo w• 90. a 250 • Io. 9:c' r >xu2uY PVSWIM07 967 UAIER TOPPACKIh � C,, OX29x COMAS -w 5, 'ALA TOP 9T FN, NL71*IELRR 7�'; F! .NBR ELEMENT RM 1; ""'. 11,200 P.i Cut.,"* 10,200 Pr Olt- a ate` PJP X*IT 3-1,2" MyW I $11 &. B tae' 24.74' Tbg A —1 (30 M fru BP:mleoo 0.1 Pupit-1rxn�� :0000487 s;sc x. sit CowLwa, fr79009. YIM TGP MT BOX. x Box. 12!K 1 BION_ O M p;. 4182 ft Cdbpr T2 T50 p.1 t7o- TAts' tn.e 11w nt•sir3aYLetetu M1/9MLIL0 LINER MANctER, 07 MM X 00 TS.69. YAW TOP MT WN X PIN 1290.7X10 PSI SMEAi ".[514$1 Br.e: 14.230 pl Calppu..1;2 T7D pu 00. S 250' 19.6 tow. R0, 7' A VAWT", try BGA A --K* 17M TSP n lit PIN 00. 7386' 49.4 66'•' Ll 11 lip NO •5-N2' Nr4041611 GADX AI 44` 61L 1•Ih OD. 4 Sw 1 W1.2 w Pon, IS LQ➢ SEALS URE. 17.08 11I8I1VBBEN OSI AL ABLT, 64390 00, 5-w 1740 TBM 621 BOX R PIN 125K>. 4 SETS 6 YJMAo.64 x•15.1 BTL BOR, oD.608O6 2.02' Us" ID.4 TSD' Co. A?w w. s rss• xo - W.6-6- Box R 5 -SR" ftd M S7 t Par XCIVER _ 5 -04' 17 a i8m 521 Box t 09.4 7,500.1111 2 Iqt• 4 K'"240b VV Sti PAA Ot.N LYW luuarl�l 4 1'S240Mn 5w BLP Llnw On11n1.1 1 Y• f5 2 a RYG 602 SL.P tntaa Se - 4 t4" 152.0 Myn S63 So Liner Top to Top of PBA ID = xx Am ft Liner Top to Btrn of PBR ID = — —ft No -Go to Bern of Seel Ass = xX.xx ft 1 •• Total Liner A -y length = xx.a ft Total Seel Asty Length = xx xx ft 561Page Drilling & Well Construction Report 0 AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Application of ) BlueCrest Energy to Establish Pool Rules ) for the Hansen Undefined Oil Pool, ) Cosmopolitan Unit. ) Docket number: CO 19-014 PUBLIC HEARING Anchorage, Alaska August 21, 2019 10:00 o'clock a.m. BEFORE: Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Chmielowski 03 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 3 1 P R O C E E D I N G S 2 (On record) 3 COMMISSIONER CHMIELOWSKI: I'd like to call 4 this hearing to order. Good morning. The date is 5 August 21st, 2019, the time is 10:00 in the morning. 6 We are located at 333 West Seventh Avenue, Anchorage, 7 Alaska, in the office of the Alaska Oil and Gas 8 Conservation Commission. I'll introduce the bench. 9 Commissioner Dan Seamount is to my left and I am 10 Commissioner Jessie Chmielowski. 11 We are here regarding docket number CO 19-014. 12 This is a public hearing for pool rules for the Hansen 13 Oil Pool in the Cosmopolitan Unit which is operated by 14 BlueCrest Energy. 15 Computer Matrix will be recording the 16 proceedings. You can get a copy of the transcript from 17 Computer Matrix Reporting. 18 This is a continuation of the hearing that was 19 opened and closed on August 13th, 2019. The pool rules 20 application submitted by BlueCrest had a map that 21 indicated that the Hansen Oil Pool may extend onto 22 federal acreage. The August 13th hearing was continued 23 to ensure that the federal agency, the Bureau of Ocean 24 Energy Management or BOEM was informed that the pool 25 may extend onto federal acreage and to allow them an Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 4 1 opportunity to comment via letter or at this hearing. 2 I'm looking at the sign -in sheet and it looks 3 like we have two people signed up to testify, Megan 4 Carr with BOEM and Andrew Buchanan with BlueCrest. 5 MR. BUCHANAN: Correct. 6 COMMISSIONER CHMIELOWSKI: Megan Carr, if you 7 wouldn't mind coming forward and I'll swear you both in 8 at the same time. Sit down would be great and then if 9 you could both press the button so the green light is 10 on. So before we get into any questions I'll swear you 11 both in as witnesses. If you could both please raise 12 your right hands. 13 (Oath administered) 14 IN UNISON: Yes. 15 COMMISSIONER CHMIELOWSKI: Thank you. Can you 16 both each please state your name, who you represent and 17 your job title. We'll start with BlueCrest, please. 18 MR. BUCHANAN: I'm Andrew Buchanan and I am 19 vice president of Alaska. 20 COMMISSIONER CHMIELOWSKI: That's great. 21 MR. BUCHANAN: That's it. 22 COMMISSIONER CHMIELOWSKI: Okay. 23 DR. CARR: I'm Megan Carr, the regional 24 supervisor for Bureau of. Ocean Energy Management in the 25 Alaska region for the Office of Resource Evaluation. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 5 1 COMMISSIONER CHMIELOWSKI: Okay. Great. Thank 2 you. So, Dr. Carr, I will start with a few questions 3 if that's okay. Did BOEM receive the pool rules 4 application from BlueCrest? 5 DR. CARR: I know that we were provided a 6 proposal of the rules, but I'm not aware if it was a 7 formal application. 8 COMMISSIONER CHMIELOWSKI: Okay. Did the 9 application include a structure map with the oil/water 10 contact that would outline the potential Hansen Oil 11 Pool boundary? 12 DR. CARR: The version of the proposal that we 13 received was heavily redacted and did not provide any 14 figures that would have had that information. 15 COMMISSIONER CHMIELOWSKI: Okay. Has BOEM had 16 time to review it and prepare questions or testimony? 17 DR. CARR: No, we have not. 18 COMMISSIONER CHMIELOWSKI: Okay. Does BOEM 19 need additional time to review the application and 20 discuss it with operator? 21 DR. CARR: Yes. 22 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 23 Mr. Buchanan, it is our understanding that this 24 hearing might need to be closed and a new hearing 25 scheduled, is that your understanding also? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileggci.net AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 6 1 MR. BUCHANAN: That is my understanding as 2 well. 3 COMMISSIONER CHMIELOWSKI: Okay. Great. I'm 4 just going to check in the back of the room. Do we 5 need to take a recess for any reason? 6 (No comments) 7 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 8 In that case this hearing will be closed and a new 9 hearing for pool rules on the Hansen Oil Pool will be 10 noticed. BlueCrest will need to resubmit the pool 11 rules application to the AOGCC. The AOGCC will ensure 12 that BlueCrest contacts at BOEM are given a minimum of 13 30 days notice for the new pool rules hearing date. 14 Are there any questions? 15 DR. CARR: We did provide or come prepared to 16 give a formal statement that we'd like to submit to -- 17 within the hearing. So I don't know if you'd like me 18 to read it out loud or I can submit the paper copy that 19 shows that we're redacting -- I'm sorry, rescinding the 20 letter that we provided to BlueCrest yesterday. 21 COMMISSIONER CHMIELOWSKI: You're welcome to 22 read it or we can take it as a piece of paper for the 23 record. 24 DR. CARR: I'll provide it as a paper then. 25 COMMISSIONER CHMIELOWSKI: Okay. Great. Thank Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 7 1 you. Are there any other questions. 2 COMMISSIONER SEAMOUNT: Let the record say that 3 was -- are you Dr. Carr? 4 DR. CARR: Yes. 5 COMMISSIONER SEAMOUNT: Okay. Dr. Carr just 6 made those statements. 7 COMMISSIONER CHMIELOWSKI: Okay. Thank you, 8 Dan. Do you have anything to add? 9 COMMISSIONER SEAMOUNT: I have nothing. 10 COMMISSIONER CHMIELOWSKI: Okay. I think we'll 11 go ahead and close this hearing. The time is 10:06 and 12 this hearing is adjourned. 13 Thank you. 14 MR. BUCHANAN: Thank you. 15 DR. CARR: Thank you. 16 (Hearing adjourned - 10:06 a.m.) 17 (END OF PROCEEDINGS) 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8/21/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 � =0 C E R T I F I C A T E UNITED STATES OF AMERICA ) ) ss STATE OF ALASKA ) I, Salena A. Hile, Notary Public in and for the state of Alaska, residing in Anchorage in said state, do hereby certify that the foregoing matter Docket number: CO 19-014 was transcribed to the best of our ability; IN WITNESS WHEREOF I have hereunto set my hand and affixed my seal this 4th day of September 2019. Salena A. Hile Notary Public, State of Alaska My Commission Expires: 09/16/2022 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net NAME STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: CO -19-014 Hanson Oil Pool, Cosmopolitan Unit The application for Pool Rules Order August 21, 2019 at 10:00 am AFFILIATION Testify (yes or no) TV IC 1MIA,ra) 30 Aoh AI r�o L— B Of -M /✓o 1� CVlry Pn-5r- NO S C.L W-rdi4 ��-� K -o ri sin jV ei) sdn P/y N`D LLAL M) Vim, t o d� f) OF-- D n t e u r i -s Glint ac e, A -o 6L cc NOovj� 00 f44411 - 5 AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Application of ) B1ueCrest Energy to Establish Pool Rules ) for the Hansen Undefined Oil Pool, ) Cosmopolitan Unit. ) 1 Docket number: CO 19-014 PUBLIC HEARING Anchorage, Alaska August 13, 2019 10:00 o'clock a.m. BEFORE: Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Seamount 03 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 3 1 P R O C E E D I N G S 2 (On record) 3 COMMISSIONER SEAMOUNT: I'd like to call this 4 hearing to order. The date is August 13th, 2019, the 5 time is 10:00 o'clock. We are located at 333 West 6 Seventh Avenue, Anchorage, Alaska. That is the office 7 of the Alaska Oil and Gas Conservation Commission. 8 I'll introduce the bench. To the right of me is 9 Commissioner Jessie Chmielowski and my name is 10 Commissioner Dan Seamount. And we have enough 11 Commissioners here to form a quorum if we agree with 12 each other. 13 This is docket number CO 19-014, Hansen Oil 14 Pool, Cosmopolitan Unit. It's a public hearing for 15 pool rules. 16 On June 7th, 2019 the AOGCC received from 17 BlueCrest Alaska Operating, LLC which we'll call 18 BlueCrest in this hearing, 25 spacing exception 19 requests regarding the Hansen H10 well and it's 20 fishbone lateral branches. If granted the current 21 request will result in 63 spacing exceptions having 22 been issued to BlueCrest for the Hansen wells. Because 23 BlueCrest has never sought pool rules for the oil pool 24 within the Cosmopolitan Unit informally referred to by 25 the Alaska Oil and Gas Commission which is AOGCC from Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileggci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 4 1 now on, and BlueCrest as the Hansen Undefined Oil Pool, 2 the AOGCC is now holding a public hearing to establish 3 pool rules for development and operation of that oil 4 pool. One obvious beneficial result of the approved 5 pool rules should cut down on the considerable work 6 involved in numerous spacing exceptions required 7 because of the unorthodox, ingenious fishbone design on 8 the wells. 9 Computer Matrix will be recording the 10 proceedings. You can get a copy of the transcript from 11 Computer Matrix Reporting. 12 BlueCrest submitted a very large application, I 13 think it was over 120 pages which is probably an AOGCC 14 record. It was very complete and it's requesting more 15 than just eliminating the need for numerous spacing 16 exceptions. Some of the requests for rules can 17 probably be easily addressed in a permit to drill 18 application, but we'll go through that later. But 19 first of all we might have a legal issue here. We 20 noticed from the application that BlueCrest indicates 21 that the hydrocarbon accumulation which defines a pool, 22 pool's not defined by ownership boundaries or anything, 23 we notice that this area accumulation includes some 24 federal acreage. And my question is have the feds been 25 notified? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 5 1 MR. BUCHANAN: I don't know that (indiscernible 2 - away from microphone)..... 3 COMMISSIONER SEAMOUNT: Okay. Can you identify 4 yourself, please. 5 MR. BUCHANAN: Hi, I'm Andrew Buchanan, I've 6 vice president of Alaska for B1ueCrest. And you want 7 me to..... 8 COMMISSIONER SEAMOUNT: Let me swear you in. 9 (Oath administered) 10 MR. BUCHANAN: I do. 11 COMMISSIONER SEAMOUNT: Raise your right hand. 12 Okay. That's good. 13 Okay. The law states that all affected people 14 have to be noticed and you don't know if you noticed 15 them or not? 16 MR. BUCHANAN: We did not send a notice of this 17 -- did not send a copy of our application to BOEM, no. 18 COMMISSIONER SEAMOUNT: Okay. Are there any 19 people from the federal government in the room? 20 (No comments) 21 COMMISSIONER SEAMOUNT: Okay. I think we ought 22 to take a 10 minute recess. This may be a problem if 23 they haven't been noticed -- notified. Okay? 24 MR. BUCHANAN: Sure. 25 (Off record) Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 6 1 (On record) 2 COMMISSIONER SEAMOUNT: Okay. We're back on 3 the record. It's 10:30. Mr. Buchanan, I hate to say 4 this, but we need to continue the hearing for a 5 week..... 6 MR. BUCHANAN: Okay. 7 COMMISSIONER SEAMOUNT: .....and that would be 8 September 20th. And what we need is to -- I mean, 9 August 20th. And I really hope it doesn't foul you 10 guys up somehow. But that would be a much quicker way 11 to get -- when are you planning to drill your next 12 well? 13 MR. BUCHANAN: At this point the earliest would 14 be -- would be -- spud wouldn't be for at least two 15 months. 16 COMMISSIONER SEAMOUNT: Okay. So in any case, 17 you know, I don't think you ought to go for all those 18 spacing exceptions, I think we ought to do these pool 19 rules. 20 MR. BUCHANAN: I agree. 21 COMMISSIONER SEAMOUNT: Okay. So we'll 22 continue to August 20th and we'd like to see something 23 in writing from the feds that says either they don't 24 have a problem with it or they want to come to the 25 hearing to hear you out. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 7 1 MR. BUCHANAN: Okay. So you would like me to 2 make direct contact with them as opposed to just 3 sending BOEM the application? 4 COMMISSIONER SEAMOUNT: Pardon me. 5 MR. BUCHANAN: You'd like me to make direct 6 contact with them as opposed to just..... 7 COMMISSIONER SEAMOUNT: Yeah, you could..... 8 MR. BUCHANAN: .....sending them the 9 application? 10 COMMISSIONER SEAMOUNT: You can call them and 11 ask them to send something in writing and copy us..... 12 MR. BUCHANAN: Okay. 13 COMMISSIONER SEAMOUNT: .....and that ought to 14 make it square. And, you know, we've been through this 15 20 years ago and we went ahead with the hearing and 16 everything and then we got sued and it cost all the 17 parties well over $2 million, went to the Supreme Court 18 so we have to be really careful..... 19 MR. BUCHANAN: I understand. 20 COMMISSIONER SEAMOUNT: .....about this. Not 21 that I think that the federal government would sue us, 22 but..... 23 MR. BUCHANAN: Yeah. 24 COMMISSIONER SEAMOUNT: .....it would be 30 25 days if it was anybody other than the federal Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 1 government. 2 So August 20th at 10:00 o'clock. And we would 3 request a map that shows the oil/water contact or the 4 area of the pool accumulation and we request that it's 5 public and not confidential if you can do that. If it 6 is confidential then we'll have to do, you know, some 7 discussing. 8 MR. BUCHANAN: I will look into that. 9 COMMISSIONER SEAMOUNT: Okay. I'd really like 10 to see a structure map, but probably just the oil/water 11 contact would be good enough. 12 MR. BUCHANAN: Okay. 13 COMMISSIONER SEAMOUNT: Okay. Sorry that we're 14 continuing this for a week, but this hearing is 15 continued to August 20th at 10:00 o'clock. 16 MR. BUCHANAN: Thank you. 17 COMMISSIONER SEAMOUNT: And we're semi 18 adjourning at 10:34. 19 (Hearing adjourned - 10:34 a.m.) 20 ( END OF PROCEEDINGS) 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8/13/2019 ITMO: APPLICATION OF BLUECREST ENERGY Docket No. CO -19-014 Page 9 C E R T I F I C A T E UNITED STATES OF AMERICA ) )ss STATE OF ALASKA ) I, Salena A. Hile, Notary Public in and for the state of Alaska, residing in Anchorage in said state, do hereby certify that the foregoing matter Docket number: CO 19-014 was transcribed to the best of our ability; IN WITNESS WHEREOF I have hereunto set my hand and affixed my seal this 4th day of September 2019. Salena A. Hile Notary Public, State of Alaska My Commission Expires: 09/16/2022 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileggci.net NA STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: CO -19-014 August 13, 2019 NAME AFFILIATION TESTIFYING YES OR NO %ll--- 0 ,46C-7 cc h ;� Is 1� cr I1, W- I M.ON OR • e, nom; 16 L-, 13 4441Ck T)l6t-T A)a s 3IueCrest Engird AO i f,. 71y est Energy Cosmopolitan Unit Area - 2019 CosmopolitanProject Area _ STAR _ST_U1 EC22 TIS Rt�.YJ SM SEC 23 TJS R5,\V 51.1 SEC2, TIS 2560 acres ADL39190 -EC 27 TJS R15W SM SEC20 TIS Rt'.1b' SM —.i.—.,.-. 73S. R15W SM SEC 3:.. -JS SECS T4s P',,. ... _ T4S R15W. SM ADL1879 SCC 4. T45 R1SW SM SM St 3959 acres ADL39190 i 4036 acres SEC T4S SW SM . . �_•• , •..... .. •,... __L TJ. R1"A' GI.' •.l` TlG 91`\'. � 1 Cosmopolitan Unit Development D" 12(0820 20 19 1 C—P Y BlueCrest Energy 0 2000 4000 6000 8000 10000ftU5 1 65000 -J H - SEC JB• TJS. R15W, SM SEC 1, T45, RISK SM SM SEC 12. T4S;R15W. SM di1CNCSf Energy 100% owned and operated by BlueCrest IE • Unit comprises 4 state leases 2759 acres • 13,314 acres offshore • 11 wells drilled to data W ,> ,.,•;,M SEC T3S 1..• DLMO • Plus 20 sidetracks He sen ® to 1 SEC 3• T3S R15W. SM Ch C 32. TJS. SM SEC IJ T. STAR _ST_U1 EC22 TIS Rt�.YJ SM SEC 23 TJS R5,\V 51.1 SEC2, TIS 2560 acres ADL39190 -EC 27 TJS R15W SM SEC20 TIS Rt'.1b' SM —.i.—.,.-. 73S. R15W SM SEC 3:.. -JS SECS T4s P',,. ... _ T4S R15W. SM ADL1879 SCC 4. T45 R1SW SM SM St 3959 acres ADL39190 i 4036 acres SEC T4S SW SM . . �_•• , •..... .. •,... __L TJ. R1"A' GI.' •.l` TlG 91`\'. � 1 Cosmopolitan Unit Development D" 12(0820 20 19 1 C—P Y BlueCrest Energy 0 2000 4000 6000 8000 10000ftU5 1 65000 -J H - SEC JB• TJS. R15W, SM SEC 1, T45, RISK SM SM SEC 12. T4S;R15W. SM di1CNCSf Energy Cosmopolitan Field History Starichkof State #1 (1967) Original Discovery Well 1Oil Zone P -Logs, Mud Log, DST Cosmopolitan State #1 (2013) Discovery Well 4 New Oil + 6 New Gas Zones E -Logs, Mud Log, DST Hansen #1A -L1 (2007) Lateral drill in Upper Starichkof only Produced 33,504 60 on test Avg. Rate 350 BOPD Currently Completed Awaiting Facilities TN 1 -mile Hansen #1A (2003) Delineation Well Produced 14,851 BO on test Rates to 1000 BOPD Hemlock, Starichkof Oil Zones Hansen #1 (2001) Confirmation Well 1 New Oil Zone Hemlock, OWC, Star 5-8 3-D Seismic (2005) 40 square miles Coverage of all leases. Thorough structure definition on flanks, gas cloud on top of structure C ��1 Approximate areal extent of JI known productive reservoirs Starichkof State Unit#1 (1967) ADI -39-1902 1. 109 acres Cored Upper Tyonek and Star 8/ _ ��yz e9 h YL018790 959 acres ADL391904 4, 03Bacres I / ADL391903 / 3, aloacrea I I / / A e Q, Onshore � h V urface-Use m Lease 38 acresla p / � V I 4/ / I / / / I t \ tilueC.-i`esr \ Energy Energy 0 Geologic Summary -Northeast-southwest-trending double 7*,"�-'.. plunging anticlinal structure -Supported by local 3-D seismic and 6 wellbores -Target Eocene -Oligocene Hemlock Formation and Lower Tyonek Formation -Seal is a shale -rich member of the Tyonek Formation immediately overlying the Starichkof -Braided fluvial depositional setting with conglomeratic sandstone -Comprised of interbedded conglomerate, sandstone, siltstone, shale and occasional coal. -Compartmentalized Energy •I.'Ill101010]Irtow 111+-lI:AM\YI*I:MWoIi Development History Development History R15w, SM H-16 November 2016 R15W, SM SEC , T35, 15M. ADL384403 Single Lateral — Hydraulic Stim. H12 SEC 2%. -@- H-14 March 2017 anse H- 12- 'tan St 1 Single Lateral — Hydraulic Stim. 12-L H1 -12-L H-12 May 2018 H16 -12 -L -12-L 7 leg Multilateral H16 12-L H-16AOctober 2018 H1 y1 S aric St 1 8 Leg Multilateral _L 04 -LO_ H-04 December 2018 115W. SM H -04 -LO EC 3214 -LO SM SEC 33. T h4 S 4, 1 8 Leg Multilateral H -04- J 5th' SM SEC 5. T4 S. R15W, St.4 ADL18790 SEC 4, T4S, R15UV, SM SEC 3. T4S, R15W. SM SE SM S; ADL39190 Energy Facility Layout Energy Production History Hansen Field Monthly Avg Oil Production 1800 6 1600 O 5 1400 m 1200 4 0 1000 a` 3 o Sou $ m o >. 600 2 c C 400 Z 1 200 0 0 lufyd5 January --16 Augur,, 16 March -17 4?r:emuc. i; Aprd.18 October -18 May -19 Oecemer-19 16,000 14,000 12,000 p 10.000 m N 8.000 a Q 6=0 4,000 2,000 0 uIV-15 Hansen Field GOR & Water -Cut 80 —�GOfi 4'scf,BO 70 t Y.'ater-Cut awcer, 60 50 4p V 30 20 10 0 a nuary-16 August -16 Maroh-17 Se temb+ 17 Acrd -18 Octoberd8 May -19 Dece,mt.