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Home My WebLink About185-124 • Schwartz, Guy L (DOA) From: Jim White, P.E. <jim@applecapital.net> Sent Thursday, March 08, 2018 4:00 PM To: Schwartz, Guy L(DOA) Cc: 'Jim White' Subject: FW: Long term shut-in and suspended wells-Alaska Crude Corporation (ACC) Attachments: Pelch P&A Estimate.pdf; Katalla KS-1 PA Estimate.pdf; Berglin 33-1 PA Estimate.pdf Follow Up Flag: Follow up -11 Flag Status: Flagged fn) � � � Dear Guy, Attached are three cost estimates to plug and abandon three of the four wells you mentioned in your February 20,2018 email. In general, please note that none of the four wells you mentioned in your February 20,2018 email are"orphan" wells.Three of these wells are also located on privately owned property. At this time there have been no requests by any mineral interest or property owners to plug and abandon(P&A)any of these wells. Regarding the Amerex Well (a.k.a. Moose Point Well),the status of this well is in legal proceedings that is currently being ruled on by the Alaska Supreme Court. With the exception of the removal of the abandonment marker,the physical condition of the Amerex well is in the exact same condition as it was when it was plugged and abandoned in 1978. We cannot comment further on this well until this legal issue has been resolved. Prior to receiving your email,Alaskan Crude was not aware of any deadline for submitting information regarding P&A operations that you said were due on March 3rd,and you later said was changed to March 8th. We are happy to comply with your request, but are curious to know what statute, regulation,or order this request and deadline are based upon. If this is something other than a general information. For future reference, please send any correspondence for Alaskan Crude to jim4thgn@gmail.com and cc jim@applecapital.net.Alaskan Crude's mailing address is 10011 Villa Lea Lane, Houston,Texas 77071. You can also reach me on my cell phone at 907-394-9148 or my home phone at 281-888-7856. I am leaving tomorrow for Belize for ten days,so if you cannot reach me on my cell number you can contact my son,James A.White at 509-741-7466. You also forwarded an old email dated June 28,2017 that was addressed to Daniel Bakka, an individual who has not been employed by Alaskan Crude since at least 2009. Alaskan Crude would have liked to have attended the informal face-to-face meeting that was scheduled to occur last August 2017. For future reference, please note that the email addresses and phone numbers that the AOGCC used to correspond with Alaskan Crude back in 2013 regarding maintenance work that was being done in June of that year on the Pelch well would have worked better. Feel free to contact me if you have any further questions. Sincerely James(Jim)W.White SCANNED President Alaskan Crude Corporation Forwarded message From:James White<jim4thgn@gmail.com> Date: Mon, Feb 26,2018 at 3:14 PM 1 • • ' Subject: Re: FW: Long term shut-in and suspended wells-Alaska Crude Corporation(ACC) To: "Schwartz,Guy L(DOA)"<guy.schwartz@alaska.gov> On Tue, Feb 20,2018 at 9:48 AM,Schwartz,Guy L(DOA)<guy.schwartz@alaska.gov>wrote: Please read and reply to the below email. This is separate from the deadline for P&A operations due March 3 rd. Guy Schwartz Sr. Petroleum Engineer AOGCC 907-301-4533 cell 907-793-1226 office 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 Guy Schwartz at(907-793- 1226)or(Guy.schwartz@alaska.gov). From:Schwartz,Guy L(DOA) Sent:Wednesday,June 28,2017 4:10 PM To:casscon@alaska.net; Dbaca148@gmail.com Subject: Long term shut-in and suspended wells-Alaska Crude Corporation (ACC) Bill and Daniel, The AGOCC recently conducted an open workshop with all state operators to discuss long term Shut-in wells and how we can better manage them on the regulatory side. One of the action items from that meeting is that all current Alaska operators come to the AOGCC office and review long term shut-in wells(including suspended wells) in a face to face informal meeting.This meeting should give the commission some idea of long term plans for reducing the well count of unused wells in our state and also give the operator a forum to discuss the future utility of the wells. Please note that this is an "in person"meeting and may not be substituted by sending us information by mail.Our last correspondence with ACC was in 2009 regarding the Katalla, Pelch, Moose Pt. 1 and Burglin 33-1 well. Timing for this meeting with the AOGCC is roughly this August,2017. Call our office to set up an appointment at 907- 273-1230. Regards, Guy Schwartz Sr. Petroleum Engineer AOGCC 907-301-4533 cell 907-793-1226 office 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 Guy Schwartz at(907-793- 1226)or(Guy.schwartz@alaska.gov). 2 . Katalla KS-1 PTD 185-1 Schematic 34z---I Wellhead/tree attached w/ valves chained/locked in the closed position. No known barriers in wellbore. I S 4-1/2"Liner top hanger, 21' and/tvd Conductor36#, N-80 76' I I I I I I I I Surface casing: 7"23#K-55 351' md/tvd iS. Cemented to surface Liner 4-1/2" 11.6#K-55 Slotted in open hole I below surface casing illik. 111b. I I i .roduction tubing 2-3/8"4.6#N-80 I I Ilik. I I lNib_ Open hole below surface casing11111:t 21. I I ilib— i 11 'gib I S 71%,o ' Ig, ',3 I I JB1, I I .m lip• I I S 2-3/8"tubing to 1740' md/tvd open end 4-1/2"slotted liner to 1804' md/tvd l in open hole below SC Drilled TD 1838' md/tvd • Katalla KS-1 PTD 185-1. P&A Schematic 17:1111111111111111111111:".! 4-1/2" Liner top hanger, 21' md/tvd {4$•: Conductor 9-5/8", 36#, N-80 76' • igN Surface casing: 7"23#K-55 351' md/tvd Cemented to surface Liner 4-1/2" 11.6#K-55 Slotted in open hole } 7 below surface casing r w ilk Production tubing 2-318"4.6# N-80 j'J{•-}moi�%;: y Open hole below surface casing lAkingimMi.:Amig 4%, '*S",t+#S is<. `::4;:r{;: Sr.,•y.G::jt'?r pp R'T .riY A{ > F:r•y:ii::r::i:;'l<:{%'r -S {4:..... :d � Q �'• }:fir• 1�: •: �'> 44 2-3/8"tubing to 1740' md/tvd figtifes. p}:fir;.;:: ,;. open end 4-1/2" slotted liner to 1804' md/tvd41% in open hole below SC 411b Drilled TD 1838' md/tvd • S To: Alaska Oil&Gas Conservation Commission Date: March 8,2018 From: Jim W.White,President Alaska Crude Corporation Subject: Katalla KS-1 Abandonment Cost Estimate PTD 185-124 API#507069-20002-00 As requested,please find a summary of estimated costs of abandonment of the subject well. Total costs are estimated to be$51,000. The Katalla KS-1 well is located 2414' WEL, 1865' SNL, Sec. 36.T19S,R5E,CRM. Abandonment operations will be executed with equipment owned by Alaska Crude Corp. Labor will be provided by the equity owners. Therefore costs associated with labor and equipment rental are relatively low. • 9-5/8"36#N-80 conductor to 76' and • 7"23#K-55 surface casing to 351' and • 4-1/2" 11.6#K-55 slotted liner 21'-1804' and • 2-3/8"4.6#N-80 tubing to 1740' and • No packer • Original drilled TD 1838' • Water gradient • Wellbore volume to TD(tubing/liner/casing/6-1/8"OH)61 bbls Proposed Abandonment Operations: Operation Costs($1000) a. Load necessary equipment to location $15 b. Bullhead kill the well with water,down tubing and annulus. 2X WB vol. $1 c. Mix/pump 300 sacks 15.8 ppg cement down tubing taking returns up backside. $6 d. Pump until cement returns to surface e. WOC,cut off wellhead,perform top job if necessary $2 f. Weld abandonment plate w/appropriate info $1 g. Diesel Fuel for equipment $1 h. Equipment rental $5 i. Contingency $5 j. Remove equipment from location $15 Total estimated cost $51K Please note, Bill Stevens, the current lessee on this Katalla well, informed me that he had met with the AOGCC on March 1 and has indicated he does not want this well to be plugged and abandoned. He definitely did not want the Katalla well • P&A'd because the well is capable of producing in paying quantities. He indicated there was some question as to whether he was going to replace Alaskan Crude as operator. Note that this well is also physically located on privately owned property. 0 • 1 4 t it y. 0 t `. all :-,I:-",-,-''s --,' !' CI cn. v , "} ' 1 y : Csf i r. ? co ~ 7 d• bar . •. ' v ,kyr —..._,...'Ci2.-_-_-__....-__ ."7 eL - } 1 l , y ,. a › 1 , '+ i , .„---,......,...2.4-,..,--..i.„,,,,. ) ). 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Lc! , „''''. -,' , 4,v ,i,N, . sir* ) r. j, '?., + F Y t {J1 {@ r$ -. 1'/.1: , • , e '. xp ,r eY a fr - P.,k i ,,• ` , yy 04...:' r 41 Si ssi Air, r *" • . . • „ -f ' ' • ii. . .' ii --'`' ' „-- lor.4.'04 ' t , '' ' Z P + • • To: Alaska Oil&Gas Conservation Commission Date: March 8,2018 From: Jim W.White,President Alaska Crude Corporation Subject: Katalla KS-1 % ( �i— (°— Abandonment ZAbandonment Cost Estimate PTD 185-124 API#50-069-20002-00 As requested,please find a summary of estimated costs of abandonment of the subject well. Total costs are estimated to be$51,000. The Katalla KS-1 well is located 2414' WEL, 1865' SNL, Sec. 36.T19S,R5E,CRM. Abandonment operations will be executed with equipment owned by Alaska Crude Corp. Labor will be provided by the equity owners. Therefore costs associated with labor and equipment rental are relatively low. • 9-5/8"36#N-80 conductor to 76' and • 7"23#K-55 surface casing to 351' ands� �® • 4-1/2" 11.6#K-55 slotted liner 21'-1804' and • 2-3/8"4.6#N-80 tubing to 1740' and • No packer • Original drilled TD 1838' • Water gradient • Wellbore volume to TD(tubing/liner/casing/6-1/8"OH)61 bbls Proposed Abandonment Operations: Operation Costs($1000) a. Load necessary equipment to location $15 b. Bullhead kill the well with water,down tubing and annulus. 2X WB vol. $1 c. Mix/pump 300 sacks 15.8 ppg cement down tubing taking returns up backside. $6 d. Pump until cement returns to surface e. WOC,cut off wellhead,perform top job if necessary $2 f. Weld abandonment plate w/appropriate info $1 g. Diesel Fuel for equipment $1 h. Equipment rental $5 i. Contingency $5 j. Remove equipment from location $15 Total estimated cost $51K Please note, Bill Stevens, the current lessee on this Katalla well, informed me that he had met with the AOGCC on March 1 and has indicated he does not want this well to be plugged and abandoned. He definitely did not want the Katalla well • • P&A'd because the well is capable of producing in paying quantities. He indicated there was some question as to whether he was going to replace Alaskan Crude as operator. Note that this well is also physically located on privately owned property. II • Schwartz. Guy L (DOA) O fS From: Rixse, Melvin G (DOA) Sent: Friday, February 23, 2018 3:51 PM To: Foerster,Catherine P(DOA);Schwartz, Guy L(DOA) Subject: RE:Jim White,Alaska Crude Corp, leases and wells Cathy,Guy, Just a short update on these three Alaskan Crude wells. I will complete my work when I get back on March 12th. Jim White called to tell me his version of the status on these three wells. I will parrot what he told me. Burglin 33-1 -Jim claims he has sold the lease to Sam Napee and Barry Foote. He says the well is freeze protected and has a plug at 4100'. I will ask him to demonstrate that the lease has been sold and if not, I will ask for proof of activity. Kattala -Jim claims he has sold the lease to Bill Stevens. I will also ask him to demonstrate that the lease has been sold. Mike Peich 1—Jim claims ownership of this lease. He claims he owns 3100 acres in the proximity of this well. He said he has a BPV,a downhole plug and a remote monitoring surface camera at this wellsite. (I believe it is about 1.5 miles south of Clam Gulch just off the highway to Homer between the road and the inlet.) He said he has hired Dan Kara to work the technical details of this well. I talked to Dan today. Dan claims there are hydrocarbons, but marketing is difficult. Dan may be involved with the interface between Jim and AOGCC. He was happy I called and knows that I will be out of the office the next 2 weeks. Dan lives in Houston, but may be contacted at(907)240-8047 if anyone wants to call him while I am gone. Dan was aware of an upcoming deadline so he seems to understand some urgency in the matter. Jim White's demeanor was friendly and seemed to be looking for sympathy as an independent operator in Alaska. As I have been alerted,Jim may have ambitions that are not clearly stated so I am documenting my conversations as best I can. That is all for now. Mel Rixse SCANWO Senior Petroleum Engineer(PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-223-3605 Cell melvin.rixse@alaska.gov From: Foerster,Catherine P(DOA) Sent:Thursday, February 22,2018 12:58 PM To: Rixse,Melvin G (DOA)<melvin.rixse@alaska.gov> Subject: FW:Jim White,Alaska Crude Corp, leases and wells • From:Walsh,Chantal R(DNR) Sent:Thursday, February 22,2018 11:23 AM To: Foerster,Catherine P(DOA)<cathy.foerster@alaska.gov> Subject: FW:Jim White,Alaska Crude Corp, leases and wells Chantal Walsh Director State of Alaska Department of Natural Resources Division of Oil and Gas 550 W.7th Avenue,Suite 1100 Anchorage AK 99501-3510 Direct:907.269.7493 Cell:907.538.4804 CONFIDENTIALITY NOTICE: This e-mail message,including any attachments,contains information from the State of Alaska,Department of Natural Resources(DNR) 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 DNR is aware of the error in sending it to you,please contact Chantal Walsh at(907)269.7493 or chantal,walsh @alaska.gov. From: Beckham,James B(DNR) Sent:Thursday, February 22,2018 9:37 AM To:Walsh,Chantal R(DNR)<chantal.walsh@alaska.gov> Subject:Jim White,Alaska Crude Corp, leases and wells From Kyle,we only have one 'active' lease,the one under appeal at Moose Point—ADL 389922. White didn't drill a well at Moose Point. His efforts were concentrated upon re-entering the Moose Point Unit#1 well which was drilled by Amarex in 1978 and P&Aed in 1979. White received a permit to drill for re-entry of the well in 2005, but the PTD expired in 2007 and he did not re-enter the well. Kyle also checked to see if any drilling occurred at the Arctic Fortitude Unit before it was terminated;White didn't drill there, either. It appears four wells have been drilled by Alaskan Crude Corp. Kyle isnt sure if White was associated with ACC back then. Also he didn't find anything under James W.White or other known aliases. Yt g Katalla St 1 8/1969 Gulf of AK(P&Ad) Burglin 33-1 3/1985 North Slope(suspended) Katalla KS-01 10/1986 Gulf of Ak(Shut in) Mike Pelch 1 8/1986 Cook Inlet(Private Lands,sanded in at 6300ft,shut in) Sean Clifton pulled the attached info from AOGCC. This is a picture of the area of the Burglin well. There is an old pad btwn U and P pads that may be the drill site; it roughly matches with the coordinates listed with AOGCC. 2 x } a " :^ ., ,0,, , , ,. ..„,A,,,,4, ___,. .74,1/1-) -,-,-7-,, " -.." 'tom, . ; s^ ?�' .� s} ,...,4,,,'$.44±4't :r'.- : � � t �„ 3 ' rtes,,'` A "i ° Y i� + x, . t .� Y4,'y,'t ';. " S,L'f W,.. '-'4,- t ''' ' 4:,:3.....?"1‘4' t''' N . „,.., ,, .. ,. , .. ,...„ , ..{'„P-v,4-0—.SV r'or,0',, , 1:' ----"—`71`. Ak''. ,:`...;'.,1,--4:.,- ' _ \ . '',4.' ' , "i''..ii!",iv'' ' .Y-1'4'k't.'7 d4-'''''''' ' t 41 .r ”' " - yJ ' ,Ts "•` x' . res ., ilk =rr ','- i. 3i -7,# . ^'F b, gt�*s ars : fJ 4 . ,:?-:!.-:!-4.--.7'..-,— Y i, "a ‘ .-w ,,47,,::,,,,,,,,,,,k- z to. „ Atli S # James B. Beckham Deputy Director lir State of Alaska Department of Natural Resources Division of Oil and Gas 550 W.7th Avenue,Suite 1100 Anchorage AK 99501-3510 Direct:907.269.8775 Cell:907.310.6025 CONFIDENTIALITY NOTICE: This e-mail message,including any attachments,contains information from the State of Alaska,Department of Natural Resources(DNR) 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 a-mail,please delete it,without first saving or forwarding it,and,so that the DNR is aware of the error in sending it to you,please contact Jim Beckham at(907)269.8775 or jim.beckham@alaska.Rov. 3 • Schwartz, Guy L (DOA) - l ZLi From: Schwartz, Guy L(DOA) Sent: Tuesday, February 20, 2018 9:49 AM To: jim4thgn@gmail.com' Subject: FW: Long term shut-in and suspended wells -Alaska Crude Corporation (ACC) Please read and reply to the below email. This is separate from the deadline for P&A operations due March 3 rd. Guy Schwartz Sr. Petroleum Engineer AOGCC 907-301-4533 cell 907-793-1226 office SCO 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 Guy Schwartz at(907-793-1226) or(Guy.schwartz@alaska.gov). From:Schwartz,Guy L(DOA) Sent:Wednesday,June 28,2017 4:10 PM To:casscon@alaska.net; Dbaca148@gmail.com Subject: Long term shut-in and suspended wells-Alaska Crude Corporation (ACC) Bill and Daniel, The AGOCC recently conducted an open workshop with all state operators to discuss long term Shut-in wells and how we can better manage them on the regulatory side.One of the action items from that meeting is that all current Alaska operators come to the AOGCC office and review long term shut-in wells(including suspended wells) in a face to face informal meeting.This meeting should give the commission some idea of long term plans for reducing the well count of unused wells in our state and also give the operator a forum to discuss the future utility of the wells. Please note that this is an "in person"meeting and may not be substituted by sending us information by mail.Our last correspondence with ACC was in 2009 regarding the:.l ta4lt, Pelch, Moose Pt. 1 and Burglin 33-1 well. Timing for this meeting with the AOGCC is roughly this August, 2017. Call our office to set up an appointment at 907- 273-1230. Regards, Guy Schwartz Sr. Petroleum Engineer AOGCC 907-301-4533 cell 907-793-1226 office 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 Guy Schwartz at (907-793-1226) or(Guy.schwartz@alaska.gov). 1 PERMIT: 185-124-0 API: 50-069-20002-00-00 WELL: KATALLA KS-01 1eC 7•SA' The is an article in the Petroleum News dated June 3 — July 1, pages 14 & 15 about the Oil Wells of Katalla Field. The complete article is in the field files of Katalla. ,tryfirl. 51017 / 070-- SCANNED AUG 2 7 2007 • • SUS - 72T ALASKAN CRUDE CORPORATION 4614Bohill, San Antonio,Texas 78217, 210-651-0777 Kenai, Alaska, 907-335-1829,cell 907-394-1829 jimwhite@satx.rr.com Date: April 11,2007 To: AOGCC Re: Well status report ,S2-- SCANNED MAR 1 9 2018 Attention: Mr. Stephen Mcmains Alaskan Crude Corp is reporting the status of 2 wells. ` c0- 041 1) The Mike Pelch gas well in Kenai,Ak.,API#13320333-90 (p LORA I©n 'c'I ( This gas well is sanded-in at about 6300' below the surface and is shut in. This gas well has a sinker bar stuck atop the sand in the tubing. The mechanical condition of well is good, save for the sand in the tubing. This well will be reworked and put on stream upon a market being found for the well's gas. 2) The Ks#1 oil well located in Katalla,Ak.,API#069200002-00. The mechanical condition of the well is good. The welltree's master valve is chained and locked close. Current state required spill contingency insurance and "C plan" requirements make this oil well unprofitable to produce. (The well is located on privately owned fee property belonging to Mrs. Dale Welch, a recent widow. She is in dire need and could use the oil money that could be produced from her deceased husband's well.) Regards Jim White President Alaskan Crude Corp. SCANNED J 1 4 ?014 ALASKA OIL AND GAS CONSERVATION CO~I~IISSION TONy KNOWLES, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 Mr. James White 12225 Stoney Crossing San Antonio TX 78247 August 9, 2000 Dear Mr. White: This is to follow up our meeting on August 4, 2000, in which I promised to outline for you in writing the filings and approvals required in connection with the plans you described for the wells in which you have an interest, nmnely, the McCoy Prospect No. 1 well, the Mike Pelch # 1 well, the Burglin #33-1 well, and the Katalla KS-1 well. In each case you indicated that the intended operator is Alaskan Crude Corporation ("ACC"), so in each case the first requirement is that the $200,000 certificate of deposit securing ACC's bonding obligation under 20 AAC 25.025 be changed to show it is issued in sole favor of the Alaska Oil and Gas Conservation Commission. Additional requirements are described below for each well. McCoy Prospect No. I Well 1. Designation of Operator. For the McCoy Prospect No. 1 well, you explained that the private tract containing the well's surface location is leased to Intrepid Production Co. and the adjoining state tract is leased to you personally. Although ACC retains the obligations of operator with respect to this and other wells based on its earlier designation as operator or previous lease ownership or both. the current lessees need to designate ACC as operator in order for ACC to be authorized to conduct future operations on their behalf. Therefore, before ACC operates in the well, Intrepid Production Co. ~nust submit to the Commission for approval a Designation of Operator (Form 10-411) in which Intrepid designates ACC as operator and ACC agrees to accept the obligations of an operator. In addition, if ACC intends to operate in the well for the purpose of exploring, testing, or producing from the state lease, you personally, as lessee of the state lease, will also need to submit to the Commission for approval a separate Designation of Operator in which you designate ACC as operator and ACC agrees to accept the obligations of an operator. 2. Notice of Ownership. Furthermore, the current lessees - Intrepid, for the private tract, and you personally for the state tract - need to submit to the Co~mnission a Notice of Ownership (Form 10-417) for the respective leases. As I explained in our ~neeting, and as the statutory definition at AS 31.05.170(9) indicates, an "owner" in the case of a tract subject to an oil and gas lease is the lessee. 3. Application for Spacing Exception. You indicated that you wish to test a gas prospect in the McCoy well in accordance with the plan described in a 1995 Application for Sundry. Approvals. Because this would involve opening the wellbore to test production within 1500 feet of a property line (without identi~ of owner and landowner on both sides of the line), a spacing exception is required under 20 AAC 25.055(a)(2). Conservation Order 309 Rev'. also makes clear that a spacing exception is required. You ~nust therefore, submit to the Commission an application for a spacing exception in accordance with 20 AAC 25.055(d) and send notice by certified mail to the persons specified in that regulation. Unless a spacing exception is granted, the wellbore may not be open to test or regular production. Mr. White -2- August 9, 2000 Work in the well preparatory to test production may take place before obtaining a spacing exception as long as it is covered by an applicable sundry approval or permit to drill, which is addressed below. However, please understand that the Commission cannot guarantee that a spacing exception will be granted and therefore, you would be assuming the risk by performing the work without first having obtained a spacing exception. To provide yourself some assurance, you may wish to consider obtaining letters of non-objection from the owners and operators within a 3000' radius of the well before beginning work. 4. Application for Sundry_ Approvals Although your 1995 Application for Sundry Approvals was approved by the Commission in that year, we do not consider it to be valid anymore at this late date and do not think it is reasonable for an operator to assume that a sundry approval continues to be valid indefinitely. Also, there are at least two reasons why you would probably find it beneficial to submit a new Application for Sundry Approvals (Form 10-403). One is to enable you to revise and update your plan. The second reason is that under AS 31.05.170 and 20 AAC 25.235, flared or otherwise released gas constitutes waste unless authorized by the Commission. Under 20 AAC 25.235(d)(6), an operator may apply for authorization to flare or vent gas for purposes of testing a well before regular production. You may include such an application in a new Application for Sundry Approvals; otherwise you will need to submit a separate application for authorization to flare before you test the well. 5. Alternate Plan to Test Oil Prospect In a conversation after our meeting, you raised the possibility of re-entering the well to test a deeper oil prospect prior to obtaining a spacing exception to test the gas prospect. You pointed out that Conservation Order No. 211 granted a spacing exception to allow oil exploration (but not regular production). Before re-entering the well to test for oil you would need to obtain a Permit to Drill (Form 10-401) authorizing the operations (a permit to drill is required if the operations will include drilling or re-drilling or otherwise re-entering a plugged portion of the well). Please refer to 20 AAC 25.005 for the specific requirements to obtain a permit to drill. As you know, the permit to drill does not exempt you from obtaining additional permits required by law from other governmental agencies, and does not authorize conducting drilling operations until all other required permitting determinations are made. If there is a possibility that gas will be flared or released in connection with testing the oil prospect, you should apply in advance to the Commission for authorization under 20 AAC 25.235, as explained above. Mike Pelch/41 Well You stated that you (referred to as "James W. White et al" in Conservation Order No. 277) continue to be the lessee of the property on which the Mike Pelch #1 well is located. Before any operations are conducted, you need to submit for Commission approval a Designation of Operator form designating ACC as operator. You did not go into detail about your operating plans for this well, but you referred to Conservation Order No. 277 and implied that you intend to re-enter the well