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Home My WebLink AboutCO 300Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. Conservation Order Category Identifier Organizing RESCAN [] Color items: [] Grayscale items: [] Poor Quality Originals: [] Other: NOTES: DIGITAL DATA [] Diskettes, No. [] Other, No/Type OVERSIZED (Scannable with large ploffer/scanner) [] Maps: [] Other items OVERSIZED (Not suitable for plotter/scanner, may work with 'log' scanner) ~'~lTof~' kinds [] Other BY: ~MARIA Scanning Preparation DATE:/ ..._ C'~ j',.., ....,-/k, ,~_~ TOTAL PAGES ~~ Production Scanning Stage I PAGE COUNT FROM SCANNED DOCUMENT: ~,~ PAGE COUNT MATCHES NUMBER IN SCANNING PREPARATION: )(f YES NO Stage 2 IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: ~ YES NO (SCANNING IS COMPLETE AT THIS POINT UNLESS SPECIAL ATTENTION IS REQUIRED ON AN INDIVIDUAL PAGE BASIS DUE TO QUALrTY, GRAYSCALE OR COLOR IMAGES) General Notes or Comments about this Document: 5/21/03 ConservOrdCvrPg.wpd INDEX CONSERVATION ORDER N0.300 West Fork Gas Field 1) 2) 3) 4) 5) 6) June 25,1992 Royalty agreement July 1, 1992 Plan of Development July 14, 1992 Notice of Hearing, Affidavit of Publication August 14, 1992 Transcript August 19, 1992 Additional information requested by AOGCC at Hearing August 24, 1992 Letter Regarding Confidential data Submitted on August 20, 1992 CONSERVATION ORDER NO. 300 STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Re: The Application of CIRI ) Production Company to present ) testimony for classification of gas ) pools and to prescribe pool rules ) for development of the West Fork ) Gas Field· ) Conservation Order No. 300 West Fork Gas Field Sterling A Gas Pool Sterling B Gas Pool October 7, 1992 IT APPEARING THAT: I · By letter dated July 1, 1992, CIRI Production Company requested a public hearing to present testimony for establishing pool rules for development and operations in the West Fork Gas Field, located in T6N R9W Seward Meridian on the Kenai Peninsula. 2~ Notice of public hearing to be held on August 14, 1992 was published in the Anchorage Daily News on July 14, 1992. 3· A hearing concerning the matter of the applicant's request was held in conformance with 20 AAC 25.540 at the office of the Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501 at 9:00 a.m. August 14, 1992. The hearing record remained open until August 24, 1992 to allow submission of additional material supporting the petition. FINDINGS: I · Hydrocarbon gas was discovered in the King lB well located in Section 21 T6N R9W Seward Meridian by Halbouty Alaska Oil and Minerals Company in September, 1960. · Subsurface data available at that time suggested the accumulation was restricted to the southwest quarter of Section 21. Conservation Orde ~o. 300 October 7, 1992 Page 2 . 4, e 6, 7, 8~ . 10. 11. 12. The King lB well produced gas from October, 1978 through October, 1985. The well was abandoned in September, 1986 due to persistent problems with sand and water production and hydrate formation. The King lB well produced a cumulative volume of approximately 1.6 B cf of natural gas. Oil and gas interests for the 160-acre tract on which the King lB well is located reverted to the Bureau of Land Management (BLM) in November, 1986. Prior to that time, the oil and gas rights to the immediately surrounding acreage, including the balance of Section 21, were conveyed to Cook Inlet Region Inc. (CIRI). CIRI Production Company (CPC), a wholly owned subsidiary of CIRI, drilled and completed the West Fork 1-21 well approximately 2,600 feet northeast of the King lB well in Section 21 in January, 1991. The West Fork 1-21 well encountered hydrocarbon gas within sandstones of the Sterling Formation which are largely correlative with gas bearing sandstones in the King lB well. Regular production from the West Fork 1-21 well began in September, 1991. CPC drilled and completed the West Fork 2-21 well approximately 2000 feet northeast of the West Fork 1-21 well in Section 21 in May, 1992. The West Fork 2-21 well encountered hydrocarbon gas within gas bearing sediments which correlate with those in the West Fork 1-21 well. No apparent permeability barriers exist between correlatable gas bearing intervals of the three wells drilled in Section 21. CPC executed a compensatory royalty agreement with the BLM integrating their mutual interests in Section 21 in June, 1992. 13. The West Fork 2-21 well began regular production in June, 1992. Conservation Orde ~o. 300 October 7, 1992 Page 3 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. The vertical limits of the West Fork gas accumulation may be defined in the West Fork 1-21 well which contains representative sections of all known gas bearing sandstone intervals of the Sterling formation in the West Fork Gas Field. The Sterling Formation in the West Fork Gas Field contains two distinct depositional units referred to by CPC as the Sterling A sands and Sterling B sands. Both units are composed of multiple productive sand horizons. Average well spacing is approximately 320 acres. Reduced spacing is necessary to efficiently exploit multiple gas bearing zones within the Sterling A and Sterling B sands. No additional development drilling is planned at this time. As producing zones deplete, wells will be recompleted in undeveloped zones of the Sterling A sands and Sterling B sands. Gas bearing sandstones of the Sterling Formation may extend into Sections 15, 16, 20, 22, 27, 28 and 29 of T6N R9W SM. Porosity averages 32%, permeability ranges from less than 0.1 to 400 millidarcy, and average water saturation is estimated at 50%. Initial reservoir pressure measured in West Fork 1-21 was 2035 psi at 4700 feet ss. West Fork 1-21 was tested to a rate of 6.6 MMcf per day during a four point test and 10 MMcf/D at 4% drawdown during production testing. Produced gas from the West Fork wells is 98.8% methane with a specific gravity of 0.56 (air = 1) at separator conditions and a heat content of 1000 BTU/CF. Productive life of the field is expected to be greater than l0 years. Producing strings in each well are equipped with either a surface or subsurface safety valve to prevent uncontrolled gas flow. Conservation Order~' ~o. 300 October 7, 1992 Page 4 25. Each well is equipped with a small diameter tubing string to circulate warm fluids to prevent hydrate formation and plugging of the tubing. CONCLUSIONS: I · . e e , e 7~ 8~ It is appropriate to define gas pools and establish pool rules for development of the West Fork Gas Field. The owners of oil and gas rights throughout the maximum projected area of the West Fork Gas Field have integrated their interests. The two producing wells in Section 21 are expected to fully exploit this gas accumulation. Two distinct depositional units are identified within the Sterling Formation in the West Fork Gas Field. These sands are locally called the Sterling A and Sterling B sands by the operator. Well spacing less than 640 acres is necessary to effectively exploit the Sterling A and Sterling B sands. Automatic safety valves are appropriate to prevent uncontrolled gas flow in the event of an accident. Control of sand production and hydrate formation is required to successfully exploit reserves in the West Fork Gas Field. It is feasible to develop the Sterling A and Sterling B sands from the same wellbore by utilizing dual completion methods. NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth apply to the following described area referred to in this order as the affected area: Seward Meridian T6N R9W Section 15, 16, 20, 21, 22, 27, 28 and 29. Conservation Orde ~ ~o. 300 October 7, 1992 Page 5 Rule 1. Field and Pool Name The field is named West Fork Gas Field. Hydrocarbons contained within the Sterling Formation constitute two non-associated gas reservoirs called the Sterling A Gas Pool and the Sterling B Gas Pool. Rule 2. Pool Definition The West Fork Sterling A Gas Pool is defined as the accumulation of gas which is common to and correlates with the accumulation found in the West Fork 1-21 well between the measured depths of 4350 feet and 4700 feet. The West Fork Sterling B Gas Pool is defined as the accumulation of gas which is common to and correlates with the accumulation found in the West Fork 1-21 well between the measured depths of 4860 feet and 5290 feet. Rule 3. Well Spacing Nominal 320-acre drilling units are established for the pools within the affected area. A pool may not be opened in a well closer than 1000 feet to any other well opened in the same pool. A pool shall not be opened in any well closer than 1500 feet to the exterior boundary of the affected area or closer than 1500 feet from a boundary to a non-integrated ownership. Rule 4. Commingling Commingling of Sterling A and Sterling B gas pool production is not permitted. Commingling may be administratively approved upon proper application under 20 AAC 25.215. Rule 5. Safety Valves Each production tubing string or flow line must be equipped with a fail- safe automatic safety valve system capable of preventing uncontrolled gas flow. Rule 6. Administrative Action Upon request the Commission may administratively amend this Order so long as the operator demonstrates to the Commission's satisfaction that sound Conservation Orde~ ~o. 300 October 7, 1992 Page 6 engineering practices are maintained and the amendment will not result in physical waste or the impairment of correlative rights. DONE at Anchorage, Alaska, and dated October 7, 1992. David W. ~'ohnstc , Chair~man Alaska Oil~n~ Conservation Commission Russell A. Douglass~Commissioner Alaska Oil and Gas Conservation Commission • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7 Avenue, Suite 100 Anchorage, Alaska 99501 Re: AN ORDER rescinding those rules within ) Docket Number: CO -10 -21 existing Conservation Orders relating to ) Other Order No. 66 well safety valve systems. ) ) Statewide, Alaska ) January 11, 2011 IT APPEARING THAT: 1. On October 13, 2010 the Alaska Oil and Gas Conservation Commission (AOGCC or Commission) formally adopted new regulations relating to well safety valve systems, at 20 AAC 25.265. 2. The newly adopted well safety valve system regulations underwent final review by the Regulations Section of the Alaska Attorney General's Office and were forwarded to the Alaska Lieutenant Governor's Office on October 28, 2010. 3. The new regulations were signed by the Lieutenant Governor and took legal effect on December 3, 2010. 4. To ensure consistency with the new regulations, the AOGCC, on its own motion, proposed to rescind part or all of the outdated rules within existing Commission Orders relating to well safety valve systems. 5. On November 4, 2010, pursuant to 20 AAC 25.540, the Commission published in the Alaska Daily News notice of opportunity for public hearing on December 6, 2010. 6. The Commission received written comments in response to its public notice, and held a public hearing on December 7, 2010. 7. Oral testimony and written comments were provided at the December 7, 2010 hearing. FINDINGS: 1. Well safety valve systems are regulated under newly- adopted 20 AAC 25.265, which consolidates the requirements previously established in legacy documents, policies, and statewide guidelines relating to safety valve systems. 2. Thirty -four existing Commission Orders contain rules governing well safety valve systems. Twenty of those Orders contain broad regulatory requirements for safety valve systems that are now covered by the newly- adopted regulations. The remaining fourteen Orders include field- or pool - specific safety valve system requirements. Other Order 66 • • Page 2 Statewide, AK January 11, 2011 3. Within existing Commission Orders are rules unrelated to well safety valve systems; these rules will continue in effect, unmodified. 4. Existing Commission Orders containing individual rules relating to well safety valve systems are enumerated in the attached Table. CONCLUSIONS: 1. Eliminating redundant requirements and standardizing wording for those field - and pool- specific safety valve system requirements deemed appropriate to retain will improve regulatory clarity. 2. Twenty existing Commission Orders that include rules relating to well safety valve systems are rendered unnecessary, and can be replaced by newly- adopted 20 AAC 25.265. As more fully set forth in the attached Table, those Orders are Conservation Orders 98A, 207A, 300, 311B, 317B, 329A, 341E, 345, 402B, 432D, 452, 457B, 471, 477, 484A, 505B, 553, 559, 570, and a Commission unnumbered Order signed March 30, 1994 (policy dictating SVS performance testing requirements). 3. Fourteen existing Commission Orders include field- or pool- specific safety valve system requirements that the Commission considers appropriate for retention. Wording for the same safety valve system requirements existing in different Commission Orders has been standardized. As more fully set forth in the attached Table, those Orders are Conservation Orders 406B, 423, 430A, 435A, 443B, 449, 456A, 458A, 562, 563, 569, 596, 597, and 605. NOW, THEREFORE, IT IS ORDERED THAT individual rules in thirty -four existing Commission Orders that relate to well safety valve systems are hereby rescinded or revised as enumerated in the Table. Remaining rules unrelated to safety valve systems within affected Commission Orders remain in effect, unmodified. A ili e DONE at Anchorage, Alaska, and dated aii ..- ary 11, 2011 Daniel T. Se. r. ou , r., Commissioner, Chair . • it . • : . ss Conservation Commission . f t s rman, Coer cif (� a Oi A.a a Conserva ion Commission . 