-19 Energy Next Production Well Tri -Multi Lateral Producer M Energy Future Development Wells Green Wells - Current Production Wells Red Wells -- Next Planned Multilateral — Future Development Well Cosmopolitan Unit Development rnr am�sr 17/0d'TO19 Bh�eCrest Fnerg� STAR ST U1 AUS a 1000 z000 3000 1000 s0onnuS 135000 l�J Energy, Development Options Development options Waterflood-Pressure Maintenance Predur_eA rat Prowl-Prwaeiim MAintammne a Alkaline Surfactant Surfactant Polymer Alkaline Polymer Alkaline Surfactant Polymer in-smi i_mminusnnn Development options are mainly dictated by reservoir geology (clays, compartmentalization), surface facilities limitations, economic feasibility of development. Energ)r Oil Well Spacing Rule 3: Oil Well Spacing • Reservoir Modeling has shown that 800' spacing is optimum for maximum oil recovery • Multilateral wells are, by definition, in conflict with each other • Direction of drilling along with optimal spacing can have multiple well bores with the same governmental quarter section Energy GOR Waiver Rule 5. GOR waiver • Original GOR from bottom hole sampling 290-403 scf/stb;^ • Initial production of all wells has a much higher GOR then the samples indicate (>1000scf/stb) • Current production GOR is 4000 scf/stb • Production below GOR limits is impactable and unlikely to be successful • Compartmentalization of the reservoir (interbedded fluvial environment) • Free gas encountered at top of H-12 well • Difficulty applying effective pressure maintenance Economic burden of pressure maintenance • No evidence of communication between H-12 and Hansen 1AL1 • Can not use log suite suitable to accurately identify gas zone(s) • Unable to identify HKO or LKG Energy H-12 and Hansen 1 Cosmopolitan S� 0 50 100 150 208 251MUS 1;18'B OG132919 Rcpsradby FxM 1:7878 sbuMenan cos � u Energy H-1 6 and Hansen 1 • Pressure Data Does not indicate any communication between these wells +tea ZuNe Si Energy 5006 5500 6000 6500 7000 7500 8000 8500 9000 9500 10000 10500 11000 11500. �a • Pressure Data Does not indicate any communication between these wells +tea ZuNe Si Energy Reservoir Modeling Currently updating Reservoir Model • History matching ongoing 2019 — Conduct simulations to establish benchmark rates and reserves •Appraisal Stage — Magnitude of reserves, depletion options, potential ° sources and volumes, key risks • Lab studies and simulation studies • Waterflood — fluid types — effects on porosity and permeability • Miscible gas injection — determine composition for optimal recovery • Chemical EOR — Polymers — understand effect of polymer injection for improved mobility ratio of injected water • 2020 — Appraisal • Conduct further lab studies and simulations of short-listed secondary recovery and EOR Identifying risk and uncertainty • 2021-2022 • Develop reservoir management strategy and range of potential performance • Refine costs, production downtime, effects of delayed injection • 2023-2025 • Execute development strategy • Establish strategy for acquiring data - well data, surveillance data • Identify subsurface uncertainties and risks and range of potential outcomes Energy P Testing Rule 7: BOP Tests • 21 -day test interval is requested '" • Reduce need to pull out of the hole when tools are functioning properly • 2-3 days to run into the hole, 2-4 days to back ream to surface and up to 3 days to back ream to shoe • Would reduce drilling days • Reduce drill pipe damage/cost due to back reaming Energy Response to Most rules are requested to ease administrative burden. uestions • BlueCrest owns the BlueCrest Rig #1 • Would like Rig, BOPE, and all other equipment noted in the record • This equipment will not change unless specifically specified in the PTD • Rule 6 (surveys) • Submit package as per AOGCC without rig and associated equipment as that will not change -Pg 10 &25 • OOIP, ultimate recovery and recovery factors are results of internal calculations and measurements • As a small independent company, we are continuing to look for new investment partners and making those internal projections public could unfairly impede that process. -Pg 29 • Poor wording — should be compartmentalization not blocks Energy Back -Up Slides Energy } H-04 Production Section H04 Actual D IlIng Recap Start Report Date No. DFS Depth Hole Size Daily Footage MW Operation BOP TEST DAYCOUNT DAYS FROM 26-Jan49 44 31 15420 8.5 0 10.65 Test BOPE/MU BHA 5for production section 0 TEST AFTER FIT HANGING OFF 27 -Jan -19 45 32 15420 1 8.5 0 10.2 RIH /test cs to 35000K/clean out shoe track 1 2 0 28 -Jan -19 i_ 29 -tan -19 30 -Jan -19 ! 46 47 48 33 34 35 1544_0 i 8.5 4 16828 8.5 116445 j 8.5 20 1388 767 9.3 9.4 9.4 Swap mud systems / dr11120'/run FIT to 13.5 ppg EMW Drill 8-1/2" section to LOl /TO in L01 lateral / BROOH Trench & timedrill to L02 lateral 2 3 4 _ Drill LOl tat Drill L02 Lat LOl L02 _31 -Jan -19 49 36 18230 8.5 1775 9.5 TD in L02 lateral / BROOH 5 Drill_L02 Lal L02 1 -Feb -19 50 37 179571 8.5 1102 9.5 BROOH L02/Trench-ST-Drill L03 6 Drill L03 Lat L03 2 -Feb -19 51 38 19017 8.5 1060 9.5 TO in L03 lateral/ BROOH / spot LCM pill 7 Drill L03 Lat L03 3 -Feb -19 52 39 19017 8.5 0 9.5 BROOHtoinspect/change BHA/ chk Super Sliders 8 TF New BR 1 4 -Feb -19 53 40 19017 8.5 0 9.5 BROOH to inspect/change BHA/ chk Super Sliders 9 TF New Bit 2 5 -Feb -19 54 41 19017 8.5 0 9.5 Inspect BHA /LDDP/ remove worn out Super Sliders 10 TF New Bit 3 6 -Feb -19 55 42 19017 8.5 0 9.5 Manage drill pipe/test BOPE 11 TF New Bit 4 7 -Feb -19 56 43 19017 8.5 0 9.5 PU DP/MU BHA/RIH to drill L04 1 RIH 5 8 -Feb -19 57 44 17690 8.5 0 9.55 RIH/ Circ and condition mud/ Prep to drill L04 2 RIH/Circ 6 9 -Feb -19 58 45 17865 8.5 175 9.3 Trench & timedrill to L04 lateral / reduce MW 3 Drill L04 Lat L04 30 -Feb -19 59 46 19635 8.5 1770 9.2 Drill L04 lateral / seepage mud losses ongoing 4 Drill L04 Lat L04 11 -Feb -19 60 47 20094 8.5 459 9.2 IFInish & Backream L04 / Trench & drill L05 lateral 5 Drill LOS Lat LOS 12 -Feb -19 61 48 19888 8.5 1338 9.25 I Drill LOS lateral 6 Drill LOS Lat L05 13 -Feb -19 62 49 20735 8.5 847 9.3 Drill LOS lateral / BROOH in LOS 7 Drill L05 Lat L05 14 -Feb -19 63 50 i 19513 8.5 313 9.2 Drill L06 lateral 8 Drill L06 Lat L06 15 -Feb -19 64 51 20855 8.5 1342 9.2 Drill L06 lateral 9 Drill L06 Lat L06 16 -Feb -19 65 52 21358 8.5 503 9.2 Finish L06 / BROOH / Trench & ST to L07 10 Drill L07 Lat L07 17 -Feb -19 66 53 20872 8.5 812 9.2 Drill L07 lateral 11 Drill L07 Lat L07 18 -Feb -19 67 54 21830 8.5 958 9.2 Drill L07 lateral 12 Drill L07 Lat L07 19 -Feb -19 68 _ 55 21966 8.5 203 9.2 Trench & ST to LOS/ Drill L08 lateral partially /top drive issues/ BROOH 13 Drill L08 Lat LOS _20_ -Feb -19 21 -Feb -19 I g22eb19 Feb19 24-Fe1r19 69 70 71 72 73 56 57� 58 5920867 60 __ "20867 B.S 20867 8.5 20867 8.5 8.5 ; 20867 8.5 OW 0 0 0 9 "9. 9.2 9.2 9.2 9.2 TD of L08 Mother Bore is 20867 MO / BROOH to shoe _ Hang Off&Test BOPE-14 days/ BROOH BROOH BROOH / POOH on elevators LD BHA/ MU 4-1 ed liner/ 14 15 Energy IFA2I DAY TEST WAS DAYS FROM IF HANG ALLOWED INITIAL OFF AND AFTER BOP TEST TEST AFTER FIT HANGING OFF INITIAL BOP TEST AFTER SETTING 9-5/8" 0 1 2 0 0 3 1 1 4 2 2 5 3 3 6 4 4 7 5 5 Tripping / DP Mgmt 8 6 6 Tripping / DP Mgmt 9 7 7 Tripping / DP Mgmt 10 8 8 SECOND BOP TEST MID -FISHBONE SECTION 11 9 9 Tripping / DP Mgmt 12 10 10 Tripping / DP Mgmt 13 11 11 14 12 12 15 13 13 16 14 14 17 15 15 18 16 16 19 17 17 20 18 18 21 19 19 22 20 20 23 21 21 24 22 0 25 23 1 THIRD HANG -OFF AND TEST BOPE END OF SECTION 9 Energy H-12 Production Section 5 -Jun -18 35 29 16281 12.25 0 6 -Jun -18 36 _ 30 16_281_ 8.5__ 0 7 -Jun -18 37 31 TTI16301 ^ 8.5 20 8 -Jun -18 38 32 16301 8.5 0 _9 -Jun -18 39 _ _ 33 I 16301 8.5 0 10 -Jun -18 40 34 16544 _ 8.5 243 11 -Jun -18 41 35 18426 8.5 1882 12 -Jun -18 42 36 18447 8.5 21 13 -Jun -18 43 37 18239 8.5 1166 14 -Jun -18 44 38 19501 8.5 1262 15 -Jun -18 45 39 19501 8.5 0 16 -Jun -18 46 40 18239 8.5 439 17 -Jun -18 47 41 18239 8.5 0 18 -Jun -18 48 42 18239 8.5 0 19 -Jun -18 49 43 J 18239 8.5 0 20 -Jun -18 50 44 18239 8.5 0 21 -Jun -18 51 45 18652 8.5 414 22 -Jun -18 52 46 20290 8.5 1638 23 -Jun -18 53 47 18597 8.5 12 24 -Jun -18 54 48 20424 8.5 1827 25 -Jun -18 55 49 20968 8.5 544 26 -Jun -18 56 50 20968 8.5 0 274un-18 57 51 20968 8.5 0 28 -Jun -18 58 52 ` 20968 8.5 0 29 -Jun -18 59 53 20968 8.5 0 30 -Jun -18 60 54 20970 8.5 2 1 -Jul -18 61 55 20970 8.5 0 2 -Jul -18 62 56 20239 8.5 849 3 -Jul -18 63 57 21585 8.5 1346 4 -Jul -18 64 58 20895 8.5 710 5 -Jul -18 65 59 20895 8.5 0 6 -Jul -18 66 60 22990 8.5 2095 7 -Jul -18 67 61 20953 8.5 3 8 -Jul -18 68 62 21875 8.5 922 9 -Jul -18 69 63 22789 8.5 914 10 -Jul -18 70 64 22789 8.5 0 11 -Jul -18 71 65 22789 8.5 0 12 -Jul -18 72 66 22789 8.5 0 13 -Jul -18 73 67 22789 8.5 0 14 -Jul -18 74 68 22789 8.5 0 IFA2I DAY TEST WAS ALLOWED AFTER HANGING OFF 10.5 Test BOPE INITIAL BOP TEST AFTER SETTING 9-5/8" 0 10.5 MU clean out BHA S/RIH 1 8.8 Test csg / FIT 12.5 ppg 2 8.8 TOH for drilling BHA 6 3 8.8 BOP Test; RIH w/ drilling BHA 6 SECOND BOP TEST AFTER DRILL OUT AND MUD SWAP 0 0 8.8 Drill production section BHA 6 1 1 9.0 Drill production LO1 BHA 6 2 2 9.0 LVT in LO1/Start L02 3 3 9.0 Drill production L02 BHA 6 q q 9.0 Drill production L02 BHA 6 / LVT 5 5 9.1 LVT in L02/Start L03 6 6 9.0 7 7 9.0 Spot 10.2 mud cap / POOH BHA 6 8 I 8 10.2 TOH / DP Mgmt / Test BOPE / BHA 7 THIRD BOP TEST MID -FISHBONE SECTION 0 9 10.2 DP Mgmt / MU BHA 7 1 10 9.2 RIH BHA7 2 11 9.2 RIH/Ream down/Drill L03 BHA7 3 12 9.2 Drill L03 BHA 7 / Backream L03 4 13 9.0 LVT in L03 / ST for L04 BHA 7 5 14 9.0 Drill L04 BHA 7 6 15 9.0 7 16 10.2 SOOH / cap well / DP Mgmt 8 17 10.2 DP Mgmt 9 18 10.2 DP Mgmt 10 19 10.4 DP Mgmt Test BOPE/MU BHA8 FOURTH BOP TEST MID -FISHBONE SECTION 0 20 10.2 DP Mgmt / RIH BHA 8 1 21 9.1 Ream into L04 2 0 9.0 LVT in L04/ Drill LOS BHA 8 3 1 9.2 Drill L05 / Backream L05 q 2 9.1 5 3 9.0 Fix MPD Bearing/ RIH BHA8 6 q 9.0 Drill L06 BHA 8 7 5 9.0 Finish L06 / BROOH / LVT in L06 / Start L07 8 6 9.0 Drill L07 BHA 8 9 7 9.1 Finish L07 / BROOH to Shoe 10 8 9.1 BROOH to Shoe BHA 8 11 9 9.7 BROOH to shoe / hi vis pill / mud cap / TOH 12 10 10.1 TOH LDDP 13 11 10.1 TOH LDDP / LD BHA 8 / TEST BOPE FIFTH BOP TEST END OF SECTION 0 12 10.1 MU 5-1/2" slotted liner/ RIH 1 I 13 Energy H16A Actual Drilling Recap] Production Section Start Report I I I Hole 1Daily 1 Date No. I DFS I Depth I Size I Footage ( Mw loperation 21 -Oct -18 26 6 14582 8.5 9.2 22 -Oct -18 27 7 14622 8.5 40 9.2 23 -Oct -18 28 8 14735 8.5 113 9.2 24 -Oct -18 29 9 14735 8.5 0 9.2 25 -Oct -18 30 10 14795 8.5 60 9.2 26 -Oct -18 31 11 16336 8.5 1541 9.2 27 -Oct -18 32 12 17440 8.5 1104 9.2 28 -Oct -18 33 13 18214 8.5 774 9.2 29 -Oct -18 34 14 18390 8.5 176 9.2 30 -Oct -18 35 15 18592 8.5 202 9.2 31 -Oct -18 36 16 19268 8.5 676 9.2 1 -Nov -18 37 17 18122 8.5 -1146 9.2 2 -Nov -18 38 18 20020 8.5 1898 9.2 3 -Nov -18 39 19 20020 8.5 0 9.2 4 -Nov -18 40 20 20020 8.5 0 9.2 5 -Nov -18 41 21 20020 8.5 0 9.2 6 -Nov -18 42 22 20020 8.5 0 9.2 7 -Nov -18 43 23 20020 8.5 0 9.2 8 -Nov -18 44 24 20020 8.5 0 9.2 9 -Nov -18 45 25 20020 8.5 0 9.2 1D -Nov -18 46 26 20020 8.5 0 9.2 11 -Nov -18 47 27 18860 8.5 -1160 9.2 12 -Nov -18 48 28 20743 8.5 1883 9.2 13 -Nov -18 49 29 19881 8.5 -862 9.2 14 -Nov -18 50 30 20350 8.5 469 9.2 15 -Nov -18 51 31 20925 8.5 575 9.2 16 -Nov -18 52 32 21860 8.5 935 9.2 17 -Nov -18 53 33 21850 8.5 -10 9.2 18 -Nov -18 54 34 22310 8.5 460 9.2 19 -Nov -18 55 35 22310 8.5 0 9.2 20 -Nov -18 56 36 22310 8.5 0 9.2 21 -Nov -18 57 37 22310 8.5 0 9.2 POOH w/ mill BHA/Test BOP/ make up motor BHA /RIH RIH w/ motor BHA / drill new hole to 14622' MD Drill new 8-1/2" hole to 14735' MD / pump out for RSS BHA POOH w/ motor BHA / Test BOP / RIH w/ RSS BHA RIH thru window and to TD / drill new hole to 14795' MD Drill w/ RSS BHA / hi torque add lubes / drill to 16336' MD Drill 1-01 lateral to 17440' MD / backream & trench for L02 Trench / sidetrack / drill L02 lateral to 18214' MD Stuck pipe / backream / drill L02 to 18390' MD / trench to L03 Sidetrack & drill L03 to 18592' MD Drill L03 to TD of 19268' MD. Backream and trench for L04 Drill L04 lateral to 18122' MD Finish drilling L04 lateral to TD of 20020' MD and backream same Backream to casing window / CBU / prep to TOH for new BHA Backream to inside casing/ pump out of hole Pump out / LDDP / DP management / inspect BHA LD BHA 05 / Manage & LD DP for hard banding BOP Test / manage DP / hardband / PU BHA 06 BOP Test / PU RSS BHA 06 / RIH on 5-1/2" DP RIH BHA 06 managing DP, 5-1/2" x 4-1/2" x 5-1/2" design RIH / circ well clean / RIH to window depth RIH / search for L05 trench / drill ahead in L05 w/ RSS BHA 06 Drill L05 lateral to TD of 20743' MD / C&C / BROOH for L06 BR & trench for L06 lateral / drill L06 to 19881' MD Drill & TD L06 / BROOH to trench for L07 Trench for L07 / Drill ahead to L07 KOP at 20925' MD Drill L07 Lateral TD L07 Lateral; BROOH; Trench / Time Drill L08; Drill L08 Lateral TD L08 Lateral; BROOH BROOH; Check not re-entering L02 - OK BROOH and into 9-5/8" shoe / pump out Pump out and BROOH; LD BHA LD BHA / Test BOP / MU 4-1/2" Liner Run 4-1/2" Liner INITIAL BOP TEST AFTER SETTING 9-5/8" SECOND BOP TEST AFTER DRILL OUT AND PU RSS THIRD BOP TEST MID -FISHBONE SECTION FOURTH BOP TEST END OF SECTION BOP TEST DAYCOUNT 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 IFA21DAY TEST WAS ALLOWED AFTER HANGING OFF 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 0 1 2 3 4 5 6 7 Energy GOR from Samples Separator Recombined 403 Bottom Hole 327 18976 Bottom Hole 332 18961 367 17095 374 17080 290 5831 suet.rest Energy Request for Waiver of 14 Day BOP Test 20 AAC 25.035 (e) 10 (A) requires BOPE to be tested every 14 days BlueCrest requests the proposed Pool Rules include a requirement for 21 -day BOPE tests in the 8-1/2" reservoir section; unless drill pipe and BHA changes are made mid-section which would require a new test to be performed; i.e. add 5" and/or 4-1/2" DP to string Reference Journal of Petroleum Technology, Aug 2019: Re -write of BSEE Well Control Rule in U.S. OCS requiring 21 -day BOPE tests Note that the U.K., Netherlands, Denmark and Brazil all allow 21 -day tests as per this article'" The reservoir section at Cosmopolitan involves normally pressured sands Due to the horizontal and inverted well designs in this section, back -reaming and pumping out of the hole are standard practice all the way back to approx 3500', which minimizes the potential of swabbing in kicks A 21 -day test duration would be of great benefit since, on the three fishbone multilaterals drilled so far, (H12, H16A and H04) we have documented that the entire section could potentially be drilled within the 21 day period ERD drilling is becoming much more common in Alaska, and extending the test period to 21 days in the reservoir sections presumably would benefit the greater Alaskan oil industry in addition to BlueCrest Energy Good morning, my name is Megan Carr, I am the Regional Supervisor for the Office of Resource Evaluation at the Bureau of Ocean Energy Management's Alaska Regional Office. BOEM has been aware of Bluecrest's proposed pool rules since the beginning of August when it reviewed a heavily redacted version of the "Technical Report and Discussion" submitted with the proposed rules. However, BOEM was only notified yesterday of this hearing, at which time both Bluecrest and AOGCC requested a statement of non -objection or concurrence to the rules today. Based on our initial review of the redacted information we had received, we drafted a short letter of non -objection to Bluecrest late yesterday. In the short time between sending our letter yesterday and the hearing this morning it has been brought to my attention that my staff was only provided a heavily redacted version of Bluecrest's technical report supporting the proposed rules. The redacted version of the report did not provide BOEM the opportunity to fully analyze any potential impact the application of the rules may have on adjacent federal acreage. Based on this new information, I am here to rescind the letter of non -objection I sent yesterday. I am also requesting from the Commissioners an additional period of time to review an un -redacted version of the technical report supporting the proposed rules and to confirm with Bluecrest that BOEM has the most current version of the reprocessed seismic survey for the Cosmopolitan Field before concurring or voicing any objections. We believe 30 days will be sufficient once we have the relevant material. NT OF United States Department of the Interior BUREAU OF OCEAN ENERGY MANAGEMENT g Alaska OCS Region 3801 Centerpoint Drive, Suite 500 M4RCN 3 �OpQ Anchorage, Alaska 99503-5823 AUG 2 0 203 Andrew Buchanan, Vice President - Alaska B1ueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Dear Mr. Buchanan: The Bureau of Ocean Energy Management (BOEM) has reviewed B1ueCrest Energy's August 2, 2019 request to the Alaska Oil and Gas Conservation Commission for establishing initial Field and Pool Rules for the Cosmopolitan Field, Hansen oil pool. At this time, BOEM does not have any objections to the establishment of proposed pool rules. If you have questions, please contact Joel Immaraj, Petroleum Engineer, at (907) 334-5238 at joel.immaraj@boem.gov. Sincerely, C -7 Dr. Megan Carr, Regional Supervisor Office of Resource Evaluation Bureau of Ocean Energy Management, Alaska Office Andrew Buchanan From: Immaraj, Joel <joel.immaraj@boem.gov> Sent: Wednesday, August 21, 2019 8:51 AM To: Andrew Buchanan Cc: Megan Carr; James Kendall Subject: Re: [EXTERNAL] Re: AD001 BlueCrest Cosmopolitan Pool Rules Mr. Buchanan, After further review, the BOEM Alaska Office is rescinding the August 20, 2019 letter of no objection to BlueCrest's initial Field and Pool Rules for the Cosmopolitan Field, Hansen oil pool. In order for BOEM to provide concurrence on the proposed pool rules, we would like to review the non -redacted version of BlueCrest's Technical Report. Later this week, BOEM will also make a formal request to BlueCrest to ensure that our team has the most recent version of the reprocessed seismic data for our review. Please let us know if there are questions. Kind regards, Joel Immaraj Petroleum Engineer, Plans Section Bureau of Ocean Energy Management - Anchorage, Alaska Office (907) 334-5238 On Tue, Aug 20, 2019 at 1:16 PM Andrew Buchanan <abuchanan@bluecrestenergy.com> wrote: Mr. Immaraj, I would like to thank BOEM for expediting you review of our Pool Rules application. If you have any further question regarding the Cosmopolitan development, please feel free to contact me. Regards, Andrew Buchanan Subsurface Manager BlueCrest Energy > On Aug 20, 2019, at 12:09 PM, Immaraj, Joel <joel.immarai@boem.gov> wrote: > Mr. Buchanan, > The BOEM Alaska Office has reviewed BlueCrest Energy's August 2, 2019 request to the AOGCC for establishing initial Field and Pool Rules for the Cosmopolitan Field, Hansen oil pool. At this time, BOEM does not have any objections to the establishment of proposed pool rules. Please see the attached letter. > Kind regards, > Joel Immaraj > Petroleum Engineer, Plans Section > Bureau of Ocean Energy Management - Anchorage, Alaska Office > (907) 334-5238 > <2019_0820_AD001_BOEM_Letter_BlueCrest_Cosmopolitan.pdf> El ZI BlueCrest Alaska Operating LLC e est 3301 CStree4 Suite 202 Endzgy Anchorage, AK 99503 August 2, 2019 Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Jessie L. Chmielowski, Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: CO -19-014 Cosmopolitan Field, Hansen Oil Pool Initial Field and Pool Rules Application Dear Commissioners Seamount and Chmielowski: A AUG 15 2019 AOGCC BlueCrest Alaska Operating LLC is a wholly owned subsidiary of BlueCrest Energy. BlueCrest (BlueCrest Energy Inc. and all wholly owned affiliates herein referred to as BlueCrest), as Operator of the Cosmopolitan Unit, herein submits the following information in support of the establishment of the initial Field and Pool Rules for the Cosmopolitan field, Hansen oil pool. Request for Pool -Specific Rules Rule 1: Initial Field and Pool Rules Area These rules apply to the combined area of the then located offshore of the Kenai Peninsula, Alaska. The l 0, 6ihl[111LH: COMPLETE THIS SECTION COMPLETE THIS SECTION ON DELI -n j Ln ■ Complete items 1, 2, and 3. nat >• Print your name and address on the reverse � so that we can return the card to you.o•" ■ Attach this card to the back of the mailpiece, B. Received by (Printed me) m or on the front if space permits. I. priirla 4rlrlroccarl fn• ^ -ddress different from it �p Bureau of Ocean Energy Management delivery address below m Director, Alaska Office KF U IV E D $3.50 OR Return Receipt (hardcopy) $ VU , UU E3 Z"— Receipt (electronic) $ IMfs ❑ Cert�ed Mail Restricted Delivery $ $0.1- u [3 Adult Signature Required $ --u�_ [-3AdultSignature Restricted Delivery $ it! �J'.' Postage %7 aGJ �G Potnark r_ v Hetrp, n G Vim, Attn: Dr. James Kendall2019 Bureau of QW#V Energy Management X881 Centerpoint Drive, Suite 500' Director, Alaska Office Anchorage, Alaska, 99503-5823. Attn: Dr. James Kendall II�'I'I'II'IIIIIIIII�IIIII'IIIIIIIIIIIIIIII�I� — v— 13 pli( 3801 Centerpoint Drive, Site ❑ Adult Signature Adult Signature Restricted Delivery CI Rai; E3 Rei Anchorage, Alskaa,995 3-5823.0 9590 9402 4272 8121 3878 34 ❑ Certified Mall6 Dell ❑ Certified Mail Reshicted Delivery D ReG...... ❑Collect on Delivery Merchandise ❑Collect on Delivery Restricted Delivery ❑ Signature Confirmation - 2. Article Number (Transfer from service fabeq ?016 13 7 0 0002 3983 5650 0 Insured Mail ;erg Mail Restricted Delivery ❑ Signature Confirmation Restricted Delivery PS Form 3811, July 2015 PSN 7530-02-000-9053 Domestic Return Receipt , BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Tel: (907) 754-9550 Fax: (907) 677-0204 Transmittal Today's Date. T o Company: V lust A IN 15 2 0193 Energy Re: Application for Pool Rules AOGCC BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Tel: (907) 754-9550 Fax: (907) 677-0204 Transmittal Today's Date. T o Company: 8/15/2019 . . . .. . . ................ . ............ . ....... . .. .... . ..................... Commissioners AOGCCCompany: Transmittal #: From: .. . ... . ............ . . ................ 