to explore for hydrocarbons in accordance with that Conservation Order and Conservation Order No. 254. As recognized in those orders, you will first need to obtain a permit to drill. Refer to the above comments regarding other agency requirements. Burglin #33-1 Well You stated that the current lessee of the property on which this well is located is James W. White, but that you intend to assign the working interest to other entities. Whoever owns the working interest at the time operations are proposed will need to file a Notice of Ownership and a Designation of Operator in which ACC is designated and accepts the operatorship on behalf of the owner(s). Mr. White -3- August 9, 2000 You did not go into detail about your operating plans for this well, but you referred to a sundry approval issued to ACC in 1993 to re-enter the well. As explained above, such a stale approval is no longer valid. Depending on the nature of the operations planned, ACC will need to submit either an Application for Sundry Approvals or an application for a Permit to Drill. Katalla KS-1 Well You stated that Dale Welch owns the tract, including the mineral interest, on which this well is located and that there is no oil or gas lease but that ACC has an agreement with the owner to be operator. Our files contain a Designation of Operator by Wel-Aska designating ACC as operator. If Dale Welch personally, rather than Wel-Aska, is in fact the owner, Mr. Welch will need to file a Notice of Ownership and a Designation of Operator before ACC can conduct operations on the owner's behalf. You also indicated that there are no present plans for conducting any operations. If and when such plans develop, the Commission staff will be happy to discuss with you the application and approval requirements that might apply. Concluding Observation Finally, I should reiterate that apart from any plans for ACC to test, re-enter, or perform other operations in the wells, ACC has continuing obligations to maintain the wells in a safe condition, meet other statutory and regulatory requirements such as filing annual reports under 20 AC 25.115, and ultimately to plug and abandon the wells when that is required under 20 AAC 25.105. I hope this information is helpful. Sincerely, Cammy Oec'hsli Taylor Commissioner ljt Enclosures: 4 cc: Rob Mintz, Attorney General STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION APPLICATION FOR SUNDRY APPROVALS 1. Type of Request: Abandon 2. Name of Operator 3. Address Suspend__ 4. Location of well at sudace At top of productive interval At effective depth At total depth Operation shutdown Alter casing __ Repair well m Plugging Change approved program __ Pull tubing __ Re-enter suspended well __ Time extension ~ Stimulate __ Variance __ Perforate __ Other 5. Type of Well: Development Exploratory Stratigraphic Service 6. Datum elevation (DF or KB) 7. Unit or Property name 8. Well number 9. Permit number 10. APl number 50-- 11. Field/Pool feet 12. Present well condition summary Total depth: measured true vertical Effective depth: measured true vertical Casing Length Structural Conductor Surface Intermediate Production Liner Perforation depth: measured Size feet Plugs (measured) feet feet Junk (measured) feet Cemented Measured depth True vertical depth true vertical Tubing (size, grade, and measured depth) Packers and SSSV (type and measured depth) 13. Attachments Description summary of proposal __ Detailed operations program __ BOP sketch __ 14. Estimated date for commencing operation 16. If proposal was verbally approved Name of approver Date approved 15. Status of well classification as: Oil ~ Gas __ Suspended Service 17. I hereby certify that the foregoing is true and correct to the best of my knowledge. Signed Title FOR COMMISSION USE ONLY Date Conditions of approval: Notify Commission so representative may witness Plug integrity m BOP Test ~ Location clearance ~ Mechanical Integrity Test __ Subsequent form required 10- Approval No. Approved by order of the Commission Commissioner Date Form 10-403 Rev 06/15/88 SUBMIT IN TRIPLICATE STATE OF ALASKA ALASK OIL AND GAS CONSERVATION .,)MMISSION PERMIT TO DRILL 20 AAC 25.005 la. Type of work Drill -- Redrill lb. Type of well. Exploratory F' Stratigraphic Test ~ Development Oil [] Re-Entry - Deepen Service -- Developement Gas ~ Single Zone i-:, Multiple Zone [] 2. Name of Operator 5. Datum Elevation (DF or KB) 10. Field and Pool feet 3. Address 6. Property Designation 4. Location of well at surface 7. Unit or property Name 11. Type Bond (see 20AAC 25.025) ,.- At top of productive interval 8. Well number Number At total depth 9. Approximate spud date Amount 12. Distance to nearest 13. Distance'to nearest well 14. Number of acres in property' 15. Proposed depth(MD and TVD) property line feet feet feet 16. To be completed for deviated wells 17. Anticipated pressure (see 20 AAC 25.035 (eX2)) Kickoff depth feet Maximum hole angle 0 Maximum surface psig At total depth ¢r'VD) psig 18. Casing program Setting Depth size Specifications Top Bottom Quantity of cement Hole Casing Weight Grade Coupling Length MD TVD MD TVD (include stage data) 19. To be completed for Redrill, Re-entry, and Deepen Operations. Present well condition summary Total depth: measured feet Plugs (measured) true vertical feet Effective depth: measured feet Junk (measured) true vertical feet Casing Length Size Cemented Measured depth True Vertical depth Structural Conductor Surface Intermediate Production Liner Perforation depth: measured true vertical 20. Attac'hments Filing fee [] Property plat [] BOP Sketch i-:: Diverter Sketch [] Drilling program [] Drilling fluid program [] Time vs depth plot [] Refraction analysis [] Seabed report l-q 20 AAC 25.050 requirements 21. I hereby certify that the foregoing is true and correct to the best of my knowledge Title Date Signed : Commission Use Only PermitNu'mber I APInumber }Approvaldate See cover letter 50-- for other requirements Conditions of approval Samples required ID Yes [] No Mud log required [] Yes [] No Hydrogen sulfide.measures [] Yes [] No Directional survey required [] Yes [] No Required working pressure for BOPE []2M; [] 3M; [] 5M; [] 10M; [] 15M Other: by order of Approved by Commissioner the commission Date Form 10-401 Rev. 12-1-85 Submit in triplicate STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION DESIGNATION OF OPERATOR 20 AAC 25.020 1. Name and Address of Owner: Notice is hereby given of a designation of operatorship for the oil and gas property described below: Legal description of property.: Property Plat Attached 3. Name and Address of Designated Operator: 4. Effective date designation: 5. Acceptance of operatorship for the above described property with all attendant responsibilities and obligations is hereby acknowledged. Signed Date Name (printed) Title (printed) 6. The owner hereby certified that the foregoing is true and correct. Signed Name (printed). Date Title (printed) , Approved Date Commissioner Approved Date Commissioner Approved Date Commissioner (requires two signatures) ALASKA OIL AND GAS CONSERVATION COMMISSION Form 10-411 Rev. 01-08-92 Submit in duplicate STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION NOTICE OF CHANGE OF OWNERSHIP 20 AAC 25.022 1. Name of Operator 2. Address 3. Notice is hereby given that the owner r-l, landowner [] of rec~ord for the oil and gas property described below has assigned or transfered interest in the property indicated below: Property designation: Legal description of property: Property Plat Attached [] 4. Effective date of assignment 5. Percentage interest assigned or transfered or transfer 6. Assignee or Transferee: Address: 7. Assignor or Transferor: Address: 8. I hereby certify that the foregoing is true and correct to the best of my knowledge Signed Title Date Form 10-417, 12-1-85 Submit in Duplicate 7/11/2000 ALASKA WELLS ALSAKAN CRUDE CORP FIELD CODE 000 000 440 440 OPERATOR ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKANCRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASIQ%N CRUDE CORP ALASKAi~ CRUDE CORP ALASKAi~ CRUDE CORP ALASKAN CRUDE CORP ALASKAN CRUDE CORP ALASK3~N CRUDE CORP ALASKAN CRUDE CORP PERMIT 185-053 185-054 184-059 187-070 187-084 185-079 169-077 185-208 186-007 185-124 185-125 185-126 185-127 185-128 185-129 185-130 185-131 185-132 185-133 API NUMBER 029-21315-95 029-21316-95 029-21106-00 133-20390-95 283-20082-95 231-20009-95 669-20001-00 133-10002-01 133-20333-90 WELL NAME ACC F-02XX ACC F-03XX BURGLIN 33-1 BURGLIN BFC 31-1XX BURGLIN BRX 22-1XX EPPERSON KNOB UNIT 1XX KATALLA ST 1 MCCOY PROSPECT 1 MIKE PELCH 1 069-20002-00 KATALLA KS-01 069-20003-95 KATALLA KS-02XX 069-20004-95 KATALLA KS-03XX 069-20005-95 KATALLA KS-04XX 069-20006-95 KATALLA KS-05XX 069-20007-95 KATALLA KS-06XX 069-20008-95 KATALLA KS-07XX 069-20009-95 KATALLA KS-08XX 069-20010-95 KATALLA KS-09XX 069-20011-95 KATALLA KS-10XX WELL STATUS EXPIR EXPIR SUSP EXPIR EXPIR EXPIR P&A 1 -OIL 1 - GAS SI EXPIR EXPIR EXPIR EXPIR EXPIR EXPIR EXPIR EXPIR EXPIR STATUS DATE 4/10/1987 4/10/1987 3/17/1985 7/31/1989 8/24/1989 4/26/1987 8/21/1969 3/01/1986 8/07/1986 lO/Ol/1986 7/Ol/1987 7/Ol/1987 7/Ol/1987 7/Ol/1987 7/01/1987 7/01/1987 7/01/1987 7/01/1987 7/01/1987 LEASE ADL0318612 ADL0318613 ADL0318614 ADL0369211 ADL0326070 ADL0319686 ADL0034638 FEE SIMPLE FEE-SIMPLE OIL-CLAIM1 OIL-CLAIM1 OIL-CLAIM1 OIL-CLAIM1 OIL-CLAIM1 OIL-CLAIM1 OIL-CLAIM1 OIL-CLAIM1 OIL-CI_J~IM1 OIL-CLAIM1 PAGE TALLY 10 19 3001 PORCUPINE DR. ANCHORAGE, ALASKA 99501 Ph:907-793-1241 / Fax: 907-276-7542 E-mail: steve_mcmains@admin.state.ak.us To: Jim White From: -Steve McMains Fax: 1-210-491-0574 Pages: pages (includes cover) Phone: Date: 06/27/00 Re: Shut-in Wells CC: [Click here and type name] Urgent [] For Review [] Please Comment [] Please Reply [] Please Recycle · Comments: Jim, here is the page in our new AOGCC regulations I spoke to you Tues June 27, 2000. Call me if you have any other questions. Steve Gentlemen: The newly adopted AOGCC regulations contain a paragraph relating to reporting shut-in production and service wells annually. This is a new regulation and you may not be aware of the requirement. I have enclosed a copy of the paragraph for your information. The report was due on March 31 but in view of the its newness, the Commission will welcome the information as soon as you can file it. We are in the process of reviewing operator filings now. Should you have any questions, call me at the number provided. If I can be of any assistance let me know.- Following is the subject regulation: 20 AAC 25.115 SHUT-IN WELLS. (a) No later than March 31 of each year, an operator shall file with the commission a report on completed development or service wells that have been shut in for 365 days or longer as of January 1 of that year. The report must provide (1) the current known mechanical condition of the well, including the condition of installed tubing and casing strings; (2) the date the well was shut in and the circumstances surrounding the decision to shut in the well; and (3) an analysis of the future utility of the well. (b) The commission will require an operator of a shut-in well to file additional information as the commission considers necessary to ensure that freshwater and hydrocarbon sources are protected. ~History - Eff. 11/7/99, Register 152 Authority - AS 31.05.030 If this email should be sent to another person in your organization, please let me know. Thank you for your help and coo~eration. Sincerely, Jack Hartz of 4 6/27/00 2:00 PM 11 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION DESIGNATION OF OPERATOR 20 AAC 25.020 1. Name of Owner Wel-Aska Corporation 2. Address P.O. Box 962 Valdez, Alaska 99686 3. Notice is hereby given of a designation of operatorship for the oil and gas property described below: Property designation: KS-l, Katalla Well #1 Legaldescrlptlonofproperty: KS-l,Katalla Field,Katalla Pool Section 36,T19S,R5E,CRM Property Plat Attached 1-1 4. Name of Designated Operator Alaska Crude Corporation Address 5500 Gulf Boulevard' CL-8, Box 3 South Padre Island, Texas 78597 5. Effective date designation 11/10/93 6. Acceptance of operatorshlp for the above described property with all attendant responsibilities and obliga- tions Is hereby acknowledged R E C E IV E D JAN -$ 1994 /f ~ // I Alaska, uil & Gas Cons. Commission . _~, \/_.~/ ~- ~ Anchorage ~r hereby E~~ that the foregoing is true and co e t ~~~~ Welch Title Slgg~d. ~°rm ¥6.41't ~1.8~ - ' Submll In Duplica,~ - 53 - · ! ALA~A O1~ AND GA~ CON~RVATIO~ CO~IMISSION October 25, 1993 WALTER / / J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Craig S. Welch Operations Manager Wel-Aska Corporation P.O. Box 962 Valdez, AK 99686 ~y tt.c.c. Re: Katalla No. 1 Dear Mr. Welch: This letter is to notify you that Wel-Aska appears to be in violation of Commission regulations, 20 AAC 25.025 Bonding, regarding the Katalla No. 1. well. Over a year ago, the Commission requested Wel-Aska to provide evidence of property ownership, a designation of operator for the well (if Wel-Aska decides not to be the Operator) and a well bond in an amount not less than $100,000 for a single well or $200,000 for a blanket bond (see August 31, 1992 letter, attached). You have not complied with these requirements. The Commission will grant you until close of business on December 1, 1993 to bring this well into compliance or to show cause why further action by the Commission is not warranted. Failure to comply with Commission regulations may subject you to civil penalties under AS 31.05.150 of up to $5000.00 for each day of violation. The Commission may also seek injunctive relief under AS 31.05.160 to compel either compliance or the plugging and abandonment of the well. Sincerely, David W. Johnston Chairman Attachment cc. Rob Mintz, Asst. Attorney General ~LA~I~A OIL AND GAS CONSERVATION COMMISSION i i i / / / / / WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 October 27, 1993 Craig S. Welch Operations Manager Wel-Aska Corporation P O Box 962 Valdez, AK 99686 Re: Katalla No. I Dear Mr. Welch' Enclosed is the attachment which was inadvertently omitted from David Johnston's letter to you dated October 25, 1993. We apologize for any inconvenience this might have caused. Very truly yours, Diana L. Fleck Executive Secretary ALASKA OIL AND GAS CONSERVATION COMMISSION March 25, 1993 WALTER J. HICKEL, GOVERNOR 300~ PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Del Welch Vice President Wel-Aska Corporation P O Box 962 Valdez, AK 99686 Dear Mr. Welch: Enclosed please find a copy of the current regulations the Alaska Oil and Gas Conservation Commission (AOGCC) enforces along with copies of the following forms, 10-402 Bond, 10-417 Notice of Change of Ownership and 10-411 Designation of Operator. Executed copy of each of these forms will expedite your assumption of operatorship of the Katalla property. Regulations to note are 20 AAC 25.020, 20 AAC 25.022 and 20 AAC 25.025 on pages 3 and 4. 20 AAC 25.025(c)(2) provides that a certificate of deposit issued in sole favor of AOGCC from a qualified bank can be used as security for the bond. The certificate of deposit may not be rolled over without prior AOGCC approval, therefore we suggest that if you choose this option, the certificate be automatically renewable. Also enclosed are examples of a certificate of deposit and letter from the issuing bank for a bond. David W. John'~on ~ - Chairman ~'~ printed on recycled ROBERT C. ELY JOHN E. HAVELOCK LAW OFFICES ELY & HAVELOCK 608 WEST FOURTH AVENUE, SUITE 21 ANCHORAGE, ALASKA 99501 TELEPHONE AREA CODE 907 276-1916 FACSIMILE (907) 258-9053 October 18, 1993 David Johnston, Chairman Alaska Oil & Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 Re: Kattala Operatorship Dear Dave: Jim White and I would appreciate your assistance in clearing up Alaskan Crude/Intrepid's relationship with Dale Welch and his Katala oil wells. As you and I and Mary Ann Lundquist have discussed, the way to get Intrepid qualified as the successor operator to Alaskan Crude including succeeding to Alaskan Crude's bond is to get afl of the weff owners for which Alaskan Crude is operator to designate Intrepid as their desired operator or to designate another qualified operator. Intrepid could then post $200,000 for a new CD bond with the Commission. Intrepid could then be qualified by the AOGCC as the successor operator and the old ACC bond could be released. All owners except the owner or owners of the Katalla properties have designated Intrepid. Despite several requests to make a decision, Dale Welch has not signed with intrepid nor designated a qualified successor operator. As a consequence, the Commission will not allow the transfer or release of the existing ACC bond. We would very much appreciate the Commission's assistanCe in getting the Katalla problem cleared away so that White can conduct his operatorship unencumbered byACC's multitude of creditors. If you need anything from us, please let me know. Sincerely, o~g~ C. Ely WEL-ASKA CORPORATION P.O. BOX 962 VALDEZ, AK 99686 PHONE: (907) 835-2424 FAX: (907) 835-5170 Hatch 16, 1993 John A. Sandor, Commissioner Department of gnviro~mental Coa~ervation 410 Willoughby Ave., Suite 105 Juneau, Alaska 998~1-1795 R~: Katalla Oil Field- Proof of EEEIVED MAR 1 9 199 F~_n~ncial Rest~n~ibility/~~st for ~ Alaska Oil & Gas Cons. Commission Dear Br. Sandor- Anchorage COMM RES ENG SR ENG I ENG ASST { ENG ASST 1 SR GEOL I ___ · ~EOL ASST! -:EOL ASST! ~ ~T~'T TECH |{ ST~T TECH ~ ;-:fii..~ Wel-Aska Corporation is writing this letter to you in order to appeal a determination made by fllenn Ad~m~ in the F~n~neial Responsibility Section of the Division of Spill Prevention and Response, of the Department of Environmental Conservation. MR. Adams determined that Wel-Aska must post a $5 million bond before engaging in 'the geophysical logging of abandoned oil wells near Katalla. By letter dated October 16, 1992, Br. Adam~ ~nfOl~ us that ~el-Aska could appeal this determination to you. A copy of Mr. Adam's letter is attached, as well as a letter from the Oil and Gas Commission on which Mr. Ad~m~ apparently relied in making his decision. I. I NTROI~CfI 0~1. Wel-Aska is the landowner of certain lands at Katalla which comprise the historic Katalla oil field, a field that was drilled between 1900 and 1933, and that has been abandoned since 1933. ~el- Aska believes that the financial responsibility statutes ~o be found in AS 46.04 are at best ambiguous when applied to an abandoned oil field ~uch as Katalla's. Wei-Aska believes that the Financial P~s~-~nsibili~+y section of your Department has mistakenly interpreted these statutes in such a way as to ensure that the Katalla field will never be developed. Finally, Wel-Aska believes that the Financial Responsibility ~ection was mistaken as to the facts ~urrounding Wel-Aska's proposed activities, because it believed that Wel-Aska's activities would increase the risk of an oil spill, whereas the reverse is true -- Wel--Aska's proposed activities will actually decrease the likelihood of an oil spill. In more detail, Wel-Aska's appeal is as follows. II. ~ HI~I%)RY OF ~ KATAI.]',A OIL FIIH~_. The discovery and develot~ent of oil fields at Ka~alla occurred very early in the history of the territory of Alaska. See, for example, Petroleum fields of the Pacific Coast. of Alaska, C~ological Survey, Bulletin No. 250, which was printed in 19~5. Even at this early date, the writer observed that "for several years indications of petroleum have been observed near Controller Bay." This report also speaks of the fact that oil wells were already in existence near Katalla in the year 19~5. It states at p. 12 that: C~ommis~ toner Sandor March 16, 1993 Page 2 Thc variou~ companies interested ~n the develol~nent of this region have built trails from cabin ~o cabin, and land travel is confined to these and to a good wagon road which has been built for about 10 miles west from the mouth of Bering River to the wells 4 miles east of Katalla, with branches up the valleys of Chilkat, Burls. Mary, and Redwood creeks. There are two short tram roads from the mouth of Redwood creek and from the head of Katalla Slough to neighboring oil wells. Oil development in the area continued in the years thereafter. Accordi~ to The Copper Spi~, 22 wells had been drilled by 1928, al. tho~h only 13 produced oil in .paying quantities. By 1929, 16 producing wells were reported_ be_ Q0pDer Spike also reports that the Chilkat Oil Company, the company which operated the Katalla field in the late twenties, continued to l~n~p and refine oil for local conm,nption through 1933. On Christmas Day, 1933, the oil field refinery at Katalla caught fire and burned. Thereafter, the field was abandoned_ In short, although the oil field at Katalla saw considerable development in the early years of this century, there has been little activity since the early 38's, when the wells which were drilled in the early days were abandoned. The only activity in more recent times consists of one exploratory well which was drilled by a previous owner of Wel-Aska's property, Alaska Crude. That well was drilled in 1986. I I I . W~L-ASgA' S PRO~~ AC'rIVITIES. As Wel-Aska is p~rchasing the Katalla property and not leas}~g it from the State, we believe that it is in our best interests, as well as the State of Alaska's, to try and test each of the old Katalla wells %o determine if they are capable of commercial production or are in need of abandonment, and to responsibly take whatever measures necessary to either modernize each well, or to permanently close them using proper methods. There is a liability question that exists due to the amount of natural oil seeps in the area along with pools of oil on the surface. We are obviously interested in the possibility of oil production, but if that is not possible we need to ensure that these old wells are secure as the land will still be there, and our ownership will remain. Our plan is to operate on a small scale, similar in size to the original operation, remaining under the 5,88~ barrel limit noted in A~ 46.04.040 for exemption from proof of financial responsibility, and also due to the fact that this shallow field historically has never produced more t~h~n 10,~ barrel per year, and is replenished from a deeper source. (~mmissioner Sandor March 16, 1993 Page 3 IV. TIf~Y~~ I~S~BILII'Y.,Sg6'flON IS M~I~G UNSUPI~BTED ASSi~fP'£IONS AS TO THE FACTS. Mr. Adam's attached letter of October 16, 1992, and a letter from the Alaska Oil & Gas Conservation Co~nission dated September 14, 1992, on which Mr. Adams apparently felled (also attached), are both based u_pon the assumption that the abandoned Katalla oil wells are closed and that Wel-Aska~s proposed testing will increase the risk of an oil spill. For example, Mr. Adam~'s October 16, 1992, letter speak~ of Wel-A~ka's activities a~ involving a "reopening" of the abandoned well.s. The September 14, 1992, letter from David W. Johnston of the Alaska Oil & ~a~ Commission asserts that the historic gatalla wells are "plugged." In actual fact, however, little is known about the condition of these wells. Mr. John.~ton's letter admits that "poor records exist" and Mr. Adams's letter admits that "the abandonment methods used at gatalla are essentially unknown." ~is :rs a significant point, because Wel-A~ka's proposed inve-~tigation~ will in no way increase the risk of an oil spill. To the extent that the abandoned gatalla wells pose a risk, that risk has existed ever since 1933, when the ~ells were abandoned. Mr. letter ara'res that "it is the position of the Department that opening the well~ for any .purpose including neutron logging or other testing activities co~mtitutes a risk of spilling oil, and require~ proof of financial responsibility_" Thia statement rests upon questionable assumptions, because, as ha~ been pointed out, the current condition of the wells is essentially unknown. ~el-A~ka propoae~ to u~e a ~eries of low-risk procedures to test these wells, and to cap tb. em in accordance with modern practices if they prove to lack commercial potential_ Thus, Wel-Aska's proposed procedures will actually /~ the risk of oil spills from these abandoned wells. Wel-Aska's proposed procedures are as follows: A. Wel--..hska will inspect each well and determine whether there is sufficient internal pressure to warrant "killing" the well by introducing salt water or drilling mud; B. Wel-Aska will then remove the stuffing box from the well; C. Wel---Aska will then p~ll the pash rods and pump from the well, if possible. If not possible, the well will be capped using modern capping techniques; C~mmissioner Sandor Hatch 16, 1993 Page 4 D. Wel-Aska will than install a valve at the top of each well casing, which will be capable o£ shutti_-~ o££ the oil flow from the well if any flow should develop during the testing procedure; E. Wel-Aska will then perform geophysical logging of the wells; F. If the well tests do not reveal commercial potential, the wells will be capped using proper modern methods. If the results of Wel-Aska's investigations reveal that oil pro&~ction is not commercially feasible, Wel-Aska will plug the wells in accordance with current standards. This will be a great increase in safety over the present situation, in which there are wells which were abandoned in 1938, long before the advent of modern safety Standards. If, on the other hand, a commercially viable oil potential is revealed by the tests, Wel-Aska will then formulate a plan for the safe and responsible operation of the oil field. Wel-Aska concedes that at such point, AS 46.04.040 would apply and it would be required to post a bond in order to demonstrate financial responsibility. V. ~ AI,.a, SKA STA'IlJTES HAVE ]ql~)O~ MI$II~. The Financial Responsibility section of your Department classified Wel-Aska's proposed activities as amounting to an "exploration facility" within the meaning of AS 46.04.988(8). This in turn means that under AS 46.04.040(b) financial responsibility in the amount of $5,000,000 must be posted. This action by the Department was mistaken as a matter of law. Moreover, it effectively means that any possibility of developing the gatalla o]I field has be~n e!im.inated. We bare met with no success in obtaining coverage in the amount of $5,000, ~0, and frankly we have been ~mable to find any insurer or bending company willing to provide this coverage at any price as the State of Alaska is the o_~ state requiring proof of financial responsibility, especially for a small operator such as us. The action of the Department is also contrary to law, because Wel- Aska's activities do not amount to an "exploration .facility" within the mean:ing of AS 46.04.900(8)_ That statute says that an exploration facility "does not include platforms or vessels used for stratigraphic drilling or oAher operat~io_ns that are not author~?