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Home My WebLink AboutO 214Other Order 214 Docket Number: OTH-24-025 1. ------------ Background information emails 2. July 26, 2024 AOGCC noticed of proposed enforcement action 3. July 31, 2024 Mustang informal review request 4. September 6, 2024 Mustang Holding request for hearing 5. September 17, 2024 Notice of public hearing 6. November 5, 2024 Hearing presentation and transcript 7. November 7, 2024 Mustang response to hearing questions STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501 Re: Failure to notify of changes to approved permit for Southern Miluveach Unit well M-03A (PTD 224-070) ) ) ) ) ) ) ) ) ) Docket Number: OTH-24-025 Other Order 214 Southern Miluveach Unit (SMU) Southern Miluveach Field Kuparuk River Oil Pool M-03A (PTD 224-070) August 29, 2024 DECISION AND ORDER On July 26, 2024, the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to Mustang Holding, LLC (Mustang) regarding the M- 03A well. The Notice proposed a $50,000 civil penalty under AS 31.05.150(a). Mustang requested an informal review which was held at the AOGCC office on August 14, 2024. This decision and order now follow. SUMMARY OF PROPOSED ENFORCEMENT ACTION: The Notice identified that Mustang violated the provisions of 20 AAC 25.507 (“Change of an approved program”) while performing open hole drilling operations at Southern Miluveach Unit (SMU) M-03A. Development well SMU M-03A was drilled in July 2024. The Permit-to-Drill – approved by the AOGCC on June 24, 2024 – required a gamma ray sonde at bit measurement to assure drilling would not enter the Kuparuk sand because of safety concerns. Per 20 AAC 25.507 an operator may not undertake a change to an approved program or activity without AOGCC approval. Paragraph (a) of 20 AAC 25.507 further describes the information that must be submitted to AOGCC. To make a change, the well’s current condition and proposed change must be provided to AOGCC for review and approval. Investigation by AOGCC included a review of well records and correspondence regarding the gamma ray at bit requirements that are clearly documented as conditions of approval on the Permit to Drill, Form 10-401. AOGCC’s investigation concluded that Mustang failed to obtain approval for drilling the intermediate hole section without a gamma ray sonde at bit. Changes to approved programs require submission and AOGCC approval of an Application for Sundry Approvals, Form 10-403. Other Order 214 August 29, 2024 Page 2 of 3 Mustang’s failure to follow the approved drilling permit for well M-03A is a violation of AOGCC regulations. Violating an AOGCC regulation makes Mustang liable for civil penalties pursuant to AS 31.05.150(a). The Notice proposed civil penalties of $50,000 for the drilling intermediate hole section without gamma ray at bit measurement on SMU M-03A.1 In addition to the imposed civil penalty, AOGCC proposed Mustang provide a detailed written explanation that describes how Mustang intends to prevent recurrence of this violation. The factors in AS 31.05.150(g) have been considered in the determination of penalties for the violation. The most significant factor is AS 31.05.150(g)(3) (“the extent and seriousness of the violation and the actual or potential threat to public health or the environment”) because of Mustang's disregard for well control risks, as evidenced by the well's low kick tolerance, the uncertainty in the target oil pool's high pore pressure, and the uncertainty regarding the extent of the overburden. Additional considerations of the civil penalty include Mustang’s history of compliance, Mustang’s cooperation with the investigation, and the need to deter similar behavior(s). FINDINGS AND CONCLUSIONS: During the informal review, Mustang provided further context surrounding its actions, stating that it did not intend to violate