2019-11 . .............. .......................... . . .... Andrew Buchanan BlueCrest Alaska Operating LLC Re: Application for Pool Rules Enclosed is Proof of Delivery to Bureau of Ocean Energy Management. (Mailing of Application for Pool Rules) Thankyou Regards Andrew Buchanan BlueCrest Energy 3 rlueCrest Energy August 2, 2019 BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Jessie L. Chmielowski, Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: CO -19-014 Cosmopolitan Field, Hansen Oil Pool Initial Field and Pool Rules Application Dear Commissioners Seamount and Chmielowski: RECEIVED AUG 0 2 201VO BlueCrest Alaska Operating LLC is a wholly owned subsidiary of BlueCrest Energy. BlueCrest (BlueCrest Energy Inc. and all wholly owned affiliates herein referred to as BlueCrest), as Operator of the Cosmopolitan Unit, herein submits the following information in support of the establishment of the initial Field and Pool Rules for the Cosmopolitan field, Hansen oil pool. Request for Pool -Specific Rules Rule 1: Initial Field and Pool Rules Area These rules apply to the combined area of the then current Cosmopolitan Unit boundary, located offshore of the Kenai Peninsula, Alaska. The current Cosmopolitan Unit is shown on Exhibit C-1. The Cosmopolitan field is defined by the area enclosed in the Cosmopolitan Unit area. The Hansen oil pool is defined as the Hemlock and Starichkof oil and gas bearing formations within the Cosmopolitan Unit area. Rule 2: Pool Definition: The field will be known as the Cosmopolitan Field and the Hemlock/Starichkof oil and gas accumulation subject to this application will be known as the Hansen oil pool. The Cosmopolitan field Hansen oil pool is defined as the oil and gas bearing intervals common to and correlating with the interval between the measured depths (MD) of 6538 feet and 7312 feet in the Cosmopolitan State #1 well and contained within the Cosmopolitan unit. Rule 3: Oil Well Spacing There shall be no oil well spacing restrictions as specified in 20 AAC 25.055 within the Hansen oil pool to accommodate horizontal, multilateral, and "fishbone style" wells, except that no oil BlueCrest Alaska Operating _LC Page 2 of 5 8/2/2019 well shall be completed less than 500 feet from the exterior boundary line of the then current Cosmopolitan Unit unless property ownership is the same on both sides of the Unit boundary line. Rule 4: Administrative Approval The Commission may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based upon sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. Rule 5: GOR Waiver In accordance with 20 AAC 25.240 sections (b)(3) and (c), the gas -oil ratio limitation in 20 AAC 25.240(a) is waived and wells producing from the Hansen oil pool are exempt from the producing gas -oil ratio restriction in 20 AAC 25.240(a). Rule 6: Wellbore Surveys BlueCrest requests that the wellbore survey requirements described in 20 AAC 25.050 (b) be waived for the proposed future Hansen wells to relieve administrative burden. In lieu of the requirements of 20 AAC 25.050(b), permit to drill applications for development wells shall include: 1. Completed Form 10-401 with Cover Letter 2. Directional Wellbore Plans with: • Plan View • Vertical Section • Close Approach Data • Directional Program Description and File Data Rule 7: BOP Tests BlueCrest requests Pool Rules which include the requirement for a three (3) week BOP test duration while drilling the production section of the well as opposed to the standard two (2) week test duration currently in place and practiced by the AOGCC statewide. Rule 8: Surface Casing Surface casing (13-3/8") will be set in a competent shale at approximately 3350' SS, and 9-5/8" intermediate casing will be set into the Starichkof sands at approximately 6900' SS. Both casing shoes will be tested to an equivalent mud weight (FIT) of at least 12.5 ppg. The surface casing (13-3/8" 72# L80 BTC or equivalent) shall be cemented to surface; while the intermediate casing (9-5/8" 47# P110 H563 or equivalent) shall be cemented with 1500 linear feet of cement as per the attached design. The surface casing cement job will be remediated for cement fall back by employing top jobs with visual confirmation that cement has reached the surface in a continuous column. BlueCrest Alaska Operating LLC Page 3 of 5 8/2/2019 Rule 9: Well Completion The fishbone multilateral wells will be completed barefoot with no liners or screens in the reservoir section. The upper completion will consist of 3-1/2" tubing, a 3-1/2" X 9-5/8" production packer, with gas lift mandrels, downhole gauges, downhole chemical injection, and a SSSV. Rule 10: Cement Bond Logs The requirement for a cement bond log of any type will be waived for the 9-5/8" casing string due primarily to the justification that none of the development wells will be hydraulically fracture stimulated. In addition, due to the high wellbore angles existing in these ERD wells, a cement bond log would need to be deployed by tractor, coil tubing, or drill pipe with side entry sub. Rule 11: BOP Rating 5,000 psi rated BOP equipment is adequate and approved for the development wells based on the MASP calculations attached. Rule 12: Casing Pressure Test Both the 13-3/8" surface casing and 9-5/8" intermediate casing will be pressure tested to 3,500 psi each prior to drilling out the shoe tracks. Rule 13: Subsurface Safety Valves BlueCrest / Hansen wells are and will be equipped with both Surface Safety Valves (SSV's) and Sub -Surface Safety Valves (SSSV's). Initial testing as well as periodic inspections and tests will be conducted following notification of the AOGCC consistent with the requirements of 20 AAC 25.265. Rule 14: Diverter Waiver BlueCrest Alaska Operating LLC hereby applies for a diverter waiver for all future wells to be drilled from the Hansen / Cosmopolitan Project drill site north of Anchor Point, Alaska. This waiver is requested under 20 AAC 25.035 (h)(2) of the AOGCC Regulations. More detailed justification for the request is included in the attached. Rule 15: Mud Weights Mud weights utilized will always exceed formation pressure as indicated in the attached Mud Program. Rule 16: Well Monitoring Wells are and will be equipped with instrumentation and monitored in real time in the Control Room. The following instrumentation is employed: 1. Tubing pressure and temperature 2. Inner Annulus (IA) pressure 3. Outer Annulus (OA) pressure 4. Bottomhole Pressure (BHP) in producer wells 5. Gas Lift Rate in producer wells, when utilized 6. Water/gas injection rates in injector wells, when drilled BlueCrest Alaska Operating LLC Page 4 of 5 8/2/2019 Rule 17: Description of Rig Detailed information describing BlueCrest Rig No.1 is included in the attached. This rig and the equipment described herein are approved for drilling all wells at this location. Rule 18: LOT/FIT Procedure The attached LOT / FIT Procedure is hereby approved for all wells drilled at this location. Rule 19: Wellhead and Christmas Tree Design The attached wellhead and Christmas tree designed for all wells at this location is hereby approved. A copy of this application has been sent by certified mail to the State of Alaska, Department of Natural Resources (DNR), Commissioner's Office. DNR is the offshore surface owner as well as the offshore owner of the oil and gas mineral estate. A detailed technical discussion of the Hemlock/Starichkof reservoir and the drilling and well construction programs are enclosed as well as the rational for the proposed rules. BlueCrest believes that the above described pool rules and development plan are prudent and consistent with good oil field practices. They are based on sound engineering practices and earth science principles and are in compliance with AOGCC statutes and regulations. BlueCrest would be pleased to schedule a technical meeting with AOGCC staff to provide additional information in support of this proposal. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at phone and email. Respectfully, Andrew Buchanan VP -Alaska 907-754-9563 abuchanan@bluecrestenergy.com Enclosures: Reservoir and Development Technical Report and Discussion with Exhibits Drilling and Well Construction Technical Report and Discussion with Exhibits BlueCrest Alaska Operating LLC Page 5 of 5 8/2/2019 G� Cook Inlet 1politan r Anchor Point i Exhibit C-1: Cosmopolitan Unit Location Map Ninilchik Ninilchik i � v Deep Creek Nikolaevsk Nikolaevsk North Fork due)est Energy . August 2, 2019 BlueCrest Alaska Operating LLMC 3301 C Street, Suite 202 Anchorage, AK 99503 Commissioners Alaska Oil & Gas Conservation Commission 333 West 7"' Avenue Suite 100 Anchorage, AK 99501 RE: Application for Pool Rules Commissioners: Attached are the following: • Application for Pool Rules — Confidential Document Application for Pool Rules — Public Document Electronic versions of both — Confidential & Public on one (1) USB drive Proof of mailing to the Commissioner at Alaska Department of Natural Resources Respectfully, Andrew Buchanan VP -Alaska '� - ! CERTIFIED . © RECEIPT ru Domestic Only -0 Ln Aid PW KPA4 "t ro CerdbW Mad Fee S $ M ITl Extra Services & Fees (cnecx bw, grid fee re) '1cii� �p Rely Rerzipt (IwdcopY) $ t--tvrstTc�-- 0 [] Return Receipt (electronic] $ — v;, po P O Q Certified Marl Restricted Delivery $ O He rg ., / C3 ❑Adult Signature Required $ ., % pAdutr Signature Restnued Delivery $ ��. J G MS f n La Poshaae r _ ✓ � i7.8S Alaska D.1ptLpf Natural gs Attn: Commissioner 550 W 7th Avenue, Suite 1400 Anchorage, AK 99501-3510. t Cosmopolitan Unit, Hansen Oil Pool Application for Field and Pool Rules Reservoir and Development Description Technical Report and Discussion Prepared by BlueCrest Alaska Operating LLC July 31, 2019 lue est Energy nluest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules TABLE OF CONTENTS 1.0 INTRODUCTION.................................................................................................................1 2.0 GEOSCIENCE AND RESERVOIR DESCRIPTION.................................................................... 7 2.1 Structure.........................................................................................................................7 2.2 Stratigraphy....................................................................................................................7 2.3 Producible Reservoirs..................................................................................................10 2.4 Hemlock Conglomerate................................................................................................10 2.5 Starichkof: 6,538 feet to 6,812 feet..............................................................................14 3.0 SEISMIC DATA AND INTERPRETATION.............................................................................17 4.0 EXPLORATION AND DELINEATION HISTORY......................................................................19 5.0 OIL AND GAS IN PLACE...................................................................................................20 5.1 Fluid Properties............................................................................................................ 20 5.2 Reservoir Modeling, Performance, and Properties......................................................21 6.0 RESERVOIR DEVELOPMENT PLAN................................................................................... 26 6.1 Development History ....................................................................................................26 6.2 Future Development Plan.............................................................................................27 7.0 RESERVOIR SURVEILLANCE AND MONITORING................................................................27 8.0 SURFACE FACILITIES......................................................................................................27 8.1 Facilities Section..........................................................................................................27 8.2 Oil Export Measurement...............................................................................................27 8.3 Gas Export Measurement............................................................................................27 9.0 PRODUCTION MEASUREMENTS AND PRODUCTION ALLOCATION.......................................28 9.1 Well Testing.................................................................................................................28 9.2 Production Allocation....................................................................................................28 10.0 CONCLUSIONS...............................................................................................................28 10.1 Proposed Pool Rules....................................................................................................28 10.2 Summary ......................................................................................................................31 Reservoir & Development Description Page i nlue.st Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules LIST OF FIGURES Figure 1: Exhibit C-1: Cosmopolitan Unit Location Map.................................................................... Figure 2: Cosmopolitan Unit Development Wells.............................................................................. Figure 3: Cosmopolitan Unit Exploration and Development Wells .................................................... Figure 4: Fishbone Well Illustration.................................................................................................... Figure 5: Cosmopolitan Unit Area and Leases................................................................... Figure 6: Cosmopolitan Unit Leases.............................................:..................................... Figure7. Confidential.......................................................................................................... Figure8: Confidential.......................................................................................................... Figure 9: Detailed log of the Hemlock Conglomerate......................................................... Figure10: Confidential........................................................................................................ Figure 11: Detailed log section of Starichkof Sand............................................................. Figure12: Confidential........................................................................................................ Figure13: Confidential........................................................................................................ Figure14: Confidential........................................................................................................ Figure15: Confidential........................................................................................................ Figure16: Confidential........................................................................................................ Figure17: Confidential........................................................................................................ Figure 18: Production history of Hansen field..................................................................... Figure 19: Cumulative oil production versus producing GOR ............................................. Figure20: Confidential......................................................................................................... Figure21: Confidential......................................................................................................... Figure 22: Summary of studied options to increase production from Cosmopolitan field ... LIST OF TABLES Table 1: Confidential Table 2: Confidential ........... 2 ........... 2 ........... 4 ........... 5 ........... 6 ........... 9 .........11 .........12 ........................13 ........................15 ........................16 ........................16 ........................18 ........................18 ........................18 .......................18 ....................... 22 ....................... 23 ....................... 24 ....................... 25 ....................... 26 ............... 21 ............... 23 Reservoir & Development Description Page ii ZuNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 1.0 INTRODUCTION BlueCrest's proposed rules are designed to prevent waste, protect correlative rights and improve the ultimate recovery of remaining hydrocarbons throughout the Cosmopolitan Unit. They are also designed to reduce the administrative burdens on both BlueCrest and AOGCC staff. As the 100% working interest owner and sole operator of the field, BlueCrest's objective is to maximize and economically optimize the recovery of remaining hydrocarbons from the Hansen oil pool. The Cosmopolitan Unit currently includes ten (10) wells, of which four (4) are currently completed and online, one was permitted (permit recently canceled) but not drilled, and five (5) are plugged and abandoned. Listed below are the wells: Pennzoil Starichkof State Unit—P&A Pennzoil Starichkof State –P&A Cosmo State #1-- Temp P&A Hansen 1 -- P&A Hansen 1A -- P&A Hansen 1AL1 suspended (producing intermittently) H-04 -- Producing H-12 -- Producing H-13 – Permit canceled H-16 – Producing See Figure1 for a general location map, Figure 2 for a map of the development wells and Figure 3 for a map of all wells. 5 Cook Inle Ninllchlk i Ninilchik 0 r ~Deep. Creek Nikolaevsk F Nikolaevsk #1, rN04 Anchor Point Foirk Reservoir & Development Description Pagel of 36 Slue test Energy Figure 1: Exhibit C-1: Cosmopolitan Unit Location Map R154b SM R15:'V. Stat SEC . T35, 150A ADL38440 H12_ . 6mmin SP;4 SEC 33 St Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules ADL39t903 SEC 21, T3S. R15W. SM SEC 26, T3S, R15W, Shi T3S R15W SP,! SEC 35, T3S S srt sec s. res.. Rt sW, sra AD"� 7g" SEC 4 T45 R15W, SM SEC 3 TaS, R15W. SPA SE N, SM SI G / ADL39190 Figure 2: Cosmopolitan Unit Development Wells Reservoir & Development Description Page 2 of 36 Dluel.lest Eneirgy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Cosmopolitan Lease Map Figure 3: Cosmopolitan Unit Exploration and Development Wells Reservoir & Development Description Page 3 of 36 lueAst Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules BlueCrest cannot efficiently drill new wells and produce remaining reserves under AOGCC's current well spacing rules; and it is an unnecesary administrative burden on both BlueCrest and the Commission to process the well spacing exceptions required for BlueCrest's complex multilateral "fishbone" well designs. An example of the "fishbone" well design is shown in figure 4. Spacing between the individual fishbones (or laterals) in a single well and laterals in adjacent wells is a nominal 800 feet resulting in the need for 7 or more spacing exceptions per "fishbone". H-12 Multilateral H-12 Mumlateral Producer TSdale 1:3 07x2=19 FrJa' srgnalure- Cm..poGtan ArdBuchanan Figure 4: Fishbone Well Illustration While existing statewide rules and procedures may have adequately protected correlative rights and prevented waste during the field's initial development, they are not applicable to the preferred well design and development effort necessary to produce the remaining hydrocarbon reserves. Requests for well spacing exceptions have been an administrative burden on both the Commission and BlueCrest Requests for well spacing exceptions are administratively burdensome and are unnecessary to protect correlative rights or prevent waste in this particular unit, where well designs and locations are simply being optimized to improve ultimate recovery. As discussed above, BlueCrest, as Operator, is sole working interest owner in the Cosmopolitan Unit. The unit is comprised of 13,313.77 acres covering four State of Alaska oil and gas leases labeled tracts 2, 3, 4 and 5 on the map marked Figure 5. The legal description of the leases is attached as Figure 6. BlueCrest is the holder of the leases. Reservoir & Development Description Page 4 of 36 lluecNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules i 1� is COOK INL6T - 7 T35,R I 5 " x ADL -391903 .3 IS J4 y; 3. — _,.�•_ "�''�-^�-mss I I ADL -18790 41 __ .• Har -w PW ADL -391904 ;5;! 1 1F ,, TW.] R1 6W , i• 15W 22 aiifi,R14�V II ADL -391899 � r j j ---[ i ADL -391940 ,t r .0 510013 10.000 f=eet r�,G415Ve" � Tss�14W ■ Hansen Pad BLUECRE5T ENERGY, INC. Cosmpa-titan Unit COSMOPOLITAN UNIT Leases PLAT OF SUBJECT LANDS Raid Revisal fR/01f201 i #. Traci ReieTence EXHIBIT PrJjWrIl MSU Vir'1 Sale -Ige AtM!P I; f a'$ TKO jtow . )RA 6sanUa 3" -WA W—t• -, lyda J}n' F.w7w:g"i Kttl51PP¢+tfssuE: CW RXW NRC' 000011 Md. aQl117. R0° Figure 5: Cosmopolitan Unit Area and Leases Reservoir & Development Description Page 5 of 36 ruNs t Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Cosmopolitan Unit Exhibit A BlueCrest Alaska operating LLC Revised 2017 09-01 Page 1 of 1 Tract 2 735,R 15Vs, S.N. Tnc1 %' a Mural Omer kieresl ORPo Orariv DRPo % Wo kdesest Mo % Prarac 21).721)58%ADL384013 StarotAlaska tOD% 1250%Robert17Warhen C-? BueCrezt Eneryy Inc. 100% Sec- 20: d A6; 21)3.80 SPC. LLC 1333333H Sec.,!: PmtaCed. AL; 60.00 Bdpps V Nesrrccn C 1753000% Sec. 2& Pmtagtd Ali; Sec. X. Protracted Ali; 643.00 Robm k Chaffin 928210/30% ec S. 32: ProtaCed M; 479.20 535.8E Danny S. Davis C 326130D% Sec, 33: W12. 320.00 Brian L CmuchO.i50o0511 2758-E4 FTmbclt Vert - LP Chase Naxp U.V Tana 04383360% 1).'.750000% Bicker hasrests. Ltd DQ15706% Danker W 5 Gas, LLC 0.12MOOp% [:crier Enetpy, LLC (CEi 04375117011 C 000ftillips Alaska. 1- 2IXI00000% BueCrest Errrpy kM. 08752030% Cale Fami'yM 0.3750000% 7.8124010% 3 T35,R 15N 1472921% AD1.39100?. S"Ol Aluka 100% 1250% A.oacfe Alaska Capara4en 15% BkrCrestEn 100% See. u' PMt2Md, All; MD.Do Wlnc Sec. 23: Pnuamed Ah; 59101) Sec. 25: Surveyed Fawn). Lai 2-4. 11.13 Sec. 25: ltnutveyed. AP ude and submerged laz,ds: 62887 Sec 27: Pmvaeted. M. 640M 2,501).00 4 T3S, R t5W, S.K 24.73883% ADI -18790 State o4AbA- 107% 1250% () kW C. Nulsan 11 19 75 0 0 01.8 191" ut E -W Ino. '<M Sec. 33: E2; 320.00 Metro NaWWSara 03750000•! Ssc. 34, AN. Sec. 35: Faxon. all statrdrm am tddmM as may uMdm. MOOD 479.94 NugmtT. Basher. Jr. 0.197501)0% thepabono4 Ssssski leak sial -d-,9h tris seoen hay F. &-ashen 0.;875670% T45, 6115W, S: K Malmie Nadisc&.-Conic 1).0737500% Sec, 2 Fraata;. (tiaamm and sutunerped lands) 378.99 Mxiyn F MaNis O.O.V500% Sec. a Alt 040.00 Mad*le Nrlis K.W1,A obX75" S4e.4:Atl; 640.00 Mei a Nattas Cams 0,0937500% Sec. t1): AX. Cm Phio,he.(LLIEi 0-600DOOR Sec 1 t: Faction. f1Cs4aMs and sbrrarged IaMs). 60.E10 Mon Devon Energy Pmduaan Company. LP 1.0006001)1( 3.950.35 Eam W bll (XII, LLC) kaMne L. Bet 0.044111M C.197500D% Rosessood Re s, m 0475321)6% E=nkW(Wbi ESP) 2.C25M % Canoco%bps Alaska, ka 2-DMM O% Gi.6v Enm;y.LLC(C1E) 0,4197500% Danker Oil& Gas. LLC 0.1x10U.lp% B'ueC *9 Energy krc. 0.8759000% Cade F-ly hl 03750001)% 99561876% ., TIS, R tSW, SX Sec. 5: Pwmted, All Ek and NZ.&ped Imd 534.15 3031239% ADL 3410)4 Sur of Alaska 4001E 12-50% Apache Aluka Corpora*vca MOM% BkrCrest Enegy Ino. 100% See. 1, Pwaaed, All tide and ubT*rgW tmd 5273 See 7: PrWa"d, AN use and w Mwerped land 258.35 See 8: Fm"cWd. Ak. MOOD Sec 9: PsW.