~d or intended to dr_Lll_~ a_p~c~ati~-" Wel-Aska's plans, as outlined above, are. only to conduct geophysical logging. Wel-Aska does not plan to do any drilling of any kind, much ].ess drilling to a producing formation. Acco~ii~gly, Wel-Aska's activities do not fall within the statute. CommJ ssioner Sander ~arch 16, 1993 Page 5 Wel-Asha pointed out thi.q fact to Hr. Aclam~. Hr. Adams, in his response dated October 16, 1992, tacitly admitted that Wel-Aska's activities do not amount to an "exploration facility" within the meaning of AS 46.04.990(8), but justified the Department's actions on g~und~ that the Katalla oil wells comprised a "production facility," within the meaning of AS 46.04.909(15)_ Mr_ Adams reasoned that by classifying the abandoned wells as an "exploration facility," the De'~ari;ment was actually giving Wel-Aska a break because the financial responsibility requirements for product, ion facilities are higher than those for exploration facilities. This explanation does not hold water. In the first place, AS 46.04.9~(15) first defined a "production facility" in 1980 when the legislature passed this statute. At that time, the Katalla wells had been abandoned for almost 58 years. Wel- Aska maintains that is ridiculous to interpret this section of the law, which was obviously meant to apply to existing operations, to wells that had been abandoned for almost 58 years at the time the law passed. A second problem with the Department's interpretation of the statutes is that AS 46_04.040(b), the financial responsibility section, limits the requirements of proof of financial responsibility to a .person who "cat~e[s] or .permit[s] the operation of a pipeline or an exploration or production facility in the state." Even if it is assumed for t~rposes of argument that an oil field which _ham been abandoned for almost 58 years constitutes a "production facility," it certainly cannot be maintained that Wel-Aska will "cause or permit the operation", of a production facility, because Wel-Aska has never proposed the o~.~ration of the Kata!la oil fields. What Wel-Aska has proposed is an information gathering investigation, at the end of which the wells may well be capped forever. Only if the investigation produces evidence of co,~ercial viability will there be any pl~n~ to "cause or .permit the operation" of a production facility. O~ly then, when it is planned to reactivate the abandoned wells for production purposes, will AS 46.04.040(b) be applicable_ Moreover, Wel-Aska concedes that if it should .decide to reactivate the Katalla oil field, AS 46.04.040(b) would apply_ On the other hand, Wel-Aska believes that the Department is mistaken in applying AS 46.04.040(b) at a time when Wel-Aska is not planning %o operate the field at all, but is merely planning to conduct some very preliminary investigations. This is especially so because Wel-Aska's planned activities will not increase the risk of an oil spill_ Instead, they will 'C~ the risk of any spill. Commissioner Sandor March 16, 1.993 Page 6 We note that the I)eparhnent baa claaaified u~ a~ an "exploration facility" even though we do not fit the definition, in order to give us a break_ If the Department wants to give us some genuine assistance, we m~Igest that it classify tm as an "oil terminal facility" rather than an "exploration facility," because we would easily fit within the 5,000 barrel exemption that is contained in AS 46.84.858 for "oil terminal facilities." VI. CON~SI~. It is our opinion that the State of Alaska, as well as ourselves, would benefit from the development of this project both economically and ecologically. It would create new jobs in a depressed area and industry, and address an environmental problem in a remote location. It would also re-open a once productive alternative to existing oil production areas without the normal environmental issues associated with developing new areas. Our company is a family operation, and as such, we are interested in long-term sustained production, while remaining small enough to remain a family operation. Our past endeavors in general contract work, heavy construction, logging, marine transportation, oil spill clean-up, and related activities have given ns a keen insight into attempting to develop this project. Our 20-plus years of living and working in this state attests to our resolve and our interest in maintaining a clean and healthy environment. The largest detriment to beginning this project, aside from the normal financial considerations and the logistical problems related to remote site operations, is the current status of the OPA 98 laws and related regulations stemml ng from the Exxon Valdez oil spill, and related A]yeska Pipeline issues. These cause us to be included right along with the oil giants and large operators, even though we are a small operation and wish to operate on a small scale independent of the lax'ge companies. This fact causes us to be required to meet all criteria and all mandates of all government agencies which were intended to be directed at large producers, and severely hampers our attempts to operate. Foremost and tantamount to these requirements is ADgC's edict for proof of financial responsibility prior to doing any testing at the site. It leaves no possible chance of anyone operating on a small scale in this industry, and is not economically feasible for us at this point. If we could sUbmit to an ~nspection process of some kind to satisfy this requirement, we would he happy to do so. We are confident that we are capable of operating a safe and clean facility, and unless some exemption or option is available, it is simply not feasible to operate. (~mmissioner Sandor March 16, 1993 Page 7 It would truly be a shame to have to give up on this project due to excessive regulatory requirements, and as a small business concern engaged in trying to survive in today's economic picture, we believe it is in the State of Alaska's best interests to aid us in our efforts to achieve a progressive and economically beneficial project. After looking over the issues and information regarding ttfi. s appeal, please give careful consideration to our dilemma and to what effect this decision might have on other ~1 businesses trying to survive in this state. It is over-regulation by the government which prevents any progress or new economy from being gained at present. The fact that there is an exemption (AS 46.04.059) for a small oil term~n~_l facility should provide some leeway to modify or exempt us from having to meet the financial responsibility requirement. Without knowing or being able to find out just what possibilities exist for con~nercial production or if all of these wells simply need to be sealed, we simply carmot justify the expense of meeting this requirement, nor do we know if this field, becmme of its small size, would ever be worth further development_ We realize that the "teeth" in this statute was intended for large scale, high rolling operations, but it hes nevertheless been applied to us as well. We thank you in advance for your serious and prompt attention to this appeal, and we will await your earliest response. We hope that we have successfully presented our side in this case, and we ask that you contact us if further information is needed. Very truly yours, Del Welch Vice-President cc: Walter J_ Hickel, Governor, State of Alaska John B. Coghill, Lt. Governor, State of Alaska Jim Cantor, Asst_ Attorney General Glenn Olds, Commissioner, DNR Mead Treadwell, Deputy Commissioner, ADEC Mike Conway, Director, ADEC, SPAR Mike Mansker, Rnviro. Mgr., ADEC, SPAR, IPP Joe Sautner, Enviro_ Spec_, ADRC-SCRO 'fed Moore, Rnviro. Spec., ADRC-SCRO Dan Lawn, ADRC-Valdez Glenn Adams, ADRC, SPAR David Johnston, Chairman, AK Oil & Gas Conservation Co~ssion ...' Calvin Baker, District Ranger, USFS, Cordova DEPT. OF ENVIRONMENTAL CONSERVATION DIVISION OF SPILL PREVENTION AND RESPONSE 410 Willoughby Avenue, Suite 105 Juneau, AK 99801-1795 ' WALTER J. HICKEL, GOVERNOR Telephone: .(907) 465- 228 Fax: (907) 465-5245 October 16, 1992 Mr. Craig S. Welch WeI-Aska Corporation P.O. Box 962 Valdez, AK 99686 Dear Mr. Welch: Re: Response to Letters of September 22, 1992 and October 5, 1992 I am truly sorry to hear you may pull out of your venture at the Katalla Oil Field. Because the Old Katalla Wells comprised a "production facility" prior to their plugging and abandonment, and because the facility was clearly developed to produce oil, the Department has determined that the statutory definition in AS 46.04.900(15) applies. In response to your concerns, and after discussion with the Alaska Oil and Gas Conservation Commission (AOGCC), we agreed to accept your September 14, 1992 proposal to classify your operation as an "exploratory facility" for the purpose of financial responsibility during testing. This, in turn, significantly lowered the amount of proof of financial responsibility needed. It is the position of the Department that opening the wells for any purpose, including neutron logging or other testing activities, constitutes a risk of spilling oil, and requires proof of financial responsibility. There are documented environmental risks aSsociated with the reopening of abandoned wells. I am enclosing a copy of a letter from the Alaska Oil And Gas Conservation Commission concerning your properties. As Mr. Johnson points out in this letter, the abandonment methods used at Katalla are essentially unknown. Mr. Johnson also states that the Katalla KS-1 well is listed as "exploratory" by the Commission. Your September 22, 1992 letter stated specific objections t° the classification as an exploratory facility and the proposed testing activities based on exemptions under AS 46.04.050 and the "total discretion" given to the State by AS 46.04.010. The exemption described at AS 46.04.050 applies only to oil terminal facilities as defined in AS 46.04.900(8), not exploration or production facilities. The State is authorized under AS 46.04.010 to seek reimbursement for cleanup expenses; this statute applies only to (~ printed on recycled paper Mr. Craig S. Welch 2 October 16, 1992 expenses incurred by the State in the actual cleanup or containment of an oil discharge and would not apply to your financial responsibility coverage unless you were the spiller. My last letter to you emphasized that "your company is still expected to comply with the statutes and regulations before any more work is done at the facility". I was referring to the opening of the wells for testing and this has consistently been the subject of our discussions. It is not the Department's intent to impose an "unqualified moratorium" on your activities at the facility. Your plans to maintain the facility and the surface property without opening the wells does not require proof of financial responsibility. If you wish to my determination, you may appeal to the Commissioner of the Department of Environmental Conservation, Mr. John A. Sandor, or you may follow the Administrative Adjudication procedures at AS 44.62.101 et seq. Sincerely, Glenn Adams Financial Responsibility Enclosure: Letter from Mr. David W. Johnson Alaska Oil & Gas Conservation Commission CC; David W. Johnson, Chairman, AOGCC James Eason, Director, DNR, Division of Oil & Gas Jim Cantor, Assistant Attorney General Mead Treadwell, Deputy Commissioner, DEC Mike Conway, Director, DEC, SPAR Mike Mansker, Env. Manager, DEC, SPAR, IPP Joe Sautner, Env. Specialist, DEC, SCRO File # 4.01.157 (g:\ipp\fr\wel-e~ka.ttr) WEL-ASKA CORPORATION P.O. BOX 962 VALDEZ, AK 99686 PHONE: (907) 835-2424 FAX: (907) 835-5170 10/05/92 Mr_ David Johnston, Commissioner Alaska Oil & Gas Com~ervation Commission 3001 Porcupine Drive Anchorage, AK 99501 RE" Katalla Oil Field /Katalla Well Dear Sir; Pursuant to our letter of September 21,1992 to Mr. Glenn Adams of the Alaska Department of Environmental Conservation (ADEC), we are awaiting a response from that state agency on or before October 10, 1992 prior to engaging in any activity at the Katalla site dzie to ADEC's direction that we must obtain financial responsibility beforewe can operate on the site at all. A copy of this letter was sent to you via certified mail_ Upon notification by ADECas to their stance on our. operations in the area, we will contact your office with our plans regarding the oil field and our plans for Katalla Well ~I. We mu.~t apologize for both ourselves, the State, and the Federal agencies for the length of time it has taken to become operational on site and to comply with the Oil & Gas C~mmission's request for Operatorship and for a well bond for this site. It has been both frt~tratingand time consuming in trying to satisfy all of the required governmental permitting and compliances, but hopefully we can get back on track and appease your agency's requirements as well as all of the other required governmental mandates having an impact on the Katalla property which we have purchased. It would be nice to ac~]ally get a chance to be able to work on the site rather than to spend all of our time and efforts on regulatory requirements_ We ask that you be patient with us and to await wol~ from the ADEC before we attempt to contact you regarding your requirements, and we thank you in advance for yo~. patience, cooperation, and understanding_ Sincerely, Cra ig S. We lch Operations Manager RECEIVED Anchorage WEL-ASKA CORPORATION P.O. BOX 962 VALDEZ, AK 99686 PHONE: (907) 835-2424 FAX: (907) 835-5170 October 05, 1992 State of Alaska Department of Environmental Conservation Division of Spill Prevention and Response 410 Willoughby Ave., Suite 105 Juneau, Alaska 99801-1795 ATI'N: 1~. Glenn P,E' Financial Respon~ibili~, gat~lla Dear Hr'. Adam~: I am ~rriting this letter to ~upple~ent ~y lekter to you dated September 21, 1992. As you know, the~e are existing oil wells ak Kagalla on the property which Wel-A~ka owns at gatalla. ~1-~ p~e~ to te~t theae ~e'l.la ~~ a "neuron lo~~" device, ~hich ~ill not ~olve the ~pi~ of ~all ~unt of oil f~ these ~ell~ ~ o~er ~ ~t~r tesg th~. Since the~e ~el]a to p~uce hy~~~ f~ ~e e~st~ ~lls. do is ~ ~st th~. A~ you are aware fro~ Wel-Aska's previou~ letter, it obj~te to yo~ categorization of i~ p~~ activities ~ ~ti~t~ "a e~loration facility" ,i[hh [~ ~~ of ~ 46.84.848(b). .. ~el-~ka ~uld ~a~ ~ attention to ~ 46.84.~8(8) ,hieh defines e~lor,~tion facility. ~n t~t ~~tion, e~!oration faeili~ ia def~ ~ folio, s: (8) "~ploration Facility" ~ans a platfo~, vessel,-or other facility ~ to explo~ for hy~~n~ in or on the ~a~rs of the s~te; ~:[s ~tatute, ~ it~ e~licit ~~, ~ays t~t an oil facility d~ not ~clude o~ratio~ t~5 "~ not authori~d or ~tended to ~l]. to a p~ci~ fo~tion." ~ expla~ed a~ve, ~1- ~ doe~ not ~ue~t authori~tio~ ~ ~tll to a pr~oi~ fo~tio~, noF d~ it intend ~ ~ill ~ a p~ci~ fo~tion. ~l it ~ten~ to do i~ conduct ~ tests of e~sti~ oil ~ells, ~ich ~ve ~en e~nce ever ~ce the 192~'s, lo~ ~fo~ ~ 46. ~4 ~ ~~d. Alaska,~,,r~;; & Gas Cons. Anchorao, e Mr_ Adam~ (~:tober 05, 1992 Page 2 Under the c ir~.umntances, Wel-Aska does not feel_ that its proposed activities can properly be classified as an "oil exploration faci]iby." Wel-Ar~ka r'equest.q that D~C recom~ider it~ decision that Wel-Aska°s planu to test existing wells at Katalla constitutes an "exploration faei ! i fy_" Wel-A.qka requests that its activities be acknowledged as not constituting exploration, and that DSC acknowledge that Nel-Aska is entitled to p~ceed without complying with AS 46.04.040(b). ,Nel A~qka would appr~.ciate yoiw eorl~eou re,iX)nsc to-this letter. I£ l;hc dcci~qion rema:i, no un(:ha~ed, Nel-Aska wou]d like to know What procedtwes, if any, D~C may have governing an appeal of this decision. Very_truly your'~, I~ [ Wc Ich Vice lYe~idcnt cc' Walter J_ llickel, Governor, SLate of Alaska ,John H_ (~ghil. 1, l,t. Governor, State of Alaska Jim C~antor, As,istant Attorney ~neral (lien ()Ids, O)misai. on, ~R ~cad 'l'read.ell, l~y ~is~ioner, DRG Mike (~nway, Director, DSC, SPAR Mike ~m~ker, Anvil. ~nager, DSC, SPAR, IPP ,l~ Sautner, Anvil. S~ialist, DSC, S~ Ted H~, enrico. S~iali~, DffC, ~ ~an ~awn, DSC, Valdez :.' dnne Tonkin, DSC, ,~,wd dohrm~n, (~:aim~n, A!~a fli] ~-.d 6~ C~e~agion (~ i.~n ion ~lvin ~er, Distrieg ~er, US ffomsg ~i~, ~~a WEL-ASKA CORPORATION P.O. BOX 962 VALDEZ, AK 99686 PHONE: (907) 835-2424 FAX: (907) 835-5170 22, 1992 STATE OF ALASKA Dept. of gnviroamental Conservation Division of Spill Prevention and Response 410 Willoughby Aven~e Suite 185 Juneau, Alaska 998~1-1795 A~TN: Mr. Glenn Adams RE- Katalla Oil Fields Ne are in receipt of your August 26, 1992 letter in which you classify the "neutron logging" of the Old Katalla wells as "On-shore Exploration" ~_]ant to AS 46.84~848(b), which requires us to provide proof of financial responsibility in the amount of $5,~,~.~ ~er incident. We further understand from your letter of April 24, 1992, that should our proposed testing activity require the extraction of any amount of oil from the wells, even minute amounts, that the activity would be classified as a "Production Facility" requiring proof of financial responsibility in the amount of For the record, we object to stipulated for our proposed testing based on the following: the classifications activities. Our that you have objections are 1. The proposed testing activities, which are the ~ proposed activities, qualify ~mder the Ex~ptions Section of AS 46.84.85~. R ~ ~' ~ ~V ~ ~- Because of the total discretion given to the State by AS 46.84_818 with respect to redeeming any form of surety offered, it is unreasonable to divide the issues of S EP ~ 8 I~92 existing soil contamination fr~m natural seeps and Oil & Gas Cons. Commlssi~cial responsibility for any discharge resulting from ~nch0rage future activity. Ne also object to your unqualified moratorium on work at the facility until this matter is resolved. From your August 26, 1992 letter, "Your Company is still expec~ to comply with the statutes and regulations before any more work is done at this facility." The department should immediately acknowledge that any work that is custodial in nature is exempt from the statutes and regulations in question. Since notification, Wel-Aska Corporation has complied with this order. The most efficient operating time of this season has slipped by. Because we have had no personnel on site, we have suffered losses from vandalism, our equipment bas deteriorated from lack of maintenance, and we have lost two possible sales because the site was not in a condition to show to a prospective buyer. COMM :1 GOMM RES ENG SR ENG ~SR ENG '.~s~NG ASST NG ASST R GEOL ~ tSTAT TECH-! ~T-A-'r TECH1 , Page 2 cont. Wel-Aska Corporation is simply stating its objections for the record_ After you have read the following paragraphs, you will see that these objections have become academic. Wel-Aska Corporation does, however, intend to ask a court of law to rule as to whether or not the application of 'the statutes and regulations in question h~, constituted a "regulatory taking" of its property. ~is statute, which was adopted after our acquisition of the property, denies us all viable economic use_ (Lucas v:~. South (~rolirm Coastal Commission) Notice is hereby given to the State of Alaska, Department of Knviroz~ental Conservation, and_ other interested agencies %hat Wel-~lska Corporation is abandonir~g all intentions of developing the oil fields at gatalla, Alaska. We have come to this decision for the following reasorm: 1. After six months of diligent inquiry, we have determined that no form of commercial surety exists to satisfy the requ].re, ments of AS 46_04.040(b). 2_ A cash }~nd of $28,000,000.00 posted in favor of the State of Alaska, who can execute the entire amount at will, and spend the entire amount to clean up a site that is heavily contaminated by natural means, is not a prudent risk for those funds as the amount required by statute exceeds the known net present value of the project by at least six t:imes. 3_ The unique nature of this site, with its extensive, naturally occurring surface contamination has not been codified J.n existing law and regulations. We feel that it will require tremendous amounts of time and money %o obt;a.]_- fro~ State regulators, a permitted protocol of operations and enforcement, that would adequately prote~t an operator from this naturally occurring pollution. Wel-Aska (~rporation therefore intends to undertake the following actions in order to close this matter: 1. Arrange with the Alaska Oil and Gas Co~mission to properly c.[ose and abandon Katalla #1. 2. To use what ever technology that we, or our advisors feel 'is indicated to assess any of the old wells on the property with respect to our liability as land owners under AS 46.03.822. To use what ever technology that we, or our advisors feel is indicated to mitigate our liability under A~ 46.03.822. 4. To remove machinery, equipment, buildings, etc. not necessary for the completion of 1 - 3 above. 5. To add machinery, equipment, buildings, etc. necessary to accomplish 1 - 3 above. Page 3 cont. 6. To ~]rsue any activities necessary to market, sell, or use ou~ property for any non-oil related commercial use. 7. To offer for sale all or part of land and or oil rights. 8. To use and enjoy our property rights in any other way that maybe legal in the State of Alaska. We a~sume that none of the above mentioned activities will be classified as requiring proof of financial responsibility. It is our LqtentJon to begin this process $,~e..diate!y, and will dispatch a-Vessel and crew to the site on or about the 18th of October to take advantage of a series of high tides. We estimate that the above mentioned work can be accomplished with a maximum crew size of eight , over a period of several r,m~er work seasons. Should any of the above mentioned tasks require permitting or overview by your department with respect to drinkingwater, waste water, or solid waste, we will continue to work through Jane Tonkin in your Cordova office_ We would appreciate a response from your office by October 10, 1992, as we intend to undertake the outlined work plan on the schedule described unless notified otherwise. Thank you for your consideration in this matter. De 1 WeIch Vice President cc: Walter J. Hickel, Governor, State of Alaska John B. Coghill, Lt_ Governor, State of Alaska Jim Cantor, Assistant Attorney General Glen Olds, C~mmission, DNR Mead Treadwell, Deputy Commissioner, DEC Mike Conway, Director, DEC, SPAR Mike Mansker, gnviro. Manager, DgC, SPAR, IPP Joe Sautner, Enviro. Specialist, DgC, SCRO Ted Moore, gnviro. Specialist, DEC, SCRO Dan Lawn, DEC, Valdez Jane Tonkin, DEC, Cordova David Johnston, Cq~airman, Alaska Oil and Gas Conservation Commission v.