0 et.., `ti'r, ,‘.:411.0,". Cat y P. oerst r, Commissioner Alaska it and Gas Conservation Commission Other Order 66 • • Page 3 Statewide, AK January 11, 2011 RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the Commission grants for good cause shown, a person affected by it may file with the Commission an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The Commission shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the Commission denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the Commission mails, OR 30 days if the Commission otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the Commission grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the Commission, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the Commission mails, OR 30 days if the Commission otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the Commission by the application for reconsideration." In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. • • Fisher, Samantha J (DOA) From: Fisher, Samantha J (DOA) Sent: Tuesday, January 11, 2011 4:08 PM To: Ballantine, Tab A (LAW); '(foms2 @mtaonline. net)'; '( michael .j.nelson @conocophillips.com)'; '(Von.L .Hutchins @conocophillips.com)'; 'AKDCWellIntegrityCoordinator; 'Alan Dennis'; 'alaska @petrocalc.com'; 'Anna Raff ; 'Barbara F Fullmer; 'bbritch'; 'Becky Bohrer; 'Bill Penrose'; 'Bill Walker; 'Bowen Roberts'; 'Brad McKim'; 'Brady, Jerry L'; 'Brandon Gagnon'; 'Brandow, Cande (ASRC Energy Services)'; 'Brian Havelock'; 'Bruce Webb'; 'carol smyth'; 'caunderwood'; 'Chris Gay'; 'Cliff Posey; 'Crandall, Krissell'; 'D Lawrence'; 'dapa'; 'Daryl J. Kleppin'; 'Dave Matthews'; 'David Boelens'; 'David House'; 'David Steingreaber'; 'ddonkel @cfl.rr.com'; 'Deborah J. Jones'; Delbridge, Rena E (LAA); 'Dennis Steffy'; 'Elowe, Kristin'; 'Erika Denman'; 'eyancy'; 'Francis S. Sommer; 'Fred Steece'; 'Gary Laughlin'; 'Gary Rogers'; 'Gary Schultz'; 'ghammons'; 'Gordon Pospisil'; 'Gorney, David L.'; 'Greg Duggin'; 'Gregg Nady'; 'gspfoff; 'Harry Engel'; 'Jdarlington (jarlington @gmail.com)'; 'Jeanne McPherren'; 'Jeff Jones'; 'Jerry McCutcheon'; 'Jill Womack'; 'Jim White'; 'Jim Winegarner'; 'Joe Nicks'; 'John Garing'; 'John Katz'; 'John S. Haworth'; 'John Spain'; 'John Tower; 'Jon Goltz'; 'Judy Stanek'; 'Julie Houle'; 'Kari Moriarty'; 'Kaynell Zeman'; 'Keith Wiles'; 'Kelly Sperback'; 'Kim Cunningham'; 'Larry Ostrovsky'; 'Laura Silliphant'; 'Marilyn Crockett; 'Mark Dalton'; 'Mark Hanley (mark.hanley @anadarko.com)'; 'Mark Kovac'; 'Mark P. Worcester; 'Marguerite kremer; 'Michael Dammeyer'; 'Michael Jacobs'; 'Mike Bill'; 'Mike Mason'; 'Mikel Schultz'; 'Mindy Lewis'; 'MJ Loveland'; 'mjnelson'; 'mkm7200'; 'nelson'; 'Nick W. Glover; 'NSK Problem Well Supv'; 'Patty Alfaro'; 'Paul Decker (paul.decker @alaska.gov)'; 'Paul Figel'; 'PORHOLA, STAN T'; 'Randall Kanady'; 'Randy L. Skillern'; ' rob.g.dragnich @exxonmobil.com'; 'Robert Brelsford'; 'Robert Campbell'; 'Ryan Tunseth'; 'Scott Cranswick'; 'Scott Griffith'; Scott, David (LAA); 'Shannon Donnelly'; 'Sharmaine Copeland'; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); 'Sondra Stewman'; 'Steve Lambert'; 'Steve Moothat; 'Steven R. Rossberg'; 'Suzanne Gibson'; 'tablerk'; 'Tamera Sheffield'; Taylor, Cammy 0 (DNR); 'Temple Davidson'; 'Teresa Imm'; 'Terrie Hubble'; 'Thor Cutler; 'Tina Grovier; 'Todd Durkee'; 'Tony Hopfinger; 'trmjrl'; 'Valenzuela, Mariam '; 'Vicki Irwin'; 'Walter Featherly'; 'Will Chinn'; Williamson, Mary J (DNR); 'Yereth Rosen'; 'Aaron Gluzman'; Bettis, Patricia K (DNR); caunderwood @marathonoil.com; 'Dale Hoffman'; 'David Lenig'; 'Gary Orr; 'Jason Bergerson'; 'Joe Longo'; 'Lara Coates'; 'Marc Kuck'; 'Mary Aschoff; 'Matt Gill'; 'Maurizio Grandi'; Ostrovsky, Larry Z (DNR); 'Richard Garrard'; 'Sandra Lemke'; 'Talib Syed'; 'Tiffany Stebbins'; 'Wayne Wooster'; 'William Van Dyke'; Woolf, Wendy C (DNR); Aubert, Winton G (DOA) (winton.aubert@alaska.gov); Brooks, Phoebe L (DOA) (phoebe. brooks @alaska.gov); Colombie, Jody J (DOA) (jody.colombie @alaska.gov); Crisp, John H (DOA) (john.crisp @alaska.gov); Davies, Stephen F (DOA) (steve.davies @alaska.gov); Foerster, Catherine P (DOA) (cathy.foerster @ alaska.gov); Grimaldi, Louis R (DOA) (lou.grimaldi @alaska.gov); Johnson, Elaine M (DOA) (elaine.johnson @ alaska.gov); Jones, Jeffery B (DOA) (jeff.jones @alaska.gov); Laasch, Linda K (DOA) (linda.laasch @alaska.gov); Maunder, Thomas E (DOA) (tom.maunder @alaska.gov); McIver, Bren (DOA) (bren.mciver @alaska.gov); McMains, Stephen E (DOA) (steve.mcmains @alaska.gov); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA) (bob.noble @alaska.gov); Norman, John K (DOA) (john.norman @alaska.gov); Okland, Howard D (DOA) (howard.okland @alaska.gov); Paladijczuk, Tracie L (DOA) (tracie.paladijczuk @alaska.gov); Pasqua!, Maria (DOA) (maria.pasqual @alaska.gov); Regg, James B (DOA) (jim.regg @alaska.gov); Roby, David S (DOA) (dave.roby @alaska.gov); Saltmarsh, Arthur C (DOA) (art.saltmarsh @alaska.gov); Scheve, Charles M (DOA) (chuck.scheve @alaska.gov); Schwartz, Guy L (DOA) (guy.schwartz @alaska.gov); Seamount, Dan T (DOA) (dan.seamount @alaska.gov); Shartzer, Christine R (DOA) Subject: Other 66 Safety Valve Systems Attachments: other66.pdf Sc 4nomth i Fi:shex A l a4cai 4%L cwvi. C ayi rva -tun' C o i;ovt. (907)793 - 1223 (907)276-7542 (fax) 1 1 • Mary Jones David McCaleb XTO Energy, Inc. IHS Energy Group George Vaught, Jr. Cartography GEPS P.O. Box 13557 810 Houston Street, Ste 200 5333 Westheimer, Suite 100 Denver, CO 80201 -3557 Ft. Worth, TX 76102 -6298 Houston, TX 77056 Jerry Hodgden Richard Neahring Mark Wedman Hodgden Oil Company NRG Associates Halliburton President 408 18 Street 6900 Arctic Blvd. Golden, CO 80401 -2433 P.O. Box 1655 Anchorage, AK 99502 Colorado Springs, CO 80901 Bernie Karl CIRI K &K Recycling Inc. Land Department Baker Oil Tools P.O. Box 58055 P.O. Box 93330 795 E. 94 Ct. Anchorage, AK 99515 -4295 Fairbanks, AK 99711 Anchorage, AK 99503 Jill Schneider North Slope Borough Gordon Severson P.O. Box 69 US Geological Survey 3201 Westmar Circle Barrow, AK 99723 4200 University Drive Anchorage, AK 99508 -4336 Anchorage, AK 99508 Jack Hakkila Darwin Waldsmith James Gibbs P.O. Box 190083 P.O. Box 39309 P.O. Box 1597 Anchorage, AK 99519 Ninilchick, AK 99639 Soldotna, AK 99669 Kenai National Wildlife Refuge Penny Vadla Cliff Burglin Refuge Manager 399 West Riverview Avenue 319 Charles Street P.O. Box 2139 Soldotna, AK 99669 -7714 Fairbanks, AK 99701 Soldotna, AK 99669 -2139 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 *<\p O Y 1/4(1' Orders Establishing Requirements for Well Safety Valve Systems 1/7/2011 Unit/Field Pool Conservation Rule Rescind Rule? Existing Order Requirement New Regulation Provisions Revised Rule - "Well safety valve systems" (2) Comment Order (1) Addressing Reqts from Order fail -safe auto SSV and SCSSV; injection wells (except disposal) require "Injection wells (excluding disposal injectors) must be with(i) a double check valve 25.265(a); 25.265(b); 25.265(d)(2)(H); e equipped Check valve requirements for injectors are not covered by Colville River Unit Qannik 605 5 no (i) double check valve, or (ii) single check valve and SSV; injection 25.265(h)(5) arrangement or (ii) a single check valve and a SSV. A subsurface - controlled injection valve or readopted regulation valve satisfies single check valve requirement; test every 6 months SCSSV satisfies the requirements of a single check valve." fail -safe auto SSV and SCSSV; injection wells (except disposal) require "Injection wells (excluding disposal injectors) must be equipped with(i) a double check valve 25.265(a); 25.2659(b); 25.265(d)(1); Check valve requirements for injectors are not covered by Oooguruk Oooguruk - Nuiqsut 597 6 no (i) double check valve, or (ii) single check valve and SSV; injection 25.265(h)(5) arrangement or (ii) a single check valve and a SSV. A subsurface-controlled injection valve or readopted regulation valve satisfies single check valve requirement; test every 6 months SCSSV satisfies the requirements of a single check valve." fail -safe auto SSV and SCSSV; injection wells (except disposal) require "Injection wells (excludin disposal injectors) must be equipped with(i) a double check valve 25.265(a); 25.265(b); 25.265(d)(1); Check valve requirements for injectors are not covered by Oooguruk Oooguruk - Kuparuk 596 6 no (i) double check valve, or (ii) single check valve and SSV; injection . arrangement or (ii) a single check valve and a SSV. A subsurface - controlled injection valve or 25.265(h)(5) readopted regulation valve satisfies single check valve requirement; test every 6 months ( )( 5 ) SCSSV satisfies the requirements of a single check valve." fail -safe auto SSV and SCSSV; maintain list of wells w/ removed or 25.265(a); 25.265(b); 25.265(d)(2)(F); Requirement to maintain a wellhead sign and list of wells with Prudhoe Bay Unit Raven 570 5 yes NIA deactivated SVS was replaced with requirement to maintain a deactivated SVS; sign on wellhead 25.265 m ( ) tag on well when not manned fail -safe auto SSV and SCSSV; injection wells (except disposal) require r "I njec ti on we ll s (exc disposal injectors) must be equipped with(i) a double check valve 25.26a(a); 25 25 Check valve requirements for injectors are not covered by Colville River Unit Fiord 569 5 no (i) double check valve, or (ii) single check valve and SSV; injection 25.265(h)(5) arrangement or (ii) a single check valve and a SSV. A subsurface - controlled injection valve or readopted regulation valve satisfies single check valve requirement; test every 6 months SCSSV satisfies the requirements of a single check valve." fail -safe auto SSV and SCSSV; injection wells (except disposal) require "Injection wells (excluding disposal injectors) must be with(i) a double check valve 25.265(a); 25.265(b); 25.265(d)(2)(H); e equipped ou Check valve requirements for injectors are not covered by Colville River Unit Nanuq - Kuparuk 563 6 no (i) double check valve, or (ii) single check valve and SSV; injection . arrangement or (ii) a single check valve and a SSV. A subsurface- controlled injection valve or 25265 h readopted regulation valve satisfies single check valve requirement; test every 6 months ( )( 5 ) SCSSV satisfies the requirements of a single check valve." fail -safe auto SSV and SCSSV; injection wells (except disposal) require "Injection wells (excludin disposal injectors) must be equipped with(i) a double check valve 25.265(a); 25.265(b); 25.265(d)(2)(H); Check valve requirements for injectors are not covered by Colville River Unit Nanuq 562 6 no (i) double check valve, or (ii) single check valve and SSV; injection . arrangement or (ii) a single check valve and a SSV. A subsurface - controlled injection valve or 25.265(h)(5) readopted regulation valve satisfies single check valve requirement; test every 6 months ( )( 5 ) SCSSV satisfies the requirements of a single check valve." Prudhoe Ba Unit Put River 559 3 yes fail -safe auto SSV; SSSV landing nipple below permafrost; test as 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Y prescribed by Commission 25.265(h)(5) replaces SSSV nipple requirement for all wells Deep Creek Unit Happy Valley 553 3 yes SSV or SSSV 25.265(a) N/A Prudhoe Ba Unit Orion 505B 3 yes fail -safe auto SSV; SSSV landing nipple below permafrost; test as 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Y prescribed by Commission 25.265(h)(5) replaces SSSV nipple requirement for all wells Prudhoe Ba Unit Polaris 484A 3 yes fail -safe auto SSV; SSSV landing ni below permafrost; test as 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Y prescribed by Commission 25.265(h)(5) replaces SSSV nipple requirement for all wells Milne Point fail -safe auto SSV; SSSV landing nipple below permafrost; gas/MI 25.265(a); 25.265(b); 25.265(d); Readopted 25.265(d) dictates which wells require SSSV; Milne Point Unit Schrader Bluff 477 5 yes injection well require SSSV or injection valve below permafrost; test 25.265(h)(5) N/A replaces SSSV nipple requirement for all wells every 6 months Prudhoe Ba Unit Borealis 471 3 yes fail -safe auto SSV; SSSV landing nipple below permafrost; gas /MI 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Y injection well require SSSV below permafrost; test every 6 months 25.265(h)(5) replaces SSSV nipple requirement for all wells fail -safe auto SSV and SCSSV; test as prescribed by Commission; 500- Existing pool rule established a minimum setting depth for the Northstar Northstar 458A 4 no ft minimum setting depth for SSSV 25.265(a); 25 25.265(d)(1) The minimum setting depth for a tubing conveyed subsurface safety valve is 500 feet." SSSV Prudhoe Ba Unit Aurora 457B 3 yes fail -safe auto SSV; SSSV landing nipple below permafrost; test every 6 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Y months 25.265(h)(5) replaces SSSV nipple requirement for all wells fail -safe auto SSV; gas /MI injectors require SSV and single check 25.265(a); 25.265(b); 25.265(d); "Injection wells (excluding disposal injectors) must be equipped with(i) a double check valve Check valve requirements for injectors are not covered by Kuparuk River Unit Meltwater 456A 5 no valve and SSSV landing nipple; water injection wells require (1) double arrangement or (ii) a single check valve and a SSV. A subsurface-controlled injection valve or readopted regulation; readopted 25.265(d)(5) does not include check valve, or (ii) single check valve and SSV; test every 6 months 25 SCSSV satisfies the requirements of a single check valve" SSSV requirement for MI injectors Prudhoe Ba Unit Midnight Sun 452 6 yes fail -safe auto SSV (all injectors and producers capable of unassisted 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Y 9 Y flow to surface); test every 6 months 25.265(h)(5) replaces SSSV nipple requirement for all wells fail -safe auto SSV and SCSSV; SSSV may be installed above or below 25.265(a); 25.265(b); 25.265(d)(1); "The setting depth of a required subsurface safety valve must be located in the tubing either Existing pool rule established alternate SSSV setting depth; Duck Island Unit Eider 449 7 no permafrost; injection wells require double check valve; LPS trip above or below permafrost. Injection wells must be equipped with a double check valve check valve requirements for injectors are not covered by pressure; test every 6 months 25 arrangement." readopted regulation fail -safe auto SSV and SCSSV (producers and gas injectors); water "Injection wells (excluding disposal injectors) must be equipped with(i) a double check valve Colville River Unit Alpine 443B 5 no injection wells require (i) double check valve, or (ii) single check valve 25.265(a); 25.265(b); 25.265(d)(2)(H) arrangement or (ii) a single check valve and a SSV. A subsurface - controlled injection valve or Check valve requirements for injectors are not covered by and SSV SCSSV satisfies the requirements of a single check valve." readopted regulation fail -safe auto SSV; gas /MI injectors require SSV and single check 25.265(x); 25.265(b); 25.265(d); "Injection wells (excluding disposal injectors) must be equipped with(i) a double check valve Check valve requirements for injectors are not covered by Kuparuk River Unit Tabasco 435A 6 no valve and SSSV landing nipple; water injection wells require (i) double arrangement or (ii) a single check valve and a SSV. A subsurface-controlled injection valve or readopted regulation; readopted 25.265(d)(5) does not include check valve, or (ti) single check valve and SSV; test every 6 months 25.265(h)(5) SCSSV satisfies the requirements of a single check valve." SSSV requirement for MI injectors fail -safe auto SSV (S /D well and artificial lift); sign on well if SVS Requirement to maintain a wellhead sign and list of wells with deactivated; maintain list of wells w /deactivated SVS; test as deactivated SVS was replaced with requirement to maintain a Kuparuk River Unit; 25.265(a); 25.265(b); 25.265(h)(5); Kuparuk 432D 5 yes prescribed by Commission; CO 432D.009 modifies Rule 5(b) - LPP N/A tag on well when not manned; administrative approval CO 25 m Milne Point Unit may be defeated on W. Sak injectors w /surface pressure <500psi wl 25.265(m) 432D.009 remains effective [re:defeating the LPS when surface notice when defeated and placed back in service injection pressure for West Sak water injector is <500psi] Page 1 of 2 Orders Establishing Requirements for Well Safety Valve Systems 1/7/2011 Conservation New Regulation Provisions Revised Rule - "Well safety valves stems' (2) Comment UnitlField Pool Order (1) Rule Rescind Rule? Existing Order Requirement Addressing Reqts from Order y systems" ( ) fail -safe auto SSV; gas /MI injectors require SSV and single check 25.265(x); 25.265(b); 25.265(d); "Injection wells (excluding disposal injectors) must be equipped with(i) a double check valve Check valve requirements for injectors are not covered by Kuparuk River Unit Tarn 430A 6 no valve and SSSV landing nipple; water injection wells require (i) double arrangement or (ii) a single check valve and a SSV. A subsurface-controlled injection valve