%W, Alt 540.00 - See 16: PMWCad AC; 64000 Ste. 17: PmLaCed AC; MOD Sec 18: Protsexd As We and utmeWd UW 531).49 483572 Talak 13,313.77 (00.61)008% Figure 6: Cosmopolitan Unit Leases A participating area (PA) has been formed and aproved by the AK DNR Division of Oil and Gas. The PA includes a revenue and production sharing formula. In addition to reducing administrative burdens, the proposed well spacing order is designed to prevent economic and physical waste and improve the ultimate recovery of remaining hydrocarbons. By eliminating intra -pool spacing rules, BlueCrest will be able to target smaller, un- drained portions of the pool that cannot be reached/contacted by wells conforming to current statewide spacing restrictions. Elimination of all spacing requirements inside the pool will help to maximize recovery from otherwise bypassed pay, while allowing for continued production from established development wells. Eliminating spacing restrictions on wellbores within the Affected Area will increase the Operator's flexibility in placing wells as the pool is developed and will not adversley affect recovery, promote waste, jeopardize correlative rights, or result in an increased risk of fluid movement into freshwater aquifers. A well spacing or setback requirement will be maintained around the exterior perimeter of the unit. The Hemlock/Starichkof reservoir is compartmentalized and highly stratified. Communication between wells is believed to be very limited, and likewise communication between producing wells and any injection wells that might be drilled would also be very limited based on current reservoir Reservoir & Development Description Page 6 of 36 Zu est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules understanding. The reservoir was initially above bubble point and it appears that there was a separate isolated free gas zone in the upper Starichkof sands. The gas -oil ratio (GOR) waiver is necessary in order to continue production in the pool. The reservoir is highly compartmentalized and stratified and the permeability of the reservoir rock is relatively low (in the 10 to 20 and range). The primary recovery mechanism is solution gas drive or depletion drive. Reservoir geology (low permeability and compartmentalization) does not currently appear conducive to pressure maintenance or gas reinjection from injection wells located too far away from production wells. Instead, close well spacing using the "fishbone" well design is envisioned to maximize recovery in each separate compartment. As reservoir pressure falls below the bubble point pressure of the in-situ oil, the pressure decline will slow due to a slowly evolving gas saturation in the pore spaces. Based on production well GOR performance data it appears that there is a small isolated free - gas accumulation in some of the upper -most Starichkof sand intervals. Ultimate recovery from the reservoir is expected to range from 10 to 15 percent of the original oil in place given the current depletion plan and understanding of the reservoir. Recovery could increase if some type of pressure maintenance process or secondary recovery process is initiated at a later date; but at this time no such processes are deemed technically and economically feasible. 2.0 GEOSCIENCE AND RESERVOIR DESCRIPTION 2.1 Structure The Cosmopolitan Field, Hansen Oil Pool (hereinafter referred to as Cosmopolitan or Cosmopolitan Project) structure is a NE/SW doubly plunging asymmetric anticline bounded along its west flank by a high angle reverse fault that strikes parallel to the structural axis. Associated tear faults with normal throw cut the northern and southern portions of the feature and one smaller fault was found in the Cosmopolitan State #1. This structure, which is four and one-half miles by 2 miles in size, has approximately 600 feet of vertical closure over an area of over 6,000 acres at the Starichkof sand (Lower Tyonek sandstone just above the Hemlock Conglomerate) above the oil/water contact. Structural control includes eleven welibores, (three of these are vertical and penetrate the entire geological section on the structure, five are extended reach single lateral wells drilled from the Hansen drilling and production pad, and three are multi -lateral "fishbone" extended reach wells drilled from the Hansen drilling and production pad) 3D seismic acquired by Pioneer Resources in 2005, dip meter data in two of the vertical wells, and migrated 2D high resolution seismic data acquired by GeoTek Alaska, Inc. in 2013. 3D seismic data was used to tie all of the wells to generate several levels of structure maps (see the later discussion on seismic data and interpretation). Although there is a .3 to .5 second seafloor reverberation on the 3D data, the shallow high-resolution Geo -Hazard 2D seismic shows that the structure is typical of parallel folding. 2.2 Stratigraphy Approximately 8,600 feet of Tertiary age Kenai Group non -marine sedimentary rocks are present at Cosmopolitan. The Kenai Group is represented here by approximately 1,000 feet of the Beluga Formation (USGS unpublished data) characterized by thin bedded sandstones, coals, siltstone and silty shale intervals that were deposited in a braided stream environment. Based on estimates from seismic data and log correlation approximately 1,050 feet of Beluga was penetrated in the Starichkof State Unit #1 well, about 500 feet was present in the Starichkof State #1 and it appears to be missing in the Cosmopolitan State #1 well. The difference in thickness in the Beluga across Reservoir & Development Description Page 7 of 36 llueNst Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules the Cosmopolitan structure is related to erosion and does not represent depositional thinning. The overlying Sterling Formation is not present and has also been removed by erosion. Unconformably underlying the Beluga sequence is 5,945 feet of Miocene age Tyonek Formation, a basin wide series of fluvial conglomerate, conglomeratic sandstone, sandstone, coal, siltstone and shale which represent deposition in meandering streams, associated fluvial sediments and lacustrine environments. It is a major producer of both biogenic natural gas and thermogenic oil throughout the basin and is charged with gas and oil at Cosmopolitan. BlueCrest has informally divided the Tyonek into an upper section that contains gas productive sandstones and a lower interval that is predominately oil prone. The two zones are separated by a laterally correlative shale section that is easily recognized in all of the existing wells. The lowest section of the Lower Tyonek, from 6,742 to 7,104 feet MD has been referred to as the "Starichkof" sand by ConocoPhillips, Pioneer Resources and by BlueCrest and is the oil discovery zone found in 1967 by Pennzoil in their Starichkof State #1 well. Immediately underlying the Starichkof sand (Lower Tyonek) is the Oligocene Hemlock Conglomerate. It was drill stem tested in the Starichkof State #1 well and recovered brackish water from two separate intervals beneath the oil/water contact at approximately -7048 ft. ConocoPhillips tested water -free oil in higher structural positions in both the Hansen 1 and Hansen 1A wells. The Hemlock generally consists of medium to coarse grained, thick bedded sandstone with substantial conglomeratic beds and lenses. In the Starichkof State #1 well it is 485 feet thick, and in the Cosmopolitan State #1 it is 500 feet thick. Underlying the Hemlock is the Paleocene to Eocene age West Foreland Formation, a 1,155 feet thick sequence of volcanic tuffs and volcaniclastic sandstone and siltstone devoid of oil or gas shows and without reservoir quality rocks. The West Foreland unconformably overlies the Upper Cretaceous marine Matanuska Formation that is at least 3,339 feet of shale containing an abundance of Inoceramus shell fragments. See Figure 7 for a TVD cross-section of the field. The reservoir is highly compartmentalized and stratified. The relative lack of production rate increase success in the traditional fraced wells is evidence of the highly stressed and stratified nature of the reservoir. Reservoir & Development Description Page 8 of 36 ne'st Energy Confidential Figure 7. Confidential Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Reservoir & Development Description Page 9 of 36 ZeNst Energy 2.3 Producible Reservoirs Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 2.3.1 Type Log The Cosmopolitan State #1 well is used as a type log for the field and pool. Interval depths are measured log depths (MD) from the Cosmopolitan State #1 well unless otherwise indicated. 2.4 Hemlock Conglomerate 2.4.1 6,812 feet to 7,312 feet The Oligocene Hemlock Conglomerate is the oldest known hydrocarbon producible reservoir at Cosmopolitan. It lies unconformably on the Paleocene to Eocene age West Foreland, a dominantly volcaniclastic zone with common ash fall tuff beds and is conformably overlain by the Starichkof (Lower Tyonek) sand of probable Miocene age. The Hemlock is one of the major oil producing formations in the basin and is recognized in most wells throughout it. At Cosmopolitan, the Hemlock is easily correlated in the Cosmopolitan State #1, Starichkof State #1 and the Starichkof State Unit #1 (Figure 8). The Hemlock Conglomerate ranges from 500 feet thick in the Cosmopolitan State #1 to 485 feet in the Starichkof State #1. It is comprised of channelized sandstone and pebbly sandstone in the upper half and predominately shale with thin sandstone lenses in the lower half. Although correlating the top of the Hemlock is somewhat problematic, several internal correlations can be made with fair confidence which support general correlations in the upper section. Net Hemlock pay thickness of (Confidential) feet in the Cosmopolitan State #1 is based on a combination of parameters including gamma ray, porosity and water saturation from log analysis, mudlog shows and lithology (Figure 9). (Confidential). Based on 25 rotary cores from the Cosmopolitan State #1 analyzed by Schlumberger labs, the dominant rock type in the Hemlock is arkosic to subarkosic sandstone exhibiting good intergranular porosity. Chlorite grain coating is common and combined with kaolinite some porosity is occluded, although porosity and permeability values show that this is some of the better Hemlock reservoir in the basin. (Confidential). Special drilling and completion fluids and cements are being studied to determine which are the least damaging to the formation and to optimize production. Although no test of the Hemlock was run in the Cosmopolitan State #1, the Hemlock had substantial amounts of reservoir quality sand with oil saturation in cores and is 45 feet structurally high to the highest take point in the Hansen #1 A well, which tested water free oil at rates in excess of 1000 BOPD. Reservoir & Development Description Page 10 of 36 ZuNst Cosmopolitan Unit, Hansen Oil Pool Eneigy Proposed Pool Rules Confidential Figure 8: Confidential Reservoir & Development Description Page 11 of 36 �S: L4i:LH 4EF lEd ;lot.= MIN ZuNst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Figure 10: Confidential Reservoir & Development Description Page 13 of 36 lue est Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 2.5 Starichkof: 6,538 feet to 6,812 feet Conformably overlying the Hemlock Conglomerate is the Lower Tyonek Starichkof sand named informally by Pennzoil at the time of its discovery at Cosmopolitan. The Starichkof is 274 feet thick in the Cosmopolitan State #1 (Figure 11), 362 feet in the Starichkof State #1, 365 feet in the Starichkof State Unit #1 and 309 feet thick in the Hansen #1 (all corrected to true stratigraphic thickness). The top of the formation is easily correlated from well to well (Figure 12) as are some of the internal stratigraphic units. The Starichkof Sand in the Cosmopolitan State #1 was not tested because it is 240 feet structurally higher than in the Starichkof State #1 where it tested oil from the upper 150 feet of the formation. Also, it is structurally flat to the highest take point in Pioneer Hansen 1AL1 long lateral that was drilled across the crest of the anticline and produced water free oil. (Confidential). Closure up -structure to this contact is over 5,000 acres, which represents the aerially largest known hydrocarbon accumulation at Cosmopolitan (Figure 13). However, it is possible that the south plunge of the structure dips less than currently mapped and that this accumulation, as well as some of the shallow gas zones could extend south of the interpreted limit. The Starichkof consists primarily of fine to medium grained, subangular to subrounded arkosic and subarkosic sandstone. Volcanic and sedimentary rock fragments are common. Three rotary core samples taken in the Cosmopolitan State #1 had average non-stressed porosity of 18.1 % with 74.6 and permeability. Again, see Section 5.2 for estimates of in-situ porosity and permeability. Based on log analysis by Wayne Campaign, Starichkof sandstones have high irreducible water saturations, but the calculated values are too high to be consistent with actual water -free production from the reservoir. In the Starichkof State #1 well the Spontaneous Potential (SP) log combined with the Neutron - Density logs indicate that most of the reservoir quality sandstone is in the upper 200 feet of the formation; resistivity is low and shows almost no response to the contained oil, so water saturation calculations using the standard Archie equation do not result in values common to producible hydrocarbon reservoirs, even though a considerable amount of oil has been tested from this formation. An abundance of chlorite within the matrix forms a barrier between framework grains and pore throats that inhibit fluid flow (from Schlumberger report). Reservoir & Development Description Page 14 of 36 llueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Figure 12: Confidential Confidential Figure 13: Confidential Reservoir & Development Description Page 16 of 36 llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 3.0 SEISMIC DATA AND INTERPRETATION Pioneer Resources acquired approximately 39 square miles of 3D seismic data over the Cosmopolitan Unit in 2005 to earn an interest in the prospect from ConocoPhillips. The data quality is poor due to acquisition in the shallow water transition zone which commonly has 10-15 knot currents and a daily sea level change of 30 feet. Also affecting data quality is shallow gas that creates a "gas cloud" over the top of the structural closure creating a large time sag over the top of the anticline. In an effort to obtain the best results Pioneer Resources processed the data themselves using ProMax software and also had Hardin, Western, and CGG reprocess the volume. In a final effort to improve the data Western and CGG processed the data in depth, but this did not improve imaging or interpretability of the data. BlueCrest, along with its former partner Buccaneer Alaska, reprocessed the data with Crescent Geo using newer techniques. This volume and the Hardin version proved to be best for interpretation. All initial mapping was done on the Hardin version and both volumes were employed for later work. After the Buccaneer Cosmopolitan State #1 was drilled, a walk -away Vertical Seismic Profile (WVSP) was acquired in the well to verify the shallow gas cloud effect and eliminate the possibility of the presence of a vertically faulted graben. The WVSP dip line confirmed a low velocity zone due to gas as shallow as -800 feet TVDSS (Figure 14). The 3D was initially interpreted in time, honoring the velocity induced sag. A second interpretation was made where the horizon picks were projected through the sag. This was done on four horizons: the Upper Tyonek D Sand (Up_Ty_D — gold pick in time, red pick projected), Upper Tyonek H Sand (U_Ty_H - blue pick in time, purple pick projected), Lower Tyonek A Sand (Lw _Ty_A — gold pick in time, green pick projected), and the Hemlock Conglomerate (Hemlock — brown pick in time, light blue pick projected). The final Hemlock pick was moved up approximately 56 milliseconds to better match well ties and is shown by the dark blue pick on Figure 14. To test the validity of the projected horizons, an arbitrary line was created along the borehole path of the horizontally drilled Pioneer Hansen 1AL1 sidetrack with the Hansen #1 and #1A projected into the line (Figure 15). The Hansen 1AL1 was drilled in the Starichkof Sand, which is just above the Hemlock Conglomerate and seismically just above the Hemlock event shown in dark blue on Figure 15. Based on BlueCrest's geological interpretation, this well stayed in formation until the last 1,500' at which point it drilled into the overlying shale section. As can be seen in Figure 15, the inclination of the wellbore is less than the west dip of the Starichkof supporting the geological interpretation. The Hansen #1 and #1A also penetrated the Hemlock, supporting the interpretation. Figure 16 is a time structure map of the Upper Tyonek H Sand, and Figure 17 is the same horizon mapped using the projected picks. Based on the time map, the gas effect covers about three sections on top of the structure and terminates on the south end of the structure in Section 8, T4S-R15W. This is essentially the same place that the Upper Tyonek A and D Sand potential accumulations end, so it is possible that these two units are causing the seismic distortion. Reservoir & Development Description Page 17 of 36 41UNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Figure 14: Confidential Confidential Figure 15: Confidential Confidential Figure 16: Confidential The figure above is also the Seismic Time Structure Map on Upper Tyonek H seismic event showing pronounced velocity sag along the crest of the Cosmopolitan anticline. Confidential Figure 17: Confidential Reservoir & Development Description Page 18 of 36 Ae est Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules 4.0 EXPLORATION AND DELINEATION HISTORY The Cosmopolitan field was initially discovery by the Pennzoil Oil Company in 1967 when they drilled their Starichkof State #1 well on State of Alaska lease # ADL384403, Sec 33, T3S, R1 5W in the Kenai Peninsula Borough. This well was drilled to a total depth of 12,112 feet and bottomed in the Upper Cretaceous marine Matanuska Shale. Although this well discovered oil in the Lower Tyonek, it was drilled in an off -structure position on the east flank leaving approximately 2,500 acres untested in all zones. Four drill stem tests were run in the upper 150 feet of Lower Tyonek "Starichkof" sand, three of which recovered water free oil at low flow rates with a maximum of about 60 barrels of oil per day. All testing was through perforations in casing, and the Hemlock was tested in two zones, the upper at 7,150 feet to 7,236 feet which yielded 98 barrels of brackish water with a show of gas and a lower zone from 7,410 feet to 7,420 feet that tested over 6,000 feet of water; open flow times were not reported. Up -hole from the Starichkof, Pennzoil attempted additional tests through perforations that resulted in inconclusive results due to either insufficient cement behind pipe or possibly no cement at all. They perforated the interval from 6,444 feet to 6,454 feet in what is now designated as the "Lower Tyonek E" sand and recovered oil cut mud. A significant gas show zone from 3,810 feet to 3,842 feet was also tested and recovered 126 feet of gas cut mud after cement squeeze and formation breakdown. Clearly this zone and the previous test interval did not have adequate cement behind pipe, so the results were not definitive. Pennzoil followed this well with their Starichkof State Unit #1 drilled on the north plunge of the Cosmopolitan anticline. Pennzoil's reasoning for choosing this location is not known, but the well was structurally more than 800 feet low at the Starichkof level and resulted in a dry hole without significant shows of oil or gas. Whole cores were taken in the approximate stratigraphic equivalent to the gas show zone (now designated as the Upper Tyonek H by BlueCrest) and also in the Starichkof interval. With the discovery of Prudhoe Bay in early 1968, major oil companies that were active in the Cook Inlet shut down exploration operations and redirected their efforts to the North Slope. Although production in the Cook Inlet continued to rise for a time, it started a long, continuous decline from 1970 to early this decade when Hilcorp began to revitalize the existing old oil fields in the Inlet. In the mid 1990's, ARCO began investigating the prospect, acquiring other working interests, and began an exploration effort which was later carried on by Phillips after its acquisition of ARCO Alaska. In 2001, Phillips formed the Cosmopolitan Unit, including seven individual State of Alaska leases and two federal offshore leases immediately west of the state leases. In the same year, Phillips also completed the Hansen #1 well, drilled directionally from an onshore drill site approximately 2.5 miles away from the target reservoirs. The Hansen #1 well reconfirmed the presence of producible oil in the previously discovered Starichkof zone, and it also confirmed productive sands in the Hemlock interval. Test rates were reported to be 380 BOPD from the Hemlock and 125 BOPD from the Starichkof. In 2003, ConocoPhillips drilled the Hansen #1A well (a sidetrack of the Hansen #1 well) providing a deviated penetration of the Starichkof sands and a lateral penetration of the Hemlock zone. The Hansen #1A well was tested at rates up to 1000 BOPD and produced a cumulative total of 14,851 STB of medium -gravity (24-27 degrees API) sweet oil. In 2005, Pioneer Natural Resources ("Pioneer") joined with ConocoPhillips to obtain approximately 40 square miles of 3-D seismic data over the entire project area. The 3-D seismic provided a clear view of the perimeter flanks of the anticlinal structure, but the crestal view was obscured by a gas cloud rendering a conclusive image of the top of the structure impossible. In 2007, after acquiring ConocoPhillips' working interest