~- ColvinBaker, District Ranger, US Forest Service, Cordova RECEIVED s E P 2 8 1992 · ~{aska Oil & Gas Cons. Commissio~ Anchorage WALTER J. HIC, KEL, GOVERNOR ALASKA OIL AND GAS CONSI~RVATiON COMMISSION 3001 PORCUPINE DRIVE ANCHORAGE. ALASKA 9950t-3t92 PHONE: (907) 279-1433 TEI.ECOPY; (907) Z/'8-~-'~3 September 14, 1992 Glenn Adams Alaska Department of Environmental Conservation Spill Prevention, Planning and Management Section 410 Willoughby Ave., Suite 150 Juneau, Alaska ! Re: Katalla wells Dear Glenn, Sotne time ago, you requested clarification concerning statements attributed to the Alaska Oil and Gas Conservation Commission by Wel-Aska concerning ADEC's f'mancial responsibility requixement for the Katalla Oil Field. The Commission recognizes and supports ADEC's authority to impose financial i'esponsibility requirements for production facilities. We also believe that the state's best interests will be served by having a properly designated operator examine the production potential of these wells. Currently all Katalla wells, except the KS-1 well, are plugged and abandoned. Because the wells were abandoned in the 1930s and poor records exist, the abandonment procedures then used cannot be adequately judged. For this reason, the Commission would support any proposal by a responsible operator to enter these wells to test them for further production potential and to either recomplete them or abandon them using today's standards. The KS-i well is currently listed by the Commission as exploratox3'. Before production is authorized by the Commission, the operator must submit a plan for pool development and operation, and integration of interests in accordance with 20 AAC 25.517. David W. Joht~on ~ '"--'~ Chairman ALASKA OIL AND GAS CONSERVATION COMMISSION September 14, 1992 WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Glenn Adams Alaska Department of Environmental Conservation Spill Prevention, Planning and Management Section 410 Willoughby Ave., Suite 150 Juneau, Alaska Re: Katalla wells 'Dear Glenn, Some time ago, you requested clarification concerning statements attributed to the Alaska Oil and Gas Conservation Commission by Wel-Aska concerning ADEC's financial responsibility requirement for the Katalla Oil Field. The Commission recognizes and supports ADEC's authority to impose financial responsibility requirements for production facilities. We also believe that the state's best interests will be served by having a properly designated operator examine the production potential of these wells. Currently all Katalla wells, except the KS-1 well, are plugged and abandoned. Because the wells were abandoned in the 1930s and poor records exist, the abandonment procedures then used cannot be adequately judged. For this reason, the Commission would support any proposal by a responsible operator to enter these wells to test them for further production potential and to either recomplete them or abandon them using today's standards. The KS-1 well is currently listed by the Commission as exploratory. Before production is authorized by the Commission, the operator must submit a plan for pool development and operation, and integration of interests in accordance with 20 AAC 25.517. David W. Joh~xton ~ ~-'~ Chairman ALASKA OIL AND GAS CONSERVATION COMMISSION August 31, 1992 WALTER J. HICKEL, GQVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (90'7) 279-1433 TELECOPY: (907) 276-7542 Craig S. Welch Operations Manager Wel-Aska Corporation P.O. Box 962 Valdez, AK 99686 Dear Mr. Welch: In previous telephone conversations, you have conf'mued that Wel-Aska is now the owner of record of the Katalla #1 well. As we discussed, the Alaska Oil and Gas Conservation Commission will require evidence of property ownership, a designation of operator and a well bond in an amount not less than $100,000 for a single well or $200,000 for a blanket bond. As of yet, Wel-Aska has not complied with any of these well requirements. As you know, operations at Katalla #1 have been shut down since 1986. Since that time the property has changed hands and the previously designated operator has gone through bankruptcy proceedings. In May 1991, the Commission issued an order to the previous operator to plug and abandon the well, this order was reconfn'med in January 1992. The Commission has held off from enforcing this order pending the outcome of the bankruptcy proceedings and to allow Wel-Aska, as the new owner, time to comply with state oil and gas drilling regulations, 20 AAC 25. The Commission requests your immediate attention to this matter. Please respond by return mail' as to your plan for coming into compliance. Sincerely, David W. Jo' ston DEPT. O.F ENViIlONMi~NTAL CONSI~I~¥ATION DIVISION OF SPILL PREVENTION AND RESPONSE 410 Willoughby Avenue, suite 105 Juneau, AK 99801-1795 Telephone NO. Fsx No. WALTER J. HICKEL, GOVERNOR (907)465-5228 (907)465-524§ August 26, t992 · Mr. Craig $. Welch weI-A~ka CorporatiOn P.O. Box 962 Valdez, AK 99i~6 Dear Mr. Welch: Re: Financial Responsibility After ma(ling your lest letter, I would agree that the work that you proposed in "Neutron Log" testing of the Old Katalla wells would be classitied by statute definition as Onshore Exploration. AS 46.04.{340(b) requires proof of financial responsibility in amount of $5,000,000,00 per incident. The statutes do not allow for a waiver of financial responsibility requirements. For the re<30rd, I contacted the Alaska Oil & Gas Conservation Commission by phone and faxed · cx3py of your letter to them. I have asked for their written comments but have not received anything tO date, Your Company Is still expected to Comply with the statutes and regulations before any more work iS done at this facil~y. Sincerely, · Glenn Adams Financial Responsibility Jim Cantor~ Assistant Attorney General Mead Traadwell, Deputy Cammlssione~', DEC Mike Gonway, Director, DEC, SPAR Mike Mansker, Enviro. Manager, DEC, SPAR, IPP Joe 8autner, Enviro. Specialist, DEC, SCRO Ted Moore, Enviro, Specialist, DEC, 8CRC RE( EI¥ED File # 4.01.157 S EP Aiaska Oil & Gas Cons. Anchorage ~,uMPI_ETION DATE WELL NAME ~~..,(1 ~.u. CONTACT "~.7 ! ~ cored i~tervals AOGCC GEOLOGICAL MATERIALS INVENTORY LIS:I: I LOG TYPE 4] I ' 12} NO. JNTERVAt'~ t _ , ! SCALE ALASKA OIL AND GAS CONSERVATION COMMISSION Janum'y 7, 1992 WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Robert C. Ely Ely & Havelock 608 W. Fourth Ave. Suite 21 Anchorage, Alaska 99501 Re: Alaskan Crude Operatorship Dear Mr. Ely: The commission has received your correspondence dated November 25, 1991. You requested that the designation of operator for several wells be transferred from Alaskan Crude Corporation (ACC) to James White, Inc. (whose nmne evidently has been changed to Intrepid Production Company). Commission regulations, specifically 20 AAC 25.020, provide that only the owner of the property may designate a new operator. Accordingly, for those wells located on property not owned by ACC, the commission must receive a designation of operator (Form 10-411) from the owner. The new operator must then furnish a bond as required by 20 AAC 25.025. In addition, the co~mnission has so,ne specific concems or requires additional information regarding the operation of each of the ACC wells. These are described below. ACC F-2 (ADL 318612), ACC F-3 (ADL 318613), and Burglin 33-1 (ADL 318614). The Alaska Department of Natural Resources, Division of Oil and Gas, has determined that these wells are located on leases which expired November 15, 1990. You contend (correspondence dated Aug. 29,1991) the leases are in a "state of suspension until their status is decided by the courts." Because the court has not stayed ADNR's decision, the commission must consider these leases expired. Cmmnission regulations (20 AAC 25.101) require wells to be properly abandoned before lease expiration. An order to abandon these wells was directed toward Alaskan Crude Corporation on May 22, 1991. This order remains in effect for these wells, failure to comply will ._ .subj_ect~onsible party to penalties as provided under AS 31.05.150. --/'~ Katalla No. 1 ../ ' _---~-~ tit e searc ms revealed that ACC is not the owner of the lease on wlfich the well is located. The com~nission has been advised by the landowner that its lease agreement with ACC has been · terminated. Commission regulations require the well to be plugged and abandoned. An order to abandon this well was directed toward Alaskan Crude Corporation on May 22, 1991. Tlfis order remains in effect for the well, failure to comply will subject the responsible party to penalties as provided under AS 31.05.150. McCoy Prospect No. 1 When, and if, the purported owner submits a designation of operator for this well, the commission requests a copy of the current lease, or other documentation proving ownership of this property. Information requested in our May 22, 1991 letter to ACC is also required. Mike Pelch No. I Commission records indicate the owner of the Mike Pelch lease is James W. White et al., not ACC. Therefore, only James W. White et al. may effect the transfer of operatorship for this property, unless that ownership has changed. Form 10-411 must be revised to show the Robert C. Ely ,. - Re: Alaskan Crude Operatorship Page 2 appropriate owner prior to the commission taking any action. Information requested in our May 22, 1991 letter to ACC is also required. Also, the com~nission is not clear as to what entity is being proposed to assume operatorship of these wells. All of your designation of operator forms refer to James White, Inc. yet your letter states that James White, Inc. has changed its nmne to Intrepid Production Company. In order to avoid future confusion, please submit your revised designation of operator forms denoting the proposed operator's current name. The commission will require the operator to fumish a new bond to ensure that each well is operated, maiutained, repaired and abandoned in accordance with commission regulation. Because the commission has ordered several of the above referenced wells to be plugged and abandoned, it will not allow the ACC bond to indemnify any new operator. As an outgrowth of the ACC bankmptcy, the commission obtained esti~nates for plugging and abandoning each of the ACC wells. Based upon those estimates, the com~nission concludes that the following are reasonable costs (in thousands) for plugging and abandoning these wells. F-2 $25.0 F-3 $25.0 Burglin/133-1 $105.0 M. Pelch #1 $260.0 McCoy # 1 $75.0 Katalla #1 $45.0 - $175.0 Total $535.0 - $660.0 Accordingly, the co~nmission will require the new operator to post a bond or bonds sufficient to cover the esti~nated cost for plugging and abandoning each well. Under 20 AAC 25.025(b), the bond amount for a single well is a minimum of $100,000. Chair~nan CC. James Eason, Department of Natural Resources Jack Crichton, Crichton & Co. Clyde Harter, Texas & Delaware Corp. Raymond Thompson, TMT Corp. Ralph Duerre, Burr, Pease, & Kurtz (Attorneys for Lawrence McCoy) Jmnes W. White 20 21 22 23 24 25 26 - RECEIVED OCT 0 91991 Al .a,sk~' .u~l .& Gas Cons. Com~.~r~ Bernd C. Guetschow A Professional Corporation 425 "G" Street, Suite 650 Anchorage, AK 99501 (907) 274-6537 FILED CLERK ]3ANKRUPTcy COURT ~'"'-'-~"--'~'---, Deputy Cle~ Attorney for Trustee Gordon Zerbetz IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ALASKAN CRUDE CORP a/k/a A.C.C. Debtors Case No. A-90-00567 ORDER ALLOWING SALE OF PERSONAL PROPERTY THIS MATTER came before the court upon the application of the Trustee for approval of sale of personal property. The matter was noticed to creditors and other interested parties as required by the rules of this Court. An objection was filed by B&J Services but was resolved by the parties and was subsequently withdrawn. A further objection was filed by the Alaska Oil and Gas Conservation Commission, but the Commission agreed to withdraw its objection upon the Court's approval of this order. Accordingly, it is now ORDERED that the Trustee is authorized to sell the equipment in Katalla, Alaska, attached as Exhibit "A" "as is where is", to WEL-ALASKA CORPORATION or to such other entity as may offer him $135,000 or more; IT IS FURTHER ORDERED that the-Court's authorization to sell the equipment described in Exhibit "A" does not constitute authorization to remove any equipment from the drill site except in accordance with applicable regulatory requirements of the Alaska Oil and Gas Conservation Commission. IT IS FURTHER ORDERED that the Trustee is permitted to retain enough of the proceeds of the sale to pay the anticipated costs resulting therefrom in an amount to be agreed upon between Trustee and the Small Business Administration. IT IS FURTHER ORDERED that the Trustee is permitted to pay the balance of the proceeds to the Small Business Administration in satisfaction of its secured claim against the property. IT IS FURTHER ORDERED that the Trustee is permitted to sell miscellaneous office equipment to GBR Equipment for $1,000; - < 23 24 i 25 26 IT IS FURTHER ORDERED that the Trustee retain possession ORDER ALLOWING SALE - 2 - 20 21 22 23 24 25 26 of all remaining funds until further order of this court. day of , 1991· U. S. BANKRUPTCY JUDGE Approved as to form and for entry: CHARLES E. COLE ATTORNEY GENERAL ROBERT E. ASSISTANT ATTORNEY GENERAL ATTORNEY FOR ALASKA OIL and GAS CONSERVATION COMMISSION I certify that n true copy of the foregoing was ,,,a:;..c--To ._ on the 'D-'5'~ d~ o~ _ _~_/~. c~ ]9 9. [ ORDER ALLOWING SALE - 3 - 1 c S 2 199l z Bernd C. o A Professional onal Corporation poration ` D' 9 425 "G" Street, Suite 650 Anchorage, AK 99501 S�)7 4 (907) 274-6537 3 O1y91 us e CLER sAttorney for Trustee Gordon t beKRUprCyCOURT % yp�k 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA x In re: ) 9 ) GOFF, NORTON KELLY, a/k/a ) 14 GOFF, KELLY, a/k/a ) GOFF, N.K. "KELLY", and ) 11 GOFF, GLENDA FARRELL, ) Case No. A-90-00575 12 DEBTOR, (all names in past ) 6 years) ) 13 Social Security No. ) 14 ) 15 16 ORDER ALLOWING SALE OF PERSONAL PROPERTY 17 THIS MATTER came before the court upon the application Is of the Trustee for approval of sale of personal property. The 19 aWz We matter was noticed to creditors and other interested parties as d zo o> w„ o21 required by the rules of this Court. An objection was filed by w k� F:95�+,w3 B&J Services but was resolved by the parties and was subsequently duuof'o 22 w ��> withdrawn. A further objection was filed by the Alaska Oil and o § n a 24 Gas Conservation Commission, but the Commission agreed to withdraw zs its objection upon the Court's approval of this order. Accordingly, it is now 26 l�� 16 18 24 25 26 ORDERED that the Trustee is authorized to sell the equipment in Katalla, 'Alaska, attached as Exhibit "A" "as is where is", to WEL-ALASKA CORPORATION or to such other entity as may offer him $135,000 or more; IT IS FURTHER ORDERED that the Court's authorization to sell the-equipment described in Exhibit "A" does not constitute authorization to remove any equipment from the drill site exCept in accordance with applicable ~regulatory requirements of the Alaska Oil and Gas Conservation Commission. IT IS FURTHER ORDERED that the Trustee is permitted to retain enough of the proceeds of the sale to pay the anticipated costs resulting therefrom in an amount to be agreed upon between Trustee and the Small Business Administration. IT IS FURTHER ORDERED that the Trustee is permitted to pay the balance of the proceeds to the Small Business Administration in satisfaction of its secured claim against the property. IT IS FURTHER ORDERED that the Trustee is permitted to sell miscellaneous office equipment to GBR Equipment for $1,000; ORDER ALLOWING SALE - 2 - 10 12 14 15 16 17 18 20 21 22 23 24 26 IT IS FURTHER ORDERED that the Trustee retain possession of all remaining funds until further order of this court. Dated this Approved as to form and for entry: CHARLES E. COLE ATTORNEY GENERAL ROBERT'E. MINTZ / ASSISTANT ATTORNEY GENERAL ATTORNEY FOR ALASKA OIL and GAS CONSERVATION COMMISSION cerltfy thai' a true copy of the foregoina was ~ ~o ~. ~. T~.~,~ ~.. ~, o, th~ ~5.~ ~o~ o~ .._%.~r. ~ ~ ORDER ALLOWING SALE - 3 - day of ~, 1991. , · S. BANKRUPTCY JUDGE ~ .g ~9 uJ ~_= 22 c~_ ~<z 23 0 24 25 26 Bernd C. Guetschow A Professional Corporation 425 "G" Street, Suite 650 Anchorage, AK 99501 (907) 274-6537 FIL'EO' ,SEp 3 0 1991 U S NK~LERK Attorney for Trustee Gordon Z$[~ UPTOYCOUF~T --~ Deputy Clerk IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA 199i In re: NKG DRILLING & CONSULTANTS INC. Debtor(s) Case No. A-90-00752-3 DMD ORDER ALLOWING SALE OF PERSONAL PROPERTY THIS MATTER came before the court upon the application of the Trustee for approval of sale of personal property. The matter was noticed to creditors and other interested parties as required by the rules of this Court. An objection was filed by B&J Services but was resolved by the parties and was subsequently withdrawn. A further objection was filed by the Alaska Oil and Gas Conservation Commission, but the Commission agreed to withdraw its objection upon the Court's approval of this order. Accordingly, it is now 12 15 16 20 21 22 23 24 25 26 ORDERED that the Trustee is authorized to sell the equipment in Katalla, Alaska, attached as Exhibit "A" "as is ! , where is", to WEL-ALASKA CORPORATION or to such other entity as may offer him $135,000 or more; IT IS FURTHER ORDERED that the Court's authorization to sell the equipment described in Exhibit "A" does not constitute authorization to remove, any equipment from the drill site except in accordance with applicable regulatory requirements of the Alaska Oil and Gas Conservation Commission. IT IS FURTHER ORDERED that the Trustee is permitted to retain enough of the proceeds of the sale to pay the anticipated costs resulting therefrom in an amount to be agreed upon between Trustee and the Small Business Administration. IT IS FURTHER ORDERED that the TrusteD is permitted to pay the balance of the proceeds to the Small Business Administration in satisfaction of its secured claim against the property. IT IS FURTHER ORDERED that the Trustee is permitted to sell miscellaneous office equipment to GBR Equipment for $1,000; ORDER ALLOWING SALE - 2 - 10 12 14 16 17 19 2O 21 22 23 24 25 26 IT IS FURTHER ORDERED that the Trustee retain possession of all remaining funds until further order of this court. Dated this 7 ~day of , 1991. U.S. BANKRUPTCY JUDGE Approved as to form and for entry: CHARLES E. COLE ATTORNEY GENERAL ROBERT 1~. M ASSISTANT ATTORNEY GENERAL ATTORNEY FOR ALASKA OIL and GAS CONSERVATION COM~4ISSION cer~fy that a true copy o~ the foregoing was~ to the ~5~ d~ of · 19ql ORDER ALLOWING SALE - 3 - Dear Mr. Welch: Thank you for your letter of September 12, 1991. I am forwarding a copy of the letter to the Alaska Oil and Gas Conservation Commission for its information. There does not appear to be any reason why we should not now be able to speedily resolve the Commission's conditional objection to the proposed sale of equipment in the bankruptcy proceedings. I am hopeful that we will reach an agreeable solution with the Trustee's attorney that will enable the proposed sale of equipment to go forward as planned. cc: Bernd Guetschow, Esq. 5JEL ASKA CORP ; 9-13-91 4:ISPH ; 907~355i?~ WEL-ASKA CORPORATION P.O. BOX go2 VALDEZ,~.~K. ~~,her 12, lggl Asatetant Attor~ 6amoral 8tat~ of Alaeka I)~pert~ent 1031 W. 4th Ave i, ~kdte Sale of efluil:ment Aha T~x~e~ at Katalla Am the high bidder on the ~atalla EquAls.ant ~ have ~ ~~ti~ Our intention is to produc~ oil frc~ *.hid area. Th~ ot~rators bond is still in plaoe. (Thim t~ a result of ~Me to Mi,.. Jim White from the ban~tc~ ~) A]~o t~e ~ell ~1 i~ catA~ az~ ~A~ a "c~iat~m tl~-e" of fittt~ on tr. W~ will be filin~ all lmOp~r papers et~. ~lth all agamciee of Z~vermmcnt ma soon as ~ ~l.e is retire~_ W~ will follo~ all a~enn~ regulatione ~bat pertain to the Katalla area. We hope thia clears all misconceptions as to Katalla so ~ can ~et on with our reraittlr~ process. 987 278 ?0£2;N 2 , Vt~ President RECEIVED SEP 1 8 1991 AlaSka Oil &'Gas Cons. Commission Anchorage DEPART~IENT OF LAW ~ OFFICE OF THE A TT'ORNEY GENERA L September 17, 1991 Mr. Del Welch, Vice President Wel-Aska Corporation P.O. Box 962 Valdez, AK 99686 WALTER J. HICKEL, GOVERNOR ~ O--OMM ~ ~OM, M ~994 ' ~ ~j-~ ENG SR ENG :~G ASST ~ ,AOL I ~ASSTI · ~ ASSTI T C,I STAT TECH~ ~LE REPLY TO: .. 1~"~'03! W 4TH AVENU ANCHORAGE. ALA~ PHONE: (907) 26; FAX: (907) 276__ [~] KEY BANK BUILDIN( 100 CUSHMAN ST., FAIRBANKS, ALASI~ PHONE: (907) 45; FAX: (9O7) I~ P.O. BOX K- STAT[. JUNEAU, ALASKA PHONE: (907) 46~ FAX: (907) 46~ Dear Mr. Welch: Thank you for your letter of September 12, 1991. I am forwarding a copy of the letter to the Alaska Oil and Gas Conservation Commission for its information. There does not appear to be any reason why we should not be able to speedily resolve the Commission's conditional objection to the proposed sale of equipment in the bankruptcy proceedings. I have been in contact with the Trustee's attorney toward that end. Very truly yours, CHARLES E. COLE ATTORNEY GENERAL Robert E. Mi Assistant Attorney General REM:crg cc: Alaska Oil and Gas Conservation Commission/ Bernd Guetschow, Esq. RECEIVED s EP 1 8 1991 Alaska 0il & Gas Cons. ~(~horage S£P 13 '91 17:19 RTT¥ GEM 0IL,GRS, MIM907-2?8-702E P.1/2 ME:MO P A X .,._ T R A I~ ~ M I T T 0 Po~t-lt'"brand fax transrm~al memo BERND C. GUETSCHOW A Professional Corporation 425 "G" Street, Suite 650 Anchorage, Alaska 99501 (907) 274-653? Attorney for Trustee Gordon Zerbetz IN THE UNITED STATES BANERUPTC¥ COURT FOR THE DISTRICT OF ALASKA ~r& re*. A~ASKAN CRUDE CORP. a/k/a AoC.C. Debtors. ) ) ) Case No. A-9'0-00567 ) ) ) ) .._ THIS MATTER having come before the Cour~ upon the applicaSion of the Trustee £or approval of sale of personal : property, the matter having been noticed to creditors and other interested parties as r~qui~¢d by ~he rules of this Court, and filed within the time allowed, it ORDERED that the Trustem i~ authorized to sell the equipment, in Kata!la, Alaska, a~tached as Exhib£~ "A", "as is, where ts", to WEL-ASKA CORPORATION or to ~uch other entity may offer him $135,000 or more; IT IS FURTHER ORDERED that the Trumtee is permitted to retain enough of the prooeed~ of the sale ~o pay the anticipated costs resulting therefrom in an amount to bo agreed upon between Trustee and tho Small Business Administration; IT IS FURTHER ORDERED tha~ the Trustee is permitted to pay the balance of the proceeds to the Small Business Admtnts~.r&tion in satisfaction of its secured ~laim against the property; 2~ IS FURT~$K ORDERBD that the Trustee is permitted to sell miscellaneous Office equipment to GBR Equipment for IT IS FURTHER ORDERED that the Trustee ~ ..... ~ .... ---=-~-~ - .... . - ~ ~- ~ retain possession of all ~'e~atntng fund~ until further order of this courti DATED: '~-'~ERT ;~. R6s-~s:' ..... u.s. ~ANKRU~TCY OUOG~. .) NO. OF PAGES INCLUDI~I~ THIS PAGE: . .~'., _ _.. -_.-..-: ............. . .. · ' WEL-AS~ GORPOi:IATiON . . t ' ' i. - ........ Il ir, THO 16,'5i 907~$~;5t 70 P.OI SFNT BY:bJFL ASKA COR~ ; 9-iS-gl 4:15~hl ; 907835517~-~ 90? 278 ?02£;~ £ WEL-ASKA CORPORATION RO. BOX 962 VALDEZ0 AK 9968fl PHONE: (907) 835-2424 FAX: (907) 635-5170 , Vio. Presi~m~t ..a WEL-ASKA CORPORATION 14 CHARLES E. COLE Robert E. Mintz Assistant Attorney General State of Alaska Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501 (907) 269-5255 Attorney for Division of Oil and Gas and Alaska Oil and Gas Conservation Commission IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ALASKA CRUDE CORP. a/k/a A.C.C. Debtor(s) Case No. A-90-00567 CONDITIONAL OBJECTION TO PROPOSED SALE OF pROpERTY Although the Alaska Oil and Gas Conservation Commission 17 ("Commission") does not object in principle to.the Trustee's proposed sale of personal property for $135,000 or more, as described in his motion dated August 15, 1991, the Commission is 20 concerned that the court's approval of the sale might be 2! interpreted as authorization to move the sold equipment away from 22 ! the Katalla drill site contrary to the Commission's regulatory 23i ' requirements. Consequently, the Commission objects to the 24 25 26 proposed sale unless the court provides that the sale will not permit the buyer to move any equipment away from the drill site except in accordance with applicable Commission regulatory 2 10 12 16 24 25 26 requirements. There are two regulatory concerns that may be imDlicated in this matter. First, the Commission is informed and believes that the drilling rig may still be connected to the well. If that is so, removing the rig could lead to a release of hydrocarbons or other fluids from the wellbore if the operation were not performed properly, thus creating a safety and pollution problem. See accompanying Affidavit of Commissioner Lonnie C. Smith. Moreover, any operations at the well, including handling or removing the rig, may lawfully be performed only by the designated operator and in accordance with a program approved by the Commission. See 20 AAC 25.005, 25.015, 25.020, 25.072, 25.105, 25.570(28). A buyer who did not apply and obtain approval to become the well operator, with all the attendant obligations of operatorship, could not lawfully detach and remove the drilling rig just because the buyer obtained ownership rights to the' rig. The second regulatory concern is that most of the equipment described in Exhibit A to the Trustee's.Motion for Sale of Personal Property may not be taken off the drill site until the Commission has determined that the well has been secured, either pursuant to an approved application to shut down well operations under 20 AAC 25.072, or pursuant to an approved plan for well plugging and abandonment under 20 AAC 25.105 or well suspension under 20 AAC 25.110. (In the case of the Katalla well, the time has passed for an approved shut down, and the operator is required to plug and abandon the well.) Under 20 AAC 25.033 and 25.035, CONDITIONAL OBJECTION - 2 - 20 21 22 23 24 25 26 the Commission requires that adequate equipment to ensure well control be maintained on site as part of the approved drilling program until the well has been secured to the Commission's satisfaction. Of the equipment listed in Exhibit A, the Commission believes that the following are among those items required to be so maintained: 1983 Mod. SSH2DM Speedstar Drilling Rig; one skid mounted, twin 15,000 #PSI Pumps oilfield cementing unit; complete set rig support mats (if under rig); blow out preventer; support blow out equip.; sixty BBL mud tank system; one or more of duplex mud pumps; enclosed wheel mounted generator house with generators; drill pipe; handling equipment and tools for drill pipe; miscellaneous rig hand tools, etc.; and 2-1/2 ton tandem wheel-track comb. diesel powered welding truck. Depending on the particular needs and configuration of the operation, it is also possible that one or 'more of the following additional equipment listed on Exhibit A would also be required to 'be maintained on site: single axle float; tandem axle trailer; 2-1/2 ton trucks. See accompanying Affidavit of Commissioner Lonnie C. Smith. conclusion For the reasons stated above, the Commission asks that the court not approve the proposed sale unless 'the court also orders that the sale will not permit the buyer to move any CONDITIONAL OBJECTION - 3 - il equipment away from the drill site except in accordance with ill· applicable Commission regulatory requirements. ,, DATED: September 10, 1991. CHARLES E. COLE 4 ATTORNEY GENERAL 5 By: Robert E. M'intz 6 Assistant Attorney General 12 13 14 16 17 18 24 25 26 CONDITIONAL OBJECTION - 4 - 21 .1♦1 4 6 2) a 9 to 12 u 14 15 16 n 1s 19 auk=8 20 1 o i oww_ 21 22 0 3 2] 24 2s 26 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ) GOFF, NORTON KELLY, a/k/a ) GOFF, KELLY, a/k/a ) GOFF, N.K. "KELLY", and ) GOFF, GLENDA FARRELL, ) Case No. A-90-00575 DEBTOR, (all names in past ) 6 years) ) Social Security No. ) In re: ) ALASKA CRUDE CORP. ) a/k/a A.C.C. ) Case No. A-90-00567 Debtor (s) ) In re: ) NKG DRILLING & CONSULTANTS ) INC. ) Case No. A-90-00752-3 DMD Debtor(s) ) ) AFFIDAVIT OF LONNIE C. SMITH STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) Lonnie C. Smith, being first duly sworn, deposes and states: 1. I am a member of the Alaska Oil and Gas Conservation Commission. 