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Home My WebLink AboutCO 716AINDEX CONSERVATION ORDER NO. 716A Swanson River Field Swanson River Unit Soldotna Creek Unit Sterling/Upper Beluga Gas Pool Beluga Gas Pool Tyonek Gas Pool Kenai Peninsula Borough, Alaska 1. May 4, 2021 Hilcorp's authorization request to commingle production 2. May 4, 2021 Notice of Public Hearing INDEX CONSERVATION ORDER NO. 716A STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC for authorization to commingle production from the Sterling/Upper Beluga and Beluga Gas Pools in the wellbore of Soldotna Creek Unit 42B-05, Swanson River Field, Kenai Peninsula Borough, Alaska ) ) ) ) ) ) ) ) ) ) ) ) ) Docket Number: CO-21-008 Conservation Order 716A Swanson River Field Swanson River Unit Sterling/Upper Beluga Gas Pool Beluga Gas Pool Tyonek Gas Pool Kenai Peninsula Borough, Alaska October 19, 2023 Nunc pro tunc June 22, 2021 IT APPEARING THAT: 1. By application dated May 4, 2021, Hilcorp Alaska, LLC (Hilcorp), in its capacity as operator of the Swanson River Field, requested administrative approval1 to downhole commingle production from the Sterling/Upper Beluga and Beluga Gas Pools (S/UBGP and BGP respectively) in the Soldotna Creek Unit (SCU) 42B-05 (PTD 182-199) wellbore. 2. Pursuant to 20 AAAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for June 10, 2021. On May 4, 2021, the AOGCC published notice of the opportunity for that hearing on the State of Alaska’s Online Public Notice website and on the AOGCC’s website, electronically transmitted the notice to all persons on the AOGCC’s email distribution list and mailed printed copies of the notice to all persons on the AOGCC’s mailing distribution list. On May 5, 2021, the AOGCC published the notice in the Anchorage Daily News. 3. No protest to the application or request for hearing was received. 4. Hilcorp’s application contained sufficient information to make a decision, so the hearing was vacated on May 28, 2021. FINDINGS: 1. Operator: Hilcorp is the operator of the Swanson River Unit 2 and Swanson River Field, which is located on the east side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. Affected Area: The Affected Area remains as defined in Conservation Order No. 716. 3. Owners and Landowners: Hilcorp is owner of the Swanson River Field. The U.S. Department of the Interior, Bureau of Land Management (BLM) and Cook Inlet Region, Inc. (CIRI) are 1 20 AAC 25.215(b) specifically requires public notice and opportunity for hearing for downhole commingling requests so Hilcorp’s request could not be done through the administrative approval process. 2 Previously the Swanson River Field was split between the Swanson River Unit and the Soldotna Creek Unit but the Swanson River Unit absorbed the Soldotna Creek Unit. Conservation Order 716A October 19, 2023 Page 2 of 5 landowners for the Swanson River Field. A single pooling agreement governs Swanson River Field.3 4. Pool Identification: The pools remain as defined by CO 716.001 and are: a. The Sterling/Upper Beluga Gas Pool, which includes all intervals that correlate with the interval 2,338 feet measured depth (MD) to 4,609 feet MD in the Soldotna Creek Unit 41-4 well. b. The Beluga Gas Pool, which includes all intervals that correlate with the interval 4,609 feet MD to 5,304 feet MD in the Soldotna Creek Unit 41-4 well. c. The Tyonek Gas Pool, which includes all intervals that correlate with the interval 5,304 feet MD to 10,085 feet MD in the Soldotna Creek Unit 41-4 well. 5. Geology: a. Stratigraphy: i. Sterling/Upper Beluga Gas Pool: Within the Swanson River Field, Miocene- to Pliocene-aged sandstones of the Sterling Formation and Miocene-aged sandstones of the Beluga Formation comprise the proposed Sterling/Upper Beluga Gas Pool. ii. Beluga Gas Pool: Within the Swanson River Field, Miocene-aged sandstones of the Beluga Formation comprise the proposed Beluga Gas Pool. iii. Tyonek Gas Pool: Within the Swanson River Field, Miocene-aged sandstones of the Tyonek Formation comprise the proposed Tyonek Gas Pool. Reservoir sandstones within these formations and gas pools are lenticular in cross-section and laterally discontinuous, the result of deposition in braided to meandering river and stream channels within fluvial or alluvial environments. b. Structure: Within the development area, gas has accumulated in several pockets of a north-south trending faulted anticline, which measures about 7 miles long and 4 miles wide and is bounded on the west by a large sealing fault. 6. Well History: The SCU 42B-05 well was spudded in December 1982 and completed in February 1983 as a Hemlock Oil Pool producer and produced until October 2005. From December 2005 until June 2006 the well was completed as a gas storage well in the Tyonek 77-3 gas storage pool. The well was suspended in June 2006. The well was re-entered in March 2021 with the intent to look for gas in the Tyonek Gas Pool as well as the BGP and the S/UBGP. Four Tyonek sands were perforated but failed to flow. Three sands in the BGP were perforated and flowed but were not capable of achieving economic flowrates. 7. Hilcorp now proposes perforating the S/UBGP while keeping the BGP perforations open in the hopes of achieving economically viable flowrates from the well. Without downhole commingling authorization, the perforations in the BGP would have to be plugged, and any potential recovery from them lost, before the S/UBGP could be perforated and tested. 