in the Cosmopolitan unit, Pioneer proceeded to drill the Hansen #1AL1, another sidetrack of the original Hansen #1 well. The original Starichkof and Hemlock completion in the Hansen 1A well was temporarily plugged at the location of the sidetrack for the Hansen #1AL1. The Hansen #1AL1, a long reach undulating Reservoir & Development Description Page 19 of 36 Zue)rest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules lateral well through the upper portion of the Starichkof sand, was tested at rates of approximately 300 BOPD. In 2010, Pioneer conducted a fracture stimulation attempt of the open interval along with an extended flow test of the well. From this test, the Hansen #1AL1 cumulatively produced in excess of 33,000 STB with average final rates of approximately 250 BOPD from the open interval in the upper Starichkof zone. Pioneer proposed a development plan for the Cosmopolitan Unit that consisted of extended reach oil production and water injection wells in the previously identified Hemlock and Starichkof zones drilled from the onshore drill site, but in late 2010 decided not to pursue completion of the plan. In February 2011, Pioneer disbanded the Cosmopolitan unit and retained leases ADL018790 and ADL384403 held by well. In June 2011, Apache Corporation successfully bid on leases ADI -391902, ADI -391903, and ADL391904 (which had previously been included in the original Cosmopolitan Unit under different lease numbers) and agreed to provide a Plan of Exploration for those leases according to the terms approved by the state. Apache's initial Plan of Exploration was submitted to the Alaska Department of Natural Resources in February 2012 and approved by the state in March 2012. In March 2013, Apache provided a bi-annual report on their Plan of Exploration for the leases. In late 2010 and early 2011, Buccaneer Alaska, LLC and BlueCrest Energy began negotiations with Pioneer to jointly acquire leases ADL018790 and ADI -384403. In September 2011, Pioneer entered into a Letter of Intent with the two parties to continue negotiations eventually leading to a sale. In August 2012, sale of the two leases from Pioneer to Buccaneer Cosmopolitan, LLC ("Buccaneer Cosmopolitan") and BlueCrest Energy Inc. was concluded. Under the terms of the sale, Buccaneer Cosmopolitan acquired 25% working interest and BlueCrest obtained 75% working interest. Buccaneer Alaska Operations, LLC was the named operator of the leases. In 2012 and 2013, Buccaneer Cosmopolitan and BlueCrest conducted various reprocessing and analyses of the 2005 3-D seismic data previously obtained by Pioneer and ConocoPhillips. In the summer of 2013, Buccaneer Cosmopolitan and BlueCrest jointly drilled the Buccaneer Cosmopolitan State #1 (hereinafter referred to as the Cosmopolitan State #1) well from an offshore surface location, providing a vertical penetration of all zones from surface to a total depth of 7599 feet, penetrating the West Foreland formation. The Cosmopolitan State #1 well discovered numerous new oil and gas zones within the Upper and Lower Tyonek (above the previously known Starichkof and Hemlock zones), and a vertical seismic profile was conducted in the well to assist in interpretation of the previous seismic data. In August 2013, Apache assigned leases ADI -391902, ADI -391903, and ADL391904 to Buccaneer who, in turn, assigned 75% working interest to BlueCrest The assignment of the 75% working interest in the Apache leases from Buccaneer to BlueCrest was approved by the State of Alaska effective November 1, 2013 and was transmitted to BlueCrest on February 20, 2014. In January 2014, BlueCrest acquired Buccaneer Cosmopolitan, LLC and changed the name of "Buccaneer Cosmopolitan, LLC" to "BlueCrest Cosmopolitan, LLC", a wholly owned subsidiary of BlueCrest Energy Inc. Following the assignment of the former Apache leases to BlueCrest Energy Inc., BlueCrest was therefore provided with 100% working interest ownership of all the Cosmopolitan Project leases (ADL018790, ADI -384403, ADI -391902, ADI -391903, and ADL391904). In March 2014, the Alaska Oil and Gas Conservation Commission approved BlueCrest as the operator of the Cosmopolitan Project leases. 5.0 OIL AND GAS IN PLACE 5.1 Fluid Properties There were four (4) bottom hole samples acquired during in the Hansen 1A well drilled by ConocoPhillips in the Hemlock formation. The oil properties were: Confidential Reservoir & Development Description Page 20 of 36 /uest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 5.2 Reservoir Modeling, Performance, and Properties The Cosmopolitan Field contains both gas and oil reservoirs throughout the stratigraphic column. The reservoir is a double plunging anticlinal structural trap. The oil reservoirs are contained in the Tertiary aged Starichkof and Hemlock Formations. A geo-cellular model was build and recently updated using the industry standard Petrel software. Model input includes seismic data, well log data from more than 20 wells, core data from 2 wells and MDT data. The Cosmopolitan -State 1 was selected as a "key" well because it had the most complete log suite and core data. A fine layer static model was constructed that integrated the well tops, initial fault and horizon interpretations with the core- and log -interpreted facies/depositional environments and properties (porosity, permeability and water saturation) calculated during the petrophysical analysis. The 60 million -cell static model consists of two formations/ units, the Starichkof and Hemlock. Table 1 summarizes OOIP and average petrophysical properties from the gross volume of the updated geocellular model. Confidential Table 1: Confidential An early dynamic model was built using industry -standard software, Eclipse, and was history matched to early production data from four producers. Various depletion options, including hydraulic fracturing (fracing) the wells and a full field pressure maintenance via waterflooding, were investigated. The fracing and waterflooding development options have since been abandoned due to uneconomic production rates, the regional rock stress regime that made fracing difficult, the compartmentalization and clays in the rock that can swell in the presence of incompatible injection water. The geocellular model has recently been updated and the dynamic model will be updated in the near future. 5.2.1 Production History, Saturation Model, & Fluid and Gas Volumes Blue Crest began its development drilling with the spud of the H-16 well on November 29, 2016 from the Hansen Drilling Pad. The H-16 well was drilled as an extended reach well with an 18 - stage propped hydraulic fracture stimulation. The well began its flowback on May 19, 2017 and had an initial rate of 330 BOPD. A second well, H-14, was completed with a 12 -stage propped hydraulic fracture. The flowback began on November 17, 2017 with an initial production of approximately 1100 bbls/day. Beginning in May 2018 BlueCrest drilled the H-12 well as an extended reach multilateral "fishbone" well with 7 laterals extended from 150' above the presumed oil -water contact to the top of the reservoir. Upon completion, the well began its flowback on July 26, 2018 with an initial rate of approximately 900 bbls/day and 6.OMM scfpd of gas. With the positive results from the H-12 well, the decision was made to reconfigure H-16 into an 8 -leg multilateral. Well H -16A was completed on December 18, 2018 with an initial rate of approximately 1200 bbls/day and 2.2MM scfpd. Following the success of the two multilaterals, BlueCrest decided to delineate the reservoir to the southwest with the H-04 multilateral. The well was spudded on December 27, 2018 and the flowback began on March 22, 2019 with an initial production rate of approximately 1270 bbls/day. The production history of the field is shown in the below Figure 18. As stated above, the performance of the H-12 and H -16A multi -leg laterals out -performed horizontal or hydraulically fractured wells. The water -cut has remained low. The producing GORs are stable in the wells Reservoir & Development Description Page 21 of 36 llueNst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules drilled in the oil zones. The H-12 well, which penetrated a gas zone at the top of the pool, initially produced at a high GOR. As shown in Figure 19, a plot of cumulative production versus GOR, the multi -lateral completion style limits the effects of the gas in the top of the reservoir on oil production, because the gas is at the end of the lateral and at the highest point in the wellbore. Thus, the gas zone has the highest flowing bottom hole pressure, instead of the lowest. Hansen Field Monthly Avg Oil Production 1800 6 1600 5 1400 zo as c 1200 u u � 4 0 70 Q LL 3 O 800 600 2 Q � E C 400 2 1 200 0 0 Jury -15 January -16 August -16 March -17 September -17 April -1S October -18 May -19 December -19 Hansen Field GOR & Water -Cut 16,000 So. ——GOR ;✓I scf/B 0 14,000 7e --w—Water-Cut Percent 12,000 6O C) 10.000 50 m v 8,000 4 D v Ln a� u) 6,000 30 4,000 20 2.000 1G 0 0 Jwy-15 :anuary-16 August -16 March, -17 September -17 Apr! -i8 0cober-18 NA..ay-19 December -19 Production history of Hansen field including average monthly oil rate, number of wells producing, producing GOR and water -cut. Figure 18: Production history of Hansen field Reservoir & Development Description Page 22 of 36 llueNest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Hansen Field Cunt Field ProdUCtiOl1 vs GOR zo Oil Zone Only and Field is Field (0 v:eiis) 16 —&—Soil Zone %Nelis !except H-121 14 Is shut --n e GOP. it R 100,000 200,000 300,000 400;000 500,000 600;000 700,000 800,C00 Cumulative Gil, $O Cumulative oil production versus producing GOR. The oil zone only wells have stable producing GORs and are segregated to show the effects of H-12, which includes a gas zone. H-12 GORs are declining. Figure 19: Cumulative oil production versus producing GOR The relative lack of production rate increase success in the traditional fraced wells is evidence of the highly stressed and stratified nature of the reservoir. 5.2.2 Reservoir Data Below are reservoir data used to describe the average properties of the net pay zones within the producing oil zone. Confidential Table 2: Confidential The reservoir pressure was recently measured in a bottom hole gauge in the H-1AL1 well at 2785 psi (corrected to -6800" TVDSS), but it should be noted that the bottom hole pressure in the well was still building at approximately 1 psi per day. The well has been shut in since May 25, 2019. Due to the compartmentalization and stratification across the reservoir, it is anticipated that reservoir pressure will vary block to block and well to well. 5.2.3 Development Options Development options are mainly focused around increasing primary production, pressure support initiatives and secondary/tertiary recovery planning. Reservoir & Development Description Page 23 of 36 nuest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Since decreasing reservoir pressure can cause a decrease in oil relative permeability and increased oil viscosity, various pressure maintenance options are being studied. Currently, options for secondary and tertiary recovery are limited due to geology and economic feasibility. As more wells are drilled, the dynamic model matures and the economics of secondary and tertiary recovery options are better understood, full field development options will be reavaluated. The highest oil rates to date were achieved using a fishbone well multi -lateral design. This type of well is planned for next year. The fishbone well makes it possible to contact greater KH across the reservoir via a single mother bore. Fracing the wells was a technical failure due to in-situ rock stress, and future wells will not be fraced. Confidential Figure 20: Confidential Reservoir & Development Description Page 24 of 36 llueNest Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules Confidential Figure 21: Confidential A water injection case studied earlier was able to restore the reservoir to original pressure within one year assuming that there is good connectiveity across the reservoir. Using the old history matched reservoir model, various simulation cases were run for different injection timing and different well spacing to optimize well spacing and timing for field development planning. Moreover once the reservoir pressure is restored, the field will be producing at solution GOR till end of field life (EOFL). However, a water injection case may not be feasible at this time, because the water -sensitive clays in the reservoir may swell, causing a reduction in formation permeability. At the time of the original water injection study, it was believed that the reservoir was well connected. With the addition of wells and production data, we now understand this reservoir to be highly compartmentalized and statified. This would limit the effectiveness of the waterflood to only the compartments that the injector well contacts. An alternate scenario of gas injection is currently being investigated for reservoir pressure maintenance. Additional work would have to be done to conduct a feasibility study for enhanced oil recovery via a miscible flood (mainly CO2). In miscible gas flooding with CO2, key recovery mechanisms will include oil sweling and viscosity reduction. However, a more feasible gas injection option in Cosmopolitan field will be lean hydrocarbon gas injection mainly for pressure maintainence. 5.2.4 Enhanced Oil Recovery Options Figure 22 summarizes options studied to increase production from the Cosmopolitan field. Secondary and EOR development options at Cosmopolitan field are severely limited by the geology of the reservoir. This includes compartmentalization, stratification, clay -swelling from water injection and economic feasibility of long -reach well development. All waterflood based processes (highlighted as purple) are currently deemed as low priority until the magnitude of formation damage from water injection can be evaluated. Those options highlighted in green are to be studied further. Options highlighted in red include thermal options and are deemed not feasible due to reservoir geology, oil viscosity and surface facilities. Gas injection based IOR/EOR options will be studied in detail. Reservoir & Development Description Page 25 of 36 llue'Nest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules Primary Depletion (Fishbone and ERD Weks) Waterflood-Pressure Maintenance Development options — Secondary Recovery Produced Gas Flood -Pressure h&Antenanct Lo Sal Waterflood Emulsion Terriary ery Raeov (E -OR) Brightwater Alkaline Surfactant Chemical EOR Surfactant Polymer Alkaline Polymer Microbial Alkaline Surfactant Polyme Crestal CO2 lr*ecbon Solvents Loon Gas Injeclion HC Rich Gas Intecbm Possible Low Priority Steam Flood Thannal 4raltu Combustion Not Feasible SAW Development options are mainly dictated by reservoir geology (clays, compartmentalization), surface facilities limitations, economic feasibility of development. Figure 22: Summary of studied options to increase production from Cosmopolitan field 6.0 RESERVOIR DEVELOPMENT PLAN 6.1 Development History BlueCrest began its development drilling with the spud of H-16 well on November 29, 2016. from the Hansen Drilling Pad. The H-16 well was drilled as an extended reach producer. Once the well was completed, an 18 stage hydraulic stimulation was performed. The well began its flowback on May 19, 2017 and had an initial rate of 330 bbls/day. On March 22, 2017, BlueCrest spudded the H-14 well. Upon completion, a 12 -stage hydraulic stimulation was performed. The flowback for H- 14 began on November 17, 2017 with an initial production of approximately 1100 bbls/day. BlueCrest took a hiatus from drilling following the H-14 well to monitor the production and decline while determining the best path forward for the next drilling phase. On May 8, 2018 BlueCrest spudded the H-12 well. The H-12 well was designed as an extended reach multilateral "fishbone" well with 7 laterals extended from 150' above the presumed oil -water contact to the top of the reservoir. Upon completion, the well began its flowback on July 26, 2018 with and initial rate of approximately 900 bbls/day and 6.OMM scfpd of gas. With the positive results from the H-12 well, the decision was made to abandon the production portion of the H-16, mill a window and drill H - 16A, an 8 -leg multilateral. The whipstock was set and the window milled on October 17, 2018. Upon completion, the well began its flowback on December 18, 2018 initial rate of approximately 1200 bbls/day and 2.2MM scfpd. Following the success of the two multilaterals, BlueCrest decided to delineate the reservoir to the southwest with the H-04 multilateral. The well was spudded on December 27, 2018 and the flowback began on March 22, 2019 with an initial production rate of approximately 1270 bbls/day. Reservoir & Development Description Page 26 of 36 Allk lueNS t Energy 6.2 Future Development Plan Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules BlueCrest plans to continue drilling utilizing multilateral "fishbone" wells to maximize the production from the reservoir. The next well (H-10) will drill to the north of the currently developed area continuing with the "fishbone" design drilling form the bottom of the reservoir and extending each lateral to the top of the reservoir to penetrate each productive sand within the reservoir. Following H-13, drilling will continue to develop the reservoir away from the currently developed area in the central portion of the structure to the economics limits of the reservoir. While drilling and production progresses, reservoir behavior will be monitored and options for secondary recovery and pressure maintenance will be evaluated to determine the most feasible and economic method to maximize the ultimate recovery for the Cosmopolitan Unit. 7.0 RESERVOIR SURVEILLANCE AND MONITORING The production wells are equiped with real-time bottom -hole pressure guages 8.0 SURFACE FACILITIES 8.1 Facilities Section The Hansen Production Facility has 3-phase separation, gas processing, gas compression, power generation, product storage, and a custody transfer measurement while loading the trucks for transfer. 3-phase separation: The capacity is rated at 13,000 BPD liquid, 10,000 BPD water/oil and 15 mmscfd gas. Utilizing a HP 3-phase separator to separate bulk quantities of gas and water, and a 3-phase heater treater for final separation to meet contract specifications. Gas compression: The capacity is rated at 15 mmscfd. Utilizing 3 -stage reciprocating compressors driven by natural gas engines. These compressors also provide gas lift to the wells that require artificial lift. Gas processing: The capacity is rated at 15 mmscfd. Utilizing scrubbers, triethylene glycol dehydration, desiccant dehydration towers, mechanical refrigeration equipment, and coalescing filtration. Power generation: The capacity is rated at 1800 KW. Utilizing Capstone micro turbines. Product storage: The capacity is rated to 6,000 BBLS oil, 1,500 BBLS off -spec fluid, and 750 produced water. This is utilizing eight oil tanks, two off -spec tanks, and one produced water tank. 8.2 Oil Export Measurement Crude oil custody transfer measurement utilizes four, FMC Smith model E3 -S1, 5:1 gallon geared positive displacement meters. These meters accurately measure processed crude oil while being loaded into tanker trucks for transport to the Marathon Refinery in Nikiski. These meters are proved monthly with the use of a bi-directional prover loop that is on an annual water draw certification schedule. All associated instrumentation is calibrated quarterly. 8.3 Gas Export Measurement Natural gas custody transfer measurement utilizes a 4" S80 Daniel Senior orifice meter, with a Nuflo Scanner 2000 flow computer. Accurate measurement range is 500-18,850 MSCF/D. Reservoir & Development Description Page 27 of 36 ZeNst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 9.0 PRODUCTION MEASUREMENTS AND PRODUCTION ALLOCATION 9.1 Well Testing Well testing is done on a monthly basis for all wells that are on-line. AOGCC requires two tests per month, and these are currently done back to back utilizing Expro as a contractor. Expro ties into the test header and cycles through each well. The oil, gas and water rates and volumes and recorded with a minimum of 6 -hour tests. BlueCrest is currently in the process of purchasing a two-phase separator which will eliminate the need for contract services. The two-phase separator will provide the opportunity to have longer tests as well as being able to test more than twice per month. The reason that a two-phase separator was chosen is due to the emulsion that is produced is very difficult to break out an accurate water cut while going through the separator, as it requires significant heat and long resonance time to break out the water. Currently, only one well produces some water. The water cuts while testing will be determined by heating the fluid sample and utilizing a centrifuge. 9.2 Production Allocation Allocations are completed each month for all wells that have been online at any time during the month. The oil, water and gas allocations are determined from the monthly tests. All of the wells have bottom hole pressure gauges and the PI is determined for each well from the monthly test data. The new PI is used to determine the daily flow rate based on the bottom hole pressure and the new PI. If the PI has changed significantly from the new test, then the data is extrapolated from the previous month to the recent test. A correction factor is applied to the daily oil, water and gas test to match the daily production as the final calculation for determining the daily rates. The total volume for oil, water, and gas is reported to AOGCC by the 20th of each month. 