2. In that capacity I am generally familiar with the well and associated drilling operations in the Katalla area, known as Katalla No. 1, for which Alaskan Crude Corporation is the operator. 2 12 13 14 15 16 17 24 25 26 me to believe that the drilling rig may still be connected to the well. If that is so, removing the rig could lead to a release of hydrocarbons or other fluids from the wellbore if the operation were not performed properly, thus creating a safety and pollution problem. 4. I have inspected the list of equipment proposed to be sold and described in Exhibit A to the Motion for Sale of Personal Property in the above-captioned cases. Of the equipment listed in Exhibit A, I believe, and the other two members of the Commission concur, that the following are among those items required to be maintained on site as part of the approved drilling program to ensure well control in accordance with 20 AAC 25'.033 and 25.035 until the well has been secured to the Commission's satisfaction: 1983 Mod. SSH2DM Speedstar Drilling Rig; one skid mounted, twin 15,000 #PSI Pumps oilfield cementing unit;- complete set rig support mats (if under rig); blow out preventer; support blow out equip.; sixty BBL mud tank system; one or more of duplex mud pumps; enclosed wheel mounted generator house with generators; drill pipe; handling 'equipment and tools for drill pipe; miscellaneous rig hand tools, etc.; and 2-1/2 ton tandem wheel- track comb. diesel powered welding truck. Depending on the particular needs and configuration of the operation, it is also possible that one or more of the following additional equipment 3. The latest information I have about this well leads AFFIDAVIT OF LONNIE SMITH - 2 - 10 15 16 17 ~ ~ 19 o~ 22 24 25 26 listed on Exhibit A would also be required to be maintained on site: single axle float; tandem axle trailer; 2-1/2 ton trucks. Dated: SUBSCRIBED AND SWORN TO before me this /~7//3 day of September, 1991. Notary Public, State of Alaska My commission expires: ~ -/~ - ~- AFFIDAVIT OF LONNIE SMITH - 3 - 23 24 25 26 CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz Assistant Attorney General State of Alaska Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501 (907) 269-5255 Attorney for Division of Oil and Gas and Alaska Oil and Gas Conservation Commission IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ALASKA CRUDE CORP. a/k/a A.C.C. Debtor(s) Case No. A-90-00567 SUBSTITUTION OF COUNSEL The State of Alaska, Department of Natural Resources Division of Oil and Gas, and Alaska Oil and Gas Conservation Commission, hereby substitute Robert E. Mintz in place of Bonnie Johannsen as counsel of record in the above-entitled action and · request that notice of all proceedings affecting them be delivered or mailed to: Robert E. Mintz Assistant Attorney General 1031 W. 4th Avenue, Suite 200 Anchorage,-Alaska 99501 (907) 269-5255 16 17 18 19 20 21 22 23 24 25 26 Dated: September 10, 1991. CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz // Assistant Attorney General SUBSTITUTION OF COUNSEL - 2 - 10 12 13 14 16 19 20 21 22 23 24 25 26 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ALASKA CRUDE CORP. a/k/a A.C.C. Debtor(s) Case No. A-90-00567 CERTIFICATE OF SERVICE 'I certify that I am a legal secretary in the Office of the Attorney General, Anchorage, Alaska and that on September 10, 1991, I mailed a copy of the State of Alaska's CONDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY, SUBSTITUTION OF COUNSEL, and AFFIDAVIT OF LONNIE C. SMITH in the above-captioned proceeding to the following attorneys of record: Bernd C. Guetschow 425 G Street, Suite 650 Anchorage, AK 99501 Jon-M. DeVote District Counsel U.S. Small Business Admin. 222 W. 8th Ave., Box 67 Anchorage, AK 99513-7559 Reginald J. Christie, Jr. Jim Christie & Associates 3380 C St., Suite 101 Anchorage, AK 99503 Dow H. Heard, Vice President- General Counsel and Secretary BJ Services Co. 5500 Northwest Central Drive Houston, TX 77092 Ralph E. Duerre Burr, Pease & Kurtz 810 N Street Anchorage, AK 99501 athy ~. Gaal ~ pLEASE" PRI/~? OR TYPE FULL NAME OF CASE: In re NKG Drilling & Consultants Inc., Debtor(s) DATE: September 10, 1991 ADVERSARY CASE. NO. MAIN CASE NO. A-90-00752-3 CHAPTER OF MAIN CASE: [CIRCLE ONE~-~ 11 13 REQUESTED HEARING IS IN (CHECK ONE OR BOTH AS APPLICABLE): ADVERSARY CASE ; MAIN CASE A90-00752-3 DMI) COUNSEL FOIl MOVING PARTY OR PLAINTIFF: Robert E. Mintz, Assistant Attorney General Dept. of Law OF _A_r~_or_n_eff_General's Office Representing:.________&laak~n_Qil_a_nd .G_a_s Conservation (Law Fi rm) (C1 ient ' s name) Commission COUNSEL FOR OPPOSING PARTY OR DEFENDANT: Bernd C. Guetschow - OF Bernd C. Guetschow, P.C. (Law F i rm) CONT I NUANCE FROM: Represent ing: Trustee Gordon Zerbetz {Client's name7 TITLE OF PLEADING AND NATITIIE OF PROCEEDING DATE TO BE FILED OR DATE FILED _~_QNDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY 9/10/91 LAST DAY FOR FILING OBJECTIONS (if any, as listed in notice given):9/10/91 ESTIU~ITED TIME TO HEAR: 2~ minutes hours .... Note: this should be heard togethe with the identical objection in WOULD LIKE HEARD WITHIN days months Case No. A-90-00575 and A-90-00567 NAME & PHONE # OF PERSON MAKING REQUEST: __P~ber~_j~_~_M_i!n_~z~_A_s_sistant Attorney General, (907) 269-5255 TO BE CE~PLETED BY COURT DATE SET: TItlE SET: AMOUNT OF TIME SCHEDULED BY COURT: LF22 DISK V LOCAL FORMS 6 -84 Minutes Hours R C ./VED Alaska 0il & Gas Cons. Commission Anchorago 10 20 2l 22 23 24 25 26 CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz Assistant Attorney General State of Alaska Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501 (907) 269-5255 Attorney for Alaska Oil and Gas Conservation Commission IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: NKG DRILLING & CONSULTANTS INC. Debtor(s) Case No. A-90-00752-3 DMD CONDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY Although the Alaska Oil and Gas Conservation Commission ("Commission") does not object in principle to the Trustee's proposed sale of personal property for $135,000 or more, as described in his motion dated August 15, 1991, the Commission is concerned that the court's approval of the sale might be interpreted as authorization to move the sold equipment away from the Katalla drill site, contrary to the Commission's regulatory requirements. Consequently, the Commission objects to the proposed sale unless the court provides that the sale will not permit the buyer to move any equipment away from the drill site except in accordance with applicable Commission regulatory requirements. 13 14 16 17 18 19 20 2l 22 23 24 25 26 There are two regulatory concerns that may be implicated in this matter. First, the Commission is informed and believes that the drilling rig may still be connected to the well. If that is so, removing the rig could lead to a release of hydrocarbons or other fluids from the wellbore if the operation were not performed properly, thus creating a safety and pollution problem. See accompanying Affidavit of Commissioner Lonnie C. Smith. Moreover, any operations at the well, including handling or removing the rig, may lawfully be performed only by the designated operator and in accordance with a program approved by the Commission. .~e 20 AAC 25.005, 25.015, 25.020, 25.072, 25.105, 25.570(28). A buyer who did not apply and obtain approval to become the well operator, with all the attendant obligations of operatorship, could not lawfully detach and remove the drilling rig just because the buyer obtained ownership rights to the rig. The second regulatory concern is that most of the equipment described in Exhibit A to the Trustee's Motion for Sale of Personal Property may not be taken off the drill site until the Commission has determined that the well has been secured, either pursuant to an approved application to shut down well operations under 20 AAC 25.072, or pursuant to an approved plan for well plugging and abandonment under 20 AAC 25.105 or well suspension under 20 AAC 25.110. (In the case of the Katalla well, the time has passed for an approved shut down, and the operator is required to plug and abandon the well.) Under 20 AAC 25.033 and 25.035, the Commission requires that adequate equipment to ensure well CONDITIONAL OBJECTION - 2 - 14 24 25 26 control be maintained on site as part of the approved drilling program until the well has been secured to the Commission's satisfaction. Of the equipment listed in Exhibit A, the Commission believes that the following are among those items required to be so maintained: 1983 Mod. SSH2DM Speedstar Drilling Rig; one skid mounted, twin 15,000 #PSI Pumps oilfield cementing unit; complete set rig support mats (if under rig); blow out preventer; support blow out equip.; sixty BBL mud tank system; one or more of duplex mud pumps; enclosed wheel mounted generator house with generators; drill pipe; handling equipment and tools for drill pipe; miscellaneous rig hand tools, etc.; and 2-1/2 ton tandem wheel-track comb. diesel powered welding truck. Depending on the particular needs and configuration of the operation, it is also possible that one or more of the following additional equipment listed on Exhibit A would also be required to be maintained on site: single axle float; tandem axle trailer; 2-1/2 ton trucks. See accompanying Affidavit of Commissioner Lonnie C. Smith. Conclusion For the reasons stated above, the Commission asks that the court not approve the proposed sale unless the court also orders that the sale will not permit the buyer to move any CONDITIONAL OBJECTION - 3 - 12 14 16 17 18 23 24 25 26 4 equipment away from the drill site except in accordance with applicable Commission regulatory requirements. DATED: September 10, 1991. CHARLES E. COLE ATTORNEY GENERAL ~ Assistant Attorney General CONDITIONAL OBJECTION - 4 - 10 16 24 25 26 CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz Assistant Attorney General State of Alaska Department of Law 1031 W. 4th Avenue, suite 200 Anchorage, Alaska 99501 (907) 269-5255 Attorney for Alaska Oil and Gas Conservation Commission IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: NKG DRILLING & CONSULTANTS INC. Debtor(s) Case No. A-90-00752-3 DMD ENTRY OF APPEARANCE Please take notice that Robert E. Mintz, Assistant Attorney General, Department of Law, 1031 W. Fourth Avenue, Suite 200, Anchorage, Alaska 99501, telephone: (907) 269-5255, hereby enters his appearance as counsel of record in the above-captioned matter on behalf of the A%aska Oil and Gas Conservation Commission. Copies of all notices, motions and pleadings should be sent to the address set forth above. 16 17 18 19 2O 21 23 24 25 26 Dated: September 10, 1991. CHARLES E. COLE ATTORNEY GENERAL Robert E. Mint~ Assistant Attorney General ENTRY OF APPEARANCE - 2 - ~ g ! 4 i In re: 5 !1 NKG DRILLING & CONSULTANTS INC. 6 7 9 10 I1 12 13 14 15 16 17 IN THE UNITED STATES BANKRUPTCY COURT 19 20 21 22 23 24 25 26 Debtor(s) FOR THE STATE OF ALASKA Case No. A-90-00752-3 DMD Bernd C. Guetschow 425 G Street, Suite 650 Anchorage, AK 99501 CERTIFICATE OF SERVICE I certify that I am a legal secretary in the Office of the Attorney General, Anchorage, Alaska and that on September 10, 1991, I mailed a copy of the Alaska Oil and Gas Conservation Commission's CONDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY, ENTRY OF APPEARANCE, and AFFIDAVIT OF LONNIE C. SMITH in the above-captioned proceeding to the following'attorneys of record: Jon M. DeVote District Counsel U.S. Small Business Admin. 222 W. 8th Ave., Box 67 Anchorage, AK 99513-7559 Reginald J. Christie, Jr. Jim Christie & Associates 3380 C St., Suite 101 Anchorage, AK 99503 Ca . Gaal " 14 15 16 it 1s 19 � 3 5u��o 20 0W h� ,1 21 w 22 oY<3' 2] 8< 24 25 26 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: GOFF, NORTON KELLY, a/k/a GOFF, KELLY, a/k/a GOFF, N.K. "KELLY", and GOFF, GLENDA FARRELL, DEBTOR, (all names in past 6 years) Case No. A-90-00575 In re: ) ALASKA CRUDE CORP. ) a/k/a A.C.C. ) Case No. A-90-00567 Debtor (s) ) In re: ) NKG DRILLING & CONSULTANTS ) INC. ) Case No. A-90-00752-3 DMD Debtor(s) ) AFFIDAVIT OF LONNIE C. SMITH STATE OF ALASKA ) ) as. THIRD JUDICIAL DISTRICT ) Lonnie C. Smith, being first duly sworn, deposes and states: 1. I am a member of the Alaska Oil and Gas Conservation commission. 2. In that capacity I am generally familiar with the well and associated drilling operations in the Katalla area, known as Katalla No. 1, for which Alaskan Crude Corporation is the operator. 24 25 26 3. The latest information I have about this well leads me to believe that the drilling rig may still be connected to the well. If that is so, removing the rig could lead to a release of hydrocarbons or other fluids from the wellbore if the operation were not performed properly, thus creating a safety and pollution problem. 4. I have inspected the list of equipment proposed to be sold and described in Exhibit A to the Motion for Sale of Personal Property in the above-captioned cases. Of the equipment listed in Exhibit A, I believe, and the other two members of the Commission concur, that the following are among those items required to be maintained on site as part of the approved drilling program to ensure well control in accordance with 20 AAC 25.033 and 25.035 until the well has been secured to the Commission's satisfaction: 1983 Mod. SSH2DM Speedstar Drilling Rig; one skid mounted, twin 15,000 #PSI Pumps oilfield cementing unit; complete set rig support mats (if under rig); blow out preventer; support blow out equip.; sixty BBL mud tank system; one or more of duplex mud pumps; enclosed'wheel mounted generator house with generators; drill pipe; handling 'equipment and tools for drill pipe; miscellaneous rig hand tools, etc.; and 2-1/2 ton tandem wheel- track comb. diesel powered welding truck. Depending on the particular needs and configuration of the operation, it is also possible that one or more of the following additional equipment AFFIDAVIT OF LONNIE SMITH - 2 - 10 12 13 14 24 25 26 listed . Dated: 4 5 on Exhibit A would also be required to be maintained on SUBSCRIBED AND SWORN TO before me this //~/Sv~/') day of September, 1991. Notary Public, State of Alaska My commission expires: ~ -/~ - ~- AFFIDAVIT OF LONNIE sMITH - 3 - site: single axle float; tandem axle trailer; 2-1/2 ton trucks. / Lonnie C. BANKRUPTCY COURT CALENDAtc nnpv PLEASE PRINT OR TYPE FULL NAME OF CASE: DATE: September 10, 1991 In re__ Ggff�,_Norxgn Ke11v, a1kLa Goff. Kellv�lk/ GoffLN_K�"Kellv_i_and _____ ADVERSARY CASE. NO. __ _MAIN CASE NO.A-90-00575 ------- --------------- CHAPTER OF MAIN CASE: CIRCLE ONES 11 13 REQUESTED HEARING IS IN (CHECK ONE OR BOT_---� LICABLE): ADVERSARY CASE __-_____—_---_—; IN" E 90_00575__________ COUNSEL FOR MOVING PARTY OR PLAINTIFF: Robert E._Mintz, Assistant Attorney General Dept. of Law Dept. of Natural Resources, Div. of Oil & OF ALL ey Geri,-e__—Representing: Alaska OI1 and Gas Conservation C_o_m_mission (Law Firm ZClient's name) — COUNSEL FOR OPPOSING PARTY OR DEFENDANT: Bernd C. Guetschow OF Bernd C. Guetschow, P.C. __—Representing:�Trustee _ --------------------------- ----- (Law Firm) Client's names CONTINUANCE FROM: TITLE OF PLEADING AND NATURE OF PROCEEDING DATE TO BE FILED OR DATE FILED CONDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY 2Ll2.91 LAST DAY FOR FILING OBJECTIONS (if any, as listed in notice given): _ s Li o19 i --------------- ------------------ --------------______-- ESTIMATED TIME TO HEAR: 2 O minutes __ h hours Note: This should be eard togeth with the.identical objection in WOULD LIKE HEARD WITHIN ____days _ months Case Nos.: A90-00752-3 DMD and A-90-00567 NAME & PHONE f OF PERSON MAKING REQUEST: Robert E. Mintzer Assistant Attorney General__ 907 269_5255_ -------- ------....................... ------------------------------------------------------------------------ TO BE COMPLETED BY COURT DATE SET: TIME SET: AMOUNT OF TIME SCHEDULED BY COURT: Minutes �(' Hours ___ LF22 DISK V LOCAL FORMS R-L `E I V E D 6-84 S E P 12 1991 Alaska Oil & Gas Cons. Commission Anchorage M 9MI 4 s 6 7 e 9 10 11 12 13 14 Is 16 17 1 16 19 a o$'8 20 i o 21 a �g g 22 o ; 23 LL s o - 24 25 26 CHARLES E. COLE ATTORNEY GENERAL Robert E. Hintz Assistant Attorney General State of Alaska Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501 (907) 269-5255 Attorney for Division of Oil and Gas and Alaska oil and Gas Conservation Commission IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ) GOFF, NORTON KELLY, a/k/a ) GOFF, KELLY, a/k/a ) GOFF, N.K. "KELLY", and ) GOFF, GLENDA FARRELL, ) Case No. A-90-00575 DEBTOR, (all names in past ) 6 years) ) CONDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY Although the Alaska Oil and Gas Conservation Commission ("Commission") does not object in principle to the Trustee's proposed sale of personal property for $135,000 or more, as described in his motion dated August 15, 1991, the Commission is concerned that the court's approval of the sale might be interpreted as authorization to move the sold equipment away from the Katalla drill site, contrary to the Commission's regulatory requirements. Consequently, the Commission objects to the proposed sale unless the court provides that the sale will not 10 19 20 21 22 23 24 25 26 permit the buyer to move any equipment away from the drill site except in accordance with applicable Commission regulatory requirements. There are two regulatory concerns that may be implicated in this matter. First, the Commission is informed and believes that the drilling rig may still be connected to the well. If that is so, removing the rig could lead to a release of hydrocarbons or other fluids from the wellbore if the operation were not performed properly, thus creating a safety and pollution problem. See accompanying Affidavit of Commissioner Lonnie C. Smith. Moreover, any operations at the well, including handling or removing the rig, may lawfully be performed only by the designated operator and in accordance with a program approved by the Commission. Sse 20 AAC 25.005, 25.015, 25.020, 25.072, 25.105, 25.570(28). A buyer who did not apply and obtain approval to become the well operator, with all the attendant obligations of operatorship, could not lawfully detach and remove the drilling rig just because the buyer obtained ownership rights to the rig. The second regulatory concern is that most of the equipment described in Exhibit A to the Trustee's Motion for Sale of Personal Property may not be taken off the drill'site until the Commission has determined that the well has been secured, either pursuant to an approved application to shut down well operations under 20 AAC 25.072, or pursuant to an approved plan for well plugging and abandonment under 20 AAC 25.105 or well suspension under 20 AAC 25.110. (In the case of the Katalla well, the time CONDITIONAL OBJECTION - 2 - has passed for an approved shut down, and the operator is required to plug and abandon the well.) Under 20 AAC 25.033 and 25.035, 2 the Commission requires that adequate equipment to ensure well 3 control be maintained on site as part of the approved drilling program until the well has been secured to the Commission's satisfaction. Of the equipment listed in Exhibit A, the 6 Commission believes that the following are among those items 7 required to be so maintained: 1983 Mod. SSH2DM Speedstar Drilling Rig; one skid mounted, twin 15,000 #PSI Pumps oilfield cementing 9 unit; complete set rig support mats (if under rig); blow out t0 preventer; support blow out equip.; sixty BBL mud tank system; one or more of duplex mud pumps; enclosed wheel mounted~ generator house with generators; drill pipe; handling equipment and tools 13 for drill pipe; miscellaneous rig hand tools, etc.; and 2-1/2 ton tandem wheel-track comb. diesel powered welding truck. Depending on the particular needs and configuration of the operation, it is 16 also possible that one or more of the following additional equipment listed on Exhibit A would also be required to be i 191 ma£nta±ned on site: s±ngle axle float; tandem axle tra±ler; 2-1/2 ton trucks. See accompanying Afl±davit o£ Commissioner Lonn±e C. 20 2! 22 23 24 25 26 Smith. Conclusion For the reasons stated above, the Commission asks that the court not approve the proposed sale unless the court also orders that the sale will not permit the buyer to move any CONDITIONAL OBJECTION - 3 - 10 13 2O 21 22 23 24 25 26 equipment away from the drill site except in accordance with applicable Commission regulatory requirements. DATED: September 10, 1991. CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz Assistant Attorney General CONDITIONAL OBJECTION - 4 - t 3 4 5 6 7 x 9 1a u 12 u 14 15 16 17 19 19 a Yxogg 20 o: z° >� 21 w a g �.Ss< a o�'Byg� zi oLL<yc 13 `o - 24 25 1 26 CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz Assistant Attorney General State of Alaska Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501 (907) 269-5255 Attorney for Division of Oil and Gas and Alaska Oil and Gas Conservation Commission IN THE UNITED STATES BANKRUPTCY COURT FOR THE STATE OF ALASKA In re: ) GOFF, NORTON KELLY, a/k/a ) GOFF, KELLY, a/k/a ) GOFF, N.K. "KELLY", and ) GOFF, GLENDA FARRELL, ) Case No. A-90-00575 DEBTOR, (all names in past ) 6 years) ) ) SUBSTITUTION OF COUNSEL The State of Alaska, Department of Natural Resources Division of Oil and Gas, and Alaska Oil and Gas Conservation Commission, hereby substitute Robert E. Mintz in place of Bonnie Johannsen as counsel of record in the above -entitled action and request that notice of all proceedings affecting them be delivered it or mailed to: Robert E. Mintz Assistant Attorney General 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501 (907) 269-5255 10 13 20 21 22 23 24 25 26 Dated: September 10, 1991. CHARLES E. COLE ATTORNEY GENERAL Robert E. Mintz/ Assistant Attorney General SUBSTITUTION OF COUNSEL - 2 - i i IN THE UNITED STATES BANKRUPTCY COURT z FOR THE STATE OF ALASKA 3 In re: ) a ) GOFF, NORTON KELLY, a/k/a ) 5 GOFF, KELLY, a/k/a ) GOFF, N.K. "KELLY" and ) 6 GOFF, GLENDA FARRELL, ) Case No, A-90-00575 DEBTOR, (all names in past 6 years) ) x 9 ) ) 10 CERTIFICATE OF SERVICE u I certify that I am a legal secretary in the Office of 12I the Attorney General, Anchorage, Alaska and that on September 10, 13 1991, I mailed a copy of the Alaska Oil and Gas conservation 14 Commission's CONDITIONAL OBJECTION TO PROPOSED SALE OF PROPERTY, 151 SUBSTITUTION OF COUNSEL, and AFFIDAVIT OF LONNIE C. SMITH in the 16I above-captioned proceeding to the following attorneys of record: 17 Bernd C. Guetschow Jon M. DeVore is 425 G Street, Suite 650 District Counsel Anchorage, AK 99501 U.S. Small Business Admin. I' R 19 222 W. 8th Ave., Box 67 20 Anchorage, AK 99513-7559 Reginald J. Christie, Jr. C. R. Kennelly 21 Jim Christie & Associates 5tepovich, Kennelly & S S a 22 3380 C St., Suite 101 Stepovich, PC. n ogo� Anchorage, AK 99503 704 W. 2nd Ave., Suite 1 og i Anchorage, AK 99501 23' b - Ronald E. Noel 24 Hughes, Thorsness, Gantz, Powell & Brundin 25 5510 University Avenue, Suite 200 26 Fairbanks, AK 99709 i I I Cathy Gael I 2 3 d 5 6 7 x 9 10 1 u Is 16 17 Is 19 a �uy8 20 io> 21 �F 2z a w�s2 o 9 3ya 23 o - 24 25 26 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: ) GOFF, NORTON KELLY, a/k/a GOFF, KELLY, a/k/a GOFF, N.K. "KELLY", and GOFF, GLENDA FARRELL, DEBTOR, (all names in past 6 years) Social Securitv No. In re: j ALASKA CRUDE CORP. ) a/k/a A.C.C. ) Debtor(s) ) NKG DRILLING & CONSULTANTS ) INC. ) Debtor(s) ) Case No. A-90-00575 Case No. A-90-00567 Case No. A-90-00752-3 DMD AFFIDAVIT OF LONNIE C. SMITH STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) Lonnie C. Smith, being first duly sworn, deposes and states: 1. I am a member of the Alaska Oil and Gas Conservation Commission. 2. In that capacity I am generally familiar with the well and associated drilling operations in the Katalla area, known as Katalla No. 1, for which Alaskan Crude Corporation is the operator. 10 12 14 15 16 17 18 24 25 26 3. The latest information I have about this well leads me to believe that the drilling rig may still be connected to the well. If that is so, removing the rig could lead to a release of hydrocarbons or other fluids from the wellbore if the operation were not performed properly, thus creating a safety and pollution problem. 4. I have inspected the list of equipment proposed to be sold and described in Exhibit A to the Motion for Sale of Personal Property in the above-captioned cases. Of the equipment listed in Exhibit A, I believe, and the other two members of the Commission concur, that the following are among those items required to be maintained on site as part of the approved drilling program to ensure well control in accordance with 20 AAC 25.033 and 25.035 until the well has been secured to the Commission's satisfaction: 1983 Mod. SSH2DM Speedstar Drilling Rig; one skid mounted, twin 15,000 #PSI Pumps oilfield cementing unit; complete set rig support mats (if under rig); blow out preventer; support blow out equip.; sixty BBL mud tank system; one or more of duplex mud pumps; enclosed wheel mounted generator house with generators; drill pipe; handling equipment and tools for drill pipe; miscellaneous rig hand tools, etc.; and 2-1/2 ton tandem wheel- track comb. diesel powered welding truck. Depending on the particular needs and configuration of the operation, it is also possible that one or more of the following additional equipment AFFIDAVIT OF LONNIE SMITH - 2 - 10 12 14 15 24 25 26 listed on Exhibit A would also be required to be maintained on site: single axle float; tandem axle trailer; 2-1/2 ton trucks. ~' / L "~ ~ 1' Dated: Lonnie C. SUBSCRIBED AND SWORN TO before me this /~7~/7 day of September, 1991. Notary Public, State of Alaska My commission expires: ~ -/~ - ~.