or readopted regulation; readopted 25.265(d)(5) does not include p check valve, or (ii) single check valve and SSV; test every 6 months 25 SCSSV satisfies the requirements of a single check valve." SSSV requirement for MI injectors Milne Point Unit Milne Point - Sag 423 7 no fail -safe auto SSV; injection wells require double check valve; test j equipped p 9 Check valve requirements for injectors are not covered by River every 6 months 25.265(a); a ) ; 25.265 ( b ) ; 25.265(h)(5) h )( 5 ) "Injection wells must bee ui ped with a double check valve arran ement " readopted regulation fail -safe auto SSV; gas /MI injectors require SSV and single check Check valve requirements for injectors are not covered by valve and SSSV landing nipple; water injection wells require (i) double "Injection wells (excluding disposal injectors) must be equipped with(i) a double check valve readopted regulation; readopted 25.265(d)(5) does not include Kuparuk River Unit Kuparuk -West Sak 406B 6 n check valve, or (ii) single check valve and SSV; test every 6 months; 25.265(a); 25.265(b); 25.265(d); arrangement or (ii) a single check valve and a SSV. Asubsurface- controlled injection valve or SSSV requirement for MI injectors; administrative approval CO p p CO 406B.001 modifies Rule 6(e) - LPP may be defeated on W. Sak 25.265(h)(5) SCSSV satisfies the requirements of a single check valve. The Low Pressure Pilot may be 4066.001 remains effective [re:defeating the LPS when surface injectors w /surface pressure <500psi w/ notice when defeated and defeated on West Sak water injectors with surface injection pressure less than 500psi." injection pressure for West Sak water injector is <500psi] placed back in service fail -safe auto SSV and SCSSV; LPS trip pressure; readily accessible Badami Badami 402B 6 yes control unit; SSSV below permafrost; NTE 210days between tests; 25.265(a); 25.265(b); 25.265(h); N/A submit test results electronically within 14days; SVS defeated /removed 25.265(m) only if well SI or pad continuously manned fail -safe auto SSV (S /D well and artificial lift); sign on well if SVS 25.265(a); 25.265(b); 25.265(h)(5); Requirement to maintain a wellhead sign and list of wells with Prudhoe Bay Unit North Prudhoe 345 4 yes deactivated; maintain list of wells w /deactivated SVS; test as N/A deactivated SVS was replaced with requirement to maintain a prescribed by Commission 25 tag on well when not manned fail -safe auto SSV (S /D well and artificial lift); if SSSV installed it must be maintained and tested as part of SVS; sign on well if SVS 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Prudhoe Bay Unit Prudhoe 341E 5 yes deactivated; maintain list of wells w /deactivated SVS; test as 25.265(h)(5) replaces SSSV nipple requirement for all wells prescribed by Commission fail -safe auto SSV and SCSSV; maintain list of wells w/ removed or 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Prudhoe Bay Unit Niakuk 329A 5 yes deactivated SVS; sign on wellhead 25.265(h)(5); 25.265(m) replaces SSSV nipple requirement for all wells fail -safe auto SSV and SCSSV; SSSV may be rermoved as part of 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Prudhoe Bay Unit Pt. McIntyre 317B 8 yes routine well ops w/o notice 25.265(j); 25.265(m) replaces SSSV nipple requirement for all wells fail -safe auto SSV; sign on well if SVS deactivated; maintain list of wells 25.265(a); 25.265(b); 25.265(d); N/A Readopted 25.265(d) dictates which wells require SSSV; Prudhoe Bay Unit West Beach 311B 6 yes w /deactivated SVS; test as prescribed by Commission 25.265(h)(5); 25.265(m) replaces SSSV nipple requirement for all wells West Fork West Fork (Sterling 300 5 yes fail -safe auto SVS on each production tubing 25.265(a); 25.265(b) N/A A &B) fail -safe auto SSV; sign on well if SVS deactivated; maintain list of wells 25.265(a); 25.265(b); 25.265(h)(5); Requirement to maintain a wellhead sign and list of wells with N/A Prudhoe Bay Unit Lisburne 207A 7 yes w /deactivated SVS; test as prescribed by Commission 25.265(m) deactivated SVS was replaced with requirement to maintain a tag on well when not manned Ku suitable automatic safety valve installed below base of permafrost to 25.265(d) N/A Prudhoe Bay Readopted 25.265(d) dictates which wells require SSSV; v Unit Prudhoe Kuparuk 98A 5 yes prevent uncontrolled flow replaces SSSV nipple requirement for all wells AOGCC Policy - SVS policy dictating SVS performance testing 3/30/1994 Failures; issued by order of the Statewide N/A N/A N/A yes 25.265(h); 25.265(n); 25.265(o) N/A Commission 3/30/1994 (signed by Commission Chairman requirements Dave Johnson) Footnotes (1) No SVS rules found in Injection Orders (2) New title for Revised Rule; "N /A" means entire pool rule to be rescinded Page2of2 I Public Hearing Record And Backup Information available in Other 66 46 S . CIRI PRODUCTION COMPANY August 24, 1992 Mr. Russell Douglass Commissioner Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 -3192 SUBJECT: Confidentiality - West Fork Field Data Sent to AOGCC 8/20/92 Dear Commissioner Douglass: On August 20, 1992, CPC (CIRI Production Company) submitted additional information in response to a request made by AOGCC during the West Fork Pool Rule Hearing on August 14, 1992. In transmitting this information, it is CPC's understanding that this additional information would be held confidential by the Commission. Enclosed is a copy of the material which is clearly stamped "Confidential ". Please replace the copy of the information forwarded to you on August 20, 1992 and return the unstamped copy to CPC as soon as possible. Thank you for your cooperation. Sincerely, CIRI PRODUCTION COMPANY •---------- ' a-a.7 - 4 14,4,--2.---- Margaret L. Brow President MLB:hjf:2081 cc File 061,355.029 RECEIVED AUG 241992 Alaska Oil & Gas Cons. Commission Anchorage CIRI BUILDING 2525 "C" STREET P.O. BOX 93330 ANCHORAGE, ALASKA 99509 -3330 (907) 274 -8633 TELECOPIER (907) 279 -8836 TELEX 090 -26 -465 5 1 CIRI PRODUCTION COMPANY August 19, 1992 Mr. Russell A. Douglass cOtF1fJENrJ AL Commissioner Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 SUBJECT: Requested Additional West Fork Field Data by AOGCC Dear Commissioner Douglass: During the Pool Hearing of August 14, 1992 for West Fork Field, a request was made by the Commission for the following enclosed data: • Monte Carlo volumetric reserve estimates for all West Fork reservoir sands (see Attachments 1 -7); • WF 1 -21 type log indicating the locally adopted field nomenclature (see Enclosure 1); and • "Top" and "Base" sand stratigraphic picks for the field reservoir sands (Table 1 in Attachment 8) as well as the apparent gas -water contact for each reservoir horizon at this location. If you have further questions, please call me at the number listed below. Sincerely, CIRI PRODUCTI• .•MP Y Erik A. Oc aid Oil & Gas Consultant EAO:hjf:2025 R E€ E Y E D Enclosures (9) e cc: M.L. Brown AUG 21 1992 K. A. Brown C. [�ennertein Alaska Oil .& Gas Cons. CommIsslOn C. File 061,355.029 Anchorage CIRI BUILDING 2525 "C" STREET P.O. BOX 93330 ANCHORAGE, ALASKA 99509 -3330 (907) 274 8638 TELECOPIER (907) 279 8836 TELEX 090 26 -465 # 4 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ALASKA OIL AND GAS COMMISSION HEARING WEST FORK GAS FIELD POOL RULES HEARING PRESENTATION BY ERIK A. OPSTAD Oil and Gas Consultant ORIGINAL IN ATTENDANCE: David W. Johnson - Chairman Russell A. Douglass Leigh Griffin FILE COPY Date: Time: Place: August 14, 1992 9:00 A.M. 3001 Porcupine Drive Anchorage, Alaska RECEIVED S E P ~ 2 199~ Alaska Oil & Gas Cons. Commissiot~ Anchorage 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PROCEEDINGS COMMISSIONER JOHNSTON: I'd like to call this meeting to order. I'll note the time is approximately two minutes after 9:00 o'clock. The date is August 14th. We're located in the offices of the Alaska Oil & Gas Conservation Commission located at 3001 Porcupine Drive, Anchorage, Alaska. I'd like to begin by introducing the head table. My name is David Johnston. I'm chairman of the Commission. To my right it's my pleasure to introduce our newest member of the Commissioner, Commissioner Lee Griffin. To my left is Commissioner Russell Douglas. And to our far left is Meredith Downing, who is with R & R Court Reporters, who'll be making a transcript of these proceedings. At this time I'd like to ask Commissioner Douglas to read into the record the purpose of this hearing. COMMISSIONER DOUGLAS: This is a reading of the notice of public hearing, State of Alaska, Alaska Oil & Gas Conservation Commission, regarding the request of CIRI Production Company to establish pool rules for the development and operation of the West Fork gas field. Notice is hereby given that CIRI Production Company, by letter dated July 1st, 1992, has requested issuance of an order prescribing pool rules for the development and operation of the West Fork gas field. The gas field is located under Section 21, Township 6 North, Range 9 West, Seward Meridian on the Kenai Peninsula. A hearing on this matter will be held in 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conformance of 20 AAC 25.540, in the Oil & Gas Conservation Commission office, 3001 Porcupine Drive, Anchorage, Alaska, at 9:00 A.M. on August 14th, 1992. All interested persons and parties are invited to present testimony. Signed, Russell A. Douglas, Commissioner, Alaska Oil & Gas Conservation Commission. Published July 14th, 1992. COMMISSIONER JOHNSTON: Thank you. As the notice indicated, these proceedings will be held under the Commission rules governing public hearings. Those are specifically 20 AAC 25.540. Those regulations provide that sworn testimony, or sworn statements may be given to the Commission. In our deliberations, however, greater weight will be given to sworn testimony. As you appear before the Commission, we ask you to state your name and who you represent. If you wish to be considered an expert testifier in these matters, we ask that you state your qualificatiions. The Commission will then rule as to whether we will consider you an expert in these matters. The order of testimony will have the Applicant going first. If there are other people wishing to make Statements or to testify, they will do so after the Applicant. With Commission approval the Applicant may cross examine those witnesses. Questions from the audience, however, will not be permitted to be asked directly of the -- of the Applicant. If you wish to ask a question of the Applicant we ask that you jot those questions down on a piece of paper and forward it to the three of us. We 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORA6E, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will then take a look at those questions and if we feel it germane to the discussion, the Commission will then ask those questions. The -- as I indicated, there will be a public trancript made of these proceedings. And that will be part of the official record in this regard. At this time I'd like to ask those individuals wishing to testify to please stand and identify themselves and to be sworn in. MR. OPSTAD: My name is Erik Opstad and I'm here today to represent CIRI Production Company as an expert witness under full rules and matters for the Commission today. And in terms of qualifications ..... COMMISSIONER JOHNSTON: Excuse me, Erik. Before you proceed with your qualifications we'd like to swear you in. MR. OPSTAD: Right. MR. DOUGLAS: Raise your right hand. (Oath administered) MR. OPSTAD: Yes, I do. MR. DOUGLAS: Thank you. COMMISSIONER JOHNSTON: Okay. Thank you, Mr. Opstad. If you'd please state your qualifications. MR. OPSTAD: My qualifications are that I am a professional geologist. I'm either registered or licensed in several states, including the State of Alaska. And have 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 submitted a copy of my State of Alaska licenses Exhibit 1, in the handouts that you have today. I've been working oil and gas here in Alaska for 14 years and I've been practicing professionally for about 18 years. And I have a masters of science degree in geology and geo chemistry. And have published fairly extensively on -- on geologic issues in Alaska. COMMISSIONER JOHNSTON: If I may ask one question, Mr. Opstad. How long have you been involved working the geology of the West Fork accumulation? MR. OPSTAD: Really, since it's inception with the drilling of the 121 discovery well. So I've been involved with this project for about two years. COMMISSIONER JOHNSTON: Okay. Thank you. The Commissioner will recognize Mr. Opstad as an expert witness in this matter. Thank you. Please proceed with your testimony. MR. OPSTAD: Well, most of the people here I'm sure are familair with the Kenai Peninsula in general. However, we'll begin with the general math of oil and gas accumulations in the Cook Inlet Basin. And we find that the West Fork field is located a few miles of -- due north of Sterling, Alaska. And somewhat due south of the Swanson River oil field. In terms of the basic stratigraphy, the West Fork field is developed in Sterling formation, which is the upper most formation of the Kenai group. It's tertiary in age and pliocene specifically. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER JOHNSTON: Mr. Opstad, if I may interrupt here. It would be very helpful for purposes of the transcript, if you would identify the exhibit that you're referring to. The name of it and just generally describe what it is. MR. OPSTAD: Sure. COMMISSIONER JOHNSTON: Did you -- have you put numbers on these exhibits? MR. OPSTAD: Yes. COMMISSIONER JOHNSTON: Okay. If you coulf refer to the number of the exhibit that would also be very helpful. MR. OPSTAD: Right. This is Exhibit 3 in the hand out packet that you have. We'll being with a little history on the West Fork field, in general. The field was discovered in 1960 by Halbouty Alaska Oil & Minerals Company drilling on their King lB Well. Sterling B sand production began in October 1978 by Seagull Energy Company on 160 acre tract acquired from Halbouty. The Halbouty well originally was a oil exploration test, it was deep hemlock test. They discovered gas as a secondary objective, completed it. And then never -- never really produced it. Seagull came in and started producing the well from the B -- B sand. The B sand, and in this particular area what we call the B4 sand, had produced fairly steadily but later developed some intermittent sanding problems, water problems. And in July 1980 the well sanded up abruptly. Seagull undertook a series of remedial efforts. They 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were largely unsuccessful. They continued to wrestle with the well for some time. And then decided to abandon the B sand in 1981. Subsequently they recompleted in the A sand and the well produced for approximately one year when problems reappeared in that zone as well and the well was shut in. The well was finally abandoned in September of 1986 after a cumulative production of approximately 1.6 billion cubic feet. Following the abandonment the 160 acre tract reverted to the United States in November of 1986. By this time the surrounding oil and gas interests had been conveyed to Cook Inlet Region Incorporated. In December of 1990, CIRI Proeduction Company, which is a wholly owned subsidiary of Cook Inlet Region, began drilling on the West Fork 121 well which is located approximately at 2,600 ft. to the north/northeast of the King -- Old King lB well. In January of 1991, CPC encountered gas in both the A and B Sterling horizons. And we completed several of those zones and began commercial production from the B4 and B6 sand in September of 1991. In April of this year CIRI Production Company began drilling on West Fork 221. 