8. The proposed extent of the perforated intervals between the S/UBGP and BGP is ~ 450 ft true vertical depth (TVD) and thus reservoir pressures are expected to be similar between the two pools thus minimizing the potential for crossflow. 3Pooling Agreement for the Swanson River Field, Alaska; U.S. Department of the Interior, Geological Survey, Memorandum to Chief, Branch Oil & Gas Operations, dated December 28, 1964 Conservation Order 716A October 19, 2023 Page 3 of 5 9. Hilcorp proposes an initial production allocation based on the difference between production from the BGP perforations and the combined S/UBGP and BGP commingled production. Thereafter annual production logs will be run to determine production allocation between the pools. CONCLUSIONS: 1. Without downhole commingling approval, the reserves in the BGP would not be produced and the reserves in the S/UBGP may not be economically viable on their own. Therefore, allowing commingling will not cause waste, but instead increases the chances that this well could become an economically viable producer and thus should maximize ultimate recovery. 2. Basing the initial production allocation on the difference between the BGP standalone production test and the combined S/UBGP and BGP production test will provide an acceptable initial production allocation. Annual production logs thereafter to revise the production allocation will also provide an acceptable method of revising the production allocation. 3. Because the 2018 amendments to 20 AAC 25.556 allow administrative approvals, Rule 4 is superfluous and will be rescinded. NOW THEREFORE IT IS ORDERED: CO 716 and CO 716.001 are superseded by this order. Their records are incorporated by reference. Development and operation of the Sterling/Upper Beluga Gas Pool, Beluga Gas Pool, and Tyonek Gas Pool within the Swanson River Field are subject to the following rules and the statewide requirements under 20 AAC 25 to the extent not superseded by these rules: Affected Area - Swanson River Field: Seward Meridian (Restated from CO 716) The Affected Area for the Swanson River Field comprises the combined Swanson River and Soldotna Creek Units as follows: Swanson River Unit Township, Range Description T08N, R09W Section 9: SE¼ NE¼, E½ SE¼, NW¼ SE¼ Section 10: W½ W½, SE¼ NW¼, E½ SW¼, W½ SE¼, SE¼ SE¼ Section 15: All Section 16: E½ Section 21: NE¼, E½ NW¼, E½ SE¼, NW¼ SE¼, NE¼ SW¼ Section 22: W½, SE¼, W½ NE¼, SE¼ NE¼ Section 27: NE¼, W½ SE¼, W½ Section 28: E½ E½, SW¼ NE¼, W½ SE¼, E½ SW¼ Section 32: E½ SE¼, SW¼ SE¼ Section 33: SW¼, E½ NW¼, SW¼ NW¼, NE¼ Section 34: NW¼, W½ NE¼ Conservation Order 716A October 19, 2023 Page 4 of 5 Soldotna Creek Unit Township, Range Description T07N, R09W Section 3: W½, W½ NE¼, NW¼ SE¼ Section 4: All Section 5: E½, SW¼ Section 8: E½, E½W½, NW¼ NW¼ Section 9: All Section 10: W½ W½, NE¼ NW¼ Section 16: NW¼, W½ NE¼, NE¼ NE¼ Section 17: NE¼ NE¼ T08N, R09W Section 33: SE¼ Section 34: SW¼, W½ SE½ Rule 1 Field Name (Restated from CO 716) The field is the Swanson River Field. Rule 2 Pool definition (Restated from CO 716.001) Hydrocarbons underlying the Affected Area and within the intervals defined below constitute the named gas pools. a. The Sterling/Upper Beluga Gas Pool, which includes all intervals that correlate with the interval 2,338 feet MD to 4,609 feet MD in the Soldotna Creek Unit 41-4 well. b. The Beluga Gas Pool, which includes all intervals that correlate with the interval 4,609 feet MD to 5,304 feet MD in the Soldotna Creek Unit 41-4 well. c. The Tyonek Gas Pool, which includes all intervals that correlate with the interval 5,304 feet MD to 10,085 feet MD in the Soldotna Creek Unit 41-4 well. Rule 3 Well Spacing (restated from CO 716) There shall be no restrictions regarding the spacing of development gas wells within the Affected Area except no well shall be drilled or completed less than 1,500 feet from the exterior boundary of the Affected Area unless the owner and landowner are the same on both sides of the line. Rule 4 Administrative Action (Rescinded this order) Rule 5 Downhole Commingling (New this order) Downhole commingling of production from the Sterling/Upper Beluga Gas Pool and the Beluga Gas Pool in the SCU 42B-05 well is allowed with the following conditions: 1. Following the initial testing phase after adding perforations to the Sterling/Upper Beluga Gas Pool any incremental gas and water production above what the Beluga Gas Pool was producing will be attributed to the Sterling/Upper Beluga Gas Pool. 2. Thereafter, the operator shall conduct production logging operations at least once each calendar year, with no more than 13 months between operations, and adjust the allocation of production between the gas pools as appropriate. 