~ AFFIDAVIT OF LONNIE SMITH - 3 - �.w OFV$C - of He7r+0 C. Guus"Ow e xnc: es vaxn� Cov eO.mev eV1tt i40 'sCHORAGE. AX 01"] �207) 27-6551 ... 1 "+ .1..711 PUG 30 '91 13:37 ATTY GEN 01L,GRS,MIN907-278-7022 BERND C. GUETSCHOW A Professional Corporation 425 "G" Street, Suite 650 Anchorage, Alaska 99501 Ou lj z/ _V71)1 Attorney for Trustee P.2/6 FILED AUG 161991 CLERK U.S. BANKRUPTCY CQUFM 6y � � Deputy clerk IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA REC�1�' In re: j AUG3u1991 GOFF, NORTON KELLY, a/k/a ) GaSCo GOFF, KELLY, a/k/a ) glaSkat 44 GOFF, N.K. "KELLY", and GOFF, GLENDA FARRELL, } Case No. A-90-00575 DEBTOR, (all names in past ) 6 years) ) ) ) MOTION FOR SALE OF PERSONAL PROPERTY;-, COME NOW the Trustee, Gordon Zerbetz, by.,and through his attorney, Bernd Guetschow, A Professional Corporation, and moves the court as follows: 1. That he is the duly appointed and acting Trustee on the estate of Alaskan Crude Corporation. 2. As part of the assets subject to administration by him, there is equipment located in Katalla, Alaska, in which the debtor has claimed an interest. The equipment has been stored there unguarded for a number of years. The Trustee is not certain how much of the equipment is left or what condition it AUG ~0 '91 13:38 ATTY GE~ Oii, GAS~MIH90?-~78-?O~ P.3/6 is in. Attached hereto as Exhibit "A" is a copy of a list of the equipment originally stored there. 3. The Small Business A~ministration of the United States -has-~..,'p~rfec~-'ed 's~c~y'i~ter*e'st in all equipment in which the Debtor claims an interest. 4. The Trustee has received an ·offer.· from WEL-ASKA COPd?ORATION to. purchase whatever equipment is left "as is, where is" for $135,000 cash. 5. The Trustee has entered into an agreement with the · .. Small Business Administration whereby that entity Will release its security interest in the equipment upon its' Sale, p~ovided · . all net pro~.~..~ls,~.~fter proper~y, allocation for---Trustee's fees, counsel fees, accounting fees and anticipated income taxes are paid to the Small Business Administration. 6. In view of the fact that the Small Business Administration has a el'aim against the estate in excess of $600,000 and will receive all net proceeds from the sale, the Trustee believes that the proposed transaction is in the best interest of the estate and its zecured creditor, the Small Business Administration. WHEREFORE, Trustee requests entry of an order authorizing him to sell the above-described equipment "as is, where is", to WEL-ASKA CORPORATION or to such other entity as may offer him $135,000 or more; that he be permitted to re~ain enough of the proceed~ of the sale to pay the antzcipate_ costs resulting RUG 38 'g& Z3~38 RTTY G£N OZL, GPS, HZN90?-~?S-7~ P,4/'6 therefrom in an amount to be agreed upon between him and the Small Business Administration; that he be permitted to pay the balance of the proceeds of the sale to the Small Business ..Administra~i.0~ L~..s. atisfac.t£oa,.n£.~_ts.~acur, ed.~!aim against the property; That he be ordered to re~a~n possession of all remaining · funds until further order of this court.~ . DATED at Anchorage, Alaska, this /~day of August, 1991. BERND C. 6Uw~TSCHOW /~Pro f~s sion~rpora;ion ,,:,,..'.mE--Z.< .... Bernd- 'C .---G~etschow 2667:19 ~qLIG 30 "91 7.3:3S RTTY GF'~ OIL, G~S,,hlIH~O?-278-?022 P. 5/6 New frc~ :a:u~ac=urer ia ~.98~. :984 Mo~. D-6 Wi~e Pa~ Ca=erpi.L!ar ~i=.4 ~ ,~y blade a~d ~inch, Likm aew. · blade amd back-hoe ac.-ackmeacs, ~ =~,~ 1985, ezc Ia.Lie.:: .r Comp. ieee sec ~UG BO '-~1 13:3~ ~,¥TY GEN OIL, G~S, MIM907-278-?022 8 4-3/4" (R-L) Dr~-!l CoLlars ~l:~ ~-~/7_" Z.F. Co~acz~oms 8 3-L/2" (R-L) Dr~l Ca.rs ~ra 2-3/8" Z.r. Co~e¢:io~ 2-L/2 Tou Tande.= ~eei-~ack co=b. ~iese! po~erad ~-~ck ac~.iece ~rir-~ Ll:¢:la ~O..a~ ~jLLLe: 1/5 · .' ,1:: . . . . 3 Kouda four-'~heelers CIRICHTON & CO. l O83o N. CENTRAL EXPRESSWAY SUITE 175 DALLAS, TEXAS 75231 (214) 692-7872 August 21, 1991 Mr. Russell Douglass Commi ssi oner Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Dear Mr. Douglass: Pursuant to our conversation of August 19, 1991, enclosed is the Farmout Agreement between Alaska Crude Corporation and Texas & Delaware Corporation, Crichton & Co., and TMT Corporation. Since the terms of the Agreement were not met, an Assignment was never made to Alaska Crude Corporation on Oil Claims No. I (Mineral Survey #599) and No. 11 and 12 (Mineral Survey #1425). Thus the owners of the above Claims are Texas & Delaware Corporation (25%), Crichton & Co. (25%) and TMT Corporation (50%). JC/le Sincerely, CRICHTON & CO. Jack Crichton President RECEIVED AU G :! t991 Alaska 0il & Gas Cons. CommiSSi, ert Anchorage AMENDMENT TO THIRD AMENDED FARMOUT AGREEMENT TEXAS & DELAWARE CORPORATION ( "TDC" ) and TMT CORPORATION, (" TMT" ) entered into a Third Amended Farmout Agreement on August 1, 1984. Because of delays which have been encountered in securing the necessary permits for the drilling of ten (10) shallow wells as contemplated by the Agreement it has been determined between the parties that it is in their best interests to amend the terms of the Third Amended Farmout Agreement to provide for an additional ninety (90) days for the drilling of the ten (10) shallow wells. Ia consideration of the foregoing and other good and valuable consideration, it is hereby agreed between TDC/TMT and ALASKAN CRUDE CORPORATION that the term~ of the Third Amended Farmou t Agreement dated August 1, 1984 shall be amended at Article III(A) by s~bstitu~ing the. date "F~bruary 1, 1986" lieu of "November 1, 1985" as the latte~ date appears in Article ~(~). Except as provided for ia this ~mendment, the Third Amended Farmout Agreement shall remain unchanged and in full force and effect. TEXAS & DELAWARE CORPORATION ( Fa rmor ) ~AC~ A. CRICHTON President RECEIVED eom-~OR~,~zor,~ AUG 2,5 1991 ~o c ) Alaska Oil & Gas Cons. Commissien Anchorage RA~OND M T~HOM ~ff-- President ATTEST: - --1-- ALASKAN CRUDE CORPORATION WILSIKM~H. STEVEN~ - President Secretary STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this ~J~ day of ~~ , 1985, before me, the undersigned, a Notar~--P--ublic in a~d3for the State of Alaska, duly commissioned and sworn as such, personally appeared WILLIAM [3. STEVENS, to me known and known to me to be the President of ALASKAN CRUDE CORPORATION, the corporation named in the within aad foregoing AMENDMENT TO THIRD AMENDED FARM OUT AGREEMENT: and he acknowledged to me that he had in his official capacity aforesaid executed said instrument as the free act and deed of said corporation for the uses and purposes therein set forth, having full power and authority so to do. WITNESS my ha~d aad official seal the day and year in this certificate first above written. Notar~ Public ~n and for Alaska STATE OF TEXAS COUNTY OF DALLAS THIS 'IS TO CERTIFY that on this 3,'~- day of 1985, before me, the undersigned, a Notary Public-in and for the State of Texas, duly commissioned and sworn as such, personally appeared JACK A. CRICHTON, to me known and known to me to be the President of TEXAS & DELAWARE CORPORATION, the corporation named in the wi thin and foregoing AMENDMENT TO THIRD AMENDED FARMOUT AGREEMENT; and he acknowledged to me that he had in his official capacity afocesaid executed said instrument as the free act and deed of said corporation for the uses and purposes therein set forth, having full power and authority so to do. WITNESS my hand and official seal the day and year in this ce~tificate first above wri~.~~~ / /~ ~- ~. Notary Pub- c foc Texas / / My Commission Expires: ~/.~/ -2- STATE OF COLORADO ) / THIS IS TO CERTIFY that on this ~ day of ~~ , 1985, before me, the undersigned, a Notary Public in and ~for the State of Colorado, duly commissioned and sworn as such, personally appeared RAYMOND M. THOMPSON, to me known and known to me to be the President of TMT CORPORATION, the corporation named in the within and foregoing AMENDMENT TO THIRD AMENDED FARMOUT AGREEMENT; and he acknowledged to me that he had in his official capacity aforesaid executed said instrument as the free act and deed of said corporation for the uses and purposes therein set forth, having full power and authority so to do. WITNESS my hand and official seal the day and year in this certificate first above written. O~ary ~I~Ub~i~ f~r ~COl°~ad~ My Commission Expires: -3- Alasl a-Cr de Corporation }'Itm t Building 550 West 7Lh Avenue, SuiL¢ 1600 Anchorage, Alaska 99501 (907) 888-6363 THIRD AMENDED FARM OUT AGREEMENT THIS AGREEMENT is made and entered into on the day of , 1984, between TEXAS & DELAWARE CORPORATION, a Texas corporation, ("TDC"), with offices at 10830 Northcentral Expressway, Suite 175, Dallas, Texas 75231, and TMT CORPORATION, a Colorado corporation, (TMT"), with offices at 7006 South Alton Way, Building A, Englewood, Colorado 80112, (TDC and IHT being referred to collectively herein as "Farmors") and Alaskan Crude Corporation, an Alaska corporation, of 550 West Seventh Avenue, Suite 1600, Anchorage, Alaska 99510 (herein referred to as "ACC"). Farmors and ACC are sometimes herein referred to collectively as the "Parties". This Agreement reflects the assignment of the original Farm Out Agreement of June 3, 1981, between Farmors and C. E. Sauve to William H. Stevens, which assignment was executed on September 3, 1981, in accordance with the original Farm Out Agreement. This Agreement reflects the postponement of certain drilling dates provided in the original Farm Out' Agreement and the Amended Farm Out Agreement as well as certain substantive changes in the original Farm Out Agreement which were negotiated between Farmors and Stevens. This Agreement reflects the assignment of the Amended Farm Out Agreement of June 7, 1982, between Farmors and Stevens Lo Katalla Tertiary Recovery Corporation, an Alaska corporation, which assignment was executed on July 8, 1982, in accordance with the Amended Farm Out Agreement. This agreement reflects the changes Lo the Amended Farm Out Agreement as provided for 'in the Second Amended Farm Out Agreement between Farmors and Katalla Tertiary Recovery Corporation dated September 17, 1982, and the First and Second amendments to the Second Amended Farm Out Agreement which RECEIVED AU G 2 1991 Alas~.0ii & Gas Cons. Commissier~ '~nrhnrnne amendments were dated Hay 16, 1983, and December 30., 1983, respectively. This agreement also reflects the assignment of the Second Amended Farm Out Agreement From Katalla Tertiary Recovery Corporation Lo ACC dated , 1984. The Following is the entirety of the Agreement between the Parties and shall be deemed fully substituted in place of the original Farm Out Agreement of June 3, 1981, the Amended Farm Out Agreement of June 7, 1982, the Second Amended Farm Out Agreement of September 17, 1982, and all amendments to said Farm Out agree- ments. Article I Subject Property TMT and TDC represent, but do not warrant, that each is the owner of an undivided fifty.per cent (50%) interest in and to the oil and gas that may be produced, saved~ and marketed From the following described properties: Tract One Oil Claim No. 1, described in patent dated the 3rd day of June, 1909, from the United States of America to the Alaska Development Company, and recorded May 30, 1913, in Book 3 of Deeds, page 439, Cordova Recording Precinct (former- ly Kayak Recording Precinct), and con- taining 151.17 acres of land, more or less ("Oil Claim No. 1"); and Tract Two Redwood Oil' Claims Nos. 11 and 12, as ,described in patent dated the 21st day of July, 1924, From the United States of America to Chilkat 0il Company and re- corded September 30, 1924, in Book 3 of Deeds, page 595, Cordova Recording Pre- cinct (formerly Kayak Recording Pre- cinct) and containing 314.829 acres of land, mo~e or less ("Redwood Claims Nos. 11 and 12"); (the "Subject Property"), subject to the following: (1) an oil payment in favor of Standard Oil of California ("Standard") in -Page 2 of 19- the amount of $500,000.00, which amount is payable out of seven and a half per cent (7.5%) of the proceeds derived from the gross oil and/or gas production From or allocated to the Subject Prop- erty from any and all wells drilled on the Subject Property (the "Standard Oil Payment"); and (2) all rights by Standard in a deed dated June 28, 1973, From Standard to Arabian Shield Development Company. Article II Earning Rights By the drilling of ten (10) shallow wells in accordance herewith, ACC shall have earned and shall be entitled to an assignment of the rights as herein provided as to the entirety of the subject propety. k. First Ten Wells on 90 Acres. By drilling ten (10) "Shallow Wells" (as and where defined in Paragraph III.A of this Agreement) pursuant to Paragraph III of this Agreement, ACC shall earn and shall be entitled to receive 8n assignment, without warranty- of title, express or implied, from Farmors of a one hun- dred per cent (100%) working interest in all of the oil and/or gas that may be produced, saved, and marketed from said 10 shal- low wells to be described as hereinafter provided down to a depth as follows: (1) from the surface of the earth down to 100 feet below the stratigraphic equivalent of the greatest depth drilled with respect to acreage to be included in said 10 wells, but , not to exceed 1,800 feet; or (2) from the surface of the earth down to 100 Feet below the bottom of the producing horizon with respect to said 10 wells, but not to exceed 1,800 feet. -Page 3 of 19- earned and to subject to the (1) (2), Obligations as to First Ten Wells. per cent (8/SLhs) gas that be assigned to following: the overriding Sauve equal to (2.5~) of the may and marketed wells, free of drilling, ACC as to said 10 royalty of C. E. two and one half from the be of eight-eighths gross oil and/or produced, saved, said 10 and clear of completing, and operating wells that may said 10 wells all oil ali costs equipping, and/or gas be .drilled on the pursuant to to June Standard 0il Payment Agreement. The said royalty was orignally Favor of Farmors and assigned by Farmors by assignment dated the this overriding reserved in was duly C .E. Sauve 30, 1981. described in Paragraph I the amount out of seven (7.5%) or the gross oil be produced, From the said clear of all of this Agreement in of $500,000.00 payable and a half per cent eight-eighths (8/Bths) of and/or gas that may marketed free and drilling, saved, and 10 wells, costs of completion, ing may erty equipping, and operat- all oil and/or gas wells that be drilled on the Subject Rrop- pursuant to this Agreement. The wells interest shall be -Page 4 of 19- Upon payment to Standard oF $500,000 said seven and a half per cent (7 5°' . ,o) interest in the 10 shallow wells shall automatically revert to an oil production payment which shall be subject to overrid- ing royalty payments and operating costs and shall be divided in equal one half (1/2) shares between Farmors and ACC; (3) the reservation, in Favor of Farmors, in equal shares, of an oil production payment equal to twenty-one and a quarter per cent (~1.2.5%.) of the oil and/or gas that may be produced, saved, and market- ed From the said 10 wells, subject to all overriding royalty payments, and operating costs of said 10 wells. C. Additional Shallow Wells on Subject Property. additional shallow wells are drilled on the subject property, the production from such additional shallow wells, if any, shall be subject to the payments specified in Paragraph II.B(1) through D. Interest Earned and Obligations For Additional Shallow Wells. By drilling ten (10) shallow wells as hereinabove specified, ACC shall earn and shall be entitled to receive an assignment, without warranty of title, express or implied, From Farmors of a fifty per cent (50%) working interest in all of the oil and/or gas that may be produced, saved, and marketed From the remainder'of any such shallow wells drilled on the subject prop- erty down to a depth as Follows: -Page 5 of 19- (1) From the surface of the earth down to 100 feet below the stratigraphie equivalent of the greatest depth drilled with respect to acreage to be included in said 90 acres, but not to exceed 1,800 feet; or (2) From the surface of the earth down to 100 feel below the bottom of the producing horizon with respect to said 90 acres~ but not to exceed 1,800 Feet. The interest earned and to be assigned Lo ACC as to the remainder of any such additional shallow wells on the subject properly shall be subject Lo the following: (1) The overriding royalty of C. E. Sauve equal to two and a half per cent (2.5%) of eight-eighths (8/8Lbs) of the gross oil and/or gas that may be produced, saved, arid marketed from the Subject Prop- erty free and clear of all costs of drilling, completion, equipping, and operating all oil and/or gas wells that may be drilled on the Subject ProperLy pursuant to this .~ Agreement; (2) The Standard Oil Payment described in Article I of this Agreement in the amount of $500,000.00 payable out of seven and a half per cent (7.5%) of eight-eighths (8/aths) of the gross oil and/or gas that may -Page 6 of 19- be produced, saved, and marketed From the Subject Property f,ree and clear of all costs of drilling, completion, equipping, and operat- ing all oil and/or gas wells that may be drilled on the Subject Prop- erLy Free and clear of, all costs drilling, completion, equipping, and operating all oil and/or gas wells that may be drilled on the Subject Property pursuant to Lhis Agreement. Upon payment to Standard of, $500,000.00 said seven and a half, per cent (7.5%) interest in the additional shallow wells shall automatically revert to an oil production payment which shall be subject Lo overriding royalty payments, and operating costs and shall be divided in equal one half, (1/2) shares between Farmors and ACC. Article III Earning Obligations A. Initial Wells. The f,irst ten (10) shallow wells provided for in Paragraph II of, this Agreement shall be spudded at locations [o be agreed upon by the Parties, all of which shall be within thd old KaLalla Oilfield located upon Oil Claim No. 1 and f,urther located within 90 acres within said Oil Claim No. 1, which acreage shall be agreed upon by the Parties and located by metes and bounds or other appropriate description which shall be made an addendum to this Third Amended Farm Out Agreement. -Page ? of' 19- ACC shallow wells and workmanlike manner to the this Paragraph "Shallow Well" horizon known tion. plated as abandoned shall thereafter prosecute the drilling of the diligently, without unnecessary delay, and in good depths hereinafter specified in III.A. For the purposes of this Agreement, a is one that shall be drilled through the producing as the organic shale member of the Katalla forma- bear all of the testing, plugging back, limitation, the actual costs of gathering lines in the Field, and/or other necessary production operating costs on the ten (10) Shallow Wells that are drilled pursuant to Paragraph III.A of this Agreement. C. Failure to Drill. The only consequence of failure to drill the ten (10) Shallow Wells 8s provided All of the first ten (10) Shallow Wells must be commercial producers of oil and/or gas or plugged as dry holes, as the case may be, by July 31, 1985. B. Costs of Initial Wells. ACC or its assignees shall costs of drilling, reworking, deepening, or completing and com- and equipping (including, without and tankage with- facilities), and to be ACC's for in this Article III shall be the automatic termination of this Agreement in its entirety. any kind or character. There shall be no other penalties of Upon in Article II terms set out as provided for pursuant to the completion of this in Article IV Assignment of the obligation wells Agreement, and drilled Article III of this Agreement, and provided that the well or wells have been drilled in accordance with 811 of the terms and conditions of this Agreement, Farmors shall furnish to ACC end its successors in interest, an assignment (without warranty oF on a form to be approved by ACC's upon ACC's written request, title, expressed or implied) attorneys, of the interest -Page 8 of 19- earned by ACC, to wit: a one hundred per cent (100%) working interest in the First 10 shallow wells and a fifty per cent (50%) working interest in all subsequent shallow wells on the subject property, subject to the obligations described in Article II of this Agreement. There shall be no merger between the terms of the Assignment and this Agreement, and this. Agreement .shall sur- vive execution and delivery of all Assignments to be made pursu- ant to this Agreement. ACC's request for an assignment must be made within thirty (30) days from and after the completion of the ten (lC) Shallow Wells drilled pursuant to Article II of this Agreement. If such written request is not timely made, ACC shall relinquish to Farmors any and all rights and interest that ACC may have earned under the terms of this Agreement in the Subject Property and this Agreement shall terminate. Article V Subsequent Operations A. Operating Agreement. If and when an Assignment to ACC is made pursuant to Paragraph IV and/or V.B of this Agree- merit, and if operations are to be undertaken as to which Farmors retain a working interest in the Subject Property, an operating t'w ACC, agreement shall be entered into by and be een as operator, and Farmors, as non-operators, said operating agreement to be in a form substantially similar to the A.A'.p.L. Form 610, Model ., Operating Agreement--1977 and COPAS Accounting Procedure for Joint Operations as Recommended by the Council of Petroleum Accountants Societies of North American (suggested sample copies here attached, as "Exhibit B" and "Exhibit C", respectively), and .. ., said operating agreement and accounting procedure for joint o operations, after all detailed items thereof have been mutually agreed to by and between operator and nOn-operators, shall then ~'. become effective. It is contemplated by the parties to this · ._ Agreement that the detailed terms of [he operaLing agreement and the joint operating procedure shall be satisfiacLory to both non- operators and operator and based upon the present prevailing standards in use in the industry at this time, ACC, as operator, shall be responsible for any drilling operations undortaken on the Subject Property, In the event of any conflict or inconsis- tency between the terms of the hereinabove referred to operating agreement and this Agreement, this Agreement shall control, B, Option Deep Well, Within one (1) year from and after the completion of the ten (10) Shallow Wells (drilled in accordance with and pursuant to Article II! of this Agreement) as productive of oil and/or gas or plugged arid abandoned as dry holes, as the case may be, ACC shall have the option to spud a Deep Well to a depth sufficient to penetrate and evaluate the geological Formation known as the "Split Creek Sandstone Forma- tion"~ or to a total depth of 6~000 feet below the surface of the earth, whichever is the lesser depth. If ACC elects, within the time herein specified, to drill said Deep Well, it shall bear all the costs of said well incurred into the tanks, carrying IDC and IHT free and clear of any and all costs thereof into the tanks, if commercially productive, or through plugging and abandonment if a dry hole. In the event ACC elects to drill the Deep Well and drills the same in accordance with the terms of this paragraph, then ACC shall be entitled to receive an assignment From Farmors of an undivided one hundred per cent (100%) working interest in all of the oil and/or gas that may be produced~ saved, and mar- keted from the Subject Property below 1,800 feet and down to depth of 100 Feet below the bottom of the producting horizon~ if a dry hole, From 1,800 feet below the surface of the earth down to 100 feet below the stratigraphic equivalent of the great- est depth drilled. The interest hereby earned and to be assigned to ACC shall be subject to the Following: -Page 10 of 19- ,(2) (3) The overriding Sauve equal to two cent (2. 