AOGCC regulations.2 Mustang, however, did not acquire either verbal or written approval to deviate from the conditions of approval included in the Permit-to-Drill. The AOGCC finds that Mustang committed the violation as initially alleged in the Notice and restated in the “Summary of Proposed Enforcement Action” above and that the $50,000 civil penalty is appropriate under AS 31.05.150(g). NOW THEREFORE IT IS ORDERED THAT: Mustang is assessed a civil penalty in the amount of $50,000 for the violation detailed within this Order. If this Order is not appealed, the fine must be paid within 30 days of issuance. If appealed, the fine will be held in abeyance until the appeal process is complete. As an Operator involved in an enforcement action, Mustang is required to preserve documents concerning the above action until after resolution of the proceeding. DONE at Anchorage, Alaska and Dated August 29, 2024. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner 1 AS 31.05.150(g) requires AOGCC to consider nine criteria in setting the amount of a civil penalty. 2 Intentionally or knowingly violating an AOGCC regulation is not required for a civil penalty under AS 31.05.150(a) which is strict liability offense. Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.08.29 11:08:59 -08'00' Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.08.29 14:58:49 -08'00' Other Order 214 August 29, 2024 Page 3 of 3 cc: Mel Rixse Jim Regg Phoebe Brooks AOGCC Inspectors Josh Tempel, Fairweather (Josh.Tempel@fairweather.com) Michael Duncan, Fairweather (Michael.Duncan@fairweather.com) RECONSIDERATION AND APPEAL NOTICE Pursuant to 20 AAC 25.535(d), this order becomes final 11 days after it is issued unless within 10 days after it is issued the person files a written request for a hearing, in which case the proposed decision or order is of no effect. If the person requests a hearing, the commission will schedule a hearing under 20 AAC 25.540. As provided in AS 31.05.080(a), within 20 days after this order becomes final as discussed above, 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. From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Other Order 214 (Mustang) Date:Tuesday, September 3, 2024 7:59:48 AM Attachments:other 214.pdf Failure to notify of changes to approved permit for Southern Miluveach Unit well M-03A (PTD 224-070) Samantha Coldiron AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501 Re: Failure to notify of changes to approved permit for Southern Miluveach Unit well M- 03A (PTD 224-070) ) ) ) ) ) ) ) ) ) Docket Number: OTH-24-025 Other Order 214 Final Southern Miluveach Unit (SMU) Southern Miluveach Field Kuparuk River Oil Pool M-03A (PTD 224-070) December 10, 2024 FINAL DECISION AND ORDER On July 26, 2024, the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to Mustang Holding, LLC (Mustang) regarding the Southern Miluveach Unit (SMU) M-03A well (PTD 224-070). The Notice proposed a $50,000 civil penalty under AS 31.05.150(a) for failure to notify of changes to an approved permit. Mustang requested an informal review which was held at the AOGCC office on August 14, 2024. Following the informal review, the AOGCC issued Other Order 214 (OO 214) on August 29, 2024, which assessed a civil penalty of $50,000. Pursuant to 20 AAC 25.535(d), OO 214 would become a final order unless Mustang filed a request for a hearing within 10 days, in which case OO 214 would take no effect. Mustang, by letter dated September 6, 2024, timely filed a request for hearing. A public hearing on the matter was held November 5, 2024. The record closed November 6, 2024. This final decision and order now follow. FINDINGS AND CONCLUSIONS: 1. Development well SMU M-03A was drilled in July 2024. The Permit-to-Drill (PTD) – approved by the AOGCC on June 24, 2024 – required a gamma ray sonde at bit for the intermediate hole