221 is located approximately 2,000 ft. to the north/northeast of the 121 well. That well was completed in the -- what we refer to as the A2 and B2 sands in May of this year. In June, CIRI Production Company signed a compensatory royalty agreement, which we have submitted as a confidential submittal, with the -- with the BLM. Following the 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 signing of that agreement West Fork 221 began commercial production. What I would like to do now is just to move into just a brief geological and stratigraphic overview of the West Fork area. As I mentioned previously, the accumulation is confined to the Kenai group pliocene sterling formation. And in the way of a cartoon, we believe that the -- the depositional environment is a typical fluvial environment that is not terribly different from the type of environment that we fiknd on the Kenai Peninsula today. In that regard we have streams -- meandering streams with point bars. Little splays. Then swamps, levees, overbearing deposits. These are typically, oh, say 1000 ft. wide, in general, and can of course run for miles. In the case of the -- and this is Exhibit 4. In the West Fork field, as shown here in Exhibit 5, we have two major depositional packages, if you will. They are what we call the A package and the B package. Within the A package we find the Al, A2, and A3 sands. Within the B package we find B2, B3, B4. This -- this well -- this example is well 4220, which is located well to the west of the field. And I show this because as we come toward the field, what we are going to see is that these sands are going to increase in thickness considerably. That trend is shown by the change in -- in the net sand to gross interval ratios. And you can see that generally as -- and this is Exhibit 6. You can see generally as you move from the west to 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the east into the field area, we're seeing an increase in the amount of sand in the package. And this trend is -- is consistent in both the B and the A package. So we have a general increase in sand into the field area. These individual sand packages are subject to rapid lateral and vertical changes and exist as normally finding upward sequences. The correlation of these sands is somewhat tenuous because of course, in braided(ph) environments, you have a lot of meandering around. It's -- although you can -- although you correlate sand to sand events, they may not be necessarily continuous bodies. So for the purposes of mapping this stratigraphy, we generally rely on -- on coal as stratigraphic markers, as shown here in Exhibit 7. And this is the 121, which is CIRI's discovery well. You can see a series of coal markers. Here's one at the top of the A package. And we have several scattered down here. Essentially these define discreet depositional events and you can follow these coals throughout the limited area surrounding the field. And it gives us -- gives us a lot of comfort when we -- when we go to correlate sands that have a tendency to change rapidly as you -- as you move around the area. We believe that the hydrocarbons are likely to be derived in part from the coals that are actually within this section. Coals and organiz matter. Certainly in the tertiary and probably related to these packages. Where we look at intervals which have 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 a lo~ of sand and no coals, even though we can identify what we believe are traps, we don't find any -- we don't find any gas. However, we do find -- find gas wehre we have teh coals. We have not done any molecular work on the gas to try to go back and match it wtih tertiary organics but based on a lot of work that's been done through the years, we believe that the non associatic gas at the West Fork field is consistent with the tertiary sources. In terms of structure, we move to Exhibit 8. This is a structure map on top of the B marker. B marker is just the -- the top of the B package illustrated earlier. And you can see that this is a very gentle doubly plunging anticline. It's just a very, very m~est roll over in the Sterling. The access, as you can s~e~rom this exhibit, turns from the southwest to the northeast and it's generally consistent with the axial traces of other anticline in the Kenai and Cook Inlet Basin. This map is -- the control on this -- these are all well control points. Howedver this map is consistent also with the seismic data and our interpretation of the seismic data at hand. The trapping mechanism here is both this structural roll over and also the rfact that we get a lateral facies change, generally to the west and perhaps slightly northwest, which causes the sands to shale out, pinch out, and serves as a stratigraphic barrier as well as having this -- this structural closure. So we have really two things at work here. Structure closure and -- and a 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASK~ 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 11 stratigraphic trap. We also have, as a guide when we're mapping this and interpreting the area, some seismic amplitude events. We're not certain that those amplitudinal events are -- are totally reliable. Amplitude anomalies, are you probably all know, can be generated by coal itself. And we've noticed that the sands -- a lot of the sands here actually have dissiminated coal fragments to tiny bits and pieces of coal in them. And so we're getting an amplitude event which is in part associated with the coal and in part associated with the gas field porosity. So we see -- we see a amplitude blossom, or bloom, over the main part of the field. But we don't believe that that -- the limits of that amplitude anomaly necessarily define the limits of the accumulation. There have been also some -- some indciations by previous workers that there might be some faultikng in this -- in this area running from the southwest to the northeast. And I think that was shown in some of the previous -- some of the previous publications. I believe by the AOGCC. I think I've seen some maps of the West Fork field that have a fault running through this area. On the basis of this structure map, and then also some correlation work that we've done, as shown here in Exhibit 9 -- well, maybe we have it. This just correlates the major sands beginning with the A0 sand at the top. And then we come down through the A marker, which is at the top of our A package. The Al, A2, A3 sands. B marker and then the series of B sands. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12 And you'll see here that this is very, very gentle roll over. We're moving on the left side of the diagram from south -- the southern portion of the area right up through the main part of the field to the north. And then we roll around to the west. There's no indication of faulting in any of this correlation work. I can also add that on the basis of looking at the seismic sections, we don't see any indication of any faulting on the seismic data either. And we do have three lines that cut through the area, sort of triangulate, if you will, through the field. And we see nothing on the seismic data to indicate any -- any significant faulting either. I'd like to move on to some characterization of the reservoir. As shown here in Exhibit 10 -- and a little color to the presentation here -- what we have here is a computer log. Basically I've taken all of the logs that were run on West Fork 121 and we've computed some shale volumes, sand volumes, hydrocarbon volumes, water volumes, so forth and so on. I'd like to point out the neutron density, which is in this third tract where you have the cross overs. It indicates a major gas. So from top to bottom we have the A0 sand up here. We have Al, A2, A3. We come down into the B package. We hve B2 sand here, B4. And then down here at the bottom where we don't see a cross over is B6. B6, this area down in here, we see a significant change in the rock matrix. We don't see the neutron density croSs over yet. This is an excellent producer. There has been some 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 13 discussion and we think that we may start to see a transition from the Sterling into the Beluga at this depth approximately. We have not done any bio stratigraphy to really evaluate that. But based on soem other work in the area we think that we may have a -- we may have a formation change coming up in this area. These sands that make up the reservoir are very poorly sorted. As a general rule they tend to be fine grain and they are extremely friable. If you take a piece of core from the reservoirs and set it on a desk and go away for a week, you'll come back and find a pile of sand. It will literally fall a part on its own. There's no cement to hold these things together. And the coarse porosity is pretty high. And what binding of the grains that does exist is provided primarily by clays. The average porosity runs around 32 percent. It's a little higher in some places, little lower in others. It can vary from anywhere from less than a 10th of a millidarcy(ph) to over 400. Average apparent water saturation runs around 50 percent. That's calculated using a fairly standard RG approach with some V-shell correction. There's enough clay in here that, you know, you might want to consider using dual water model on this. And I think as we do some more work we may find out that the effective saturations are a little bit lower. We're producing essentially water free gas from these formations. There doesn't appear to be much mobile water. But that's -- that's typical of formations that have fairly high bound water 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 associated with the clays. Or a lot of micro porosity. Reservoir pressure, plus or minus 2000 lbs. A little less in the A sands, a little more in B6, B4. We've found apparent water contacts in essentially all of these zones. We say apparent becasue the water contact that we observed in many of these sands are also associated with a lithologic change. Generally your decrease in the porosity and permeability. And if you all recall your capilliary pressure theory, you know that your porosity goes down and water saturation goes up. And also it takes a lot of pressure to get -- to get gas into extremely fine grained and low porosity rocks. We -- we're not entirely certain that the apparent water contact that we're seeing are in fact real water contact. It probably is the case in B4. We cna tract that through at least two wells. And we feel that that may be within some -- some statistical area a good water contact. These contacts are listed here in the handout that I've given you. The accumulation limits are defined generally by the intersection of these multiple water contacts with structural closure and as modified by the lateral facies changes. COMMISSIONER JOHNSTON: Mr. Opstad, if I may interrupt here. This might -- I notice on Exhibit Number 10 that that is a log from the West Fork 1-21 well? MR. OPSTAD: Yes. COMMISSIONER JOHNSTON: Are you proposing that as your 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 15 type log for this -- for purposes of defining the accumulation? MR. OPSTAD: Yes, sir. We are. COMMISSIONER JOHNSTON: Okay. I also notice that the exhibit says that the West Fork accumulation consists of seven gas pools. And I assume when you refer to the seven gas pools, you are referring to the -- the sand packages. The A0 sand, the Al, A2, A3, B2, B4, and B6 sand? MR. OPSTAD: That's correct. COMMISSIONER JOHNSTON: Now, in your -- you indicated that you believe these are separate gas pools. You're basing this conclusion on the -- these apparent water contacts or do you have any otehr additional evidence that would suggest that these seven pools are not in pressure communication? MR. OPSTAD: We -- in the tests that we've run so far we have clearly seen different pressures in each of the -- each of the sands. We have not had enough production yet to determine via production whether or not we're seeing any depletion in any of the non completed sands as a result of production from the produced sands. However, all of these zones are separated by significant shale barriers and significant coal horizons. It seems from the geologic standpoint unlikely that any of these zones would be in communication with one another, with perhaps the exception of the A packages. The Al, 2, and 3 sands, which lie in a relatively close proximity to one another, however they too are also separated by coals. We -- we think of this more as 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16 if -- and particularly in the A package, more as if we have a coal/shale section that has some thick sand lenses in it, if you will. And that the gas has then accumulated in those. And you almost envision them as large horizontqal wells within this coal/shale sequence. We don't see any faulting. We don't see any idnication when we're drilling that there's any fracturing that might provide some sort of migration path or pressure communication path. We also see different water contacts in all of these sands. And you can trace the water contacts between usually two wells. Sometimes more. And it seems to make sense in terms of the overall structure in this stratigraphy. So we, I think, are of the general opinion that these are -- are separate related accumulations. COMMISSIONER JOHNSTON: From what I heard though, it appears that the evidence for the separate accumulations is really not definitive. That ..... MR. OPSTAD: I would agree with that. COMMISSIONER JOHNSTON: ..... additional information will be necessary in order to ascertain ..... MR. OPSTAD: Sure. COMMISSIONER JOHNSTON: ..... if, in reality, these are separate accumulations. MR. OPSTAD: It's very early in the life of the field and certainly I would agree with you that -- that right now taking a firm stand either way would be really in the realm of 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 17 speculation, we would be probably inclined to say that -- that although the -- the evidence at hand right now seems to suggest, to me anyway, that there's a likelihood that they'll be found to be separate, as we go into production and we -- and we continue production and we do additional testing we may well find out that that's not the case. Because we really don't have a lot of control points in this field. COMMISSIONER JOHNSTON: If, in fact, these are separate pools, how does CIRI propose to produce these wells? Are you -- will you be seeking Commission approval to comingle production down hole? MR. OPSTAD: No. We're -- well, I should take that back. Yes, in the -- to the extent that we have one well which is currently completed in two zones where we're producing through a single string. And that would be the 121 discovery well, whcih is being