5%) of (8/aths) of the gas that may be arid marketed from erty, Free of drilling, and operating all wells that may 'be Subject Property and clear of completion, Agreement; The Standard Oil in Article I of royalty of C. E. and a half per eight-eighths gross oil and/or produced, saved, the Subject Prop- all costs equipping, oil and/or drilled on pursuant to gas the this Payment described this Agreement in the out of (7.55) of the gross oil ar, d/or gas be produced, saved, arid From the Subject Property, clear of all costs off amount of $500,000.00, payable seven and a half per cent eight-eighths (8/8tbs) of that may marketed free and drilling, completion, equipping, and operat- ing all oil and/or gas wells that be drilled on the Subject Prop- pursuant to this Agreement. reservation, in Favor of may erty The Farmors, in equal shares, of a pro- duction payment equal to Fifteen per cent (155) of the oil and/or gas which may be produced, saved, and marketed From the subject prop- erty, subject to overriding royalty -Page 11 of 19- payments and operating costs of all oil and/or gas wells that may be drilled on the subject property pursuant to this agreement; Article VI Conduct of Operations A. ACC shall properly test, or evaluate all Forma- tions, sections, zones, or other reservoirs in which, in the opinion of ACC, the presence of oil and/or gas is. indicated. B. Farmors' representatives shall have Full access to the Subject Property and to the derrick Floor of all wells at all times and shall have access to and be Furnished with all informa- tion on drilling progress. C. Prior to the commencement of any well, ACC shall notify Fa~mors of the drilling, coring, testing, and logging program For that well. D. ACC shall notify Farmors' representative, at least twenty-Four (24) hours in advance, of the running of all logs, the testing and coring of all Formations, the drilling into known or expected producing horizons, and the drilling through an unex- pected showing of oil or gas so that Farmors' representatives may be present to witness such operations. E. ACC shall comply with all of th'e geological re- quirements of Standard, which requirements ate set Forth in Exhibit A, attached to and by this reference incorporated into this Agreement. Farmors shall have the same rilghts as Standard pursuant to Exhibit A, and all references ~n Exhibit A to Standard shal.1 be deemed to be references also to Farmors. F. In the event a well is completed as non-productive of oil or gas, or is not capable of producing oil or gas in pay- ing quantities, ACC shall plug and abandon that well, but not un- til Farmors, if they or either of them elect, have had a reason- -Page 12 of 19- able opportunity to run a velocity survey to the bottom of the hole, at its or their sole expense, and to take over that well pursuant to Article VIII of this Agreement. Notification of plugging and abandonment shall be given to Farmors at least fourty-eight (48) hours (exclusive of Saturdays, Sundays, and holidays) prior to commencement of the plugging and abandonment. G. In the event ACC plugs and abandons any well to be drilled under the terms of this Agreement, ACC shall do so accordance with all laws, rules, and regulations established by the State of Alaska and the United States Government. Ail aban- donment procedures will be in accordance with acceptable industry standards prevailing at the time. H. ACC shall conduct all operations under this Agree- ment in a proper and workmanlike manner and in accordance with all applicable laws and regulations of the State of Alaska and of the United States Government. ACC shall indemnify Farmors~ and each of [hem, from any and all risk, liability, expense, and claim of every kind and character that might arise out of or in- cident to ACC's operations under this Agreement. I. ACC shall procure and Furnish Lo Farmors copies Workmen's Compensation, Comprehensive General Liability, and Comprehensive Automobile Public Liability, Employer's Liability Insurance coverage in amounts 'determined to be sufficient by Farmors. All insurance obtained by ACC pursuant to this Para- graph VI.I shall name Farmors as additional insured and shall quire fifteen (15) days advance notice to Farmors in the event of any material change or of cancellation in the coverage. Article VII Payments Farmors shall continue to pay any and all shut-down hydroeerbon royalty payments and similar payments that may be re- quired to maintain the Subject Property in Force and effect and -Page 13 of 19- shall furnish ACC with statements for such payments. ACC, promptly upon receipt of such statements, shall reimburse Farmors For all such payments. Farmors shall not be held liable in dam- ages For failure to properly make such payments if such failure were the result of a mistake, clerical error, or oversight. There are no such paymenLs known Lo Farmors to be an obligation in conjunction with the Subject ProperLy. ArLicle VIII Take-Over of Wells Prior to ACC's plugging or abandoning of any wells to be drilled pursuant Lo this Agreement, ACC shall notify Farmors of its intention to do so. Farmors shall have Fourty-eight (48) hours (exclusive of Saturdays, Sundays, and holidays) after re- ceipt of such notice to determine whether they or either of them desire to take over the well or wells that are proposed to be abandoned. In the event Farmors elect to take over any such well, the Farmors shall pay ACC the reasonable salvage value of any and-all salvageable material and equipmen~ less the reason- able cost' of salvaging said equipment then existing in the well or wells. ACC shall relinquish and assign to the Farmors any and all rights, titles, and interest to which ACC may be entitled in such abandoned well under the terms of this Agreement. All oper- ations on any su£h wells From and after the date of take-over by Farmors shall be aL Farmors' sole cost, risk, and expense. Article IX Relationship of Parties Farmors shall have no control over the operations to be conducted by. ACC pursuant to this Agreement. Those operations are to be conducted at ACC's sole risk~ and the expense of those operations shall be borne as p?ovided in this Ag?cement. None of those operations shall be considered as joint operations~ it be- ing expressly understood that this Agreement does not constitute -Page 14 of 19- or provide For any type of partnership or joint venture as be- ! tween the Parties. Article X Notices , A, All notices and other information required under the terms oF this Agreement to be Furnished to Farmors' repre- sentatives shall be Furnished to the ffollowjng: Lo TDC's Representatives: to TMT's Representatives: JACK A. CRICHTON (or) CLYDE C. HARTER 10830 Northcentral Ex- pressway, Suite 175; Dallas, Texas 75231 (214) 692-7872 RAYMOND M, THOHPSON 7006 South Alton Way, Building A; Englewood, Colorado 80112 (303) 773-6990 JACK CRICHTON and RAYMOND M. THOMPSON are appointed the representatives of TDC and TMT, respectively. TDC and TMT re- serve the right Lo replace their representatives and, upon exer- cise of t'hat right, shall Furnish ACC with the name, address, and telephone number of the new representative. B. All notices and other information required under the terms of this Agreement Lo be Furnished to ACC shall be Fur- nished to it as Follows: to ACC's Representatives: N. K. GOFF 550 West Seventh Avenue, Suite 1600 Anchorage, Alaska 99501 C. All notices and correspondence required or permit- ted under thls Agreement, except that required by Article VI of thls Agreement, shall be deemed to have been properly given when -Page 15 of 19- drilling operations. Farmors. deposited in the United States mail, postage affixed, and addres- sed to the Party to whom the notice is directed at the address for that Party set forth in this Agreement. A Party may change his or its address for the purposes of receiving notice by giving notice of change of address to the other Parties in accordance with Paragraph X.A or X.B as indicated. Article XI Assignment This Agreement shall not be assigned in whole or in part by ACC without the prior written consent of Farmors except as hereinafter provided. Farmors understand that ACC intends to assign all or a portion of its working interest as to the Subject Property to an investor or group of investors formed to finance such drilling and development of the Subject Property on the con- dition that any such assignee must engage ACC to conduct the Such assignment is hereby approved by Article XII Lesser Interest Clause In the event that Farmors own less than an undivided one hundred percent (100%) interest in the Subject Property, then the rights earned by ACC, the overriding royalty reserved to Farmors and assigned to Sauve~ and the Parties' respective shares of gross production of oil and/or gas shall be reduced in the proportion that the Farmors' actual interest bears to the entire undivided one hundred per cent (100%) 'interest in the Subject Property. Article XlII General A. Time is of the essence in fulfilling the terms and provisions of this Agreement. -Page 16 of 19- B. No agent or represenLative of any Party has the authority to make, and the Parties hereto shall not be bound by, any statement, representation, promise, or agreement not spec/fi- tally set forth or referred to in Lhis Agreement. No changes, amendments, or modifications of Lhis Agreement shall be valid un- less reduced Lo writing and signed by the Parties and attached to this Agreement as an addendum hereto. C. Nothing in this Agreement shall be consLrued so as Lo be in violation of applicable state and/or Federal laws or regulaLions. D. This Agreement shall be binding upon and shall inure Lo the benefit of Lhe Parties hereto and to their respec- tive heirs, devisees, successors, legal representaLives, and assigns. E. This agreement shall be construed pursuant to the laws of the laws of the State of Alaska and venue shall be laid in the Third Judicial District at Anchorage. EXECUTED as of Lhe date first above written. TEXAS & DELAWARE CORPORATION (Farmor) THT CORPORATION (Farmor) By: By President President ATTEST: ATTEST: Title: Title: ALASKAN CRUDE CORPORATION .,, ? ,-/? -Page 17 of 19- STATE OF TEXAS COUNTY OF THIS IS TO CERTIFY that on this day of , 1984, before me, the undersigned, a' Notary Public in and For the State of Alaska, duly commissioned and sworn as such, personally appeared , to me known and known to me to be the of TEXAS & DELAWARE CORPORA- TION, the corporation named in the within and Foregoing THIRD AMENDED FARM OUT AGREEMENT; and he acknowledged to me that he had in his official capacity aforesaid executed said instrument as the Free act and deed of said corporation for the uses and pur- poses therein set Forth, having Full power and authority so to do. WITNESS my hand and official seal the day-and year in this certificate First above written. Notary Public for My Commission Expires: STATE OF COLORADO COUNTY OF THIS IS TO CERTIFY that on this day of , 1984, before me, the undersigned, a Notary P~blic in and For the State of Alaska, duly commissioned and sworn as such, personally appeared , to me known and known to me to be the of TMT CORPORATION, the corpo- ration named in the within and Foregoing THIRD AMENDED FARM OUT AGREEMENT; and he acknowledged to me that he had in his official capacity aforesaid executed said instrument as the free act and deed of said corporation for the uses and purposes therein set Forth, having Full power and authority so to do. WITNESS my hand and official seal the day and year in this certificate first above written. Notary Public for My Commission Expires: STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this ~~day oF~-~L~Z~ , 1984, before me, the undersigned, a Notary Public in ~nd ~or the State of Alasks~ duly commissioned and sworn as such, personally appeared N. K GOFF~ to me known and known to me to be the Presi- dent of ALASKAN CRUDE CORPORATION, the corporation named in the within and Foregoing THIRD AMENDED FARM OUT AGREEMENT; and he acknowledged to me that he 'had in his official capacity aforesaid executed said instrument as the Free act and deed of said corpo- ration For the uses and purposes therein set Forth, having Full power and authority so to do. WITNESS my hand and official seal the day and year in this certificate First above written. Notary Public in and for Alaska My Commission -Page 18 of 19- ALASKAN CRUDE CORPORATION APPROVAL OF THE BOARD OF DIRECTORS ORYALL · ~ ~,:y APPRO-VE/D'I'~AP~ROVE , APPROVE~I ~AP~R~VE DA"[ E / DATE -Page 19 oF 19- May 22, 1991 WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Alaskan Crude Corporation Attn: Kelly Goff P. O. Box 11-1187 Anchorage, Alaska 99511 Dear Mr. Goff: As an oil and gas well operator in the State of Alaska, .Alaskan Crude Corporation (ACC) has assumed certain responsibilities. These responsibilities include compliance with the Alaska Oil and Gas Conservation Act (AS 31.05) and Title 20 Chapter 25 of the Alaska Administrative Code.. All of the wells operated by ACC in the state are in violation of the aforementioned statutes and regulations. McCoy Prospect No. 1 Section 6, TlS, R13W, SM A request for information dated October 30, 1987 (copy included) was sent to ACC. No response was received. The information remains delinquent. The Commission requests that it be submitted immediately. Mike Pelch No. 1 ' Section 2, T5N, RllW, SM This is currently a shut in gas well and has been idle since the second quarter of 1987 when the well was reperforated without Commission approval. The Commission requests an updated status report showing current condition (e.g. wellhead pressures) and a statement of what plans are scheduled for the well in the next 12 months. Burglin 33-1 Section 33, T10N, R14E, UM Commission records classify this as a suspended well. The lease on which the well is located has expired. Commission regulations (20 AAC 25.105) require wells to be abandoned prior to lease expiration. ACC is in direct violation of state regulations and must immediately take steps to properly abandon this well and is subject to penalties provided for under AS 31.05. 150. Kelly Goff Alaskan Crude Corporation -2- _.i.May 22, 1991 ACC F-2 Section 26, T10N, R13E, UM This well is also located on an expired lease and is subject to the same requirements as stated above for the Burglin 33-1." ACC F-3 Section 29, T10N, R14E, UM This well is also located on an expired lease and is subject to the same requirements as stated above for the Burglin 33-1. Katalla No. 1 Section 36, T19S, R5E, Copper River Meridian This well has been shut down since October, 1986. The twelve month period for an operation shutdown has expired and action must be taken to abandon the well per 20 AAC 25.105. We anticipate a prompt response. Alaska Oil and Gas Conservation Commission Telecopy No. (907) 276-7542 November 30, 1990 Thomas W McKay- ATO 1438 Drlg Engineer ARCO Alaska, Inc P 0 Box 100360 Anchorage, AK 99510-0360 Res Abandonment costs for specific wells Dear Mr McKay: As recer~tly discussed on the phone, we would appreciate ARCO's help in developing costs to abandon some specific wells. These costs would include down]hole work, cutting off the casing at least three feet below rig grade level, and installing abandon- ment markers. Costs are not to include location cleanup or filling of pits. The wells for which we would like ARCO's estimated abandonment costs are the Alaskan Crude wells: F-2 Sec 26 T~0N R13E UM F-3 Sec 29 T10N R14E Burglim 33-1 Sec 33 T10N R14E.UM Mike Pelch ~1 Sec 2 T 5N RilW SM McCoy Prospect Sec 6 T IS R13W SM Katella KS-1 Sec 36 T19S R 5E Tom, I appreciate ARCO's help in obtaining this information. Sincerely, Blair E Wondz~T1, P.E. Sr Petroleum Engineer Jo/A.BEW. 168 Alaskan Crude Corporation P.O. Box 11-1187 Anchorage, Alaska 99511 (907) 522-5232 December 14, 1988 C.V. Chatterton Chairman Alaska Oil & Gas Conserv@tion Commission 3001 Porcupine Drive Anchorage, g.g 99501-3192 RE' Katalla Wells KS-1 through KS-lO Dear Chat; Thank you for you letter of December 8 concerning the above referenced wells. ACC was unable to perform the work intended im the Sundry Notice approved 3/07/88, see attached form 10-404. We did have personnel on site in May and again in September to check on the status of the Well KS-1 and our equipment. Everything was found to be in order at those times. As for wells KS-2 through KS-10 ! will happily apply for new 10-401 Drilling Permits. We look forward to getting active again. Sincerely, AL^SKA~SUDE C~O R_ P ORAT I~N David J]/0ryall, President Enclosures (1) cc file · · Fo~ No. DL-9 Revised May, [960 ,' . ! · ', ST^~S oF AL~ DE?ARTMENT OF NATURAL RESOURCES Dlvi&lon o£ Lands Bond of Oil and Cas Lessee Lease No. ADL 318614 K.NOW ALL MEN BY THESK PRESENTS that we, .ALASKAN CRUDE CORPO~ATiON , , ~ F,E~Tt~fCTED C~RTIFICAT~. OF DEPOSIT WITH ~INI~R BANK ALAS~ ,. prtn:i.at, .~ ~0100000827 ~ome address Is DDU west seventh Avenue, Suite i600 Anchorage. Alaska 99501." . ' ara held and firmly bound unto che-S~aKm of Alaska In ohm s~ of &' (2) any o~e= of a portion of ~he land subJe=~ ~o ~he =overage of this bond who has a statutory right co compensation In connection with a reservation of the oil and Sas deposl=s ~o cha S~a~e of Alaska, and (3) any ~essee or perml=cae under a lease or permE~ issued by the S~aCe of Alaska prior ~o che issuance of a~ o~ or ~as lease for =he sa~ ~and sub]acc co this bond, coveri~ the use of ~he surface or the prospeccin~ fo= or developmen= of ocher mineral deposE=s In any pot=ion of such [and, =o be paid to the Scats of Alaska. Foc such pa~mnc wel% and ~ruly to be made w, bind ourselves ~nd each of us and each of ouc heirs, e~c~tors, adminis~ra~ors, successors and assiSns, jointly and severally by ~hese presents. The conditions of the foce~oin8 ob~iSacions are such chat, whereas: A. The principal ho~ds an o[1 and ~as lease, dated 11/1/80 ., oa lands of the S=a~e of Alaska under ~he ]ur%sdiction o~ the Dtvisio~ o~ Lands of ~he Depar=menc of Na~ura~ Resources, described as fol%ows: Sections 33 and 34 T10 N _, R 14 E , Umiat Heridian, containing £, 280 acres, more or less. B. The principal is authorized to drill for, explore for, develop, proddce, process, and market oil and gas deposits in or under the lands covered by such lease and is obligated to comply with certain covenants and agreements set forth in such lease. C, The principal and surety agree that without notice to the surety the coverage o£ this bond shall extend co and include any extension of the lease covered by this bond, such coverage to continue without any interruption due to the expiration of the term set forth in the Lease. D, The surety hereby waives any right to notice of and agrees that this bond shall remain in full force and effect notwithstanding: l. A transfer or transfers et:her In whole or in par: of the [ease, and further agrees to remain bound under this bond as to the interests in the lease retained by the principal when the approval of the transfer or transfers becomes effective;2. Any modif£carton of the [ease or obligations thereunder Whether or effected by co~iCmenc of such Lease co unit, cooperative, co.unitization, or storage agreements, or development contracts, suspensions of operations or production, waivers, suspensions, or changes In rentaL, minim~ royalty and royalties, compensatory royalty pa~encs, or otherwise. NOW THEREFORE, if said ptincipa~ shall in aL1 respects faithfully compty with all of the provisions of the Lease referred co hereinabove, chert :he above obligations are. to be void; otherwise, co remain tn furl force and effect. June t9 8 5 · , , ,a · - /, EXHIBIT 4 r ~ ' STATE OF ALASKA ALASKA ~,,' AND GAS CONSERVATION COMMISSION MONTHLY REPORT OF DRILLING AND WORKOVER OPERATIONS 1. Drilling well Workover operation [] 2. Name of operator Alaskan Crude 3. Address P 0 Box 111187 Corporation Anchoraqe, 4. Location of Well at surface 2414' WEL and 1865' SNL Ak 99511 Sec 36 T19S R5E CRM 5. Elevation in feet (indicate KB, DF, etc.) I 6. Lease Designation and Serial No. 94_'J<J~ I Oi! Claim No 7. Permit No. 85-124 8. APl Number 50- 069-20002 9. Unit or Lease Name Kata 1 ] a 10. Well No. KS-1 11. Field and Pool Katalla For the Month of. November ,19 88 2. Depth at end of month, footage drilled, fishing jobs, directional drilling problems, spud date, remarks The well at this time X-mas Tree, with open filled w/ brine water. on 3-7-88 Form' 10-403 done. is closed in and is equipped with a complete ended tubing hung @ 1740' and the well is The work authorized by the Commission Application for Sundry Approval was not 13. Casing or liner ru.n and quantities of cement, results of pressure tests 14. Coring resume and brief description 15. Logs run and depth where run RECEIVED 6. DST data, perforating data, shows of H2S, miscellaneous data 0il.& Gas Cons, C0mmissi0~ 17. I hereby certify that the foregoing is true and correct to the best of my knowledge. SIGNED C- TITLE Pres i dent DATE 1 2- 1 4-88 NOTE Report on this form~' equiizfd for each calendar month, regardless of the status of operations, and must be filed in duplicate with the Alaska Oil and Gas Conservation Commission by the 15th of the succeeding month, unless otherwise directed. Form 10-404 Submit in duplicate Rev. 7-1-80 Telecopy No. (907) 276-7542 December 8, 1988 David J Oryall President Alaskan Crude Corporation P O Box 11-1187 Anchorage, AK 99511 Re: Katella Wells KS-1 through KS-10 Dear.-.'Mr Oryall: A sundry notice, approved 3/7/88, was submitted for well KS-i to pull and re-run tubing with bottom hole pump, and to evaluate the well during 1988. If this work has been done, please report the results on a Report of Sundry Well Operations, form 10-404. This is a reminder that the 10-401 Drilling Permits for Kateila wells KS-2 through KS-10 expired in July of 1987 [per 20 AAC 25. 005(h)]. If you wish to drill these wells, it will be necessary to apply for new permits. if you have questions, please contact me or Lonnie Smith. Sincerely,. /'~ .! ,' / /" C V Chatterton Chairman jo/A.BEW.126 Telecopy (907) 276-7542 November 21, 1988 David J Oryall Vice President Alaskan Crude Corporation 550 West 7th Ave, Suite 1600 Anchorage, AK 99501 Re: Katel!a Well~l~)through KS-10 Dear Mr Oryall: A sundry notice, approved 3/7/88, was submitted for well KS-1 to pull and re-run tubing with bottom hole pump, and to evaluate the well during 1988. If this work has been done, please report the results on a Report of Sundry Well Operations, form 10-404. This is a reminder that the 10-401 Drilling Permits for Katella wells KS-2 through KS-10 expired in July of 1987 [per 20 AAC 25. 005(h)]. If you wish to drill these wells, it will be necessary to apply for new permits. if you have questions, please contact me or Lonnie Smith. Since. re ly,..-r" · / :.-, ,:..'/,.' / /: ; ~ z // : / :.; : .,/' . . //'. : . , .~...../ · ~ . . ... : .~. ._ ..... ~ . .... .' / C V Chatterton Chairman jo/A.BEW.126 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMIS~SION APPLICATION FOR SUNDRY APPROVALS 1. Type of Request: Abandon [] Suspend E3 Operation Shutdown [] Re-enter suspended well ~ Alter casing [] Time extension [] Change approved program [~ Plugging [] Stimulate [] Pull tubing ~ Amend order [] Perforate [] Other:~ 2. Name of Operator ALASKAN CRUDE CORPORATION 3. Address Mailing Address 9525 King St./ P O Box 111187 Anchorage, A~9511 4. Location of well at surface 2414' WEL and 1865' SNL Sec#36 T-19-S, R-5-E,CRM 5. Datum elevation(DForKB) 94' KB/85.3 MSI, 6. UnitorPropertyname Katalla 7. Well number KS- 1 At top of productive interval Same At effective depth Same At total depth February 1988 11. Present well condition summary Total depth: measured 18 3 8 ' true vertical Same Effective depth: measured 360 ' - , true vertical Same 8. ~rmitnumber 85-124 9. APInumber 50-- 069-20002 10. Pool Katalta R.K.B. feet Plugs (measured) None feet 1800 ' feet Junk (measured) None feet Casing Length Structural Conductor (Surface) 76 ' Surface 351 ' Intermediate Production LinerHung @21'KB 1783' Perforation depth: measured Size Cemented Measured depth True Vertical depth 9 5/8" To surface 85' R.K.B. Same 7" To surface 350' R.K.B. Same 1804 ' Same 4½" Slotted true vertical Tubing (size. grade and measured depth)2 3/8" - 4.6# N-80 10rd. Hung with tail @ 1740' Packers and SSSV (type and measured depth) None 12.Attachments Descriptionsummawofproposal[] Detailedoperationsprogram [] BOPsketch [] Hereto = Form 10-403 Rev. 7-1-80 and (85-124) 13. Estimateddateforcommencingoperation Between May 1st and October 30, 1988 14. If proposal was verbally approved Name of approver Date approved 15.1here yc~~yth~he~9~going is true and correct to the best of my knowledge Signed ~/~~~_ .~-~/~/__ Title Chairman/Sec. Treas ,,, Commission Use Only Conditions of approval Notify commission so representative may witness I Approval [] Plug integrity [] BOP Test [] Location clearanceI Date 02/24/88 No. ~_..~,. /t ,~ This approval is for well 0RI011'JA.L SIGNED BY Approved by I.n~lE C..qMITH Form 10.403 Rev 12-1-85 testin~g only; Approvea Copy ,_~Retyrne_d ~ .. ~ -. f.~' ~/~ 6ommissioner by order of ._~ /~ ~ the commission Date ~ ,~/'?'/> Submit in triplicate STATE OF ALASKA ~ ~ ~'- ~ ~- ALASKA OiL AND GAS CONSERVATION CO"~MISSION SUNDRY NOTICES AND REPORTS ON WELLS 1. DRILLING WELL [] COMPLETED WELL [] OTHER 2. Name of Operator ALASKAN CRUDE CORPORATION 3. Address Mailing Address 9525 King St./ P O BOX 4. Location of Well 2414' WEL & 1865' SNL 36 T-19-S, R-5-E, CRM 111187 Anchoragei Ak 99511 Sec 7. Permit No. 8. APl Number so- 069-20002 9. Unit or Lease Name 5. Elevation in feet (indicate KB, DF, etc.) 94' KB/85.3 MSL I 6 . Lease Designation and Serial No. Oil Claim ~T Katalla 10, Well Number KS ~] 1 1. Field and Pool Katalla 12. (Submit in Triplicate) Perforate [] Alter Casing [] Perforations Stimulate [] Abandon [] Stimulation Repair Well [] Change Plans ~-I Repairs Made Pull Tubing [~ Other ~ Pulling Tubing (Note: Report multiple completions on Form 10-407 with a submitted Form 10-407 for each completion.) Check Appropriate Box To Indicate Nature of Notice, Report, or Other Data NOTICE OF INTENTION TO: SUBSEQUENT REPORT OF: (Submit in Duplicate) [] Altering Casing [] Abandonment [] Other 13. Describe Proposed or Completed Operations (Clearly state all pertinent details and give pertinent dates, including estimated date of starting any proposed work, for Abandonment see 20 AAC 25.105-170). The operations on this well were suspended after evaluating the data and information gained from the drilling & completion programs on October 1, 1986. ACC is requesting A.O.G.C.C. Approval of ACC's intent to pull the tubing and rerun same equipment with abottom hole pum~in order to evaluate the well~ potential. This operation would take place' between May 1st and October 30, 198%. The well at this time is closed in and is equipped with a complete X-mas Tree, with open end tubing hung @ 1740' and the well bore is filled with brine water. -~. NOTE: The above two paragraghs were submitted to the A.O.G.C.C. in the (1-27-87) reports. ACC did not accomplish its goals in 1987 and has rescheduled its plans for KS #1 for the same time frame in 1988. 