10.0 CONCLUSIONS 10.1 Proposed Pool Rules 10.1.1 Rule 1: Initial Field and Pool Rules Area These rules apply to the combined area of the then current Cosmopolitan Unit boundary, located offshore of the Kenai Peninsula, Alaska, The Cosmopolitan field is defined by the area enclosed in the Cosmopolitan Unit area. The Hansen oil pool is defined as the oil and gas bearing Hemlock and Starichkof formations within the Cosmopolitan Unit area. 10.1.2 Rule 2: Pool Definition: The field will be known as the Cosmopolitan Field, and the Hemlock/Starichkof oil accumulation subject to this application will be known as the Hansen oil pool. The Cosmopolitan field Hansen oil pool is defined as the oil and gas bearing intervals common to and correlating with the interval between the measured depths (MD) of 6,538 feet and 7,312 feet in the Cosmopolitan State #1 well and contained within the Cosmopolitan unit. 10.1.3 Rule 3: Oil Well Spacing There shall be no oil well spacing restrictions as specified in 20 AAC 25.055 within the Hansen oil pool to accommodate horizontal, multilateral, and "fishbone style" wells, except that no oil well Reservoir & Development Description Page 28 of 36 n1yest Energy Cosmopolitan Unit, Hansen Oil Pool Proposed Pool Rules shall be completed less than 500 feet from the exterior boundary line of the then current Cosmopolitan Unit unless property ownership is the same on both sides of the Unit boundary line. 10.1.4 Rule 4: Administrative Approval The Commission may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based upon sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. 10.1.5 Rule 5: GOR Waiver In accordance with 20 AAC 25.240 sections (b)(3) and (c), the gas -oil ratio limitation in 20 AAC 25.240(a) is waived and wells producing from the Hansen oil pool are exempt from the producing gas -oil ratio restriction in 20 AAC 25.240(a) . 10.1.6 Rule 6: Wellbore Surveys BlueCrest requests that the wellbore survey requirements described in 20 AAC 25.050 (b) be waived for the proposed future Hansen wells to relieve administrative burden. In lieu of the requirements of 20 AAC 25.050(b), permit to drill applications for development wells shall include: 1. Completed Form 10-401 with Cover Letter 2. Directional Wellbore Plans with: a. Plan View b. Vertical Section c. Close Approach Data d. Directional Program Description and File Data 10.1.7 Rule 7: BOP Tests BlueCrest requests Pool Rules which include the requirement for a three (3) week BOP test duration while drilling the production portion of the well as opposed to the standard two (2) week test duration currently in place and practiced by the AOGCC statewide. 10.1.8 Rule 8: Surface Casing Surface casing (13-3/8") will be set in a competent shale at approximately 3350' SS, and 9-5/8" intermediate casing will be set into the Starichkof sands at approximately 6900' SS. Both casing shoes will be tested to an equivalent mud weight (FIT) of at least 12.5 ppg. The surface casing (13-3/8" 72# L80 BTC or equivalent) shall be cemented to surface; while the intermediate casing (9-5/8" 47# P110 H563 or equivalent) shall be cemented with 1500 linear feet of cement as per the attached design. The surface casing cement job will be remediated for cement fall back by employing top jobs with visual confirmation that cement has reached the surface in a continuous column. 10.1.9 Rule 9: Well Completion The fishbone multilateral wells will be completed barefoot with no liners or screens in the reservoir section. The upper completion will consist of 3-1/2" tubing, a 3-1/2" X 9-5/8" production packer, with gas lift mandrels, downhole gauges, downhole chemical injection, and a SSSV. Reservoir & Development Description Page 29 of 36 tueNst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 10.1.10 Rule 10: Cement Bond Logs The requirement for a cement bond log of any type will be waived for the 9-5/8" casing string due primarily to the justification that none of the development wells will be hydraulically fracture stimulated. In addition, due to the high wellbore angles existing in these ERD wells, a cement bond log would need to be deployed by tractor, coil tubing, or drill pipe with side entry sub. 10.1.11 Rule 11: BOP Rating 5,000 psi rated BOP equipment is adequate and approved for the development wells based on the MASP calculations attached. 10.1.12 Rule 12: Casing Pressure Test Both the 13-3/8" surface casing and 9-5/8" intermediate casing will be pressure tested to 3,500 psi each prior to drilling out the shoe tracks. 10.1.13 Rule 13: Subsurface Safety Valves BlueCrest / Hansen wells are and will be equipped with both Surface Safety Valves (SSV's) and Subsurface Safety Valves (SSSV's). Initial testing as well as periodic inspections and tests will be conducted following notification of the AOGCC consistent with the requirements of 20 AAC 25.265. 10.1.14 Rule 14: Diverter Waiver BlueCrest Alaska Operating LLC hereby applies for a diverter waiver for all future wells to be drilled from the Hansen / Cosmopolitan Project drill site north of Anchor Point, Alaska. This waiver is requested under 20 AAC 25.035 (h)(2) of the AOGCC Regulations. More detailed justification for the request is included in the attached. 10.1.15 Rule 15: Mud Weights Mud weights utilized will always exceed formation pressure as indicated in the attached Mud Program. 10.1.16 Rule 16: Well Monitoring Wells are and will be equipped with instrumentation and monitored in real time in the Control Room. The following instrumentation is employed: a. Tubing pressure and temperature b. Inner Annulus (IA) pressure C. Outer Annulus (OA) pressure d. Bottomhole Pressure (BHP) in producer wells e. Gas Lift Rate in producer wells, when utilized f. Water/gas injection rates in injector wells, when drilled 10.1.17 Rule 17: Description of Rig Detailed information describing BlueCrest Rig No.1 is included in the attached. This rig and the equipment described herein are approved for drilling all wells at this location. 10.1.18 Rule 18: LOT/FIT Procedure The attached LOT / FIT Procedure is hereby approved for all wells drilled at this location. Reservoir & Development Description Page 30 of 36 ZuNst Cosmopolitan Unit, Hansen Oil Pool Energy Proposed Pool Rules 10.1.19 Rule 19: Wellhead and Christmas Tree Design The attached wellhead and Christmas tree designed for all wells at this location is hereby approved. 10.2 Summary BlueCrest believes that the above described pool rules and development plan are prudent and consistent with good oil field practices. They are based on sound engineering practices and earth science principles, and are in compliance with AOGCC statutes and regulations. Reservoir & Development Description Page 31 of 36 8 STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT IN VOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVITOF PUB ADVERT SMENITACHED COPY OF T. ADVERTISING ORDER NUMBER AO-19-024 FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O. AGENCY PHONE: 333 West 7th Avenue 6/12/20191(907)279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: Anchorage Daily News LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: iv LEGAL DISPLAY v CLASSIFIED ;� OTHER (Specify below) DESCRIPTION PRICE CO -19-014 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENTTO: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae I of 1 Total of All Pages $ - REF Tye Number Amount Date Comments I PVN VCO21795 2 AO AO -19-024 3 4 FIN AMOUNT SY Act. Template PGM LGR Object FY DIST LIQ 1 19 A14100 3046 19 2 3 4 rchasing Ant o ty Purchasing Authority's Signature Telephone Number 1. A.O,# an receiving agency name must appe invoices and documents relating to this purchase. 2. The stao is registered for tax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not forr ale. DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fiscal, Receiving Form: 02-901 Revised: 6/12/2019 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Numbers: CO -19-014 Hansen Oil Pool, Cosmopolitan Unit Public Hearing for Pool Rules On June 7, 2019, the AOGCC received from B1ueCrest Alaska Operating LLC (B1ueCrest) 25 spacing exception requests regarding the Hansen H10 well and its fishbone lateral branches. If granted, the current request will result in 63 spacing exceptions having been issued to B1ueCrest for the Hansen wells. Because B1ueCrest has never sought pool rules for the oil pool within the Cosmopolitan Unit, informally referred to by Alaska Oil and Gas Conservation Commission (AOGCC) and B1ueCrest as the Hansen Undefined Oil Pool, the AOGCC will hold a public hearing to establish pool rules for development and operation of that oil pool. The AOGCC has scheduled a public hearing for August 13, 2019, at 10:00 a.m. at 333 West 7th Avenue, Anchorage, Alaska 99501. At the hearing, B1ueCrest should be prepared to present evidence on all relevant aspects of creation and operation of the oil pool, including, but not limited to the definition, boundaries and geology of the pool, reservoir and fluid properties, well spacing rules, any other requested rules, or any variances from AOGCC's applicable regulations. Written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the August 13, 2019 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than August 7, 2019. Jn1Cielowski Commissioner ANCHORAGE Ruix N.T.EVNS AFFIDAVIT OF PUBLICATION JUN 18 2019, AOGCC Account #: 270227 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION 333 WEST 7TH AVE STE 100 nni(^unoerrG ett QQrr)1 2rIQ STATE OF ALASKA THIRD JUDICIAL DISTRICT Joleesa Stepetin being first duly sworn on oath deposes and says that he/she is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on June 13, 2019 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. ^� Signed J0I e a Stenetin Subscribed and sworn to before this 13th day of June, 2019 f' NofarV Public in and for The ate of Alaska. Thid Division Anchorage, Alaska MY COMMISSIO EXPIRES L/1 41 / — ZG Order# 0001439422 Product ADN -Anchorage Daily News Cost $209.18 Placement 0300 Position 0301 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS d bNSVTtvATION COMMISSION Re: Docket Numbers: CO -19-014 Hansen Oil Pool, Cosmopolitan Unit Public Hearing for Pool Rules On June 7, 2019, the AOGCC received from BlueCrest Alaska Operating LLC (BlueCrest) 25 spacing exception requests regarding the Hansen H10 well and its fishbone lateral branches. If granted, the current request will result in 63 spacing exceptions having been issued to BlueCrest for the Hansen wells. Because BlueCrest has never sought pool rules for the oil pool within the Cosmopolitan Unit, informally referred to by Alaska Oil and Gas Conservation Commission (AOGCC) and BlueCrest as the Hansen Undefined Oil Pool, the AOGCC will hold a public hearing to establish pool rules for development and operation of that oil pool. The AOGCC has scheduled a public hearing for August 13, 2019, at 10:00 a.m. at 333 West 7th Avenue, Anchorage, Alaska 99501. At the hearing, BlueCrest should be prepared to present evidence on all relevant aspects of creation and operation of the oil pool, including, but not limited to the definition, boundaries and geology of the pool, reservoir and fluid properties, well spacing rules, any other requested rules, or any variances from AOGCC's applicable regulations. Written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, Alaska 99501: Comments must be received no later than the conclusion of the August 13, 2019 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than August 7, 2019. //signature on file// Jessie L. Chmielowski Commissioner Published: June 13, 2019 �� OF AC,gs� Z' CO NOTARY Pug�IC c� ✓ada � No Karl BernieBerRecycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 1 Colombie, Jody J (CED) From: Davies, Stephen F (CED) Sent: Wednesday, June 12, 2019 11:53 AM To: Andrew Buchanan Cc: Roby, David S (CED); Boyer, David L (CED); Colombie, Jody J (CED) Subject: RE: Pool Rules Andrew, To date, the AOGCC has issued 38 spacing exception orders regarding various Hansen development wells and branches. On June 7, 2019, the AOGCC received 25 spacing exception requests regarding the Hansen H10 well and its fishbone lateral branches. If granted, the current request will result in 63 spacing exceptions having been issued for the Hansen wells. AOGCC has repeatedly advised BlueCrest it should request a hearing to establish pool rules. BlueCrest has declined to do so. The AOGCC will not act on the current application, but instead will set a hearing to establish pool rules to name, delineate and classify the pool as well as prescribe rules to govern its development and operation. At the hearing, BlueCrest should be prepared to address all matters necessary to creation and operation of the pool, including but not limited to the definition, boundaries and geology of the pool, reservoir and fluid properties, well spacing rules, and any other requested variances from AOGCC's applicable regulations. The public hearing will be scheduled for 10 AM on August 13, 2019 at the AOGCC. AOGCC's Public Hearing guidelines—including topics that BlueCrest's technical representatives must be capable of addressing at the Public Hearing—as well as other useful information regarding pool rules and preparation for the hearing are included in AOGCC's emails dated May 16, 2019, below. Please contact me if you have any questions. Regards, Steve Davies Senior Petroleum Geologist Alaska Oil and Gas Conservation Commission (AOGCC) 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 907-793-1224 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.aov. unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Roby, David S (CED) Sent: Thursday, May 16, 2019 5:44 PM To: Davies, Stephen F (CED) <steve.davies@alaska.gov>; Andrew Buchanan <abuchanan@bluecrestenergy.com> Subject: RE: Pool Rules Andrew, Also keep in mind that pool rules are only for things where you want to deviate from the statewide regulations and a set of pool rules is a living document that can be updated as your plans change. So if you're fine with the rest of the statewide regs at this time your pool rules can just be a single rule that eliminates the interwell spacing requirements in the defined area and if your development plans change in the future the pool rules can be amended to implement new rules. On a side note, we're now about 6 months out (November 1, 2019) from when the temporary GOR waivers for the Hansen wells that were granted to collect reservoir performance data expire so you should be giving some thought on how you want to proceed on that front (implement an EOR project, seek a permanent GOR waiver, something else?). Both the EOR project and permanent GOR waiver routes will require public notice and hearing so if you opt to go that route you should try to get those applications in no later than the middle of August. Regards, Dave Roby Sr. Reservoir Engineer Alaska Oil and Gas Conservation Commission 907-793-1232 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Dave Roby at 907- 793-1232 or dave.roby@alaska.gov. From: Davies, Stephen F (CED) Sent: Thursday, May 16, 2019 4:59 PM To: Andrew Buchanan <abuchanan(a@bluecrestenergV.com> Cc: Roby, David S (CED) <dave.roby@alaska.gov> Subject: RE: Pool Rules Andrew, A good place to start is AOGCC's website. AOGCC's Public Hearing Guidelines (http://doa.alaska.gov/ogc/hear/PubHrgGuid.pdf) discuss expectations and requirements for the Pool Rules public hearing. Conservation Order No. 747 (CO 747) is a recent order that defines the Lookout Oil Pool within the Greater Moose's Tooth Unit and establishes the Pool Rules that govern its development and operation. This order shows the types of information required by AOGCC. Whomever is assigned as lead for BlueCrest would be wise to visit AOGCC's library and review the entire CO 747 file that includes the operator's application, correspondence, hearing transcript and final order. To view this file, please submit a "Request for AOGCC Records" form (http://doa.alaska.gov/ogc/data/DataRegst.pdf) to AOGCC's Natural Resources Tech, Abby Bell (abby.bell@alaska.gov) and a make an appointment in advance. AOGCC's library is open from 8:30 to 5 every business day. Please let me know if I can help you further. Thank you, Steve Davies AOGCC CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Andrew Buchanan <abuchanan@bluecrestenerey.com> Sent: Thursday, May 16, 2019 3:59 PM To: Davies, Stephen F (CED) <steve.daviesCa@alaska.gov> Subject: RE: Pool Rules I would like to pursue pool rules. It would make all of our lives easier. Will look into who I can assign to get that done. I may need to come talk to you for some guidance. Andrew Buchanan VP - Alaska BlueCrest Energy Ph: 907-754-9563 Cell: 907-250-6545 From: Davies, Stephen F (CED) <steve.davies@alaska.gov> Sent: Thursday, May 16, 2019 3:00 PM To: 'Andrew Buchanan' <abuchananCc@bluecrestenergy.com> Cc: Tom McKay<tom.mckav@bluecrestenergy.com>; Roby, David S (CED) <dave.robv@alaska.gov> Subject: RE: Pool Rules ...considering... From: Davies, Stephen F (DOA) Sent: Thursday, May 16, 2019 2:55 PM To: 'Andrew Buchanan' <abuchanan@bluecrestenergy.com> Cc: Tom McKay <tom.mckay@b luecrestenergy.com>; Roby, David S (DOA) <dave.robv@alaska.gov> Subject: Pool Rules Andrew, In light of the ADN article regarding Cosmo development utilizing fishbone laterals, is BlueCrest considered applying for Pool Rules so that spacing exceptions will not be required for each future well and fishbone lateral? Regards, Steve Davies AOGCC CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Tom McKay <tom.mckay@bluecrestenergy.com> Sent: Friday, December 21, 2018 10:40 AM To: Davies, Stephen F (DOA) <steve.davies@alaska.gov> Cc: 'Andrew Buchanan' <abuchanan@bluecrestenergy.com> Subject: RE: DRAFT REVISED APD_H04 Rev 1_PTD 218-126_20Dec2018 Pool Rules would be great Steve as we all know, but I had better let Andrew answer as the official BlueCrest spokesman on this subject I I Best, TM From: Davies, Stephen F (DOA) [mailto:steve.davies@alaska.gov] Sent: Friday, December 21, 2018 10:37 AM To: Tom McKay Cc: Andrew Buchanan(abuchananCoDbluecrestenergV.com) Subject: RE: DRAFT REVISED APD_H04 Rev 1_PTD 218-126_20Dec2018 Tom, While I'm reviewing this revised application and thinking about the spacing exception that was required to drill H-04, I'm wondering: has BlueCrest considered applying for Pool Rules so that spacing exceptions will not be required for each future well and fishbone lateral? Regards, Steve Davies AOGCC CONFIDENTIALITY NOTICE. This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. lueNest Energy June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10 Onshore Horizontal Producer Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H-10 Spacing Exception_AOGCC llueNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10 Well Dear Commissioners, BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10 well. Cosmopolitan Project BlueCrest Energy - H-10 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: PnAu—tlu U State � �'' av � 0" YPU UIC r�s�ni�H-' Maryick y Oo; �an!S"loll E��irtn; Dec S, BlueCrest Energy - H-10 Affidavit 0 26, ns, Rises. 9M DEC 32, nE, MSW. EM TD H10•Ct.& KOP H-10 S acing Exception Map T35, RIM. EM SEC 33, n,, RIM, SM EEC 27. n3, ROW, w SEC 36, TA, R?