3. Within 30 days of completion of production logging operations, electronic copies of all logs used for determining allocation of production shall be submitted to the AOGCC. Conservation Order 716A October 19, 2023 Page 5 of 5 DONE at Anchorage, Alaska and dated October 19, 2023, Nunc pro tunc June 22, 2021. Brett W. Huber, Sr. Gregory C. Wilson Chair, Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Gregory Wilson Digitally signed by Gregory Wilson Date: 2023.10.25 08:56:48 -08'00' Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2023.10.25 10:27:55 -08'00' From:Carlisle, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Conservation Order 716A (nunc pro tunc) Date:Wednesday, October 25, 2023 10:56:16 AM Attachments:co716A_correction.pdf Explanation of change: this change corrects an error in the affected area description for CO 716A. In the description for the affected area in the original order, acreage within Section 12 of Township 07 North and Range 09 West was erroneously listed. Instead, that acreage is part of Section 16. Thank you, Samantha Carlisle Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.carlisle@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.carlisle%40alaska.gov STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC for authorization to commingle production from the Sterling/Upper Beluga and Beluga Gas Pools in the wellbore of Soldotna Creek Unit 4213-05, Swanson River Field, Kenai Peninsula Borough, Alaska IT APPEARING THAT: Docket Number: CO-21-008 Conservation Order No. 716A Swanson River Field Swanson River Unit Sterling/Upper Beluga Gas Pool Beluga Gas Pool Tyonek Gas Pool Kenai Peninsula Borough, Alaska June 22, 2021 1. By application dated May 4, 2021, Hilcorp Alaska, LLC (Hilcorp), in its capacity as operator of the Swanson River Field, requested administrative approval' to downhole commingle production from the Sterling/Upper Beluga and Beluga Gas Pools (S/UBGP and BGP respectively) in the Soldotna Creek Unit (SCU) 4213-05 (PTD 182-199) wellbore. 2. Pursuant to 20 AAAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for June 10, 2021. On May 4, 2021, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On May 5, 2021, the AOGCC published the notice in the Anchorage Daily News. 3. No protest to the application or request for hearing was received. 4. Hilcorp's application contained sufficient information to make a decision so the hearing was vacated on May 28, 2021. 20 AAC 25.215(b) specifically requires public notice and opportunity for hearing for downhole commingling requests so Hilcorp's request could not be done through the administrative approval process. Conservation Order 716A June 22,2021 Page 2 of 6 FINDINGS: O erator: Hilcorp is the operator of the Swanson River Unite and Swanson River Field, which is located on the east side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. Affected Area: The Affected Area remains as defined in Conservation Order No. 716. 3. Owners and Landowners: Hilcorp is owner of the Swanson River Field. The U.S. Department of the Interior, Bureau of Land Management (BLM) and Cook Inlet Region, Inc. (CIRI) are landowners for the Swanson River Field. A single pooling agreement governs Swanson River Field.' 4. Pool Identification: The pools remain as defined by CO 716.001 and are: a. The Sterling/Upper Beluga Gas Pool, which includes all intervals that correlate with the interval 2,338 feet measured depth (MD) to 4,609 feet MD in the Soldotna Creek Unit 41-4 well. b. The Beluga Gas Pool, which includes all intervals that correlate with the interval 4,609 feet MD to 5,304 feet MD in the Soldotna Creek Unit 41-4 well. c. The Tyonek Gas Pool, which includes all intervals that correlate with the interval 5,304 feet MD to 10,085 feet MD in the Soldotna Creek Unit 41-4 well. 5. Geology: a. Stratigrauhv: i. Sterling/Upper Beluga Gas Pool: Within the Swanson River Field, Miocene- to Pliocene -aged sandstones of the Sterling Formation and Miocene -aged sandstones of the Beluga Formation comprise the proposed Sterling/Upper Beluga Gas Pool. ii. Beluga Gas Pool: Within the Swanson River Field, Miocene -aged sandstones of the Beluga Formation comprise the proposed Beluga Gas Pool. iii. Tyonek Gas Pool: Within the Swanson River Field, Miocene -aged sandstones of the Tyonek Formation comprise the proposed Tyonek Gas Pool. ' Previously the Swanson River Field was split between the Swanson River Unit and the Soldotna Creek Unit but the Swanson River Unit absorbed the Soldotna Creek Unit. 'Pooling Agreement for the Swanson River Field, Alaska; U.S. Department of the Interior, Geological Survey, Memorandum to Chief, Branch Oil & Gas Operations, dated December 28, 1964 Conservation Order 716A June 22,2021 Page 3 of 6 Reservoir sandstones within these formations and gas pools are lenticular in cross-section and laterally discontinuous, the result of deposition in braided to meandering river and stream channels within fluvial or alluvial environments. b. Structure: Within the development area, gas has accumulated in several pockets of a north -south trending faulted anticline, which measures about 7 miles long and 4 miles wide and is bounded on the west by a large sealing fault. 6. Well Historv: The SCU 42B-05 well was spudded in December 1982 and completed in February 1983 as a Hemlock Oil Pool producer and produced until October 2005. From December 2005 until June 2006 the well was completed as a gas storage well in the Tyonek 77-3 gas storage pool. The well was suspended in June 2006. The well was re-entered in March 2021 with the intent to look for gas in the Tyonek Gas Pool as well as the BGP and the S/UBGP. Four Tyonek sands were perforated but failed to flow. Three sands in the BGP were perforated and flowed, but were not capable of achieving economic flowrates. 