14. I here/by ~r~-,~ that the foreg~ is true and correct to the best of my knowledge. Sign ed [/~/~~ ~~/~ Title Ch a i r ma n / S e c. T r e.as. The__space%el%w~or C/~mi;sion u~e '/ -~ ,r ....... Cot~ditions of Approval, if any: .' \ \ ..- ""-. By Order of Approved'lEV- .... ""-.. COMMISSIONER the Commission Form 10-403 Date 02/24/88 Date [ ~Sd~mit "Intentions" in Triplicate Rev. 7-1-80 and "Subsequent Reports" in Duplicate Oxford® MADE: IN U.S.A. NO. 753 1t3 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501 (907) 279-1433 TO: RE': Receipt of the following material which was transmitted via l~-,~...,~ ~/-~V~''-) is hereby acknowledged: QUANT I TY DESCRI PT ION RECEIVED: DA TED: Copy sent to sender YES ,r . NO ~ STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION SUNDRY NOTICES AND REPORTS ON WELLS 1. DRILLING WELL [] COMPLETED WELL [] OTHER Suspended 2. Name of Operator ALASKAN CRUDE CORPORATION 3. Address Mailin~ Address 10501 Olive Ln/P.O. Box 11-1187. Anchorage, Alaska 4. Location of Well 2414' W.E.L. & 1865' S.N.L. T-19-S, R-5-E, C.R.M. (9511 Sec 36 5. Elevation in feet (indicate KB, DF, etc.) 94' KB/85.3 MSL 6. Lease Designation and Serial No. 0il Claim # I 12. 7. Permit No. 85-124 8. APl Number 50- 069-20002 9. Unit or Lease Name Katalla 10. Well Number KS# 1 11. Field and Pool Katalla Check Appropriate Box To Indicate Nature of Notice, Report, or Other Data NOTICE OF INTENTION TO: SUBSEQUENT REPORT OF: (Submit in Triplicate) (Submit in Duplicate) Perforate [] Alter Casing [] Perforations [] Altering Casing [] Stimulate [] Abandon [] Stimulation [] Abandonment [] Repair Well [] Change Plans ~] Repairs Made [] Other [] Pull Tubing ~] Other ~] Pulling Tubing [] (Note: Report multiple completions on Form 10.407 with a submitted Form 10-407 for each completion.) 13. Describe Proposed or Completed Operations (Clearly state all pertinent details and give pertinent dates, including estimated date of starting any proposed work, for Abandonment see 20 AAC 25.105-170). The operations on this well were suspended after evaluting the data and information gained from the drilling & completion programs on October 1, 1986. ACC is requesting A.O.G.C.C. Approval of ACC's intent to pull the tubing and rerun ccmcS~ equipment with a bottom hole pump in order to evaluate the wells potential. This operation would take place between May 1st and October 30, 1987. The well at this time is closed in and is equipped with a complete X-Mas Tree, with open end tubing hung @ 1740' and the well bore is filled with brine water. Signed Title The spac~/bel~--w for Co~'ssion u'se// Conditions of Approval, if any: By Order of Approved by COMMISSIONER the Commission Date Form ! 0-403 Rev. 7-1-80 Submit "Intentions" in Triplicate and "Subsequent Reports" in Duplicate STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMI'SSION MONTHLY REPORT OF DRILLING AND WORKOVER OPERATIONS 1. Drilling well [~ Wor. kover operation [] 2. Name of operator 7. Permit No. ALASKAN CRUDE CORPORATION 84-124 Address Mailing Address 8. APl Number 10501 Olive Lane/P.O. Box 11-1187 Anchorage, Alaska 99511 5o- 069-2002 Location of Well at surface 2414' W.E.L. & 1865' S.N.L. Sec. 36, T-19-S, R-5-E, C.R.M. 5. Elevation in feet (indicate KB, DF, etc.) I 6. Lease Designation and Serial No. 94'-KB/85.3 MSL lOll Claim No I Unit or Lease Name Katalla 10. Well No. KS-It 1 11. Field and Pool Katalla For the Month of, 12. Depth at end of month, footage drilled, fishing jobs, dir~tional drilling problems, spud date, remarks ~otal Depth of Well (T.D.) 1838' R.K.B. 12¼" Hole to 88' R.K.B. (Conductor) (Surface) (Air) 11-17-85 8 3/4" Hole to 356' R.K.B. (Surface) (Gel mud) 7-9-86 - 7-13-86 6¼" Hole to 1838' R.K.B. (Liner) (Polymer Mud) 7-21-86 - 8-22-86 13. Casing or liner run and quantities of cement, results of pressur~ tests 9 5/8" - 36# N-80 BTC set @ 85 R.K.B./Class "G" Cmt. from shoe to surface. 7" - 23# K-55 8rd set @ 350'/Class "G" cmt. from shoe to surface 4~"-11.6# K-55 8rd slotted liner. Hung @ 21' R.K.B. w/shoe @ 1804' 2 3/4" - 4.6# N-80 10rd w/open end shoe @ 1740' R.K.B. 14. Coring resume and brief description lO' or 5' Drill samples were taken from surface to T.D. Tot~o Single Shot surveys were taken (7° chart) @ 85'-02 350'-o to 1/42, 1240' - 1/49 and @ 1830 = 1/29 15. Logs run and depth where run Grammaray-Newtron (8 3/4" hole) 356'-9 5/8" casing, shoe @ 85' (6¼"hole) from T.D. to 356' log # 1 single point resistivity, SP-Gammaray Log # 2 Gammaray Density _Lo~g #~3 Standard electric log 16" - 64" normal C~TL~o~'f#~ Side wall Newtron Gammaray 1 6. DST data, perforating data, shows of H2S, miscellaneous data No D.S.T.'s were run - through tubing swabbing was attempted to evaluate the wells potent w/no conclusive results. 17. I hereby cer ' that the foregoing is e and correct to the best of my knowledge. SIGNED ~~% TITLE President/C.E.O. /-- -- . ,......_ ,. ,, 27 NOTE--Report on this f/Cra is requfr~J for each calendar month, regardless of the status of operations, and must be filed in duplicate with the Alaska Oil and Gas Conservation Commission by the 15th of the succeeding month, unless otherwise directed. Form 10-404 Submit in duplicate ~'~ -.- ' -"~;,-'.- ,5.. '.~:1 '- .,-., - ' '. ...... .... . ...... -*,:-5~? 'v;. ::,'- ,' '- ':, ~ ---v:.-=,,. . .. ,1 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION APPLICATION FOR SUNDRY APPROVALS 1. Type of Request: Abandon [] Suspend ~ Operation Shutdown [] Re-enter suspended well ~q Alter casing [] Time extension ~ Change approved program FX Plugging [] Stimulate [] Pull tubingX3 Amend order [] Perforate [] Other 2. Name of Operator ALASKAN CRUDE COR?O~ATION 3. Address Ma±l±hg 'Address 10501 Olive Ln/P.O. Box 11-1187 Anchorage, Alaska 99511 4. Location of wellatsurface 2414' WEL and 1865' SNL Sec # 36 T-19-S, R-5-E C.R.M. 5. Datum elevation (DF or KB) 94'-KB/85,3 MSL 6. Unit or Property name Katalla 7. Well number KS-1 At top of productive interval Same At effective depth Same At total depth ~,_~ ~_.~ 1987 8. Permitnumber 85-124 9. APInumber 50-- 069-20002 10. Pool Katalla feet 11. Present well condition summary Total depth: measured 1838' R.K.B. Effective depth: , true vertical Same measured 360 '-1800 ' true vertical Same Casing Length Structural Conductor (Surface) 76' Surface 351 ' Intermediate Production Liner Hung @ 21' K oB, 1783' Perforation depth: measured feet feet Plugs (measured) None feet feet true vertical Junk (measured) None Size Cemented Measured depth True Vertical depth ~.~" Slotted Same 9 5/8" To surface 85' R.~-~B. Same Same ~ .. . ?. fZ~ Tubing (size, grade and measured depth) 2 3/8" - 4,6# N-80 10rd, Hung with tail @ 1740' Packers and SSSV (type and measured depth) None,: 12.Attachments Description summary of propos~al I~ Detailed operations p;ogram E~ BOP sketch [] 13. Estimated date for commencing operation Between May 1st and. October 30~, 14. If proposal was verbally approved 1987 Name o~.p.l~.o.ver Date approved 15. I her~j~ that the for~'~g is true and correct to the best of my knowledge Signed - /' "7/ Conditions of approval Commission Use Only Notify commission so representative may witness L-J Plug integrity [] BOP Test [] Location clearance~ Approved by Commissioner by order of the commission Date Form 10-403 Rev 12-1-85 Submit in triplicate Alaskan Crude Corporation 10501 Olive Lane Anchorage, Alaska 99515 (907) 522-5232 l~'larch 14, 1986 ~.~r. Bill Van Allen Alaska Oil & Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 RE: Katalla Oilfied %~ell Locations KS-i through KS-10 Dear Bill: As we have discussed in the past and again on ~larch 12, 1986, there will be changes to the locations of Alaskan Crude's Wells KS-1 through KS-10 to be drilled in the old Katalia Oil Field. Item No. 14 on the Pern~it to Drill, distance to nearest property line, will also be revised for all of the above mentioned wells. -r~lf-'KS~ ~as a corrected location of: 914.92' WEL, 1825' SNL, Sec. 36, T 19S, R5E CR~ Btm. hole location: Same Distance to Nearest Lease Line: 1005.76' from the property line to the West. Well KS-2 has a corrected location of: 1332.49' WEL, 1837.5' SNL, Sec. 36, T i9S, R5E CRM Btm. hole Location: Same Distance to Nearest Lease Line: 611.56' from the property line to the West. The corrected locations and distances for Wells Ks-3 tl~roug-h KS-10 shall be provided to you as the locations are built and surveyed in. . ~' ' i~' ~: ~e appreciate all the help you and Commissioners have provided ACC and if we can be of any assistance please don't hesitate to call. Very truly yours, ALASKAN CRUDE CORPOP~.TION D J 0/s h David J. Oryali Vice President/Exploration · \% CLAIM' NO. I . _ · U S'MS 599 0 0 Z ~6.42' ~7 ua IlilC I00, z ~Vo. Z O' COR. IV Febr~mry 14, 1986 :~. David J. Oryall Vice President AlasP~ln Cr~.te Corporation 550 W. Seventh Avenue, Suite 1600 And~orage, Alaska 99501 AlasPm. Crude Corporation I~talla KS-1 Permit No. 85-124 It is noted that the "Alaska Report", ;~,lished v~eklY b~,,~ Petrole~n.,,_~ . information., has been reporting a No_vember 17, 1985 spud d~te and subse- quent maspension for the ~abject '~all. }~e~ng this i~fo_rmation to be correct, I '~ish to advise yoga that to date the Cc~rission has not received the follov~ing required i~£ormation: l.ontb, ly RepOrt of Drilling and i~rkover Operatior,.~ Form.. 10-404 (20AAC 25.070(a) (2)). I vzish also to advise that a survey plat certified by a reFfistered land~ surveyor, sha.~ng the precise surface location of ~b_..e v~ll, b~s ~ot yet ' been received. On July 5, 1985, Mr. Kelly'C~ff of }~ur corporation ad- vised Cx~,~missior: staff n~mber !..,~lliam Vain Alen that ap, "as-built" survey2 - reflecting the well's precise location ~rill be sui~tted approx~vately Auo~mt 15, 1985. Please submit the above material. Sincerely, Lonnie C. Smith Cannissioner LCS:vdl July 1, 1985 Mr. David J. Oryall Vice President Alaskan Crude Corporation 550 W. Seventh Avenue, Suite 1600 Anchorage, Alaska 99501 Re: Katalla KS-1 Alaska Crude Corporation Permit No. 85-124 Sur.-Loc. 2414'I~L, 1865'S~, Sec. 36, T!9S, R5E, CRiM. Btmhole Loc. S A M E Dear Mr. Oryall: Enclosed is the approved application for permit to drill the above referenced well. A complete set of drill cuttings samples is required consisting of no less than four tablespoons of washed and dried cuttings for each 10, 20, or 30 foot interval of hole drilled, whichever interval is determined for sample collection. If coring is conducted, a brief description of each core 'and a one cubic inch size chip from each foot of recovered core is required. A complete mud log is required. An inclination survey is required as per 20 ~AC 25.050(a)(2). If available, a tape containing the digitized log information shall be submitted on all logs for copying except experimental logs., velocity surv~vs__~ and dipmeter surveys. Many rivers in Alaska and their drainage systems have been classified as important for the spawm~ing or migration of anadromous fish. Operations in these areas are subject to AS 16.05.870 and the regulations promulgated thereunder (Title 5, Alaska Admin.~.strative Code). Prior to commencing operations you may be contacted by the Habitat Coordinator's Office, Department of Fish and Game. Pollution of any waters of the State is prohibited by AS 46, Chapter 3, Article 7 and the regulations promulgated thereunder (Title 18, Alaska Administrative Code, Chapter 70) and by the Federal Water Pollution Control Act, as amended. Prior to David J. Oryai~ Katalla KS-1 July i, 1985 commencing operations you may be contacted by a representative of the Department of Environmental Conservation. To aid us in scheduling field work, please notify this office 24 hours prior to commencing installation of the blowout prevention equipment so that a representative of the Co~ission may be present to ~itness testing of the equipment before the surface casing shoe is drilled, l~here a diverter system is required, please also noti~v_~ this office 24 hours_ Drior~ to commencing equipment installation so that the Commission may witness testing before drilling below the shoe of the conductor pipe. In the event of suspension or abandonment, please give this office adequate advance notification so that we may have a witness present. Very ~ruly~ y~ours, ~ Chairman of Alaska Oil and Gas Conservation Co~ission be Enclosure cc: Department of Fish & Game, Habitat Section w/o encl. Department of Environmental Conservation w/o enc!. Mr. Bill H. Lamoreaux 06-12-85 Alaskan Crude Corporation Hunt Building West 7th Avenue, Suite 1600 Anchorage, Alaska 99801 (907) 888-6868 June 10, 1985 Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 RE: Application for Permits to Drill Alaskan Crude Corporation Katalla-Stevens No. 1 through No. 10 Gentlemen: Please find enclosed three copies each of our Application for Permit to Drill for the Katalla-Stevens No. 1 through No. 10 exploratory wells on Oil Claim No. 1 at Kataila. Included are the following docu- ments: · 2. 3. 4. AOGCC Form 10-401 AOGCC Conservation Order No. 179 Location Plat Filing Fee of $100 per well Thank you for your consideration of these applications. If you re- quire additional information, please contact Mr. Kelly Goff at Alaskan Crude. Sincerely, ALASKAN CRUDE CORPOP~TION ,4 4;/./; David J. Oryall Vice President/Exploration DJO/ra Enclosures RECEIVED Alaska Oil 8, Bas Cons, Commission A~;chor-age STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERMIT TO DRILL 20 AAC 2,5.005 la. Type of work, DRILL REDRILL DEEPEN lb. Type of well E XPLORATOR~[~ DEVELOPMENT OIL [] DEVELOPMENT GAS n SERVICE [] STRATIGRAPHIC L~ SINGLE ZONE r'-I MULTIPLE ZONE [~] 2. Name of operator ALASKAN CRUDE CORPORATION 3. Address 550 W 7th Ave., Suite 1600 4. Locatio'~'~~f ~v~ll'at s~rfac~ I ,~' ~ .~-' -~* Same At total depth Same ' ,5. El-'----~v'-~ii'~n-i~ feet (indicate K-B-, i~'F etc.) ~~ 85 f KB 12. Bond information (see 20 AAC 25.025) Type Blanket 13. O~slance and direction from nearest town Cordova NW Anchor_a_~_,_ A__I a ska 16. Proposed depth (MO & TVO} 1,800 99501 6. Lease designation and serial no. Oil Claim No. 14. Distance to nearest pro_pe_rt~/ or leas~ 9. Unit or lease name Katalla 10. Well number KS-1 11. Field and pool Katalla Field Katalla Pool CD #0100000452 Surety end/or number Amount ~ 0 (') I") 0 ., Rainier Bank Alaska_ $2~ ..... 15. Dislance to nearest drilling or completed well n / a feet 20. Anticipated pressures (~ee 20 AAC 25.035 (c} (2) 18. Approxima%e spud date July 1, 1985 ~ psig(~ .... Surface ~2___psig~ ] _R00.,ft. TD (TVD) 17. Number of acres in lease ~e,,t 151.17 19. If deviated (see 20 AAC 25.050) I KICK OFF POINT feet. MAXIMUM HOLE ANGLE o ! 21 Proposed Casing, Liner and Cementing Program SiZE ........ CASiNGANOLiNER SETTINGDEPTH QuAN~ISYOFCE~ENT' Hole "Cas(X;- We----'~ :GTade Coupling tength MD TOP TVO [~6%~TT'OMTVO (incl;destagedata) ~TY,- ~"57~'-!i6-6-6-6-~'--- K55 8rd 80'---'~urfac~ ..|~80"''I..80t' to surface "' 8 3/~7' ' ~0# K55 '8rd '350'' ~urfac~. 350' ~.350' to surface 6 ¼ 5 15# J55 "8rd~i496''3~0 , 310 1800 tiS06 liner will no~ ........ i ............ ~ I cemented .... I .... I .... ................................................. ~ ..... I 22. Describe p~oposed program: The program will meet the conditions specified in conservation order No. 179 dated April 28, 1982. AOGCC will be notified sufficiently in advance to witness pressure tests of BOPE. CaSing will be cemented using Class G oilfield cement. 5" liner will be both blank and slotted and will not be cemented. ' *;~;~'.-'i h-e;~-~'~:-e-r lily that the ~are,,qoina is true and~0~.r'bci to SIGNED .......... --~,/~-/- .C---~'- %,~' e_,-:_ ~.< ,_ ...... The space below lot CoOl'isaiah the best of my knowledge -Alaska Oil & Gas Cons, CoffmissJort TITLE Vice Preside~ch°reD9 DATE 6/11/85 "~'~r~31es required "- : '~YES EJNO "-~e,r~it'-n,~Mbe-, ..................... i Fo,m 10401 Rev. 7.1,80 CONDITIONS OF APPROVAL Mud log required ~YES C]NO Approval date ._'_'_:. 7¢" ' // Directional Survey required I APl number OYES [~0 SEE COVER LETTER FOR OTHER REQUIREMENTS .COMMISSIONER DATE J~ly 1, 1985 ... by ord0r of the Commission Submit in triplicate B I10 26 ! 25 590 D/C W 35 . · MS 1425 514.82.° ~.$ 599 Lot 60'/ '~ . · Long / 44'25'4 /.234"W ~'ARNIhlG, THIS PLAT IS THE BUREAU'S RECORD OF TITLE /.,ND SHOULD BE USEI~ ONLY AS A GR/.,PHIC DISPLAY OF TOWNSHIP SURVEY DATA. RECORDS HEREON DO NO'l' REr'LECT TITLE CH/.,NSES WHICH k/AY HAVE BEEN EFFECTED BY LA'fERAL MDVEk4ENT$ OF RIVERS OR OTHER r~ODIES OF v,~';'ER REFEr, 'TO 'THE C/.,D/.,$TRA. L SURVEY FOR OFFICIA. L SURVEY INF ORMz.,T ION. CURRENT TO i F8,¥;' i I' I Ne,9~,'~ 'Tow'uS /-).dc". ?" Zooo ~'Ss.L RECEIVED RECEIVED JUN 17 ~, JUN ~ 7 STATE OF ALASKA ALASI(A OIL ANI) GAS CONSEIWATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501 Re ' TIIE APPLICATION OF IiAT'~LLA ) TI~RTIARY RECOVI.'.IIY CORP. for ) an exception to 20 AAC 25.055) and for the adopt ion of field) rules for the liatalla Field· ) Conservation Order No. 179 Iiatal la Field t(atal la Pool. April 28, 1982 IT APPEARI · · · · NG TItAT: I(atal la Tertiary Recovery Corp., by correspondence dated March 2, 1982, requested the Alaska Oil and Gas Conservation Commission to grant an exception to the statewide spacing regulations contained in 20 AAC 25.055 and to adopt special field rules for the Natal la Field. Notice of a public hearing was published in the Anchorage Times on March 9, 1982. A public hearing was held on April 7, 1982 at the Municipality of Anchorage Assembly Room, 3500 East Tudor Road, Anehor'hge, Alaska. Testimony was presented by the applicant aii'd there were no oral or written statements received· The hearing was held open until April 21, 1982. FINDINGS: · · · · Natural oil seeps discovered in the I(atalla Area in 1896 attracted the attention of oil explorationists. Oil was first discovered by drilling in the Natalla area in 1902 and oil was produced from the Katalla Field from about 1904 to 1933. Explot'atory and development wells were drilled in the area without spacing' regulations and the exact location of 18+ successful wells is not certain. The location of the successful oil wells appears to be confined to a surface area of about 90 acres. Co~scrvation Order No. 179 · Thc 90 Claim 1909 a Claim acres appear to be within the l)ouz~(laries of "Oil No. 1", a 151.17 acre parcel that was patented in nd recorded in 1913. Mineral Survey 599 and Oil No. 1 appear to be synonymous· · The oi OCCUr found feet b 1 accumulation in the t<atalla Field appears to in fracture porosity and the successful wells oil in the ilaterval occurring from 360+ to 1800+ clow the surface. · There i and t he for the s littl availa establ e subsurface information on this field ble information does not appear adequate ishment of a permanent well spacing rule. · · Katal la explo i t the a rea spac i ng Tertiary Recovery Corp. requests permission the Katalla Field by drilling ten new wells of the originally developed field without restrictions. Some of the existing wells in the field are still leaking oil and gas in small quantities but this may still be due to natural seepage. to i n 10. For safety and to prevent further seepage to the surface, the production casing should be cemented to the surface· 11. 12. The nature of the accumulation indicates that low pressure blowout., prevention equipment should prove adequa t e. The adoption of pool,rules for the t<atalla Field eliminates the need to grant an exception to the wide spacing regulation· state- NOW TItEREFORE IT IS OI{I)ERED TIIAT the rules hereinafter set forth apply to the folloWing described area: Oil Claim No. 1 as recorded in Book 3 of Deeds, page 439, Cordova Recording Precinct and located principally in the NW ~ Sect ion 31, T19S, R6E, CRM. llule 1. Name of the Field The field will conti~ue to be k~own as the l<atalla Fi e Id. Rule 2. Defini t ion of Pool The Katal la Oil Pool is defined as the accumulation of oil that is commol~ to and occurs between the depths of 360 , feet and 1800 feet under Oil Claim No. 1. -2- Conservation Ordc- No. 179 Rule 3. Wcl 1 Spacing There is no spacing requirement for wells drilled on Oil Claim No. 1 except that the pool cannot be opened to a wellbore that is closer than 500 feet to the exterior boundary of Oil Claim No. 1. A total of ten wells may be drilled without spacing restrictions. With the'*data obtained from the wells, the Alaska Oil and Gas Conservation Commission will either admin- istratively continue the unlimited spacing rule, upon request, or call for a public hearing to determine the correct spacing for tl~e further development of the pool. l{ule 4. Blowout Prevention Ecluipment Before drilli diverter system taus flow of any hydroca through a minimum 4 shall include eithe or' two ram type (10 ng below the conductor casing, a flow t be installed, capable of diverting the rbons or other fluids from tile wellbore "diverter line. This diverter system r an annular type (1000 psi WP) preventer 00 psi WP) preventers. l~u 1 e 5. Casing and Cement i~g Requirements (a) For proper anchorage and to prevent an uncontrolled flow, a conductor casing shall be set at least 80 feet below the surface and sufficient cement shall be used to fill the annulus behind the pipe to the surface. (b) To provide sui. table and safe operating conditions, to confine liquids to the'wellbore, to prevent migration of fluids, to assure control 'of pressures encountered and to protect strata bearing fresh water, a production easing shall be set through or just above the productive interval and shall be cemented to the surface. Rule 6. Logging Requirements The operator shall log the portion of the hole below the conductor casing by a complete gamma ray-neutron log. Rule 7. Administrative Discretion Because of the paucity of subsurface information as of tl~c (late of this or(let, the Co,',.nissio~ t)y A(lmini.'~t,'~tive ().der, .my :.:~el~d a:~y /'tile eontair~e(l in this order should waste appear imminent or correlative rights be in jeopardy. ~' 'Co~servation Order ~1o. 179 DONE at Anchorage, Alaska and dated April 28, 1982 C. V. Chat tertofi- ~ / Cha i rman / Alaska Oil and Gas Conservation Commission Ilar'fy W. Kt~le' AC~r~n~aSS~'~earnd Gas Conservation Lonnie C. Smith ~ C~mmi ss ioner Alaska Oil and Gas Conservation Corem i s s i o n Corem i s s i o n -4- ,L~ ~1 -~ ~ ,-'~',~,.' ;.,',~o.,,:f,:, ,,,,,, ~,~; ~', ~, %-".~,c~.:- -_. ,' ...%;;~,¢~;~-,~:~ .~,,~' .... :~ ~.:~ ~ .,. , ~ ' ' .... .." ;~ 4-,. -~.- ~.~~ ..... .~ .... . ...................... ~'~ ~ ~' ~ ..... 'C¢. -'. '..":."~"?¢.'?..' .~ .;" '.... . %:' -- :.'~.' ' '. "%, '" . ¢?:'.'~' '.""~'~S:?~¥'3' ~: :-Is~we~ located- proper· distance .from property line . ....... ', ·,; · · .'- ;'.Z ~;.':~ · ~ ~e~~t~. (Y,, ~¢ &'l ~ ~,.~ . . 1- .,, '4 :'.1:.; i ' ' ':',*;-~ ' i~' ~ ~,~%~,¥,.', ...... . ,. . .,,'. : .... · :, ;'t~.~ ~ ' " ~ '.,', ' , -. ~:-?'.";'"?" '",:~'~'4' ~'7~'ell., located proper distance.from other.~,wells ............ -:;..,:~'.':;'.:~~?~ ' ' . - . ';~' '~-:,~.~-. '. ',.' ;t:'v,'-':'~-'~ :-~'~%::,..,"?,' ' ' . ,"' ..... ~' , ~.:'.',,.~,. ',, ,',~,:.: ,"~.- . , ~'. ':,,. ' . ',' . .....· .... , ~,~, - ~ ............ ? - - ' .',,'. · (":..~:; '..;~'z .:....:;:~:~.,'5~ ~'~ ~IS:.:suf.ficzent. undedicat.ed~%.,acrea~e available zn thzs pool .,...-...-.; .'~ ~.::..-_ ,: '-.. .' ' ' , ,',~-t,,' ,'" ~.' -~ . .% ~¥ ~.~ ' ,. ,: "~ ~,~ .... ' ~:~,;; .:~¢:: ":::~:6 ~ ti'sEmele:to be deviat~d".:a~d"is?~wellbore plat 'included .. '..., ,:,'~ ... ;:, .-../~¢:~?.{~ ·., . ' . -,. ' : "/'. -).-~ :,', .,,,~ .~.,,~., , ~"'~-'",,,: ,,, ,,, -:~, . . . ,..',,: · . .',~(3 ...... .,%<;,'. , , ,,,'. , - , .:, ..... ¢~ ' .... :'~'~' 7" ';'-Is operator the only-aff~ted:~:.party ......................... ,'~....... ~~ .:.. '_ _. ~.. :,,?:.:'-.":"~,: .... "' 8 : 'c~, ~e~t ~ ~rowa ~e,~ore':~'~e~-a~ ~ ......... '... ~ ..... ,-. ,,,., :.(~..- . '....' . ,..¢,. .... ~,.[ ~,,;,?¢,~ ...... . , ..... . .?... . ...- ~, . ' '. :::::;: , ................................ . :: . · . =================================. .- ~ ~x~f~ ~~~ ~am~t~t~ ~p~o~ ~a~a .................... .: ...... ,.' ..~ -(10 and 1'2) ~z. Is the lease number approprSate., (4) Casg~ ,~[~g/~ 13. Is conductor str~ng provided ............... ' .......... '. ....... ~ ', · .. (13 thru 21) .14 Is enough cement used to circulate on conductor and surfac~' .... 15 Will cement tie in _surface and inte~ediate or production strings' ... ' 16. Will cement cover all kno~ productive~.horizons ............ ' . ~ ~ ~ o. ....... 17. Will surface casing', protect fresh water, zones .............. , ...... '. ~ ~ ~;ll ~ ~.~ 18. Will all casing give adequate 'safety in collapse, 'tension and. burst.. H 19. Is this well to be kicked off from an 'existing wellbore ........ 20. Is old wellbore abandonment, procedure included on 10-403 ............ '~' 21. Is adequate wellbore separation proposed . .... '. (5) BOPE ~~_~/~ 22. Is a diverter system required .......... ; ........... · ................ ' (22 ~hrU",26)~'? '~' 23. Are necessary diagr~s of diverter and BOP .equipment attached ,~ · 24. Does BOPE have sufficient pressure rating - Test to ~ psig .. 25. Does the choke manifold comply w/~I RP-53 (Feb. 78) .................. 26. Is the presence of H2S gas probable .......................... ' ........ (6) Add: ~~ ~f~/~ 27. Additional requSrements ............................................. ..... ~. ~dditional Remarks: Geology: En~ineerin~: , ~w~ ~ ~.cs ~.w~~ · %~_m~ MTM ~ HJH/ rev: 03/13/85 6.011 INi'TIAL 'GEO. UNIT ON/OFF POOL CLASS STATUS AREA NO. SHORE , · .