*, SM ADL39190 SEC 26, n3, RIM, SM SEC 36. T39, ROW, SM Mew, SM SEC 38, T3S, MSW, w Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H1070p at Production Easting: 159,750.9' Northing: 2,153,645.8' SEC4, T64, ROW, AN ADL187 GSC: 382' FSL, 281' FEL, Sec. 28, T3S, R15W SM e�ew. w Depth: 15,840.0' MD/7,123.3' TVD SEC 2, TSS, R1 , SEC 1, T15, MEW, w Total Depth Easting: 153,687.5' Northing: 2,158,048.3' GSC: 4613' FSL, 1189' FEL, Sec. 29, T3S, R15W SM Depth: 23,386.5' MO/6 972.9' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 0 1000 2000 3000 4000 5000ftUS 1:30000 a PETREL Prepared by ABuchanan Field Cosmopolitan lueNest Energy June 10, 2019 Cosmopolitan Project BlueCrest Energy - H-10 Affidavit AOGCC BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Alaska Oil & Gas Conservation Commission Commissioners 333 W 7th Avenue, Suite 100 Anchorage, AK 99501 Dear Commissioners, RE: Spacing exception for the proposed H-10 Well BlueCrest Alaska Operating LLC is, hereby providing the following submittals: Request for Spacing exception for the proposed H-10 well. Request for Spacing exception for H-10-AL01. Request for Spacing exception for H-10-AL02. Request for Spacing exception for H-10-AL03. Request for Spacing exception for H-10-AL04. Request for Spacing exception for H-10-AL05. Request for Spacing exception for H-10-AL06. Request for Spacing exception for H-10-AL07. Request for Spacing exception for H -10 -ALOE. Request for Spacing exception for H-10-BL01. Request for Spacing exception for H-10-BL02. Request for Spacing exception for 1-1-10-61-03. Request for Spacing exception for 1-1-10-131-04. Request for Spacing exception for H-10-BL05. Request for Spacing exception for H-10-BL06. Request for Spacing exception for H-10-61-07. Request for Spacing exception for 1-1-10-61-08. Request for Spacing exception for H-10-CLO1. Request for Spacing exception for H-10-CL02. Request for Spacing exception for H-10-CL03. Request for Spacing exception for H-10-CL04. Request for Spacing exception for H -10-C1-05. Request for Spacing exception for H-10-CL06. Request for Spacing exception for H-10-CL07. Request for Spacing exception for H-10-CL08. The foregoing instrument, confirmation of enclosure, and proof of delivery to the Bureau of Ocean Energy Management — Alaska Region, and proof of delivery to Alaska Department of Natural Resources — Units SE etiam, was Sign {�e€eree reri day of 2019. Siate cf.Vaska NOTARY PL LI% Bruni H. Warrick Andrew Buchanan Notary Public in for Alaska L., as Ekins Dec 1, 2022 V.P. — Alaska My Commission Expires: BlueCrest Alaska Operating LLC Phone (907) 754-9563 16-9v�4 li BlueCrest Energy - H-10 Affidavit AOGCC ^luest Energy June 7, 2019 Alaska Department of Natural Resources — Units Section Division of Oil and Gas Unit Manager 550 W 7th Avenue, Suite 1100 Anchorage, AK 99501-3560 RE: Spacing exception for the proposed H-10 Well BlueCrest Alaska Operating LLC is, hereby providing the following submittals Request for Spacing exception for the proposed H-10 well. Request for Spacing exception for H-10-AL01. Request for Spacing exception for H-10-AL02. Request for Spacing exception for H-10-AL03. Request for Spacing exception for H-10-AL04. Request for Spacing exception for H-10-AL05. Request for Spacing exception for H-10-AL06. Request for Spacing exception for H-10-AL07. Request for Spacing exception for H-10-AL08. Request for Spacing exception for H-10-BL01. Request for Spacing exception for H-10-BL02. Request for Spacing exception for H-10-BL03. Request for Spacing exception for H-10-BL04. Request for Spacing exception for H-10-BL05. Request for Spacing exception for H-10-BL06. Request for Spacing exception for H-10-BL07. Request for Spacing exception for H-10-BL08. Request for Spacing exception for H-10-CL01. Request for Spacing exception for H-10-CL02. Request for Spacing exception for H-10-CL03. Request for Spacing exception for H-10-CL04. Request for Spacing exception for H-10-CL05. Request for Spacing exception for H-10-CL06. Request for Spacing exception for H-10-CL07. Request for Spacing exception for H-10-CL08. Regards, Andrew Buchanan Received by: V. P. —Alaska Date: BlueCrest Alaska Operating LLC Phone (907) 754-9563 Cosmopolitan Project BlueCrest Energy - H-10 Affidavit Main BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 R ECcomEDD' JUN 1 0 2019 L):,,, ,,viv �)F OIL AND GAS BlueCrest Energy - H-10 Affidavit Main lue est Energy June 7, 2019 Cosmopolitan Project BlueCrest Energy - H-10 Affidavit BOEM BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Bureau of Ocean Energy Management —Alaska Region Office of Leasing and Plans Unit Manager 3801 Centerpoint Drive, Suite 500 Anchorage, AK 99503 RE: Spacing exception for the proposed H-10 Well BlueCrest Alaska Operating LLC is, hereby providing the following submittals Request for Spacing exception for the proposed H-10 well. Request for Spacing exception for H-10-AL01. Request for Spacing exception for H-10-AL02. Request for Spacing exception for H-10-AL03. Request for Spacing exception for H-10-AL04. Request for Spacing exception for H-10-AL05. Request for Spacing exception for H-10-AL06. Request for Spacing exception for H-10-AL07. Request for Spacing exception for H-10-AL08. Request for Spacing exception for H-10-BL01. Request for Spacing exception for H-10-BL02. Request for Spacing exception for H-10-BL03. Request for Spacing exception for H-10-BL04. Request for Spacing exception for H-10-BL05. Request for Spacing exception for H-10-BL06. Request for Spacing exception for H-10-BL07. Request for Spacing exception for H-10-BL08. Request for Spacing exception for H-10-CL01. Request for Spacing exception for H-10-CL02. Request for Spacing exception for H-10-CL03. Request for Spacing exception for H-10-CL04. Request for Spacing exception for H-10-CL05. Request for Spacing exception for H-10-CL06. Request for Spacing exception for H-10-CL07. Request for Spacing exception for H-10-CL08. Regards, Andrew Buchanan Received by: -� V.P. — Alaska Date: BlueCrest Alaska Operating LLC 7 Phone (907) 754-9563 BlueCrest Energy - H-10 Affidavit BOEM /1ue*Cest Energy Cosmopolitan Project BlueCrest Energy - H-10-AL01 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-AL01 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL01. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same ''/< section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10 -Al 04 Spacing Exception_AOGCC nue est Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL01 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL01 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-AL01 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the 7 46h day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: Ol ZOZZ ---------------- _ C Gruni H. Warrick M� CrJ f T)? i4 i fres DOC t, 2,,';32 BlueCrest Energy - H-10-AL01 Affidavit H -10 -ALO Spacing Exception Map N ADL39190 ADL38440 SEC" T33. R'S' 9M SEC 2E, TSD. RIM, 8M SEC 27, nS. RIM. SM SEC M. nS, RIM. SM TD SEC 32, T38, RIM, SM HIO -AL -01 Surface Coordinates: Northing: 2,144,734.44' WS Easting: 168,833.09' 1LUS GSC: 2,285' FSL, 1,535'FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-ALo1Top of Production Easting: 1158,376.1' Northing: 2,154,294.8' GSC: 982' FSL, 1682' FEL, Sec. 28, T3S, R15W SM Depth: 17,374.0' MD17,124.2' TVD Total Depth Easting: 156,901.5' Northing: 2,154,939.3' GSC: 1595' FSL, 3174' FEL, Sec. 28, T3S, R15W SM Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan KOP SEC 33, r;j RIM. SN SEC 34. M. 11110B. SM SEC 31, T3/, RIM. SM 8SCP SEC t, US, RIMWADL187 EEC 3.44S. Rteer, DM SEC Z,Ttl, Rt , 0 1000 2000 3000 4000 5000ftUS 1:30000 RIM, SM SEC SE, T7S, MEW, 8M EEC 1, AS, RIM, SM a SrREL lueNest Energy Cosmopolitan Project BlueCrest Energy - H-10-AL02 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 1 Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-AL02 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL02. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same ''/< section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H- O -Al 02 Spacing Exception_AOGCC nue est Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL02 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL02 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-AL02 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P.— Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the ?*day of Q_ 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: � �2 NOTARY LIC Brairii H. Warrick MY C-0amus+orgy EXP'ras Dec a, 2,'122 BlueCrest Energy - H-10-AL02 Affidavit ADL38440 29. TSS. RIM. SM SEC 32, TSS, RIM. SM Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535'FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10•AL02Top of Production Easting: 159,339.1' Northing: 2,153,912.0' GSC: 637' FSL, 709' FEL, Sec. 28, T3S, R15W SM Depth: 16,330.9' MD17,128.1' TVD Total Depth Easting: 158,092.0' Northing: 2,155,480.0' GSC: 991' FSL, 1732' FEL, Sec. 28, T3S, R15W SM Depth: 17,424.1' MDl/.125.0' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by.- Field ABuchanan Cosmopolitan H-10-ALOA2 Spacing Exception Map ADL39190 KOP9EC 28. TIC RIM, SM SEC 21, T23. R16W. SM SEC 26, T30, RIM, SM TD SEC 33, ns RIM, SM SEC 34. T35, RIN14. SM SEC 36.736. RIM, W SEC 4, US, RISK SM ADL1879 SEC 3. 4S. MSW. SM SEC 2, 0 1000 2000 3000 4000 5000ftUS 1:30000 RIM, SM SEC 30, US. RISW, SM SEC t, TIS, RIM, SM llueNest Energy Cosmopolitan Project BlueCrest Energy - H-10-AL03 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-AL03 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL03. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H- 1 0-AL03 Spacing Exception_AOGCC llueNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL03 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL03 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-AL03 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the Today of e- 2019. By Andrew A. Buchanan. Ili Notary Public in and for Alaska My Commission Expires: 2C. Ol 2022 -o Bru of H. Wanrick ick fij Corita'isssicn E pjr'�s De, 1, 20,12 BlueCrest Energy - H-10-AL03 Affidavit 4) H-10-AL0Spacing Exception Map ADL39190 ADL SEC 29, nS, R16W, S4 ` RIM. 29, 175, R1. 84 H10 -A_ t@.k_ SEC 27, 179, RIM. 94 SEC 26, na, RIM, 94 SEC 32, 738, RIM, S4 SEC 33, "t RIM. SM R16W, am KOP SEC 36. Tia, WNW. SM H10-AL03 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' fdJS GSC: 2,285' FSL,1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-AL03Top of Production Easting:150,619.3' Northing: 2,154,237.1' IEC 4. US. RIM. I4 ADL187 GSC: 941' FSL, 1438' FEL, Sec. 28, T3S, R15W SM SEC 3, u, eilW. W Depth: 17,126.1' MD/7,119.7' TVD Total Depth Easti ng: 2,154,237.1' Northing: 158,619.3' GSC: 941' FSL, 1438' FEL, Sec. 28, T3S, R15W SM Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan 0 1000 2000 3000 4000 5000ftUS 1:30000 SEC 36.732, MEW, SM SEC 2, ... ne .moi.. - .. .. aee a1, 77a,RgW, IM „r SEC 1. US. RIM, SM a PETREL llueNest Energy Cosmopolitan Project BlueCrest Energy - H-10-AL04 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-AL04 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL04. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303' azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10 -At 04 Spacing Exception_AOGCC Ilu est Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7 I Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL04 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL04 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-AL04 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. - Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska � My Commission Expires: bec- 01 2-02.2— a 'z,'e GPUaska I bQ10 .tea � ��`' ua 3runi H. Warrick EXP PIrU DOr I, 2r, BlueCrest Energy - H-10-AL04 Affidavit H-10-AL0Spacing Exception Map ADL39190 TD DL38440 SEC 2/. 733. R15W. !M 1-11 Q - SEC 21. 13E, RIM. EM SEC 2T. ns. R16W. SM SEC 23, Tal, R15W. SM SEC 32, TSS, R15W. 51.1 SEC 33, nj, RIM. SM KOP SEC U. IN, kft, SM SEC U. TSS, R1SW, SM RIM, EM SEC 3E, TSE, RIM. SM Northing: 2,144,734.44' RUS Easting: 168,833.09' ftUS GSC: 2,285FSL, 1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10•AL04Top of Production Easting: 157,850.1' Northing: 2,154.441.3' EEC 4, US, RIM, EM ADL1879 GSC: 1124' FSL, 2213' FEL, Sec. 28, T3S, R15W SM EEC 3.443, RUM. EM T4S. RI , : 17,923.4' MDR,124.9' TVD EEG 2. DepthEEC 1, WS.R1EW, EM Total Depth Easting: 158,819.3' Northing: 2,154,237.1' GSC: 2944' FSL, 32' FEL, Sec. 29, T3S, R15W SM Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanen Cosmopolitan 0 1000 2000 3000 4000 5000ftUS 1:30000 METRE[ llueNest Energy Cosmopolitan Project BlueCrest Energy - H-10-AL05 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-AL05 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL05. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP —Alaska BlueCrest Energy - H -10 -AL 05 Spacing Exception_AOGCC llueNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL05 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL05 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-ALOS well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the 7 day of4Q— 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: 2022 i rani H. Mai. `^P h i r.'ni'n1u3SIG t ?IrWv Der, i "'2 BlueCrest Energy - H-10-AL05 Affidavit TD 29, 734. RIM, SM SEC 32, T33, Rim, W Northing: 2,144,734.44' ftuS Easting: 168,833.09' ft1JS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, R15W SM Elevation: 177.54' Above MSL N10-AL05Top of Production Easting: 157,123.8' Northing: 2,154,726.8' GSC: 1389' FSL, 2947' FEL, Sec. 28, T3S, R1 5W SM Depth: 18,707.5' MDf7,122.8' TVD Total Depth Easting: 154,276.8' Northing: 2,156,686.4' GSC: 1389' FSL, 2947' FEL, Sec. 28, T3S, R15W SM Depth: 20.036.0' MDf7.124.2' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by-, Field ABuchanan Cosmopolitan H-10-AL0Spacing Exception Map ADL39190 SEC 29. 73S. HIM, W SEC 2T. 739, RIM W SEC 26, T3E, Rim, W I SEC 33, "1I RIM. !M SEC U. TabRl. !M SEC K, 775, Rim, W . � 7 {EC 39. T3E. RIM, W SEC C AS, RIM, W ADL167 eEc s, 9s. R/m. W SEC 2, 0 1000 2000 3000 4000 5000ftUS 1:30000 SEC 1, US. RIM, W a I TPEL llueNpst Energy June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 1 Avenue, Suite 100 Anchorage, Alaska 99501 Cosmopolitan Project BlueCrest Energy - H-10-AL06 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com RE: Application for Spacing Exception for H-10-AL06 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL06. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP —Alaska BlueCrest Energy - H-110-A.l 06 Spacing Exception_AOGCC '00 lue est Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL06 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL06 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-AL06 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P.— Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: Stere cyzia " Grum H. Warrick �1� 6 I ,reg?d to 5 airzs Dec 1, 21-l" -, BlueCrest Energy - H-10-ALO6 Affidavit H -10 -ALO Spacing Exception Map TD H10 -A ADL39190 DL38440 SEC 29, n3. R/6N', SM SEC Y9, 13S, RIM, w SEC 27, n3, R16W, SM KOP SEC 23, n3, R16W. w SEC 32, n3, RIM, SM Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285 FSL, 1,535'FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-AL06Top of Production Easting: 156,481.8' Northing: 2,155,204.2' GSC: 1848' FSL, 3601' FEL, Sec. 28, T3S, R15W SM Depth: 19,507.8' MD/7,125.2' TVD Total Depth Easting: 156,461.8' Northing: 2,155,204.2' GSC: 1848' FSL, 3601' FEL, Sec. 28, T3S, R13W SM Depth: 20,733.4' MD/7.126.3' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan SEC 33, nt R16W. SN SEC U. M. R1fW, SM SEC K 733, RIM ON fec t, T{f, naw, w ADL1879 eEc3. ta.RlfW,w SEC 2, Ttf, 0 1000 2000 3000 4000 5000ftUS 1:30000 Be SEC 1, rte, R1EW, w al PETREL Iye est Energy June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Cosmopolitan Project BlueCrest Energy - H-10-AL07 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com RE: Application for Spacing Exception for H-10-AL07 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL07. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10 -Al 07 Spacing Exception_AOGCC llueNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL07 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL07 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-AL07 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the ?'A day of Q— 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: pi, 2022 te COMMISSIon 1:z Bruni H. 0 1 . BlueCrest Energy - H-10-AL07 Affidavit 28, T33. RIM. SM SEC 32, M. RIM, SM TD H-10-ALOI Spacing Exception Map KOP SEC 20, T3S, R13W, SM SEC 33, T34L RIM, SM SEC V, T35, R1SW, SM SEC 34, T38, R/bp, SM H70-AL07 Surface Coordinates: Northing: 2,144,734.44' RUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, R15W SM Elevation: 177.54' Above MSL '.. H10-AL07Top of Production Easting: 155,826.0' Northing: 2,155,662.7' SEC 4, T48, RIM, SM ADL187 GSC: 2288' FSL, 4269' FEL, Sec. 28, T3S, R15W SM sEc 3. u. RIM. w Depth: 20,308.2' MD/7,124.7' TVD Total Depth Easting: 153,446.6' Northing: 2,157,252.4' GSC: 3810' FSL, 1409' FEL, Sec. 29, T3S, R15W SM Depth: 21.347.7 MD/7.125.T TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan 0 1000 2000 3000 4000 5000ftUS 1:30000 ADL39190 SEC 28, T311, RIM, SM SEC 38. T38, RIM, W SEC 2, SEC U. "S. RIM, SM SEC 1, TN, RIM, - LE�ETPJE[ liueNest Energy June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 1 Avenue, Suite 100 Anchorage, Alaska 99501 Cosmopolitan Project BlueCrest Energy - H-10-AL08 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com RE: Application for Spacing Exception for H-10-AL08 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-AL08. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same Y. section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H- i 0-AL08 Spacing Exception_AOGCC nue est Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-AL08 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-AL08 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-ALOS well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: G Ol 2o22- . PUBLIC i fu --n! H. Warrick E41M Dec 1, 2022 BlueCrest Energy - H-10-AL08 Affidavit 29. TIS, RIM. SM SEC 32, T35. RIMSM TD H-10-ALOO Spacing Exception Map SEC 23. M. RIM. SM SEC 33. T34 RIM. SM SEC 2T TIS. RIM. - SEC 34, T35. R114y, SM Northing: 2,144,734.44' ftUS Eaating: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, R1 5w SM Elevation: 177.54' Above MSL H10-ALOSTop of Production Eaating: 155,160.2' Northing: 2,156,104.7' BEC 4, T49. RIM, BM ADL1879 GSC: 2712' FSL, 4947' FEL, Sec. 28, T3S, R15W SM BEC 3. 48, RIM. SM Depth: 21,107.3' MDf7,124.9' TVD Total Depth Eaating: 153,041.6' Northing: 2,157,523.4' GSC: 4070' FSL, 1821' FEL, Sec. 29, T3S, R1 SW SM Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan 0 1000 2000 3000 4000 5000ftUS 1:30000 ADL39180 SEC 26, T39. RIM, SM SEC W. T3B, R34M, m SEC 2. T48, SEC X. T39, RIM. SN SK 1,1 ", RIM, BM 'e'reE[ llue)est Energy Cosmopolitan Project BlueCrest Energy - H-10-131-01 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-BL01 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BL01. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10 -BL 01 Spacing Exception_AOGCC ZuNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7 I Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-BL01 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-BL01 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL01 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 el The foregoing instrument was acknowledged before me on the3!�day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska �„ I Or 2b=My Commission Expires: �•t— BlueCrest Energy - H-10-BL01 Affidavit 29. IJS RIM, SM SEC 32, T33, RIM. SM H-10-BLOI Spacing Exception Map TD AOL38440 SEC 28, SEC 33. TA. R1 SW. 3M Northing: 2,144,734.44' ftUS 'eating: 168,833.09'ftUS GSC: 2,285' FSL, 1,535' FEL, See. 2, US, R15W SM Elevation: 177.54' Above MSL H10-BL01Top of Production Easting:158,612.0' Northing: 2,155,116.8' SEC i, T4 S. RIM, SM GSC: 1821' FSL, 1469' FEL, Sec. 28, T3S, RiSW SM Depth: 17,763.4' MDf7,126.3' TVD Total Depth Easting:157,796.6' Northing: 2,156,265.3' GSC: 2946' FSL, 2315' FEL, Sec. 28, T3S, R15W SM Depth: 19,297.9' MD/6.600.8' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan ADL39t90 i SEC 27, IJS. RIM, SM ` 9EC 23,135. R16W. 3M KOP } maw, we SEC Ji. 118, SEC 36, i]B, Rt3W, 3Y /1 aEC >a. T33, m3W, 3M bADL1679d SEC 3. rm RIM. SM E3� SEC 1. TN, RIM, SM 0 1000 2000 3000 4000 5000ftUS 1:30000 L9 llueNpst Energy Cosmopolitan Project BlueCrest Energy - H-10-BL02 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-BL02 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BLO2. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10 -BL 02 Spacing Exception_AOGCC ZuNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-BL02 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-BL02 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL02 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, lo Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of %— 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My C fission Expires 3 �� /O s�i I ` ' sa Cr ;sn;i:E:=, icr� :.lydis z *3 2022 BlueCrest Energy - H-10-BL02 Affidavit H-10-BLO� Spacing Exception Map TD H1 (IN, 1(IN, ADL38440 20. T3S. RIM, SM SEC 23, nS. I SEC M. 133, R1SW. SM H10-BL02 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, R15W SM Elevation: 177.54' Above MSL H10-BL02Top of Production Easting: 158,181.2' Northing: 2,155,828.8' GSC: 2521' FSL, 1918' FEL, Sec. 28, T3S, R15W SM Depth: 18,601.4' MD/7,126.3' TVD Total Depth Easting: 157,052.0' Northing: 2,156,764.2' GSC: 3424' FSL, 3073' FEL, Sec. 28, T3S, R15W SM De the 20".... MD/6,555.6' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan SEC 33, 134 R16W, SM SEC 4, T42, R16W, W KOP SEC 27, TSS, R16W. SM SEC 36, M. R13W. SM ADL7879 SEC 3, N, R16W. SM 0 1000 2000 3000 4000 5000ftUS 1:30000 ADL39190 SEC M. T3S. RISK SM SEC 30.133, R"W, - SEC 2, Mow. SM SEC 38, T33, MOW. SM SEC 1, TW, R16W, SM LE PErREL IuNest Energy Cosmopolitan Project BlueCrest Energy - H-10-131-03 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-61-03 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BL03. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10 -BI, 03 Spacing Exception_AOGCC /lueNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-11311-03 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-BL03 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL03 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the ?* day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: 1 ''S Ir+,r3di��i'Rkruu Vac I� ....,.��......+..t,.. �, �...��.........�.. �.e�...a. .. .:ate$ BlueCrest Energy - H-10-BL03 Affidavit H-10-BLO Spacing Exception Map TD N10 -B ' ADL39190 KOP �ADL384403] � SEC 29, T36. RIM, SN 9EC 2S. TJ S, Rf'. I£ SEC ]]. TJ9 RiSW. SN ' SEC 23, TJS, RIM, SM R16W, SY SEC Ji, T33. RIM SM ' SEC 13, TS RIM. SM SEC JI, T3S. R1 . SM SEC 36, T39, RIM, SN SEC U. TJS, RIM, 9M HIO -BI -03 Surface Coordinates: Northing: 2,144,734.44' RUS Easting: 168,833.09' RUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-BL03Top of Production Easting: 157,698.2' Northing: 2,156,333.4' GSC: 3012' FSL, 2415' FEL, Sec. 28, T3S, R15W SM Depth: 19,300.0' MD/7,126.3' TVD Total Depth Easting: 156,359.6' Northing: 2,157,227.4' GSC: 3868' FSL, 3777' FEL, Sec. 28, T3S, R15W SM Depth: 21,034.5' MD/6.540.8' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by Field ABuchanan Cosmopolitan ADt1879 SEC 4, TAS, RIM, SN SEC ]. 413, R15W. SN SEC ^.. ?98, Rt SEC 9, US, Rt6W, SN 0 1000 2000 3000 4000 5000ftUS 1:30000 PETREL lueNest Energy Cosmopolitan Project BlueCrest Energy - H-10-BL04 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-6104 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BL04. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10-L9104 Spacing Exception_AOGCC IluCeSt Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-BL04 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-131-04 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL04 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the T"'lday of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: � �1 202 fl ,A A)awz��- of r -ny ��•,;:>a �'`' ° °PC's BlueCrest Energy - H-10-BL04 Affidavit H-10-BLO4 Spacing Exception Map (4I V TD Date 06/06/2019 0 1000 2000 3000 4000 5000ftUS 1:30000 Q H 10-B Field Cosmopolitan PETME KOP ADL39190 jADL3844031 SEC 29. T39. RtEW. SM SEC I6.TSS.Rt5Y. M SEC 27. nS R16W SM SEC N. T]S, R16W. SM mew, - I 1 SEC 32. TSS. R— SPA SEC 33, T3 R15 W. SM 9EC N. 738, R1 . 