7. Hilcorp now proposes perforating the S/UBGP while keeping the BGP perforations open in the hopes of achieving economically viable flowrates from the well. Without downhole commingling authorization, the perforations in the BGP would have to be plugged, and any potential recovery from them lost, before the S/UBGP could be perforated and tested. 8. The proposed extent of the perforated intervals between the S/UBGP and BGP is — 450 ft true vertical depth (TVD) and thus reservoir pressures are expected to be similar between the two pools thus minimizing the potential for crossflow. 9. Hilcorp proposes an initial production allocation based on the difference between production from the BGP perforations and the combined S/UBGP and BGP commingled production. Thereafter annual production logs will be run to determine production allocation between the pools. CONCLUSIONS: 1. Without downhole commingling approval, the reserves in the BGP would not be produced and the reserves in the S/UBGP may not be economically viable on their own. Therefore, allowing commingling will not cause waste, but instead increases the chances that this well could become an economically viable producer and thus should maximize ultimate recovery. 2. Basing the initial production allocation on the difference between the BGP standalone production test and the combined S/UBGP and BGP production test will provide an acceptable initial production allocation. Annual production logs thereafter to revise the production allocation will also provide an acceptable method of revising the production allocation. Conservation Order 716A June 22,2021 Page 4 of 6 3. Because the 2018 amendments to 20 AAC 25.556 allow administrative approvals, Rule 4 is superfluous and will be rescinded. NOW THEREFORE IT IS ORDERED: CO 716 and CO 716.001 are superseded by this order. Their records are incorporated by reference. Development and operation of the Sterling/Upper Beluga Gas Pool, Beluga Gas Pool, and Tyonek Gas Pool within the Swanson River Field are subject to the following rules and the statewide requirements under 20 AAC 25 to the extent not superseded by these rules: Affected Area - Swanson River Field: Seward Meridian (Restated from CO 716) The Affected Area for the Swanson River Field comprises the combined Swanson River and Soldotna Creek Units as follows: Swanson River Unit Township, Range Description T08N, R09W Section 9: SE%4 NE%4, E'/2 SE%4, NW%4 SE'/4 Section 10: W%2 W'/z, SE'/4 NW'/4, E%2 SW'/4, W'/2 SE'/4, SE'/4 SE'/4 Section 15: All Section 16: E%s Section 21: NE'/4,E%z NW'/4,E%2 SE'/4,NW'/4 SE'/4,NE'/4 SW'/4 Section 22: W%2, SE'/4, W%2 NE%4, SE%4 NE%4 Section 27: NE'/4, W%2 SE%4, W%2 Section 28: E'/2 E%z, SW'/4 NE'/4, W%2 SE'/4, E%2 SW'/4 Section 32: E%2 SE'/4,SW'/4 SE'/4 Section 33: SW'/4, E%z NW'/4, SW%4 NW'/4,NE'/4 Section 34: NW'/4, W'/z NE'/4 Soldotna Creek Unit Township, Range Description T07N, R09W Section 3: W%2, W'h NE'/4, NW'/4 SE'/4 Section 4: All Section 5: E'/2, SW'/4 Section 8: E'/2, E'/2W'/2, NW'/4 NW'/4 Section 9: All Section 10: W'/2 W%2, NE'/4 NW'/4 Section 12: NW'/4, W %z NE'/4, NE'/4 NE%4 Conservation Order 716A June 22,2021 Page 5 of 6 Township, Range Description Section 17: NE% NE%4 T08N, R09W Section 33: SE'/4 Section 34: SW'/4, W'/2 SE%2 Rule 1 Field Name (Restated from CO 716) The field is the Swanson River Field. Rule 2 Pool definition (Restated from CO 716.001) Hydrocarbons underlying the Affected Area and within the intervals defined below constitute the named gas pools. a. The Sterling/Upper Beluga Gas Pool, which includes all intervals that correlate with the interval 2,338 feet MD to 4,609 feet MD in the Soldotna Creek Unit 41-4 well. b. The Beluga Gas Pool, which includes all intervals that correlate with the interval 4,609 feet MD to 5,304 feet MD in the Soldotna Creek Unit 41-4 well. C. The Tyonek Gas Pool, which includes all intervals that correlate with the interval 5,304 feet MD to 10,085 feet MD in the Soldotna Creek Unit 41-4 well. Rule 3 Well Spacing (restated from CO 716) There shall be no restrictions regarding the spacing of development gas wells within the Affected Area except no well shall be drilled or completed less than 1,500 feet from the exterior boundary of the Affected Area unless the owner and landowner are the same on both sides of the line. Rule 4 Administrative Action (Rescinded this order) Rule 5 Downhole Commingling (New this order) Downhole commingling of production from the Sterling/Upper Beluga Gas Pool and the Beluga Gas Pool in the SCU 4213-05 well is allowed with the following conditions: 1. Following the initial testing phase after adding perforations to the Sterling/Upper Beluga Gas Pool any incremental gas and water production above what the Beluga Gas Pool was producing will be attributed to the Sterling/Upper Beluga Gas Pool. Conservation Order 716A June 22, 2021 Page 6 of 6 2. Thereafter, the operator shall conduct production logging operations at least once each calendar year, with no more than 13 months between operations, and adjust the allocation of production between the gas pools as appropriate. Within 30 days of completion of production logging operations, electronic copies of all logs used for determining allocation of production shall be submitted to the AOGCC. DONE at Anchorage, Alaska and dated June 22, 2021. Daniel agitally signed by Denied seamomt Seamount Dete:2021M.22 1235:s9-O8'm' Daniel T. Seamount, Jr Commissioner Jessie L. oinisilysigned bylessie