completed in the B6 sand, and also in the B4 sand. And they are currently being comingled. COMMISSIONER JOHNSTON: How will you allocate production to the various zones? MR. OPSTAD: That's a good quesxtion. I think that at the moment we feel that -- that almost all of the production of 121, that's coming from the B6 sand. The B4 gravel pack has -- is quite tight. Has 1000 psi pressure drop across it. We don't really think we're producing anything of any consequence from the B4 at this time. Our plan at the moment is to continue with 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 18 production of the B6. We will then shut off the B6 sand and undertake some remedial work on the B4. So, in fact, although we are technically comingling these two zones, as a practical matter we're only producing one. The 221 well is completed with dual strings. Each is essentially a separate well. Production is monitored independently. And so there's no comingling of that production at all. COMMISSIONER JOHNSTON: In the event that you were to determine that the most economically viable way to produce is to comingle down hole, how would you produce then on allocating production? MR. OPSTAD: I -- I think that we'd have to assume in terms of the A sands, the Al, 2, and 3, which are the likely candidates for a single completion of -- of several zones, I think we would have to assume and allocate equally among those zones. The formation characteristics in terms of porosity, permeability, are essentially identical. The pressures are going to be very, very close since they're at nearly equivalent depths. I think the prudent -- the prudent approach would just simply be to allocate it equally. Unless we had some -- some information to the contrary that was developed during testing of those zones prior to completion that would lead us to believe that one or more of those zones would preferentially contribute to the production. COMMISSIONER JOHNSTON: And that obviously can be a 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 19 bridge that we can cross when and if CIRI comes to us ..... MR. OPSTAD: Right. COMMISSIONER JOHNSTON: ..... and requests a comingling down hole. MR. OPSTAD: In terms of the other zones, there's sufficient difference in the depths. And just our simple philosophy on managing production has been that -- that we complete with dual strings. COMMISSIONER JOHNSTON: For purposes of the record, could you define for us the vertical depths of each one.of your seven pools, starting with the A1 sand? MR. OPSTAD: Sure. We'll start with A0. And -- let's see here. We'll, on the basis of the measured depth in 121, what we have right here at the moment. The A0 sand is approximately 4350. The A1 sand is approximately 4,630. The A2 sand is approximately 4,660. The A3 sand is approximately 4,680. The B2 sand is approximately 4,860. The B4 sand is approximately 4,980. And the B6 sand is approximately 5,140. And those are measured depths in West Fork 121, which is essentially vertical well with a Kelly bushing of 322 ft. COMMISSIONER JOHNSTON: Thank you. And are thsoe depths that you just gave us, are those to the top of the sand or to the basis(ph) (simultaneous speaking)? MR. OPSTAD: Approximately to the top of the sands. Yes. COMMISSIONER JOHNSTON: Thank you, Mr. Opstad. I have no 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 20 other questions at this time. MR. OPSTAD: Ail right. The accumulation then is generally defined by the -- we believe, at least, defined by a combination of several events. Certainly the water contacts being one. A lateral changes -- facies changes being the other. And to some extent we see the structure playing, of course, a role in the whole thing. This is Exhibit 11. And it shows the approximate limits for the West Fork A sand reservoirs. This includes Al, A2, and A3. We haven't shown A0 here. It -- largely because we don't have enough information to define it well. the A0 is observed in 121 but we haven't really been able to identify it in any other well boards that cut the area. So we're assuming that it is a fairly limited accumulation right near the crown of the -- of this structure. Generally you can see from -- from the Exhibit 11, that the limits of accumulations essentially follow the structural trend but also have a tendency to line up along their -- their northwestern edge. And then we feel that this is related and associated with the shale out of the -- of the sands in that direction. COMMISSIONER JOHNSTON: On that Exhibit 11, I see a couple of vertical and horizontal lines. Do those lines indicate section, township, range or ..... MR. OPSTAD: Yes, they do. Those are section, township, 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 17 18 19 20 21 22 23 24 25 21 and range. And this -- this boundary running really from 221 on the north down to a little bit south on King lB represents the Section 21. COMMISSIONER JOHNSTON: Of -- of what township and range? MR. DOUGLAS: Six north, nine west. MR. OPSTAD: Yeah. COMMISSIONER JOHNSTON: Six north, nine west? MR. OPSTAD: Six north, nine west. COMMISSIONER JOHNSTON: Okay. MR. OPSTAD: Seward Meridian. COMMISSIONER JOHNSTON: Okay. So for purposes of defining the accumulation aerially, we can refer to Exhibit 11 and note that portions of the accumulation occurs to those sections immediately surrounding Section 21 of six north, nine west? MR. OPSTAD: That's correct. COMMISSIONER JOHNSTON: Thank you. MR. OPSTAD: Likewise we can refer to Exhibit 12, which shows the approximate limits of the B sand reservoirs, including the B2, B6, and B4 sand reservoirs. This also extends out -- outside of Section 21 a little bit and to the immediate surrounding sections. Again, these accumulations appear to generally follow the structural trend modified somewhat by the intersection with apparent water contacts. And for the purposes of defining the pool, again, accumulation, again, on this exhibit 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 22 the vertical and horizontal lines represent section and township and range lines. We have, in the course of evaluating the scurry(ph) well, we did do some testing. And the testing of the B4 sand provided rates above 10,000,000 cubic feet per day at four percent draw down approximately. And we observed initial reservoir pressure of 2,035 lbs. MR. DOUGLAS: Which well was this now? MR. OPSTAD: This is 121. This is the 121 discovery well. Analysis of the gas is shown in Exhibit 13. And what we see in this exhibit is that the gas is approximately 98.8 percent methane. We see a little ethane and some carbon dioxide, and a trace of nitrogen. Trace of carbon dioxide and a little nitrogen. About one percent. This -- this analysis was taken shortly after completion. We have noticed that the nitrogen in subsequent tests has dropped a bit and we think that we had a little bit of contamination -- nitrogen contamination from the completion process. But this is pretty representative. And you can see that we have better than 1000 BTU of gas here. So it's an excellent fuel gas. We've calculated reserves using a Monte Carlo volumetric modeling. And we have assumed water drive as being the -- rather than -- rather than completion. It's conservative. We see a lot of water around the area in the sands. We see apparent water contacts in the sands. And so we've assumed that these are all 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 water drive reservoirs. Based on that assumption and the results of the Monte Carlo modeling, we expect the field life to exceed 10 years. As far as our current and future development plans, the field is currently developed by two wells that are providing production from four intervals. The West Fork 121 well is completed in the 4B sand. And the -- B4 sand. Excuse me. And also in the B6 sand. The West Fork 221 well is completed in the A2 sand and the B2 sand. These gas zones are typically produced through gravel pack completions to control sanding. This is something that differs from what Halbouty's Seagull Energy folks did with their King lB well. This is a typical -- typical completion where we'll run -- we'll run dual strings. It's actually concentric down here. This is Exhibit 14. You'll see that we have dual strings, dual gravel packs. The gravel packs are intended to prevent the migration of this very friable, very soft sand into the well bore. What the Halbouty experience told us was that -- that if you try to produce through perforations, you cavitate and scavenge the soft sand out from behind the well bore. You eventually produce the sand and you develop a cavity behind the -- behind the cement in the casing. Eventually this works its way down into the water. You start getting water production. Since it's a fairly cold geothermal gradient you get water into the system and you start to produce hydrates and freezing problems. And pretty soon the well develops problems 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24 and essentially becomes uneconomic to produce. What we've done to mitigate those -- those vents is that we do gravel pack. We use a pretty fine grained sand to contain the sand. We also run a heat string in the well bore. We circulate hot fluid down the annulus. And this varies from time to time. It's either diesel or -- or just water. And that keeps the production tubing in the well warm so that it basically eliminates the hydrate formation problem. Even when we do get a little water from time to time. At the moment we have two -- two safety systems on the wells. The 221 well we've got surface safety valves on both production strings. And on the 121 well we have both surface and sub surface safety valves. Our original philosophy was to use sub surface safety valves because it was a remote site. And we wanted to avoid the -- the problem of having something happen in a remote site and not being able to control the well. The sub surface is a little bit better in that regard. When we've gone to more -- more exotic completion in terms of the amount of jewelry we have in the hole, as in 221 we felt that sub surface safety valves would add an expanded element of complication that we really didn't need. We would have had to run additional control lines in the well to depth along with each string -- the fuel production strings. It became a very challenging job to -- to run that when we were looking at it from an operational standpoint. So on the 221 wells and -- and any subsequent work 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 that we would do in the field, we reverted to surface safety valves. And we find them to be -- to be perfectly adequate. We also have -- because we are circulating diesel or hot water as a heat string down the annulus, we also have pilot valves which are a type of safety valve on the heat string itself in the event that there was a leak of gas from the production tubing into the annulus. Those safety valves are designed to -- to close in the event that we have pressure on the -- on the. circ(ph) fluid. So we actually have all of the -- all of the production and heat fluids circulating systems monitored by safety valves which will control any -- any unexpected changes in our flow. For the moment we're planning on recompleting the current wells in undeveloped intervals as the zones that are currently completed are -- are depleted and then abandoned. Given the -- given the reserves that we have and the location of the current wells, we don't see the need for any additional drilling at this time. And of course subject to change as we gain more experience with the -- with the reservoir. In terms of closing comments, I'd ju st like to point out that the West Fork field is the first development of an oil and gas resource by an Alaska Native Corporation. And I htink it's a fairly significant event and I expect to see not only CIRI but perhaps some of the other native corporations moving forward to develop resources that are on their own lands. The crude(ph) reserves cover approximately 640,000 acres, although, depending 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 on the zone, it kind of slides around. So it's not just a nice little cube in side Section 21. It overlaps out into some of the other sections. There's no evidence of any significant faulting. Just to reiterate. And we have -- have currently developed that with two wells in what I call pools; you can call them zones, at the moment. And we don't plan to do any more work at the moment. And that concludes my testimony and I'll be happy to answer any questions that the Commission has on the subject. COMMISSIONER JOHNSTON: Thank you, Mr. Opstad. I just have a couple of questions for you. If I heard you correctly relative to CIRI's plans for producing this -- this accumulation, you indicated that you saw no -- it was not likely that you'd be drilling additional wells. That you would be producing the reservoir from the existing wells. So that the record is absolutely clear on this, which wells would you be producing out of again? MR. OPSTAD: The wells that are currently in the field are the West Fork 121 well and the West Fork 221 well. COMMISSIONER JOHNSTON: So you'd only be dealing with those two wells? MR. OPSTAD: That is correct. COMMISSIONER JOHNSTON: Okay. In the event that you saw the need to drill additional wells, I would assume you'd propose the same completion technique? Gravel pack? MR. OPSTAD: Yes. We've found that that appears to be 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 on the zone, it kind of slides around. So it's not just a nice little cube in side Section 21. It overlaps out into some of the other sections. There's no evidence of any significant faulting. Just to reiterate. And we have -- have currently developed that with two wells in what I call pools; you can call them zones, at the moment. And we don't plan to do any more work at the moment. And that concludes my testimony and I'll be happy to answer any questions that the Commission has on the subject. COMMISSIONER JOHNSTON: Thank you, Mr. Opstad. I just have a couple of questions for you. If I heard you correctly relative to CIRI's plans for producing this -- this accumulation, you indicated that you saw no -- it was not likely that you'd be drilling additional wells. That you would be producing the reservoir from the existing wells. So that the record is absolutely clear on this, which wells would you be producing out of again? MR. OPSTAD: The wells that are currently in the field are the West Fork 121 well and the West Fork 221 well. COMMISSIONER JOHNSTON: So you'd only be dealing with those two wells? MR. OPSTAD: That is correct. COMMISSIONER JOHNSTON: Okay. In the event that you saw the need to drill additional wells, I would assume you'd propose the same completion technique? Gravel pack? MR. OPSTAD: Yes. We've found that that appears to be 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKJ% 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 the most effective way to complete the reservoir. We've had quite honestly a bit of a learning curve one 121. Subsequently we modified the completion technique in terms of the type of slurrying we did, the carrier, the size of the gravel used in the gravel pack. And have now a very successful completion -- gravel pack completion in the 221 wells. So we would essentially follow the same model as the 221 well. Dual string, dual gravel packs, heater string, so forth. COMMISSIONER JOHNSTON: The -- on Exhibit 11 and 12 that shows basically the aerial distribution of the accumulation, I note a number of sections that I believe you testified were basically all owned by CIRI. Is that correct? MR. OPSTAD: That is correct. CIRI owns all of the oil and gas rights on all of the surrounding sections. COMMISSIONER JOHNSTON: There is one on lease, I believe, quarter section in Section 21 that is curently owned by BLM that you do have a -- an agreement with BLM on that quarter section. Is that correct? MR. OPSTAD: Taht is correct. We signed a compensatory royalty agreement with -- with BLM. And that has been submitted to the Commission as a confidential exhibit. COMMISSIONER JOHNSTON: Okay. Did you mark it in any way as an exhibit number? MR. OPSTAD: No. But I will be happy to do so. COMMISSIONER JOHNSTON: Okay. Why don't we, for the 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 28 record, enter this as a confidential submittal and mark it as a confidential submittal, Exhibit Number 15. MR. DOUGLAS: Do you have a tabulation of your Monte Carlo results for the reserves in the various pools? Has there been an estimate of what kind of recovery factor you're looking at? MR. OPSTAD: I can give you -- if you request, I can provide you with basically a summary of the Monte Carlo run on each zone which provides the -- teh range of the variables for the volumetric equation. MR. DOUGLAS: Okay. I'd like that. MR. OPSTAD: I can provide you with that. MR. DOUGLAS: That's all the questions I have. COMMISSIONER JOHNSTON: Okay. At this time I'd like to just take a brief five minute recess. I would like to consult with our staff to see if they have any questions that we might ask of the Applicant. I note the time is approximately 10:00 in the morning. We're recessed for five minutes. (Off record) (On record) COMMISSIONER JOHNSTON: Okay. I'd like to reconvene this hearing. I note the time is approximately 13 after 10:00 in the morning. The Commission had just recessed to consult with staff to ascertain if we have additional questions that we'd like. At this time Commissioner Douglas has one or two questions. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 29 MR. DOUGLAS: Erik, on your type log here on West Fork 121 showing the various horizons you spoke of in your testimony, is it indeed your proposal to develop each one of these horizons as a separate pool? MR. OPSTAD: As a practical matter, probably not. The -- starting from the top, you know, the A0 sand, at the moment we think that's very small in terms of its extent. And I doubt that we would go in and complete that as a -- as a separate completion unless we find, through additional evaluation of the field, that the aerial extent is quite a bit larger than we think it is at the moment. It's -- it's probably not enough to justify completion economically. MR. DOUGLAS: I guess what I'm asking for is some sort of characterization. 'Cause you did mention, if I remember correctly when you talked about the Al, 2, and 3, that they actually may be in communication. It's too early to tell at this point but ...... MR. OPSTAD: Right. MR. DOUGLAS: ..... their proximity may not really allow, or be conducive to two separate ..... MR. OPSTAD: Right. I think that our plans would call for comingling any production from Al, 2, and 3. We would complete those as a single completion ..... MR. DOUGLAS: Um-hum. MR. OPSTAD: ..... with a relatively long -- long gravel 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30 pack spanning the entire interval. MR. DOUGLAS: For sake of -- that type of thing requires -- under our regulations requires a comingling order ..... MR. OPSTAD: Um-hum. MR. DOUGLAS: Rather than maybe go into comingling order, if you could maybe characgterize the nature of the beast, so to speak, for -- for the Commission here so that in our order we could possibly that they really -- for conservation purposes, that development of say the Al, 2, and 3 sands ..... MR. OPSTAD: Right. MR. DOUGLAS: ..... would best be made as a single pool. Maybe you can characterize it that way. Then we could go ahead and write the order. MR. OPSTAD: Sure. I think that that's a valid way to look at it. Because you could really call the -- the Al, the A2, and the A3 as a -- as a single pool. They're -- although they are separatic classic events separated by coals and shales, they're basically a sequence of classic events within a package. And so from a development standpoing and a conservation standpoint, I would certainly consider that to be a single pool. And -- and since they are closely related depth wise and given the fact that we do commonly see little fractures, faults, and things in these packages, it wouldn't be unreasonable to assume that they would be in communication. MR. DOUGLAS: Going on to the development of said sands, 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 31 if you were to try and develop them separately would you envison getting more, less? Would it raise your economic limit and therefore allow you -- I mean if you had to develop them separately or if you were to have them developed as a single reservoir? MR. OPSTAD: I don't ..... MR. DOUGLAS: Is there a difference? MR. OPSTAD: Right. I don't see any scenario whereby we would -- we would want to develop them separately. I think that given the cost at a completion, the completion system generally, particularly gravel pack completion, you would -- you would logically of course go to complete as much net pay in a single completion as you could. Since these sands are in immediate proximity to one another, from an economic standpoint, we would almost always go at development as a single -- as a single unit as opposed to trying to isolate the sands off as -- as separate zones with separate gravel packs and separate completion, separate production strings. That would -- simply wouldn't be economic, frankly. MR. DOUGLAS: Economics set aside ..... MR. OPSTAD: Um-hum. MR. DOUGLAS: ..... what about the overall recovery utilizing the separate scheme versus the -- the one single pool scheme? MR. OPSTAD: I don't think you would -- there would be 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 2¸0 21 22 23 24 25 32 any real benefit in doing a -- a multiple packs or multiple completions over just a single in terms of your recovery. I don't think you would gain anything by -- by doing separate production strings in these sands as opposed to -- as opposed to just using a single completion of the entire zone. MR. DOUGLAS: Going on to the B2, 4, and 6 ..... MR. OPSTAD: Um-hum. MR. DOUGLAS: ..... they're a little bit further a part. But would they warrant maybe the same type of treatment as being say left together as a single pool versus separate? MR. OPSTAD: You certainly -- you certainly could. Thus far we have treated the B2 and the B4 sands separately in the sense that we have completed them individually with individual production strings. The B6 sand is currently comingled with the B4. But as I mentioned earlier, in fact, nearly all of the production is coming from B6. And if we were to go back and recomplete this well, it's likely that 121 would be recompleted in the B4 as a single completion. And then in the -- the Al, 2, 3 package as a single completion. So we -- we have a tendency, as a practical matter, to treat the B sands as separate entities although logically since they too are relatively close together, there wouldn't be any loss in reserves by completing those as a single -- single zone, single pool. Treat them as a single pool either. We don't see enough pressure difference to be -- to pose a problem. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 33 MR. DOUGLAS: I don't have any other questions. COMMISSIONER JOHNSTON: Yeah. Erik, would -- it would be quite helpful for us in understanding the -- the structure out there and the stratigraphy. If you could also give us -- you earlier gave us the tops to these sand bodies. Could you also give us the bottoms? Do you have that information before you? MR. OPSTAD: Not right at hand but I can certainly provide it. I can give you ..... COMMISSIONER JOHNSTON: If you would submit that to us MR. OPSTAD: Sure. COMMISSIONER JOHNSTON: ..... and that will give us a relative idea of the thickness that you're dealing with here on these. MR. OPSTAD: Right. COMMISSIONER JOHNSTON: Unless you're saying that, for example, the A0 sand extends all the way down to the A1 sand. MR. OPSTAD: No. COMMISSIONER JOHNSTON: Okay. Then the -- the bottom depths would be very appropriate if you could ..... MR. OPSTAD: Yeah. information. COMMISSIONER JOHNSTON: Fine. We can provide that And I think, again, just to clarify the record here. Maybe I wasn't listenting quite correctly or I didn't hear you quite correctly. But you -- would 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, A~SK, A 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 34 you characterize again the production from the B6? MR. OPSTAD: The current production from the B6 in 1217 COMMISSIONER JOHNSTON: Right. MR. OPSTAD: Okay. Currently the 121 well is completed with a gravel pack in the B4. And a tail pipe, regular perforation, in B6. The gravel pack is essentially plugged off and all of the production is coming via the tail pipe and normal perforations from the BG. COMMISSIONER JOHNSTON: Okay. Very good. MR. DOUGLAS: What about the B2 sand here? You talked about the 4 and the 6. What are you proposing? Would we be adding that into this bottom pool or -- I haven't heard where this is going to go. MR. OPSTAD: Well, I think from the gist of -- or our conversation has been that basically you can treat the B sands together as a pool. They're part of a shale/coal sequence. They're all fingers -- classic fingers within that sequence and even though -- even though we see aerially some different water contacts -- apparent water contacts, that as a practical matter you can treat them as a single pool. Likewise the Al, 2, and 3 sands also exist within a discreet shale/coal package as classic events within that package. And they too can be treated as a -- a single pool. The A0 sand is a little bit of a flyer. It's extent is so limited we really can't say too much about that. But I -- I suppose that you could include that with the Al, 2, 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 35 and 3 as well. Again, you're not talking about a greal deal of difference in that. MR. DOUGLAS: Okay. So for -- on Exhibit Number 10 it would be more accurate then to describe that, or the statement on Exhibit 10 says the West Fork accumulation consists of seven gas pools. I think it would be more accurate to say consists of seven gas -- or gas/sand horizons. MR. OPSTAD: Or gas zones perhaps. MR. DOUGLAS: Gas zones. Okay. MS. GRIFFIN: And just to make the record clear, then you're suggesting that it would then be two pools? The A's would be one pool and the B sands would be the second? MR. OPSTAD: I think we can certainly propose that as the way it should be treated. Yes. COMMISSIONER JOHNSTON: Any additional? MS. GRIFFIN: So when you're requiring the bottom depths, it's needed for each individual ones or do you just want it for the pools? COMMISSIONER JOHNSTON: It would help us understand, again, the nature of the reservoir if you gave the ..... MS. GRIFFIN: All of them? COMMISSIONER JOHNSTON: ..... the depths to each sand. Okay. At this time the Commission has no further questions of Mr. Opstad. I would like to turn to members of the audience and ask if there are any individuals out there wishing to testify or 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 36 make an oral statement, or submit written statements. I see no such person. At this time then the Commission has no further qudstions in this matter. I would like to then adjourn this meeting. I note the time is approximately 10:25. The date, again, is August 14th. This meeting is adjourned. (Off record) (On record) COMMISSIONER JOHNSTON: Go back on record. Russ just wanted me to clarify that the record will remain open until the Applicant CIRI submits the information that was requested by the Commission. MR. OPSTAD: Okay. And for the purposes of our clarification, the requested submittals include the tops and bottoms of the producing sands, or the gas sands in the West Fork field. And also the perimeter and ranges of perimeter for the Monte Carlo reserve models. COMMISSIONER JOHNSTON: That is correct. Okay. This is the second time around then. We will now adjourn this meeting. Thank you. (Off record) (END OF PROCEEDINGS) 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT' REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 l0 l! 12 13 14 16 17 20 2! 22 23 24 25 CERTIFICATE STATE OF ALASKA THIRD JUDICIAL DISTRICT I, Wanda Ventres, Notary Public in and for the State of Alaska, and court reporter for R & R Court Reporters, Incorporated, do hereby certify: THAT PURSUANT TO NOTICE the annexed and foregoing transcript of Testimony of ERIK A. OPSTAD, was taken before Meredith Downing, on behalf of the Applicant CIRI Production Company,, at the offices of Alaska Oil & Gas Commission, 3001 Porcupine Drive, Anchorage, Alaska, on the 14th day of August, 1992, commencing at the hour of 9:00 o'clock A.M., on behalf of the Applicant. THAT this Deposition as heretofore annexed, is a true and correct transcription of the testimony of said Witness, taken by Meredith Downing and thereafter transcribed by Wanda Ventres. THAT PURSUANT TO CIVIL RULE 30(f)(1) AMENDED the Original Transcript of this transcript will be lodged in a sealed envelope with the attorney requesting transcription of same, that attorney being: Commissioner David W. Johnston, Chairman Alaska Oil & Gas .~ommission, 3001 Porcupine Drive., Anchorage, Alaska 99501. THAT I am not a relative, employee or attorney of any of the parties, nor am I financially interested in this action. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal this 22nd day of September, 1992. Wanda Ventres Notary Public in and for Alaska My commission expires: 8-26-95 81ON STREET (907) 277-0572 FAX (907) 274-8982 r & r COURT rEPOrTErS 1007 WESTTHIRD AVENUE 1135 WEST EIGHTH AVENUE (907) 272-75 ! 