section as a Condition of Approval (COA). The exact COA language was “Gamma ray at bit to assure 7” casing point prior to drilling into Kuparuk oil pool.” 2. Email communication from Mustang to the AOGCC on July 11, 2024, was interpreted by AOGCC staff as clear intent that Mustang intended to deviate from the above COA for PTD 224-070 and drill to casing point without gamma ray at bit. Therefore, AOGCC staff concluded a violation had already occurred as articulated in the July 12th, 2024, email correspondence to Mustang. As such, AOGCC staff proceeded to work with Mustang on an alternate plan to safely pick the 7-inch casing point rather than force them to pull out of Other Order 214 Final December 10, 2024 Page 2 of 3 the hole and change out the bottom hole assembly to bring them in compliance with the COA. 3. The COA can be interpreted that gamma ray at bit is not required for the entirety of the intermediate hole section, but only that portion to assist in picking casing point. Interpreted in this manner, there was still opportunity for Mustang to swap out the bottomhole assembly prior to believing they had approval to change the drilling program. 4. Intent by Mustang to change the bottom hole assembly to include gamma ray at bit at some point prior to casing point cannot be ascertained with certainty. 5. Mustang acknowledged that it did not follow up email approval for the change to the COA with a Form 10-403 as required by 20 AAC 25.507(b). 6. During the hearing on November 5, 2024, Mustang articulated that its intent is to have a professional and mutually respectful relationship with all AOGCC personnel based on transparency, honesty, and sound engineering practices. 7. While the AOGCC does not believe that Mustang acted with complete transparency during the PTD approval and change process with this well, due to potential ambiguities in the COA, the AOGCC does not find sufficient evidence to warrant a finding that Mustang violated AOGCC regulations by making changes to an approved drilling program without prior AOGCC approval. NOW THEREFORE IT IS ORDERED THAT: Other Order 214 took no effect by Mustang’s timely request for a hearing. Based on the findings outlined above, the AOGCC will take no further enforcement action against Mustang for this incident and considers this matter closed. DONE at Anchorage, Alaska and Dated December 10, 2024. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner cc: Mel Rixse Jim Regg Phoebe Brooks AOGCC Inspectors Josh Tempel, Fairweather (Josh.Tempel@fairweather.com) Susan Childs, Fairweather (susan.childs@fairweather.com) Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.12.10 11:05:57 -09'00' Gregory C. Wilson Digitally signed by Gregory C. Wilson Date: 2024.12.10 15:46:47 -09'00' Other Order 214 Final December 10, 2024 Page 3 of 3 RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Other Order 214 final (Mustang) Date:Tuesday, December 10, 2024 3:59:40 PM Attachments:other 214 final.pdf Failure to notify of changes to approved permit for Southern Miluveach Unit well M-03A (PTD 224-070) Samantha Coldiron AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v 7 CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Harry Bockmeulen To:Coldiron, Samantha J (OGC) Subject:Mustang Holding LLC / Other Order 214 Hearing 11/5/2024 Date:Wednesday, November 6, 2024 11:18:11 AM Attachments:image001.png Outstanding Responses to AOGCC_MHLLC.docx Mustang Daily Report for 7.12.24.pdf Samantha, Good morning. Please find attached Mustang Holding LLC (MHLLC) responses to the three questions posed by the Commissioners towards the end of the hearing yesterday. We would like to express our thanks to the AOGCC for the opportunity to present. It is acknowledged that MHLLC failed to submit a 10-403, but we are concerned that the Order as written does not accurately characterize