r. Cnmielo did Chmielowski DMa: I021.062221:120 Dray Jessie L. Chmielowski Commissioner As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration most set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period oftime above, the date of the event or default after which the designated period begins to ran 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. Salazar, Grace (CED) From: Salazar, Grace (CED) Sent: Tuesday, June 22, 2021 7:34 PM To: AOGCC Public Notices Subject: AOGCC Conservation Order No. 716A Attachments: CO716A.pdf Please see attached. THE APPLICATION OF Hilcorp Alaska, LLC for authorization to commingle production from the Sterling/Upper Beluga and Beluga Gas Pools in the wellbore of Soldotna Creek Unit 428-05, Swanson River Field, Kenai Peninsula Borough, Alaska. Respectfully, M. Grace Salazar, Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 Direct: (907) 793-1221 Email: grace.salazar@alaska.aov https://www.commerce.alaska.gov/web/aogcc/" Docket Number: CO-21-008 Conservation Order No. 716A Swanson River Field Swanson River Unit Sterling/Upper Beluga Gas Pool Beluga Gas Pool Tyonek Gas Pool Kenai Peninsula Borough, Alaska June 22, 2021 Bernie Karl Gordon Severson K&K Recycling Inc. 3201 Westmar Cir. P.O. Box 58055 Anchorage, AK 99508-4336 Fairbanks, AK 99711 George Vaught, Jr. Darwin Waldsmith P.O. Box 13557 P.O. Box 39309 Denver, CO 80201-3557 Ninilchik, AK 99639 s Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 INDEXES Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket No. CO-21-008 The application of Hilcorp Alaska, LLC (Hilcorp) for an authorization under 20 AAC 25.215(b)(2) to commingle production downhole from two gas pools in the Swanson River Field SCU 4213-05 well (PTD 182-199). Hilcorp, by letter dated May 4, 2021, requests the Alaska Oil and Gas Conservation Commission (AOGCC) amend Conservation Order No. 716 to authorize the downhole commingling of production from the Sterling -Upper Beluga and Beluga Gas Pools in the Swanson River Field. This notice does not contain all the information filed by Hilcorp. You may obtain more information about this filing by contacting the AOGCC's Special Assistant, Grace Salazar, at (907) 793-1221 or grace. salazarna,alaska.gov. The AOGCC has tentatively scheduled a public hearing on this application for June 10, 2021, at 10:00 a.m. in the AOGCC hearing room located at 333 West 71 Avenue, Anchorage, AK 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on May 27, 2021. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after June 1, 2021. Interested parties who wish to participate at the hearing telephonically should call 1-800-315-6338, passcode 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. In addition, written comments regarding this application may be submitted to the AOGCC at 333 West 7' Avenue, Anchorage, AK 99501. Comments must be received no later than 4:30 p.m. on June 8, 2021, except that, if a hearing is held, comments must be received no later than the conclusion of the June 10, 2021, hearing. Individuals or groups of people with disabilities who require special accommodations to comment or attend the hearing should contact Ms. Salazar at (907) 793-1221, no later than June 7, 2021. Jeremy "s ne'" Jeremy M. ce Wiv:2 W M. Price ,WAI.,-0OW Jeremy M. Price Chair, Commissioner ANCHORAGE DAILY NEWS AFFIDAVIT OF PUBLICATION R G G E i vkccount #: 100869 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION MAY 12 2021 333 W. 7TH AVE STE 100, ANCHORAGE, AK 99501 AOGCC Order #: W0022462 Cost: $283.9 STATE OF ALASKA THIRD JUDICIAL DISTRICT Notice of Public Hearing Lisi Misa being first duly sworn on oath deposes and says that she is a representative of the An- STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION chorage Daily News, a daily newspaper. That said newspaper has been approved by the Third RE: Docket No. CO-21-008 Judicial Court, Anchorage, Alaska, and it now The application of Hilcorp Alaska, LLC (Hilcorp) for an authorization and has been published in the English language under 20 AAC 25.215(b)(2) to commingle production downhole from two gas pools in the Swanson River Field SCU 42B-05 well continually as a daily newspaper in Anchorage, (PTD 182-199). Alaska, and it is now and during all said time was printed in an office maintained at the afore- Hilcorp, by letter dated May 4, 2021, requests the Alaska Oil and said place of publication of said newspaper. Gas Conservation Commission (AOGCC) amend Conservation Order No. 716 to authorize the downhole commingling of That the annexed is a co of an advertisement copy production from the Sterling -Upper Beluga and Beluga Gas Pools as it was published in regular issues (and not in In the Swanson River Field. supplemental form) of said newspaper on This notice does not contain all the information filed by Hilcorp. You may obtain more information about this filing by contacting the AOGCC's Special Assistant, Grace Salazar, at (907) 793-1221 or grace.salazar@alaska.gov. 05/05/202] The AOGCC has tentatively scheduled a public hearing on this application for June 10, 2021, at 10:00 a.m, in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501. To request that the tentatively scheduled hearing be held, a written and that such newspaper was regularly distrib- Y request must be filed with the AOGCC no later than 4:30 p.m. on May 27, 