5 (907) 272-3022 ANCHORAGE, ALASKA 99501 ALASKA OIL AND GAS CONSERVATION COMMISSION CIRI PRODUCTION COMPANY PUBLIC HEARING - AUGUST 14, 1992 SIGN IN PLEASE NAME ( PLF. ASE PRINT) COMPANY DO YOU PLAN TO TESTIFY? YES NO WEST FORK GAS FIELD Pool Rules Hearing at Alaska Oil & Gas Conservation Commission August 14, 1992 CIR! PRODUCTION CO. Presented by Erik A. Opstad Oil & Gas Consultant PRODUCTION CO. PRESENTATION OUTLINE INTRODUCTION · FIELD HISTORY GEOLOGIC & STRATIGRAPHlC OVERVIEW · FIELD STRUCTURE · RESERVOIR CHARACTERIZATION · CURRENT & FUTURE DEVELOPMENT PLANS CLOSING COMMENTS · QUESTIONS & ANSWERS WEST FORK FIELD HISTORY DISCOVERED SEPTEMBER 1960 BY HALBOUTY ALASKA OIL & MINERALS CO. DRILLING ON KING lB WELL. STERLING "B" SAND PRODUCTION BEGUN IN OCTOBER 1978 BY SEAGULL ENERGY COMPANY FROM 160 ACRE TRACT. KING lB SANDED UP JULY 1980 AND REMEDIAL EFFORTS WERE UNDERTAKEN, BUT PROBLEMS CONTINUED. "B" SAND ABANDONED APRIL 1981 AND WELL RECOMPLETED IN STERLING "A" SAND WHICH PRODUCED FOR APPROXIMATELY 1 YEAR AND THEN SHUT-IN. KING lB ABANDONED SEPTEMBER 1986 AFTER CUMULATIVE PRODUCTION OF 1.6 Bcf. 160 ACRE TRACT REVERTS TO UNITED STATES NOVEMBER 1986. SURROUNDING OIL AND GAS INTERESTS HAD PREVIOUSLY BEEN CONVEYED TO COOK INLET REGION INC. DECEMBER 1990 ClRI PRODUCTION COMPANY SPUDS WEST FORK 1-21 2,600 FEET N.N.E. OF KING lB. JANUARY 1991 CPC ENCOUNTERS GAS IN THE "A" AND "B" STERLING ZONES. COMMERCIAL PRODUCTION BEGINS SEPTEMBER 1991 FROM THE STERLING B4 AND B6 INTERVALS. APRIL 1992 CPC SPUDS WEST FORK 2-21. STERLING A2 AND B2 SANDS COMPLETED IN MAY 1992. CPC SIGNS C.R.A. CONVEYING 160 ACRE FEDERAL TRACT WITH BLM JUNE 1992. WEST FORK 2-21 BEGINS COMMERCIAL PRODUCTION. GEOLOGIC STRATIGRAPHIC OVERVIEW WEST FORK ACCUMULATION CONFINED TO SANDS OF THE KENAI GROUP PLIOCENE STERLING FORMATION [EXHIBIT 3J. DEPOSITONAL ENIVIRONMENT CHARACTERISTIC OF BRAIDED AND MEANDERING FLUIVIAL ENVIRONMENT. [EXHIBIT 4] MOST GAS BEARING SANDS CONFINED TO THE "A" AND "B" DEPOSlTIONAL PACKAGES CONSISTING OF INTERBEDDED SHALE, SlLTSTONE, COAL AND SANDSTONE. "A" SANDS REPRESENT SMALL CHANNELS AND OVERBANK DEPOSITS, WHILE "B" SANDS ARE TYPICAL OF LARGER BRAIDED STREAMS [EXHIBIT 5]. · PACKAGE NET-TO-GROSS RATIOS INCREASE FROM THE WEST AND NORTHWEST TOWARD THE FIELD AREA [EXHIBIT 6'J. INDIVIDUAL SAND PACKAGES SUBJECT TO RAPID LATERAL AND VERTICAL CHANGES IN NORMALLY FINING UPWARD SEQUENCES. SAND CORRELATIONS ARE TENUOUS DUE TO THE DEPOSlTIONAL ENVIRONMENT, BUT COAL BEDS CAN BE EFFECTIVELY EMPLOYED AS LOCAL STRATIGRAPHlC MARKERS [EXHIBIT 7J. HYDROCARBONS ARE BELIEVED TO BE DERIVED FROM COAL AND RELATED ORGANIC MATTER WITHIN THE TERTIARY SECTION. FIELD STRUCTURE STRUCTURALLY THE WEST FORK IS A FAIRLY SYMMETRICAL DOUBLY PLUNGING ANTICLINE DEFINED BOTH BY THE INTERPRETATION OF SEISMIC DATA ON 3 LINES AND BY SUBSURFACE WELL CONTROL AT 7 LOCATIONS [EXHIBIT 8]. LATERAL FACIES CHANGES IN CONJUCTION WITH GENTLY DIPPING STRUCTURAL CLOSURE SERVE TO TRAP HYDROCARBONS. INTERPRETATIONS BY PREVIOUS WORKERS SUGGESTED A SOUTHWEST-NORTHEAST TRENDING FAULT THROUGH THE FIELD AREA, HOWEVER, ADDITIONAL WELL CONTROL PROVIDED BY RECENT DRILLING SHOWS NO EVIDENCE FOR THIS FAULT [EXHIBIT 9]. STRUCTURAL INTERPRETATION OF AVAILABLE SEISMIC DATA IS CONSISTANT WITH THAT CONSTRUCTED FROM WELL CONTROL. INSTANTANEOUS AMPLITUDE EVENTS SERVE AS A GENERAL GAS INDICATOR. RESERVOIR CHARACTERIZATION · GAS ACCUMULATIONS HAVE BEEN IDENTIFIED IN 7 ISOLATED ZONES INCLUDING 4 "A" SANDS AND 3 "B" SANDS [EXHIBIT 10]. · RESERVOIR SAND IS POORLY SORTED, FINE GRAIN AND EXTREMELY FRIABLE. · AVERAGE POROSITY: · PERMEABILITY RANGE: · AVERAGE APPARENTSw: · TYPICAL RESERVOIR PRESSURE: · APPARENT GAS-WATER CONTACTS: ACCUMULATION 32% <0.1 - >400 md 50% _+ 2,000 psig A0 SAND - 4042 TVDss A1-3 SANDS - 4370 TVDss B-2 SAND B-4 SAND B-6 SAND - 4556 TVDss - 4700 TVDss - 4838 TVDss LIMITS ARE DEFINED BY THE INTERSECTION OF MULTIPLE GAS-WATER CONTACTS WITH STRUCTURAL CLOSURE AND LATERAL FACIES CHANGES [EXHIBIT 11 AND EXHIBIT 12J. · INITIAL TESTING OF THE B4 SAND PROVIDED RATES ABOVE 10 MMCF/D AT 4% DRAWDOWN AND INITIAL RESERVOIR PRESSURE OF 2035 AT 5000 FEET. · GAS IS 98.8% METHANE [EXHIBIT 13]. · RESERVES HAVE BEEN INITIALLY CALCULATED BY MONTE CARLO VOLUMETRIC MODEL ASSUMING WATER DRIVE. · FIELD LIFE IS EXPECTED TO EXCEED' 10 YEARS. CURRENT & FUTURE FIELD DEVELOPMENT · THE FIELD IS CURRENTLY DEVELOPED BY 2 WELLS PROVIDING PRODUCTION FROM 4 INTERVALS. WF 1-21 B4 SAND B6 SAND WF2-21 A2 SAND B2-SAND GAS ZONES ARE TYPICALLY PRODUCED THROUGH GRAVEL PACK COMPLETIONS TO CONTROL SAND PRODUCTION [EXHIBIT 14]. HEAT STRINGS ARE EMPLOYED TO CONTROL HYDRATE FORMATION. ALL PRODUCTION STRINGS ARE EQUIPPED WITH AUTOMATIC SAFETY VALVES TO PREVENT UNCONTROLLED GAS FLOW. CPC EXPECTS TO RE-COMPLETE CURRENT WELLS IN UNDEVELOPED INTERVALS AS CURRENTLY COMPLETED ZONES ARE DEPLETED AND .ABANDONED. NO ADDITIONAL DEVELOPMENT DRILLING IS PLANNED AT THIS TIME. CLOSING COMMENTS THE WEST FORK FIELD IS THE FIRST DEVELOPMENT OF OIL & GAS RESOURCES BY AN ALASKA NATIVE CORPORATION. THE FIELD CONSISTS OF 7 DISCRETE GAS POOLS TRAPPED BY LATERAL FACIES CHANGES AND GENTLE STRUCTURAL CLOSURE. PROVED RESERVES COVER APPROXIMATELY 640 ACRES. THERE IS NO EVIDENCE FOR SIGNIFICANT FAULTING. THE FIELD HAS BEEN DEVELOPED WITH 2 WELLS CURRENTLY COMPLETED IN 4 POOLS. NO ADDITIONAL DEVELOPMENT DRILLING IS PLANNED AT THIS TIME. EXHIBITS STATE OF ALASKA DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT Division of occupational Licensing P.O. Box D-LIC, Juneau, Alaska 99811-0800 This certifies that as provided by IaW,Ahe.persi AA Ld H H 9xMrMim Ode w COOK INLET OIL & GAS DEVELOPMENT LOCATION MAP , :+ NI~IliI ¢lilI I ! I COOK INLET DEVELOPMENT MAP ~pllnltlQn EXHIBIT 2 System Series Litholo~ Formation thickness{feet I-; Rec. ~;!~.!..",.~.:..'.?.'::?':!ii~!iilI AIluvium · e.e~, ~, 'e.'=. '4 e.'I Glacial o ,,e.~ .... ~:: ...,...'... ~... ~ 2 ~.C'.'2~'.:c~'~ ~,..~ ,....'... ;... ~ ~ ~.;~x:}¢..~.~::~ Sterling Fro. 0 .......... 0*- I I~000' ~ ~ :~"*'.".'" ;.'". {.':'. ~ ~ '~-;: :..-'.:...'.;..: WEST FORK FIELD :... ~: ...:;., ~..,.:; ~; ................. Beluga Fro. ~ ................. ~- 6000' Z ............. ~ ~ '" ""' ' ~' ''1'" ~ ~ ..... Chuitn~ Mem. ............... , ...... 1400'-~700' i i ii .' ~ .'~ ,..,:..=.'.. ~, Mid. Ground ....... Shoal Mem. ~I 2600'- 5000' ~-~.~..=: ~ o~ .~.~ ~ ,~ .,~; 300'-- 1400' ~ ~ '; - -': -'- ;'-' 0 - 8500 . . '.., ,,, . ,,,,,, ·, ~ ~ ~.?g.'~:..~,;.'~; Unnamed 0'-1800' ~ :----.~..,:, ,...., ........... o'- zooo' ~ ~ ~~ ~ Talkeetna Fro. LEGEND Conglomerate Sandstone Siltstone Mudstone/Shale Coal Volcanics 0il production Interval Gas production interval Surface oil seeps REFERENCES Alaska Geological Society, Ig70, oil and gas fields in the Cool[ Inlet Basin,Alaska. Catclen~d, K.W. and Facl~ler, W.C., 1972, Proposed stratigrapl~ic nomenclature for Kenai Group, Cook Inlet Basin,Alasl~a. Am. Assoc. Petroleum Geologists 8ull.,v. 56 no. 4, p. 739-754 MacJoon, L.B., ~nd Claypool, G. E., 1979, Petroleum Geology of Cook Inlet Basin, Alaska -- an exploration model: U.S.(S.S. open file re~ort no. 79 - 548. Dette~man, R.L., and Reed, B.L.,1980, Stratigraphy, Structure, and Economic Geolo~ of the Illiamna Quadrangle, Alaska; U.S.G.S. Bull, 1368 Fisne,, M. A., anti Magoon, L. B.. 1978, G eoiogic Frame- wor~ of Lower Cook Inlet,Alaska, A,A. RG. Bull,, Vol. 6~ NO. 3, CIRI Production Company GENERALIZED STRATIGRAPHlC COLUMN Cook Inlet Basin, Alaska Modified after AOGCC, 1981 EXHIBIT 3 TYPICAL STERLING DEPOSITIONAL. ENVIRONMENT LEVEE SWAMP POINT BAR I I I I I I I I I ! ' . o 1 oo0 It '~-'- - - . I'' ','' , ~' m Vertical exaggeratiOn lOX Sandstone Siitstone as~d shule P ebble lag Coal Rooting --~ Trough cross-beds Bedding planes - Block diagram of a typical continental fluvial environment representative of Sterling Formation deposition. MAJOR DEPOSITIONAL PACKAGES West Fork Field Area YEST FORX 4Z-ZB 5-~IUG-gZ I~ IZ :87:3Z West Fork "A" Sand Package Top =~ (Al, A2, A3) Bottom West Fork "B" Sand Package Top = (B2, B3, B4, ) Bottom With the exception of small gas accumulations in the A0 and B6 sands, all other West Fork gas is confined to sands in the "A" and "B" depositional packages. Laterial facies changes inconjunction with gently dipping structural closure serve to trap gas within sandstones which "shale-out" from East to West. EXHIBIT 5 WEST FORK STERLING "B" NET SAND TO GROSS INTERVAL RATIO TREND 416000 41 4000 412000 410000 40B000 406000 f 404000 336000 338000 340000 342000 344000 346000 348000 3~0000 Net sand to gross interval ratios for the Sterling "A" and "B" packages tend to increase from the West toward the field area. EXHIBIT 6 CIRI {,lEST FO}iH 1-21 6-~qOG-92 {~ 12:25 C~L I 1 / SFLU B I~ lB 1BBB .2 OHMM 2BBB FEET SP ILD BB MV-ZB .2 OHMM 2BBB ~,,,.,, ~ , , , ~:~:~: , illi I li~ i}lillIIIIll ' I i ii ,i,~l ,,COAL STRATIGRAPHIC MARKERS West Fork Field Area COAL MARKER <-- COAL MARKER <--- COAL MARKER <--- COAL MARKER <--- COAL MARKER <-- COAL MARKER Over a limited area, bedded coals provide reliable time lines and aid in defining discrete stratigraphic events. Although sands within discrete packages bounded by major coal events can be correlated, these clastic events are not necessarily continuous bodies. EXHIBIT 7 "B" MARKER STRUCTURE WEST FORK FIELD AREA 241 6000 2414000 2412000 42- 20 (-4.S78) 24~0000 2408000 2405000 13-29 2404000 I t I I 336000 330000 340000 -4540~, 342000 344000 346000 348000 350000 BAR = 6000 FEET Structure map of the "B" marker over the West Fork field area. This map is consistent with structural interpretations drawn from seismic data. EXHIBIT 8 8/13/92-EAO Sterling Formation Correlations - West Fork Field Area ST 43-28 KING lB WF 1-21 WF 2-21 WF 233-16 WF 42-20 SWF 13-29 -4100 -4200 -4300 -4700 -4800 South North West Well Control Points Marker Subsea Tops -' A0 TVDss E:I A-Marker ~e ,, A1 TVDss o A2 TVDss ~, A3 TVDss · ~- B1 TVDss ~e B-Marker -~o B2 TVDss ~X B3 TVDss 135 TVDss B6 TVDss Correlated sands are related clastic events within discrete sedimentary packages, but are not necessarily continuous sand bodies or even precise time equivalents. Reference available logs and seimic data inconjunction with this interpretation. WEST FORK FIELD GAS POOLS CIRI WEST FOil( 1-7.1 13-allG-97. I) 88: 29: 4? Depth Ptxcs Carue : DEPTH Units : F? CaLI I / .C;FLU DPH I 8 IX 18 1588 .Z OXltXT-888 68 PO 8 FEET SP ILD ltPH I B0 1~ -28 .7. OHI~M 7.881] a8 Ptl 8 :~:::::;.-::::: =':.=.--.-~, · 1388 .- _~_._--.__-:..-:.z-~.-?~-,1 ,- ..~ 4488 ,. ', m~mmm,,,,~ = ..~..~..._'.' .----'. "-~ 4588 ...... , ,, '~_~ , ::::::::::::::: 4 ?8 8 , .... '-'- ...... ~-~ ..... ,_-"--_-:-'_:'-.~E: i ' ; 51BB :;. . ~C, ' I '~"~ ~ ..L ., , T' . '. .~, .~ ~-',~ , <-- a-8 S~ND <-- a-1 Sa)ID <-- 0-2 SaND <-- P~-3 SaIiD <-- B-Z <-- B-4 S~D . <-- B-6 S~D The West Fork accumulation consists of 7 gas pools. Locally these are designated as the A0, Al, A2, and A3 sands, along with the 82, 84 and 86 sands. EXHIBIT 10 APPROXIMATE LIMITS FOR WI=ST FORK "A" SAND RESERVOIRS 2416~00 241 4000 241 2000 24100~0 ' 24~80~ 24~6000 2404000 336000 N~m'oximte I imit of A2 ~ml rme'~ir o o 2:33-16 ~ ', -- · , -__ : 2-~1 , 42- 2e ~ ' 1-21 ' ~ - ~ - /' I ~ ~m ~s . i - [ 13-29 _ ~ 43-2~ 338000 340000 342000 344000 346000 348000 3B0000 BAR = 6000 FEET The approximate limits for West Fork Al, A2, and A3 sand reservoirs. The A0 reservoir is not illustrated since this zone has only been encountered in WF 1-21. EXHIBIT 11 APPROXIMATE LIMITS FOR WEST FORK "B" SAND RESERVOIRS _ AFoximote limit of 82 s~d reservoir _ 233-1 ./ - / 2-21 Approximote limit of B6 sond reservoir . ~ ~ ................... 42- 2O -- · qS- ° - KIN Approximote limit of B4 sond reservoir / 13-29 _ ~ 43-2% 2416000 241 4000 241 2000 241 0000 2408000 2406000 2404000 336000 338000 340000 342000 344000 346000 348000 350000 BAR = 6000 FEET I '1 I I I The approximate limits for West Fork B2, B4, and B6 sand reservoirs. EXHIBIT 12 SEPARATOR GAS ANALYSIS ClRI PRODUCTION COMPANY WEST FORK FIELD WELL - WF 1-21 HYDROGEN S~IDE 0 . 00 ~ON DIOXIDE 0.0~ NI~~ 1.11 ~T~ 98.75 ET~ 0.11 PROP~ 0.00 ISO-B~ 0.00 N-BUT~ 0.00 I SO-PE~ 0 . 00 N-PE~ 0.00 ~~S 0.00 ~T~S PLUS 0.00 SEPARATOR GAS GPM @ MOL % 14.70 PSIA mmmmmmmmm~mmmmmmmmm~mmmmm 0.029 0.000 0. 000 0. 000 0. 000 0. 000 0. 000 0. 000 :06.00 0.029 CALC. GAS SpEcIFIC GRAVIT~ (AIR=I.00) = 0.5602 SEPARATOR GAS SEP. GAS HEAT OF COMB. (BTU/CU. FT. @ 14.70 PSIA & 60°F) DR~ = 1001.6 REAL SEP. GAS HEAT OF COMB. (BTU/CU. FT. @ 14.70 PSIA & 60°F) WET = 984.0 ~TATER SAT. SEP. GAS COMPRESSIBILITY'(@ I ATM & 60°F) Z = 0.9980 CIRI PRODUCTION COMPANY WEST FORK 1-21 SAMPLE NO. 2 SAMPLED: 1-26-91 @ 0846 HOURS 471 PSIG & 86.07°F EXHIBIT 13 TYPICAL WEST FORK WELL COMPLETION 2 2 13-3/~ g;$$ Saad 1.66' ~..3# 1-55 LONG ~I~ lr~ I~, 2-7/8" N-80 6.4 # BLIT~ 1. Baker'C3,f' Slidiag Sleeve 2. Balu~r"ALJ' DuaZ Pac..k~ 3. Locatar NO-GO Stm 4. Upl~r Gravel PacI~r"~C-IL' 96A4..60 6. Bak~-"~.t' Sliding 7. C.n'avei Par=k Sca'~.-n f(n' A-2 Saad Ii. Lower Cnavei Par. kef 'SC-LA' 96A4.60 10. Baker "F' Nippl~ 11. Gravei Part Sa'~n for B-2 Sand 12. Baka-"SC-iL' 96A4-60 Sump Parka' I3. Baka- "$' Remevin$ 14. Bai~r '.'R' Ni.~p. Ir. 15. W'u-Jii= E=~. Gaida Wells in the West Fork field typically employ a multiple gravel pack completion using dual production strings. HYdrate formation is controlled by the circulation of fluid through a heat string. EXHIBIT 14 3 #6646 STOF0330 PO# 08-5719 AFFIDAVIT STATE OF ALASKA, ) THIRD JUDICIAL DISTRICT. ) Eva M. Kaufmann being first duly sworn on oath deposes and says that he/she is an advertising representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 7/14, 1992 OF PUBLICATION · NotiCe O! Public-Hearing- ,', S3~ATE' OF: ALASKA ', , Alaska Oil' i~' 1~S ' Collde~vltiolriComm ission Re:'The request of,'CIRI Pro- duc.ttQfl C0_niPai~y to establish Imo~r 'juleS. fOr.the development a_nd ;;'~perati~:. of th· :. West Hoti~:e' ,is'l,he~by,' .given, that ¢1R I :,Pr~Uctio. cOmpanY by letter,~la~d~ .lul¥ 1, 1992 has reque~. __tgd. ~s~. ~ance,of an. order pres~. ~riblng.,,IX)Ol': rules tor 'the. deveJ~ment and' Operatlo.n o~ the .W~%t FOrk "gas field. The gas'fleld,,-Is' located under ~ec- tioni',: 2!,' '",T6H;"" ,Rgw i, 'seward AAerldian on {J~e Kenal Penln- sula~ ',. ·,' i' , ,i~,' , · be'l~eld,in conformance with '~,' AA_(:' .~,..~ -~,' :*ne, oi! Ge~' cons~rvatibn commission office,,.3001,' porc0'pine Dr., Anchorag6~':'AlaSka' at .9 i 00 a m on' Augus1.:.~,1;4~: ;'1992~. All. inter- ested perSC~n'b':- a~d ,".parties are l~Vltecl t0".present:.~teStlm0n¥.. U,glass , , ,.:, and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. signeO - --~' Subscribed and sworn to before me this .~,c~. day of .."~.~...~ Notary Public In and for the State of Alaska. Third Division. Anchorage, Alaska MY COM/V~ISSION EXPIRES Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The request of CIRI Production Company to establish pool rules for the development and operation of the West Fork gas field. Notice is hereby given that CIRI Production Company by letter dated July 1, 1992 has requested issuance of an order prescribing pool rules for the development and operation of the West Fork gas field. The gas field is located under section 21, T6N R9W Seward Meridian on the Kenai Peninsula. A hearing on this matter will be held in conformance with 20AAC 25.540 in the Oil and Gas Conservation Commission office 3001 Porcupine Dr. Anchorage, Alaska at 9:00 am on August 14, 1992. All interested persons and parties are invited to present testimony. Russell A. Douglass Commissioner Alaska Oil and Gas Conservation Commission Published July 14, 1992 r SOMM COMB ~ES ENG SR LNG SR LNG LNG ASST 'E~ AS. ST CIRI PRODUCTI(~ ~P~N~) GEOL ASSTI, GEOL 'ASSTI~3 July 1, 1992 David W. Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 3TAT TECHI STAT TECHI i FILE J._._i SUBJECT: CONSERVATION ORDER NO. 292 WEST FORK GAS FIELD - PLAN OF DEVELOPMENT AND OPERATION Dear Chairman Johnston, Pursuant to Conservation Order No. 292 and the provisions of 20 AAC 25.517, CIRI Production Company hereby submits the following plan for development and operation of the West Fork gas field. · CIRI Production Company will be the Operator of the field. Production of natural gas from the West Fork field will be accomplished by the development and operation of two wells, West Fork 1-21 and West Fork 2-21. Both wells have been drilled and completed in the Sterling formation, with West Fork 1-21 completed as a single producer and West Fork 2-21 completed as a dual producer. · No addtional drilling activities are presently planned. ° All available gas has been committed to market. Intergration of interests has been accomplished by Compensatory Royalty Agreement No. AK AA075633, executed by and between CIRI Production Company and the U. S. Bureau of Land Management. The Agreement has been provided to the Commission under separate cover. Permanent disposal of solid wastes resulting from drilling operations and disposal of produced water from the operation of the West Fork 1-21 well will be accomplished on site pursuant to Solid Waste Disposal Permit Application No. 9123-BAO15 and Wastewater Disposal Permit Application No. 9123-DB012. Both permit applications are currently under review by the Alaska Department of Environmental Conservation. R E C E IV E D J U L - 6 1992 ClRI BUILDING 2525 "C" STREET P.O. BOX 93330 ANCHORAGE, ALASKA 9950~-~3~ 0il & Gas 00ns. I:;ommt~sio~ (907) 274-8638 TELECOPIER (907) 279-8836 TELEX 090-26-465 Anchorags ,, David W. Johnston, Chairman July 1, 1992 Page 2 All development and operations will be conducted utilizing the existing West Fork site and associated facilities located in SW4 NE4 Section 21 Township 6 North, Range 9 West, Seward Meridian. · This plan of development and operation will remain in effect unless and until amended by CIRI Production Company. Based on the above, CIRI Production Company requests the Alaska Oil and Gas Conservation Commission to issue pool rules for the development and operation of the West Fork gas field. If you have any additional qiaestions, please contact me. Sincerely, CIRI PRODUCTION COMPANY Margaret LQ.~own, ['resident MLB:CD:vg cc: Mr. Joe Dygas, BLM File 061,356.004 *1 United States Department of the Interior BUREAU OF LAND MANAGEMENT ALASKA STATE OFFICE 222 W. 7th Avenue, #13 ANCHORAGE, ALASKA 99513-7599 June 25, 1992 3160 (984) Mr. David W. Johnston, Chairman Ala:'~ka Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Dear Mr. Johnston- Attached is a Compensatory Royalty Agreement, executed by CIRI Production Co. and the United States on June 19, 1992, to compensate the U.S. for the drainage of natural gas from the unleased West Fork tract located in the SW 1/4 Sec. 21, T6N, R9W, Seward Meridian. The effective date of the agreement is September 6, 1991. If you have any questions concerning this agreement, please contact myself or Aden Seidlitz at (907) 271-4403 or (907) 271-4416; respectively. Sincerely, ~ Chief, Branch of Lease Operations Division of Mineral Resources Attachment - Comp. Roy. Agrmt. (7pp.) cc' Mr. Kevin Brown CIRI Production Co. (w/o attachment) RECEIVED JUN ~, 0 1992 Alasl~a Oil & Gas Cons. commission Anchorage COMPENSATORY ROYALTY AGREEMENT This Agreement is made and entered into this . /~"/~ day ot~~. !~/~, by and between the United States of America, through the Secretary ~l' the'interior, or his designated representative (hereinafter called "United States"),VandCIRI Production Company (hereinafter called "Operator"). I. RECITALS A. Throu§h a mineral lease effective September 1, 1958, the United States leased to Halbouty Alaska Oil and Minerals Company the oil and gas interests in a certain 160 acres located in the SW4 of Section 21, T6N, Rgw, SM, Alaska as described in Exhibit "A" attached to and made part hereof.(h~reJn.3fter the "United States Acreage"). B. The Halbouty Alaska Oil Company Alaska Oil and Minerals 1-B well (Halbouty l-B) was drilled on said United States Acreage and discovered commercial quantities of natural gas in the West Fork field. The Halbouty 1-B well produced a cumulative total of approximately 1.6 bcf of natural gas, more or less, from the West Fork field commencin§ October 1978 until September 1986 when the well was plu§§ed and abandoned. C. Through a mineral reversion effective November 11, 1986, the United States acquired a one hundred percent (100%) mineral interest in said United States Acrea§e. D. Pursuant to PL 94-204 (Terms and Conditions for Land Consolidation in the Cook Inlet Area, Alaska), Cook Inlet Re§ion, Inc. (CIRI) acquired a one hundred percent (100%) interest in the the oil, gas and coal located in the N2, SE4, Section 21, T6N, Rgw, SM, Alaska as described in Exhibit "B" attached to and made part hereof (hereinafter the "CPC Acrea§e"). E. Pursuant to a lease issued by CIRI which was subsequently acquired by Operator, Operator drilled the West Fork 1-21 natural gas well located in the West Fork field, 1984' from the North Section line and 1707' from the East Section line, of Section 21, T6N, Rgw, SM, Alaska. Commercial production of natural gas from West For!-, 1-21 w~[! began Sep~.e~ber 6, i991. F. Pursuant to the provisions of the Alaska Administrative Code, specifically 20 AAC 25.055(a)(2), the drilling unit for natural gas from the West Fork field consists of the governmental Section 21 T6N, R9W, SM Alaska (640 acres)located as described in Exhibit "C" attached to and made part hereof. THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, the United States, and Operator agree as follows: R ¢EIVED II. AGREEMENT A. Consistent with the provisions of 20 AAC 25.055(a)(2), the West Fork Drilling Unit shall consist of a 640 acre unit located in Section 21, T6N, R9W, SM, Alaska, as described in Exhibit "C" attached (hereinafter "said Unit"), unless a state governmental entity validly orders otherwise. B. Effective September 6, 1991, Operator will pay to the United States a royalty of twelve and one-half percent (12.5%) of the value of gas or other hydrocarbon substances, attributable to the United States Acreage, produced and saved from the well drilled and now producing on said Unit, and any well or wells drilled thereafter on said Unit. No royalty shall be due for gas or other hydrocarbon substances used on said Unit for operations or unavoidably lost. The amount of gas or other hydrocarbon substances attributable to the United States Acreage shall be based on the proportion that the surface acreage of the United States Acreage (160 acres) bears to the total surface acreage of all lands included within said Unit as said Unit may exist from time to time. The value of gas or other hydrocarbon substances produced from said Unit shall be determined in accordance with the applicable provisions of Title 30 of the Code of Federal Regulations (CFR) or successor regulations in effect at the time the substances are produced. Operator shall be entitled to deduct transportation costs allowed under Title 30 of CFR or successor regulations and and other costs allowed to be deducted thereunder prior to the payment of royalty to the United States. C. Payment due the United States for the production of gas from said Unit shall be made monthly on or before the last day of the calendar month following the month of production on which such payment is based. Each payment shall be accompanied by the statement of oil and gas produced and marketed during the period for which payment is made. All payments shall be made by check drawn to the order of the Department of the Interior and transmitted to the Minerals Management Service, Royalty Management Program, P. O. Box 5810, Denver, Colorado 8021 7-5810. D. Nothwithstanding the provisions of paragraph C above, the parties hereby agree that payment due to the United States based upon gas produced during the period from September 6, 1991 to the date of execution of this Agreement shall be made as follows: Operator shall determine the total amount due the United States for that period in accordance with Paragraph B above within 30 days of the execution hereof, and shall pay that total to the United states in'12 equal monthly installments, without interest or penalty, commencing with the date of the first payment to the United States for gas produced subsequent to the date of execution hereof. E. The United States agrees to furnish Operator with all logs and well history of the Halbouty 1-B well drilled on the 640 acre West Fork Unit, and the statement of gas production runs and royalties. F. Operator agrees to furnish the Secretary of the Interior or his duly authorized representative with all logs and well history of the West Fork 1-21 well and any additional wells drilled on said Unit, and the statement of gas production runs and royalties, together with such reports as are deemed necessary to verify production and compute monthly the royalty due the United States. R~:~ l V'~ D JUN 5 0 t992. Alaska Oil & Gas Cons. Commission ~nctio. rage G. During the life of this Agreement the United States will not issue any oil and gas leases covering the land described in Exhibit "A" (the United States Acreage). H. This Agreement applies only to production occurring on or following September 6, 1991 and affects only the 160 acre tract of land described in Exhibit "A" (the United states Acreage) and the 480 acre tract of land described in Exhibit "B" (the CPC Acreage). This Agreement and is not to be construed as affecting in any manner any right, title, or interest owned or claimed by the United States or Operator in and to any other land, and is not intended to affect any rights of any person or entity not a party hereto. I. Operations on said Unit will be conducted in accordance with the applicable laws and regulations governing the removal of oil and gas from lands owned by the United States. The United States will not acquire by this Agreement any right or authority to supervise or control the exploration for, production of, o.' marketing of oil, gas or other hydrocarbon substances from said Unit, all operating rights and control, and ownership of all production, being vested exclusively in Operator. However, Operator shall protect said Unit from drainage by an oil and gas well or wells which may be drilled affecting said Unit. The United States has the right to inspect metering facilities and witness meter calibrations within said Unit. J. The United States shall defend, indemnify and hold Operator harmless from any costs, damages or environmental impacts to any lands or waters resulting from any activities associated with the exploration, drilling, production or abandonment of the Halbouty l- B well. Operator shall bear no obligation or liability for effects to the surface or subsurface, including any and all forms of environmental pollution, which may have occurred as a result of operations by a party other than Operator on said United States Acreage. K. This Agreement shall become effective at the time of execution and shall continue in full force and effect so long as said Unit remains in force and effect, provided, however, that this Agreement may terminate upon execution of an agreement between CIRI and the United States Fish and Wildlife Service to exchange the interests of the United States in the United States Acreage for lands or interests in lands owned by CIRi located within the Kenai National Wildlife Refuge. U If, as the result of an order issued by the Alaska Oil and Gas Conservation Commission, said Unit is caused to be expanded through the inclusion of additional acreage, this Agreement shall remain in full force and effect, but the amount of oil, gas or other hydrocarbon substances attributable to the United States Acreage shall be adjusted to reflect the proportion of surface acreage the United States Acreage bears to the total surface acreage of the new Unit boundaries. M. Should Operator fail to make any payment required herein pursuant to paragraphs C and D above, and remain in default for 30 days after receiving written demand therefore, the United States shall have the right and privilege to cancel and terminate this Agreement. N. This A§reement and all of its provisions shall be bindin§ upon and extend to the heirs, administrators, executors, personal representatives, successors, and assi§ns of the parties hereto. O. It is also further agreed that no member of, or delegate to Congress, or Resident Commissioner, after this election or appointment, or either before or after he has ualified and during his continuance in office, and that no officer, agent or employee of e Department of the Interior shall be admitted to any share or part in this Agreement derive any benefit that may arise therefrom, and the provisions of Section 3741 of the Revised Statues of the United States, as amended (41 U.S.C. 22), and Sections 431,432, and 433, Title 18, U.S. Code, relating to contracts, enter into and form a part of this Agreement so far as the same may be applicable. P. Nondiscrimination: In connection with the performance or work under this Agreement, Operator agrees to comply with all of the provisions of Section 202 (!) to (7) inclusive, or Executive Order 11246 (30 F.R. 12319), which are hereby incorporated by reference herein. IN WITNESS whereof, Operator has caused these presents to be executed in its corporate name by its duly authorized official; and the United States has caused these presents to be executed by its Secretary of the Interior or his designated representative, all on the day and year first above written. BUREAU OF LAND MANAGEMENT UNITED STATES DEPARTMENT OF THE INTERIOR CIRI PRODUCTION COMPANY Its: ~/'/z/L~ ~ 7&~~L~ 17 16 15 Cow L~ 14 HIGHWAY KENAI { NATIONAL WILDLIFE REFUGE 26 28 27 Gagara 32 T6N COMPENSATORY ROYALTY AGREEMENT EXHIBIT "A" - UNITED STATES ACREAGE 17 20 2g 32 16 15 14 /3 NATIONAL WILDLIFE REFUGE ,/ _ 28 27 26 T6N COMPENSATORY ROYALTY AGREEMENT EXHIBIT "B" - CPC ACREAGE 17 32 eGagam 16 15 14 13 · , 25 N~ HIGH1NAY KENAI NATIONAL WILDLIFE REFUGE 28 27 26 33 34 35 T6N COMPENSATORY ROYALTY AGREEMENT EXHIBIT 'C" - WEST FORK UNIT June 25, 1992 CIRI PRODUCTION COMPANY David W. Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 SUBJECT: CONSERVATION ORDER NO. 292 - WEST FORK GAS FIELD Dear Chairman Johnston, On March'11, 1992 the Alaska Oil and Gas Conservation Commission (Commission) issued Conservation Order No. 292 approving CIRI Production Company's application for an exception to 20 AAC 25.055 for the purpose of drilling the West Fork 2-21 well. Rule 2 of that Order requires that a valid pooling agreement for the drilling unit must be established prior to regular production from West Fork 2-21. Attached please find a Compensatory Royalty Agreement (Agreement) executed by and between CIRI Production Company and the U.S. Bureau of Land Management. The Agreement provides for the integration of interests within the drilling unit, and is hereby submitted to the Commission pursuant to Rule 2 of Conservation Order No. 292 and in accordance with the requirements of 20 AAC 25.517(c). The U. S. Minerals Management Service has assigned the Agreement the number AK AA075633. In addition to this letter and attached Agree. ment, CIRI Production Company will provide the Commission with a plan of operation and development for the West Fork field. In the meantime, should the Commission have any questions, please contact me. Sincerely, CIRI PRODUCTION COMPANY n, President MLB:CD:vg2071 Enclosure cc: File 061,356.004 RECEIVED J UN 2 6 1992 Alaska Oil & Gas Cons. Comraiss~on ;Anchorage CIRI BUILDING 2525 "C" STREET P.O. BOX 93330 ANCHORAGE, ALASKA 99509-3330 (907) 274-8638 TELECOPIER (907) 279-8836 TELEX 090-26-465