MHLLC’s behaviors and actions. Best Regards Dr. Harry Bockmeulen Chief Operating Officer Finnex LLC / Mustang Holding LLC 301 Calista Ct, Ste 103, Anchorage, AK 99518 Office +1 (907)-865-5808 Cel.: +1 (907)-230-3476 MustangHolding Re: Docket Number: OTH-24-025, Other Order 214 Mustang Holding LLC’s responses to the AOGCC Commissioners’ questions Please find Mustang Holding LLC’s responses below to the outstanding questions raised by the AOGCC Commissioners at the public hearing for Other Order 214 Hearing requested by Mustang Holding, held on November 5th, 2024. • Please confirm the time the second intermediate Bottom Hole Assembly (with 1.5o angle) reentered the well. o On M-03A, the rig crew started picking up the 2nd intermediate drilling BHA at 5pm on July 11, 2024. Please see the attached daily drilling report for reference. • Did the original SMU-03 well penetrate the Kuparuk reservoir interval? o No. • Mr. Tempel referred to a pressure survey in the North Tarn-1A well. Please advise whether this is in the same fault block as the SMU-03A well and provide the distance between the wells’ bottom hole locations? o We confirm the NT-1A well is in the same geologic fault block as the M-03A well. The wells are 0.5 miles (2678 ft) apart. See map below. MustangHolding 6 Phone 1 7.12.24 Phone 2 Tool Pusher (N): 21 API No: PTD: Field: 13 2,455 ft 7.9.24 2,455 ft 28.0 3 25.5 P.B.T.D.: 23.3 From To Hrs iadc 0:00 1:00 1:00 E 1:00 2:00 1:00 E 2:00 8:00 6:00 2 8:00 8:30 0:30 B6 8:30 10:00 1:30 E 10:00 11:30 1:30 B6 11:30 12:00 0:30 B6 12:00 14:00 2:00 20 14:00 15:00 1:00 21E 15:00 16:30 1:30 1E 16:30 17:00 0:30 20 17:00 20:00 3:00 20 20:00 21:30 1:30 6A 21:30 22:30 1:00 3A 22:30 24:00 1:30 2 Bit # Size Depth Depth Feet Bit hrs K-revs Avg. Nozzles TFA [in] In Out Drilled Run rpm sq in RR#1 8.75 PDC 2572 2655 28 6.3 Time Drill RR#2 8.75 PDC 2655 Time Depth MW PV YP Mud Gas Readings:Used Available 2655 9 7 23 Rig:921 2900 9 8 22 Total: Pump Type Liner Sz SPM Eff %Flow SPP Pump Depth SPM SPP MW 1 Triplex 6 60 98 250 1600 1 2633 20 150 9.1 2 Triplex 6 60 98 250 2 2633 30 200 9.1 MD TVD Inc.OD ID Conn. Length 2502 2498.25 21.6 8.75 0.78 2587 2517.35 18.3 6.75 4.498 4.5 reg 37.72 2617 2545.69 17.0 6.75 3.125 4.5IF 8.95 2685 2610.84 18.1 6.75 1.9 NC50 25.13 2781 2701.88 21.0 4.03 1.9 NC50 4.03 2878 2792.19 19.4 6.75 1.9 NC50 27.73 6.9 3.25 4.5IF 21.68 6.6 3.25 4.5IF 57.74 6.5 3.25 4.5IF 1.83 6.4 2.56 4.5IF 2.10 4 2.56 xt39 183.99 6.75 1 xt39 2.52 6.5 2.75 4.5IF 32.02 6.75 1 4.5IF 2.10 4 2.56 XT39 429.57 Supervisor (D): Jerry Otto 907-252-5297 Tool Pusher (D): Andrew Yochum Report Date: Daily Drilling Report Well Name:SMU M-03A Rig/Contractor:141 Doyon Well Type: Development Report #: Supervisor (N): Ed Castagne 307-250-4592 Andrew Carlo Camp on location 50-103-20705-01-00 224-070 Southern Miluveach unit camp Off location KB-GL, ft Prog FTD md: 175.0 Budget Amount: Actual Days since Spud:RKB,7 CS, LDS TD @ 06:00 Daily Cost: Planned Days (Spud to TD): GL, ft Progress: Cum. Cost: Spud Date: 7.9.24 Project Number:RKB,TBG. LDS Hole Size: 42" 12-1/4" 8-3/4" 6-1/8"Last BOP Test:7.8.24 7.22.24 OD/Weight 20" / 91.5# 9-5/8" / 40# 7" / 26# 4.5"x 3.5"Last Safety Mtg:7.11.24 AM/PM Casing: Conductor Surface Intermediate Production Next BOP TEST: 7.8.24 Actual Depth: 80' 2565 Plan Depth: 110' MD 2565' 6800 7350/7756 Last Rig Insp.: Ops @ 06:00 hrs: Drilling dir hole T/3014'Phase: N/A Wind Speed: 10-Aug 24 hour Summary:Trip for new bha 1.5 motor bend, leak off test, test mpd system, drill ahead F/2655'Weather Gen Conditions: Morning fog/ overcast Shoe Test: N/A 13 HSE Events:None PM Temp: 56 Operational Details (06:00 - 06:00) Stand back 1 stand F2603' T/2505' rig up to preform fit, install head pin and purge kill and choke lines, shut top rams, pump up t/590 psi with 13 strokes, shut in pump and kill line, shut low torq, hold psi