2021. uted to its subscribers during all of said period. That the full amount of the fee charged for the If a request for a hearing is not timely filed, the AOGCC may foregoing publication is not in excess of the rate consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after June 1, 2021. charged private individuals. Interested parties who wish to participate at the hearing telephonically should call 1-800-315-6338, passcode 14331. Signed Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those Subscribed and sworn to before me calling in may need to make repeated attempts before getting through. this 5th day of May 2021. In addition, written comments regarding this application may be submitted to the AOGCC at 333 West 7th Avenue, Anchorage, AK 99501. Comments must be received no later than 4:30 p.m. on June 8, 2021, except that, if a hearing is held, comments must be received no later than the conclusion of the June 10, 2021, hearing. v v — Individuals or groups of people with disabilities who require tary Public in and for 0 M y special accommodations to comment or attend the hearing should ;rhe State of Alaska. ° O r- � contact Ms. Salazar at (907) 793-1221, no later than June 7, 2021. Third Division ' //signature on file// Anchorage, Alaska Jeremy M. Price Chair, Commissioner MY COMMI7ON EXPIRES pub: May 5, 2021 STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER AO-O8-2I-O2I FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Grace Salazar DATE OF A.O. AGENCY PHONE: 5/4/2021 907) 279-1433 333 West 7th Avenue Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: Account Number: 100869 COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: id LEGAL r DISPLAY F- CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE CO-21-008 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDERNO.,CERTIFIEDAFFIDAVITOF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENTTO: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Page I of I Total of All Pages S REF Type Number Amount Date Comments t PVN ICO21795 2 AG O- A08-21-021 3 4 FIN AMOUNT SY Au. I I PGM LGR Ohjert FA DIST LIQ I 21 AOGCC 3046 21 2 3 4 5 Purchasing Authority Name: Title: M. Grace Salazar, AOGCC Special Assistant - - ace I horitys Signature r Telephone Number (907) 793-1221 1. AG. # antl receiving agency name must appear on all invoices and documents relating to this purchase. 2. The state is registered fortaxfeetransacLions under Chaptw32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fiscal, Receiving Form: 02-901 Re .ae: 5/4/2021 Please note to those participating telephonically, the call -in number has changed to: 1-650-479-3207 or toll -free at 1-355-244-8681 Access Code: 17760349694 Notice of Public Hearing Attendee ID/Password: 99 378699# STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket No. CO-21-008 The application of Hilcorp Alaska, LLC (Hilcorp) for an authorization under 20 AAC 25.215(b)(2) to commingle production downhole from two gas pools in the Swanson River Field SCU 4213-05 well (PTD 182-199). Hilcorp, by letter dated May 4, 2021, requests the Alaska Oil and Gas Conservation Commission (AOGCC) amend Conservation Order No. 716 to authorize the downhole commingling of production from the Sterling -Upper Beluga and Beluga Gas Pools in the Swanson River Field. This notice does not contain all the information filed by Hilcorp. You may obtain more information about this filing by contacting the AOGCC's Special Assistant, Grace Salazar, at (907) 793-1221 or grace.salazar(a,alaska.gov. The AOGCC has tentatively scheduled a public hearing on this application for June 10, 2021, at 10:00 a.m. in the AOGCC hearing room located at 333 West 7 h Avenue, Anchorage, AK 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on May 27, 2021. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after June 1, 2021. Interested parties who wish to participate at the hearing telephonically should call 1-800-315-6338, passcode 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. In addition, written comments regarding this application may be submitted to the AOGCC at 333 West 7a' Avenue, Anchorage, AK 99501. Comments must be received no later than 4:30 p.m. on June 8, 2021, except that, if a hearing is held, comments must be received no later than the conclusion of the June 10, 2021, hearing. Individuals or groups of people with disabilities who require special accommodations to comment or attend the hearing should contact Ms. Salazar at (907) 793-1221, no later than June 7, 2021. Jeremy °nem, .Pdce M. Price 13.01A1 WOO Jeremy M. Price Chair, Commissioner Hilcorp Alaska, LLC May 4, 2021 Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7 h Avenue, Suite 100 Anchorage, Alaska 99501 RECEIVED By Grace Salazar at 10:39 am, May 04, 2021 3800 Centerpolnt Drive Suite 1400 Anchorage, AK 99503 Phone: 907-777-8432 Fax: 907-777-8301 ctemell@hllcorp.com RE: Request for Administrative Approval to Downhole Commingle Production from the Sterling -Upper Beluga & Beluga Gas Pools in the wellbore of SCU 4213-05 at the Swanson River Field Dear Commissioner Price: Hilcorp Alaska, LLC (Hilcorp), as Operator of the Swanson River Field ("SRF") hereby requests that a Conservation Order be granted by the Alaska Oil and Gas Conservation Commission ("AOGCC") to permit the commingling of gas production from the both the Sterling -Upper Beluga