9M SEC 36. T33. RIM, SM .�., IEC 34. Tee. RIM, IM 1,110-81-04 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' MUS GSC: 2,285' FSL, 1,535'FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10•BL04Top of Production Easting: 157,039.6' Northing: 2,156,772.4' IEC a, Tai, RIM. IM ADL187 GSC: 3432FSL, 3085' FEL, Sec. 28, T3S, R15W SM IEC 3. TIS, RIM, IM Depth: 20,095.6' MD/7,126.3' TVD iEC2,T1e,m , SEC t, Tae, Rtlw, eu Total Depth Easting: 155,730.6' Northing: 2,157,649.4' GSC: 4272' FSL, 4418' FEL, Sec. 28, T3S, R15W SM Depth: 21,786.2' 10113/6.560.8' TVD Cosmopolitan Lease Map scale 1:30000 Date 06/06/2019 0 1000 2000 3000 4000 5000ftUS 1:30000 Q Prepared by., ABuchanan Field Cosmopolitan PETME lueNiest Energy Cosmopolitan Project BlueCrest Energy - H-10-BL05 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 1 Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-BL05 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BLOS. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H-? 0-3i 05 Spacing Exception_AOGCC lue st Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-BL05 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-BL05 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL05 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the T Aday of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: � 0l1 202„2 � "�4 �) . 7 wti,�in�C7�6'l i::SlQdl i.^kof �; ''22 BlueCrest Energy - H-10-BL05 Affidavit 29. TSS. R1611J, 91A SEC 32, TSA R16W, W H-10-BLOO Spacing Exception Map TD 00-8 KOP ADL38440 SEC 28. nS, SEC 33, n4 R16W, SM SEC 27. T35, R16W. SM SEC 34, TSS, RIXV. SM Northing: 2,144,734.44' RUS Eastlng: 168,833.09' RUS GSC: 2,285' FSL,1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10•BL057op of Production Easting:156,382.2' ADL187 Northing: 2,157,212.0' SEC 4. T48, R16W, SM GSC: 3853' FSL, 3754' FEL, Sec. 28, TSS, R15W SM SEC 3.74S. R16W. SM Depth: 20,886.9' MD/7,126.3' TVD Total Depth Easting:155,207.6' Northing: 2,157,998.4' GSC: 4607' FSL, 4950' FEL, Sec. 28, T3S, R15W SM Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by Field ABuchanan Cosmopolitan 0 1000 2000 3000 4000 5000ftUS 1:30000 ADL39190 SEC 26, T35. R16W, SM SEC 36. T35, R16W, SM SM SEC 30, Tis, RISK s61 SEC 1, TN, MSW, sM LE ETREC 11yeNst Energy Cosmopolitan Project BlueCrest Energy - H-10-131-06 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-BL06 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BL06. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same Y. section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP —Alaska BlueCrest Energy - H-1043106 Spacing Exception_AOGCC llueNest Entergy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-BL06 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-BL06 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL06 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the 7""day of 2 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: ©/ 2022 Bluttx'�' 1 Brum i`?. wauic" MY BlueCrest Energy - H-10-BL06 Affidavit H-10-BLOO Spacing Exception Map H10 -B TD KOP ADL38440 T33. RIM, 311 SEC 20. nS. SEC 32, n3, RIM. SM H10-BL06 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' mis GSC: 2,285' FSL, 1,535' FEL, See. 2, US, R15W SM Elevation: 177.54' Above MSL H10-BL06Top of Production Easting: 155,716.2' Northing: 2,157,658.7' GSC: 4281' FSL, 4432' FEL, Sec. 28, T3S, R15W SM Depth: 21.688.9' MW7,126.3' TVD Total Depth Easting: 154,757.6' Northing: 2,158,300.4' GSC: 4896' FSL, 126' FEL, Sec. 29, T3S, R15W SM Depth: 22,913.8' MD/6,760.9' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan SEC 33, M R1 M. SN SEC 37, ng, RIM, SM SEC J4, n3, R1ft1 SM ADL39190 SEC 23, n$, RIM, W SEC 36, n3, RIM, BM at" na, RIM. NO ADL1879 SEC 3. 43, R16W. SN SEC 2. T48. 0 1000 2000 3000 4000 5000ftUS 1:30000 SEC 3B, 733, RIM, 3M SEC 1, T48, RIM, aM D ETREC llueNest Energy Cosmopolitan Project BlueCrest Energy - H-10-BL07 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-BL07 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BL07. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H- 10 -BI 07 Spacing Exception_AOGCC ZuNst Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-131-07 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-131-07 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL07well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of �-�'1� 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: De4-- ^boli ?.,o2z— p BlueCrest Energy - H-10-BL07 Affidavit 4) Tia, RIM, SM SEC 32, TSS, R16W, SM TD H-10-BLO Spacing Exception Map — KOP ADL38440 H10.8L07 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-BL07Top of Production Fasting: 155,053.0' Northing: 2,158,102.4' GSC: 4706' FSL, 5107' FEL, Sec. 28, T3S, R15W SM Depth: 22,486.8' MD17,126.3' TVD Total Depth Fasting: 154,341.6' Northing: 2,158,578.3' GSC: 5162' FSL, 549' FEL, Sec. 29, T3S, R15W SM ,pr the 23,381.2' MD16 900.8' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by-, Field ABuchanan Cosmopolitan SEC 26, TS, SEC 33. T34L RIM. SM SEC 27, nS, R16W, SM SEC 34, T33, R17M8'. SM ADL39190 SEC 26. T33, RIM. Sat SEC 36. TSS, R1SW. SM ADL1879 SEC 4, US, RIM, W SEC a 44C RIM. ax ssc 2, 0 1000 2000 3000 4000 5000ftUS 1:30000 rr SEC X. Tia, MSW, SM SEC 1, WS, RIM, SM nuest Energy Cosmopolitan Project BlueCrest Energy - H-10-131-08 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-BL08 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-BL08. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303' azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H-10-61-08 Spacing Exception_AOGCC IuNpst Em�rgy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-BL08 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-BL08 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-BL08 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the ? day of 'e_— 2019. By Andrew A. Buchanan. NJ Notary Public in and for Alaska O� ZOZZ My Commission Expires: ,F�= i State of"C"an Bruni H. Warric'< �^"iM7 [r.",E`Ii4?";lSr•'Cii'3 �'z"^Iruv" Dk¢; 1, 'P,"�?;? BlueCrest Energy - H-10-BL08 Affidavit TD KOP H-10-BLO Spacing Exception Map ADL39190 ADL38440 3EC 29, nS. AIM, SM SEC 28. T'S. RIS SEC 27. TSS R16W. SM SEE X. TSS. RIM. SM SEC 32, TSS, RIM, SM Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285 FSL, 1,535' FEL, Sec. 2, US, R15W SI Elevation: 177.54' Above MSL H10-BL08Top of Production Easting: 154,385.5' Northing: 2,158,549.1* GSC: 5134' FSL, 505' FEL, Sec. 29, T3S, R15W SM Depth: 23,290.0' MD/7,126.3' TVD Total Depth Easting: 153,960.6' Northing: 2,158,834.4' GSC: 125' FSL, 937' FEL, Sec. 20, T3S, R15W SM Depth. 23,810.2' MO/7,046.3' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by. Field ABuchanan Cosmopolitan SEC 33, nI. RIM, SR SEC U. TSS. RITW SM SEC 36. T36, RI6W. SM SEC 4, Tia. RIM. SM ADL1879 SEC 3, 46, RIM SM SEC 2. US, 0 1000 2000 3000 4000 5000ftUS 1:30000 RIM, SM SEC U. 736, MSW. SM SEC I, T46, RIM, SM ETREC llueNst Energy Cosmopolitan Project BlueCrest Energy - H-10-CL01 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL01 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL01. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10-C1.01 Spacing Exception_AOGCC lueNest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL01 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL01 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL01 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the 7 4h day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: 022 y 'tate of-Alaska- T`I- PUBLIC i Brurti H. Warrick i rVw conninission Eplw Dec 1, 2022 BlueCrest Energy - H-10-CL01 Affidavit 20, T33, MOW, SM SEC 32, T33, RTOW, SY H -10 -CLO' Spacing Exception Map ADL38440 SEC 23. T3S, RISK SM TD H10 -CW 1 H70-CL01 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' RUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, RI 5W SM Elevation: 177.54' Above MSL H10-CL01 Top of Productlon Easting: 159,365.4' Northing: 2,153,895.9' GSC: 621' FSL, 683' FEL, Sec. 28, T3S, R15W SM Depth: 16,300.0' MD/7,129.4' TVD Total Depth Easting: 158,498.4' Northing: 2,154,619.6' GSC: 1320' FSL, 1569' FEL, Sec. 28, T3S, R15W SM .Depth: 17,510.8' MD/6 750.8' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by-, Field ABuchanan Cosmopolitan SEC 33, nL R16W, SM SEC 27. "S, MSW, SM SEC 3!, T33, RfOW. SM ADL39190 SEC 23, Tit. MOW, W SEC 36. M. R1SW. W SEC 4. T63, R13W, W Seca 33 W 3.440 Ruw. W SEC 3, 0 1000 2000 3000 4000 5000ftUS 1:30000 0-1 SEC 36, T33. MOW, W SEC 1. T13, MSW, W a 'ETRE[ Ilu est Energy Cosmopolitan Project BlueCrest Energy - H-10-CL02 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL02 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL02. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H -10-C1.02 Spacing Exception_AOGCC lueNst Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7 t Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL02 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL02 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL02 well. 1, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the .94A day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska -� My Commission Expires: kz 2022 St�X$e OfAraSkr� NOTkRy PUBLIC runt H. Warrick 7' r°3�ini".. ion w....n_ w Eaq�lMS Dec 1, 2022 BlueCrest Energy - H-10-CL02 Affidavit 7SW acing Exception Map ADL39190 �ADL384403 SEC 29. T38. RIM. SM SEC SEC 27. T38, RIM 8N � TD SEC 23, T38, RIM. &J H10 -CLQ KOP SEC 32. T38. RIM SM Northing: 2,144,734.44' MS Easting: 168,833.09' fttJS GSC: 2,285' FSL,1,535' FEL, See. 2, US, R1SW SM Elevation: 177.54' Above MSL H10-CL027op of Productlon Easting: 158,802.9' Northing: 2,154,409.6' GSC: 1119' FSL, 1259' FEL, See. 28, T3S, R1SW SM Depth: 17,066.8' MD/7,1262TVD Total Depth Easting: 157,802.5' Northing: 2,155,294.3' GSC: 1975' FSL, 2283' FEL, Sec. 28, T3S, RI 5W SM Depth! e the 18,500-4' MD/6,670.8' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Prepared by Field ABuchanan Cosmopolitan SEC 33, n1, RIM, SFJ SEC 34, US. RITJFW', SM SEC d, T48. RIM, 9M ADL1879d SEC 3. 743, RIM SFJ 0 1000 2000 3000 4000 5000ftUS 1:30000 SEC 36. T38, RIM. SM SEC; Se SEC M, T38, R1SW, SM SEC 1, TW, RIM, SR nluest Energy Cosmopolitan Project BlueCrest Energy - H-10-CL03 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL03 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL03. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, .1 Andrew Buchanan VP — Alaska BlueCrest Energy - H-10-CL03 Spacing Exception_AOGCC llueNest En6rgy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL03 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL03 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL03 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the T� day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: 01 Z02.2 C7 S%s e OfAlaska a �.T � a �' LIC Brumi H. Warrick Y m3ni�sirs11 Aires Dec 1, 2022 BlueCrest Energy - H-10-CL03 Affidavit ADL38440 23 T38. RISK &A SEC 32, TSS. R16W, SM Northing: 2,144,734.44' ftus Easting: 168,833.09' fttJS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-CL03Top of Production Easting: 158,308.6' Northing: 2,154.949.1' GSC: 1645' FSL, 1768' FEL, Sec. 28, T3S, R15W SM Depth: 17,800.0' MD17,126.3' TVD Total Depth Easting: 156,941.5' Northing: 2,155,870.3' OS C: 2527' FSL, 3159' FEL, Sec. 28, T3S. R15W SM De the 19,564.7' MD/6,560.9' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Freld ABuchanan Cosmopolitan H -10 -CLO Spacing Exception Map TD . T36. R16W. SM KOP SEC 33. T3%R16W, SIA SEC 22, TSS R16W. SM SEC U. T33. R1V. SM ADL39190 SEC 26, TSS, R/6W. SM SEC 36. T39. R16W. SM SEC 4, T4R R/SW, sM ADL187 SEC 3. S, R1SW. SM SEC 2, T48, 0 1000 2000 3000 4000 5000ftUS 1:30000 MW SM SEC M. 738, RISK SM SEC 1, TN, R13W, SM Zj- ETRFJ Ze)erst Energy Cosmopolitan Project BlueCrest Energy - H-10-CL04 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 1 Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL04 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL04. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP —Alaska BlueCrest Energy - H -10 -Cl 04 Spacing Exception_AOGCC lueNerst Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL04 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL04 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL04 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the T-91 day of oa_ 2019. By Andrew A. Buchanan. Notary Public in and for Alaska f�, _ My Commission Expires: .c v, 'wZZ �Nt4WC'� 4 sii,ate of.. Arial NO. ARY PUBLTO Bruni H. Warrick c� Itlr Commission Expires Doe 1, ' ^? BlueCrest Energy - H-90-CL04 Affidavit 29. TSS R16W. SM SEC 32, T35, RIM. SM Northing: 2,144,734.44' ftuS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, R15W SM Elevation: 177.54' Above MSL 1-110-CL047op of Production Easting: 157,593.7' Northing: 2,155,433.6' GSC: 2109' FSL, 2495' FEL, Sec. 28, T3S, R15W SM Depth: 18,663.9' MDl7,126.3' TVD Total Depth Easting: 156,205.6' Northing: 2,156,363.3' GSC: 3000' FSL, 3908' FEL, Sec. 28, T3S, R15W SM Depth: 20.459.1' MD16.520.9' TVD Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by-, Field ABuchanan Cosmopolitan H-10-CLO4 Spacing Exception Map ADL39190 TD xe, T3s. R+6w, sr6 KOP SEC 27. 139. R16W. SM SEC 26. 131, RIM. SM M6W, SM SEC 33, n RI 6W, $N ` SEC U. T31, R1 SM SEC 36, T39, RIM, SM OEC>t, T3O, MOW, OM SEC 1. TIS, R+SW. SM ADL1679 SEC 3, 49, MOW. SM SEC 2. TAS. R1 OEC 1, T", R16W, OM 0 1000 2000 3000 4000 5000ftUS 1:30000 PETREL llueNest En&gy Cosmopolitan Project BlueCrest Energy - H-10-CL05 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 1 Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H -10 -CLOS Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL05. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP —Alaska BlueCrest Energy - H-10-Ct_05 Spacing Exception_AOGCC nluest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H -10 -CLOS Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL05 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL05 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: .014 20ZZ 's! ate faf vasJa 'CIT OTARLY PUBLIC Un_',nd H. 1,Mar rick sivn apIres 0ec 1, 2M2 BlueCrest Energy - H-10-CL05 Affidavit �n4 T33, RIM, W SEC 32, T35, RIM, W Northing: 2,144,734.44' ftUS Easting: 168,833.09' FdJS GSC: 2,285' FSL,1,535' FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-CL057op of Production Easting:156,931.6' Northing: 2,155,876.6' GSC: 2533' FSL, 3169' FEL, Sec. 28, T3S, R15W SM Depth: 19,460.6'MD/7,126.3' TVD Total Depth Easting:155,540.6' Northing: 2,156,808.3' GSC: 3426' FSL, 4585' FEL, Sec. 28, T3S, R15W SM Depth: 21,303.5' MD/6 420.7' TVD Cosmopolitan Lease Map Scale Date 1:30000 06/06/2019 Preparedby Field ABuchanan Cosmopolitan H -10 -CLO Spacing Exception Map TO ADL39190 KOP TSS, RIM. W SEC 27, TSB, RIM. SM SEC 25, 755. RIM, W � }/ Ff SEC 33, T3( RIM, SM SEC 34, M WSW. SM SEC 35, 735, It". W SEC 1, T43, RIM, BM ADL1879 SFC 3. /S, RIM, SM SEC 2. T43. 0 1000 2000 3000 4000 5000ftUS 1:30000 5M SEC 39, T39, MSW, W SEC 3, US, RISS, W Ej PETREL llue'Cest Energy Cosmopolitan Project BlueCrest Energy - H-10-CL06 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 t Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL06 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL06. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H-10-CL06 Spacing Exception_AOGCC lIue est Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL06 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL06 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL06 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of Lt.tie- 2019. By Andrew A. Buchanan. Notary Public in and for Alaska kk � My Commission Expires: o • o! 2b22 e6zf A %runi H, W1rick „e t.7rlmis„ lon Expires Dec 1, 2022 BlueCrest Energy - H-10-CL06 Affidavit 26. 135. M&W, SM SEC 32, T3S. R16W. SM H -10 -CLO Spacing Exception Map TD ADL39190 KOP _38440 Y8, T35. R16W. 51� SEC 2l. T39 R16W. SM SEC 28, T35, R15W. 9M SEC 33, T31, R16W. SM H10 -CLOS Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535'FEL, Sec. 2, US, R15W SM Elevation: 177.54' Above MSL H10-CL06Top of Production Easting:156,261.1' Northing: 2,158,325.3' IEC A, US, R%W, IM GSC: 2863' FSL, 3852' FEL, Sec. 28, T3S, R15W SM Depth: 20,267.4' MD/7,126.3' ND Total Depth Easting: 155,000.6' Northing: 2,157,169.4' GSC: 3772' FSL, 5135' FEL, Sec. 28, T3S, R75W SM Cosmopolitan Lease Map Seale Date 1:30000 06/06/2019 PIepared by.- Field ABuchanan Cosmopolitan SEC 34, TES, Rlft. SM ADL187 SEC 3, 4S, R/6W. W 0 1000 2000 3000 4000 5000ftUS 1:30000 SEC 36. T38. M6W. SH SEC 2, T47, SEC 39,733, MSW, III IEC 1, 7443, MEW, SM ETRE[ nluest Energy Cosmopolitan Project BlueCrest Energy - H-10-CL07 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7 I Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL07 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CL07. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP —Alaska BlueCrest Energy - H -10 -Cl 07 Spacing Exception_AOGCC nluest Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL07 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL07 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CL07 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V.P. — Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the 74h day of 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: �ZZ State of,41askra �7OTARY PUBLIC f3nini H. Warrick CfIrI-Oswlon Explms Deis 1, 2022 BlueCrest Energy - H-10-CL07 Affidavit HAO-CLOOt Spacing Exception Map TD H 10-C KOP ADL39190 ADL38440 BEC 29, T38, R16W, SM 28, 156. R18W, SM SECR16W, SY BEC 26,158, R16W, SM f T SEC 32,733, R16W SM Northing: 2,144,734.44' RUS Easting: 168,833.09' ftUS GSC: 2,285' FSL, 1,535' FEL, Sec. 2, T4S, R15W SM Elevation: 177.54' Above MSL H10-CL07Top of Production Easting:155,596.1' Northing: 2,156,770.3' GSC: 3389' FSL, 4529' FEL, See. 28, T3S, R15W SM Depth: 21,067.6' MDf7,126.3' TVD Total Depth Easting:154,496.6' Northing: 2,157,507.4' GSC: 4095' FSL, 366' FEL, Sec. 29, T3S, R15W SM Cosmopolitan Lease Map scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan SEC 33, n` R16W, SM SEC 36. M. R111Ie', SM SEC 36. T38, WSW, W SEC 1, T66. RISK SM ADL1879 SEC 3. 18, R16W, SR SEC 2. T66, 0 1000 2000 3000 4000 5000ftUS 1:30000 R16W, SII BEC $6, T38, R78W, BM SEC 1, US, R15W, BM LE ETRE[ lueNst En,rgy Cosmopolitan Project BlueCrest Energy - H-10-CLO8 Spacing Exception_AOGCC 3301 C Street, Suite 202, Anchorage, AK 99503 Andrew Buchanan Phone: (907) 754-9552 Email: abuchanan@bluecrestenergy.com June 7, 2019 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception for H-10-CL08 Onshore Horizontal Producer Dear Commissioners, BlueCrest Alaska Operating LLC hereby applies for a spacing exception for the horizontal production well H-10-CLO8. Reservoir modeling indicates that the optimum spacing for the laterals is 800'. Because of that spacing, the laterals conflict with each other. Also, due to the 303° azimuth we are drilling for hole stability, there are multiple instances where two or more of the laterals will be within the same % section. Accordingly, an exception to statewide spacing requirements is requested. BlueCrest Energy is the only effected working interest owner and operator within the leasehold contacting the Cosmopolitan Undefined Oil Pool. The Bureau of Ocean Energy Management (BOEM) and Alaska Department of Natural Resources Division of Oil and Gas (ADNR DOG) have been notified of BlueCrest Energy's intent to submit this application for exception. The necessary documentation confirming notice is included in the attached. For these reasons, in lieu of pool rules that would allow for this unique and field specific spacing, BlueCrest Energy is requesting a spacing exception. Please find attached for the review of the Commission the information required by 20 ACC 25.055 for this well bore. If you have any questions or require further information, please do not hesitate to contact me at 907-754-9563. Sincerely, Andrew Buchanan VP — Alaska BlueCrest Energy - H- i 0 -CLOS Spacing Exception_AOGCC IuNpst Energy June 7, 2019 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Spacing exception for the proposed H-10-CL08 Well Dear Commissioners, Cosmopolitan Project BlueCrest Energy - H-10-CL08 Affidavit BlueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 BlueCrest Alaska Operating LLC is requesting a spacing exception for the proposed H-10-CLO8 well. I, Andrew Buchanan, verify that the facts stated are true and the plat correctly portrays all pertinent and required data. Regards, Andrew Buchanan V. P. —Alaska BlueCrest Alaska Operating LLC Phone (907) 754-9563 The foregoing instrument was acknowledged before me on the day of t.«? 2019. By Andrew A. Buchanan. Notary Public in and for Alaska My Commission Expires: &4 cl 2022 bpa'U2 4A)571_�_ State laska NOTARYPUBLIC f Bruni H. Warrick MY COMMlssion Expire Dec 1, 2:022 BlueCrest Energy - H-10-CL08 Affidavit 29, 733, RIM, SM SEC 32, T3S, MSW, W To KOP H10LL08 Surface Coordinates: Northing: 2,144,734.44' ftUS Easting: 168,833.09' MUS GSC: 2,285FSL, 1,535' FEL, Sec. 2, T4S, R15W SM Elevation: 177.W Above MSL H10-CLOSTop of Production Easting: 154,937.7' Northing: 2,157,212.6' GSC: 3813' FSL, 5199' FEL, Sec. 28, T3S, R15W SM Depth: 21,86o.r MD17,126.3' TVD Total Depth Easting: 154,080.5' Northing: 2,157,765.4' GSC: 4361' FSL, 789' FEL, Sec. 29, T3S, R13W SM Depth: 22,949.7' MDl6,820.8' TVD Cosmopolitan _Lease Map Scale Date 1:30000 06/06/2019 Prepared by., Field ABuchanan Cosmopolitan H-10-CL0 Spacing Exception Map TJ S. R15W, 3M SEC 33, T3t R15W, $M SEC 27, T S. RIM. SM SEC 31, T33, Rft. W ADL39190 SEC 28, T35, RIM, W SEC 36,732, MSW, W ADL1879 SEC 1, U& RIM, W SEC 3. 45, R1 M. W SEC 2, 0 1000 2000 3000 4000 5000ftUS 1:30000 RIM, SM SEC U. T38. MSW. W SEC 1, TSS, RIM, SM L EJ PETREL