for 5 min, bleed off 1.5 bbls test EMW= 13.5 24 hour Forecast:Drill ahead F/ 3014' Make wiper trip Wind Direction: East AM Temp: 38 Rack back bha, download data Drain stack, pull wear ring and set test plugpull trip nipple, install rcd plug Hold pjsm, on testing mpd equip, test mpd T/250 low, 1800 high, good test, pull mpd plug and re-install flow nipple, line up for drilling Pull test plug and install wear bushing P/U bha, Hold pjsm load tool and nukes, make up bha T/837' Tih F/ 837' T/ 2573', P/U=80, D/W=77 Blow down choke and kill, shut hcr's, clear rig floor of tools Time drill 8.75 hole sec F/2603' T/2655', wob=3, gpm=550, off btm psi=1390, on btm psi=1450, flow out=78, ecd=9.3, P/U=85, D/W=80, S/O=75 Pull out of hole F/2655' T/2505' pumping 514gpm =1410psi, P/U= 85, S/O=75, RTW=75 R/U to preform fit with 13.5 mw, line up to pump down dp and back side, taking psi on choke panel, pumped up to 530 psi, pump 1 bbl , and shut in, record psi on chart recorder, 1bbl bleed back Continue Pooh F/2505' T/837' P/U=75, D/W=70 Continue pooh F/837' T/249' standing back hwdp, total mud loss=19bbls Bit Performance Bit Type:Ser #Avg ROP IADC Dull Condition JV6775 Wash Ream F/2573' T/ 2655' U/W=90, D/W=77, ROT=82, 440gpm=1265 psi, 2k tq off btm, 2k tq on btm, 30 rpm, flow 76%, tight spot @ 2596' work clean Drill F/2655' T/2728' MD, 2651'tvd, 4k wob, 500gpm=1578psi, 40rpm, 2k tq on btm, flow out 76%, 9.3ppg mw, 90k up wt, 78k down wt, 83k rot wt, bit hrs 12.25, jar hrs 12,25, 10bbls loss this tour, 29bbls 24 hrs, spr @2633' md, 2582 tvd, 9.0 mw, time 22:30 = #1 pump 20stks=150 psi, 30 strokes=200 psi, #2 pump 20 stks=160 psi, 30 stks=200 psi Total Hours 24:00 Comments: Vis 50 Background (Avg) % 6,616 JV6775 Mud Properties Gas Details Fuel 52 Connection % Trip Gas % Volume Delivered:0 AZ.Item Comment 118.84 Bit Pump Data Slow Pump Rates Model Continental Emsco-1300 Continental Emsco-1300 Surveys BHA 6.875 pwd/ ALD collar 132.65 6.875DGR 135.91 6.75 ADR 120.25 Tearaface/ blade 124.44 DM collar 128.12 XO 6x 4" hwdp XO 6.75 HOC/CTN collar 2xNM flex Float sub 14x hwdp Total Length (ft): 837.89 jar XO MustangHolding 6 MustangHolding Mustang Holding LLC Public Hearing Presentation Nov. 5, 2024 SMU-M03A Docket Number: OTH-24-25 Other Order 214 Intent of Mustang Holding’s Hearing Request Mustang Holding LLC believes many assertions within Other Order 214 are incorrect and reputationally damaging. We are here today to add additional information to the areas that are incorrect, and to ask that Other Order 214 be rescinded. Mustang Holding LLC wishes to reaffirm our intent to maintain a professional, transparent, honest, and mutually respectful relationship with AOGCC. MustangHolding Mustang Holding LLC takes responsibility for its actions. Mustang Holding LLC safely and responsibly drilled through the Kuparuk and into the Alpine. Well Control Incidents - Zero Safety Incidents - Zero Pressure Prognosis - Accurate Geologic Prognosis - Accurate Drilling Risk Mitigations - Successful SMU M-03A was a success. The deepest and safest well drilled in the history of Mustang Pad. Presentation Outline 1.M-03 well condition prior to rig arrival 2.M-03A sequence of events prior to the PTD change 3.AOGCC’s points made in Other Order 214 a.Violation Section b.Findings and Conclusions Section i.AOGCC’s written approval to change the PTD conditions of approval (COA). ii.PTD requirements and standard of interpretation. iii.Mustang Holding LLC’s interpretation of the COA. iv.AOGCC’s meaning when writing the COA. v.What the 7” Casing Point is and how it relates to the COA. vi.Timeline and events leading to AOGCC approving the change to the COA in the PTD. vii.Summary of Finding and Conclusion Section. c.Penalty Section: Factors in determination of the penalty i.Well control and safety – “The most significant factor”. ii.History of compliance, cooperation with the investigation, and need to deter similar behavior. 