Gas Pool ("Sterling-U. Beluga") and Beluga Gas Pool (`Beluga"), as defined in Conservation Order 716.001 ("CO 716.001"), in the SCU 4213-05 well. Hilcorp is also requesting that AOGCC take Administrative Action on this matter and issue an order for this approval, pursuant to Rule 4 of Conservation Order 716 ("CO 716"). Issuance of the requested Order requires an exception to CO 716 and 20 AAC 25.215(b).t Additionally, Hilcorp requests waiver of the requirement to provide complete separation of flow streams from separate pools as specified in 20 AAC 25.210? On April 17, 2015, AOGCC issued CO 716 amending CO 123B for the classification of three (3) new gas pools and to prescribe pool rules for development of the gas pools, including the Sterling-U. Beluga and Beluga CO 716 currently does not allow for any downhole commingling between gas pools. On June 25, 2015, AOGCC issued administrative approval of CO 716.001 which revised the defined gas pool depths for the 120 AAC 25.215(b) provides: Comingling of production within the same wellbore from two or more pools is not permitting, unless, after request, notice, and opportunity for public hearing in conformance with 20 AAC 25.540, the commission (I) finds that waste will not occur, and that production from separate pools can be property allocated; and (2) issues an order providing for commingling for wells completed from these pools within the field. 2 20 AAC 25.210 provides: A well may not be completed in more than one pool without approval of the commission. The commission will require evidence of complete separate of flowstreams from separate pools, as ascertained by a pressure test or other acceptable test conducted at the time the packers are set. Subsequently, if packer leakage is suspected, the commission will require the operator to provide proof of complete separation of the pools involved in the completions or make a packer leakage test. At least 24 hours notice must be given so that the packer leakage test may be witnessed by a representative of the commission. SCU 42B-05 Comingling Application Page 2 of 5 Swanson River Field. Pursuant to CO 716.001, the current pool depths for the Sterling-U. Beluga are defined as all intervals that correlate with the interval between 2,338' MD to 4,609' MD measured in the SCU 41-4 well. Pursuant to CO 716.001, the current pool depths for the Beluga are defined as all intervals that correlate with the interval between 4,609' MD to 5,304' MD measured in the SCU 41-4 well. In order to maximize recovery from the Swanson River Field gas pools and to minimize any waste any of resources, Hilcorp is requesting administrative approval to downhole commingle production from the Sterling U. Beluga and Beluga. Background Hilcorp drilled the SCU 42B-05 in February 1983 targeting oil in the Hemlock Oil Pool. After 20 plus years as a reliable oil producer (1AMMBO cum), rates declined below the commercial threshold and the well was shut in. Until recently, economic constraints prohibited work to revive the SCU 42B-05 as either an oil or gas producer. Review of the OH log data in late 2020 revealed shallow gas potential throughout the Sterling-U. Beluga, Beluga, and Tyonek formation in the SCU 42B-05. Work progressed in March and April 2021 to develop various thin prospective gas sands in the well. Perforations across four Tyonek sands (TY 62-3, TY 61-0, TY 55-4, and TY 54-1) and three Beluga sands (LB 52-9, LB 50-8, and UB 51-1) have thus far failed to generate commercial levels of gas. While the Tyonek sands did not produce at all and were fully isolated, the Beluga sands are open and collectively flowing—150MCFD. Based on OH log data, mudlogs, and area analogues, there is potential for commercial gas rates when the Sterling-U. Beluga and Beluga are commingled. By adding perforations to the Sterling-U. Beluga, specifically to the UB 49-4, and commingling them with three currently -open Beluga sands, Hilcorp anticipates increasing gas production to commercial levels and extending the productive life of the SCU 42B-05. Hilcorp now requests permission to complete, test and produce potential productive sands in the Sterling-U. Beluga without isolating existing Beluga perforations. As demonstrated below, Hilcorp's proposal to commingle production from both the Sterling-U. Beluga and Beluga will not lead to a loss of reserves or less ultimate recovery from either pool. Moreover, waste will not occur, and proper procedures will be in place to ensure that production from the Sterling-U. Beluga and Beluga is properly allocated. Discussion SCU 42B-05 is a monobore completion producing through a 2-7/8" kill string cemented inside 7-5/8" casing. Due to this design — a function of Hilcorp's intent to maximize the SCU 42B-05 Comingling Application Page 3 of Swanson River Field's ultimate hydrocarbon recovery by repurposing a long-term shut-in oil producer as a gas producer. The targeted sands will not produce at a commercial rate if Hilcorp is required to install a dual production string to isolate downhole flows from the Sterling-U. Beluga and Beluga reservoirs. By allowing for commingling between the Sterling-U. Beluga and Beluga, Hilcorp anticipates increasing gas production to commercial levels and extending the productive life of the SCU 42B-05. This will minimize any waste of resources that would occur due to by-passing these sands altogether, as these sands likely will not produce if isolated. By allowing for commingling between the Sterling U. Beluga and Beluga, Hilcorp will be able to produce two sands from the Beluga (UB 50-8 and LB 52-9) that would otherwise be prematurely isolated and thus bypassed. Without approval to commingle, waste will occur by leaving behind Beluga gas that cannot be economically produced without commingling. Because the completion does not permit Hilcorp to install a dual string well design, selectively and independently producing gas from sands within each reservoir is not a mechanical option. It is only through commingling with the Sterling-U. Beluga that gas production from the UB 50-8 and LB 52-9 is economic, and waste is avoided. The upper -most Beluga and lower -most Sterling-U. Beluga sands that Hilcorp is targeting in SCU 42B-05 are similar geologically and from a reservoir characteristics perspective. Productive reservoirs of the UB 47-0 down through the LB 52-9 are primarily fine grained to locally medium grained, clayey and micaceous sandstones and siltstones. Deposition of the UB 47-0 on down through the Lower Beluga was sourced from the east (Chugach metasediments) in a fluvial environment dominated by meandering streams and single thread anastomosing channels. The maximum anticipated span of the commingled perforations across the four named reservoir intervals (UB 47-0, UB 50-6, UB 50-8, and LB 52-9) is —450' TVDss. Given this relatively small distance, we do not expect significant reservoir pressure differentials between the sands, nor do we expect any abnormally pressured sands in the Sterling-U. Beluga. Core taken in well SRU 12-15 in the LB 52-9 (522V — 5242' TVDss) and UB 50- 6 (4665 — 4681' TVDss) reservoirs show similar porosity and permeability characteristics. Comparing the log characteristics in the --450' TVDss interval suggests that the four zones (UB 47-0, UB 50-6, UB 50-6, and LB 52-9) should also share similar porosity and permeability. Crossflow and sand production are therefore considered very low risk. Should mild crossflow occur, the open sands will ultimately equilibrate as reservoir pressure drops over time, enabling full gas recovery from any crossflowing zones. Regardless of suspected or actual crossflow, annual PLT logging will monitor any changes and be used to allocate production splits. Following the initial testing phase after adding perforations to the Sterling U. Beluga, any incremental gas and water produced will be attributed to the Sterling U. Beluga Pool. On SCI142B-05 Cotnin_eling Application Page 4 of 5 an annual basis thereafter, Hilcorp will run a production log across all open perforations to determine how the production will be allocated. Such data will be used to meet the requirements of 20 AAC 25.215(b)(1) (requiring that production from separate pools can be property allocated). During the initial testing phase and thereafter, all of SCU 4213-05's production from the Sterling U. Beluga will be reported, for royalty purposes, to BLM according to the allocation schedule required by the Swanson River Unit's Sterling U. Beluga Participating Area. See Exhibit A. Likewise, all SCU 4213-05 production from the Beluga will be reported, for royalty purposes, to BLM according to the allocation schedule required by the Swanson River Unit's Beluga Participating Area. See Exhibit B. Adherence to proper reporting requirements for both allocations of pool production and payment of royalties will ensure that the correlative rights of affected landowners are adequately protected. By allowing commingling, this will ensure that otherwise bypassed production will not be wasted. Conclusion Hilcorp respectfully requests that a Conservation Order be granted by AOGCC to commingle gas production from the Swanson River Field, Sterling U. Beluga and Beluga Gas Pools in the SCU 4213-05 well. Further, Hilcorp requests a waiver of the requirement to provide complete separation of flow streams from the two pools. If BLM does not grant approval to commingle the PAs, Hilcorp will isolate SCU 4213-05's current low -rate, non-commercial Beluga gas in order to access potentially higher -rate gas in the Sterling PA, resulting in wasted Beluga PA resources. If you require additional information regarding this request, please contact Jeff Nelson (Geologist) at 907-777- 8455, Meredyth Richards (Reservoir Engineer) at 907-777-8430, or the undersigned at 907-777-8432. Sincerely, G -T_;.� Cody T. Terrell, Landman Hilcorp Alaska, LLC Enclosures: Attachment 1 (Map), Exhibit A (SRU Sterling U. Beluga Gas PA Exhibits), Exhibit B (SRU Beluga Gas PA Exhibits), Exhibit C (SCU 4213-05 Schematic) CC: Jody Colombie, AOGCC (via email) Robert Brumbaugh, BLM (via email) Sharon Yarawsky, BLM (via email) SCU 42B-05 Comingling Application Page 5 of 5 SD07N009W Attachment 1 SCU 4213-05 Well Overview ,,;, „,p,,,,L, ,,,, Commingling Application Legend O Pad Location Surface Well Locations e Bottom Hole Locations — SCU_42B_05_Wellpath C_ l A0289% C A028997 500 Feet A�,ika Saab PNna 2nm 4, NA027 Map Date: kta7 4.2021 A S007NO09VV Attachment 1 It SCU 4213-05 Well Overview Ilil,orl,.Al.4.,LIT Commingling Application 4 Legend = Pad Location e Surface Well Locations • Bottom Hole Locations — SCU_42B_05_Wellpath A028996 A028997 0 500 Feet Alaska State Plane Zone 4, NAD27 Map Date: May 4, 2021 1,000 N A