4.Conclusion This is the well Mustang Holding LLC acquired from the Original Operator in Oct 2023. 1)Drilled Surface Hole 2)Set Surface Casing 3)Drilled 8-3/4” Intermediate Hole to 7” Casing Point 4)Was not able to get 7” casing to bottom 5)Abandoned the hole section with open hole cement plugs and weighted viscous pills 6)Top cement plug entered the surface casing shoe Mustang Holding LLCSMU M-03A Sequence of Events Surface Casing Pull Tubing Mill Cement to Shoe •Bit and HWDP 285’ Start Intermediate Hole Kick Off from Cement Plug •1.83° Bend Motor •MWD / GR / Res Cont. Intermediate Hole Drill from KOP to TD •1.5° Bend Motor •MWD / GR / Res / ND Initial Email sent to AOGCCApproval Received 1 day prior to drilling 7” Casing Point 7” Casing Point AOGCC Points Made in Other Order 214 Violation: Mustang violated 20 AAC 25.507 (“Change of an approved program”) a.by not submitting a 10-403 Sundry to change the PTD b.by not submitting the required information to AOGCC for review and approval Findings and Conclusions: a.“Mustang did not acquire either verbal or written approval to deviate from the conditions of approval included in the Permit-to-Drill.” Penalty: Factors in determination of penalties a.“The most significant factor is AS 31.05.150(g)(3) (“the extent and seriousness of the violation and the actual or potential threat to public health or the environment”) because of Mustang’s disregard for well control risks as evidenced by” i.The well’s low kick tolerance ii.The uncertainty in the target oil pool’s high pore pressure iii.The uncertainty regarding the extent of the overburden b.Mustang’s history of compliance c.Mustang’s cooperation with the investigation d.The need to deter similar behavior(s) MustangHolding Violation: Mustang violated 20 AAC 25.507 (“Change of an approved program”) a.by not submitting a 10-403 Sundry to change the PTD b.by not submitting the required information to AOGCC for review and approval. Mustang Holding LLC acknowledges that form 10-403 was not submitted to AOGCC to change PTD 224-070 as per 20 AAC 25.507. •However, Mustang Holding LLC received written approval to change the program by email on July 13, 2024 at 12:17pm. •In the future, all changes to approved Permits to Drill will be submitted as a 10-403 unless an AOGCC representative has explicitly stated in writing that a 10-403 is not required. We have also implemented a Standard Operating Procedure for Regulatory Compliance and Change Management. Other Order 214: Violation Section Findings and Conclusions: a.“Mustang did not acquire either verbal or written approval to deviate from the conditions of approval included in the Permit-to-Drill.” The “Findings and Conclusions” are in conflict with AOGCC’s communications with Mustang Holding LLC. On July 13 at 12:17pm, Mustang Holding LLC received written approval from AOGCC to deviate from the conditions of approval. Other Order 214: Findings and Conclusions Section Phone log from AOGCC verbally indicating approval will be coming. July 12 at 11:17pm “Gamma-ray at bit” referenced in 2 locations MustangHoldingMustang Holding LLC abided by the drilling procedure and the conditions of AOGCC’s approval MustangHolding AOGCC’s Written Approval – 13hrs later Mustang Holding LLC received written approval to change the PTD. Mustang Holding LLC strongly disagrees that a condition was ignored. What was required in the PTD? “Gamma-ray at bit” referenced in 2 locations MustangHoldingMustang Holding LLC abided by the drilling procedure and the conditions of AOGCC’s approval What is the standard for interpreting AOGCC permit requirements? MustangHolding Reasonable Person Standard How would a reasonable and qualified drilling engineer interpret the conditions of approval? Mustang Holding LLC had 3 qualified Drilling Engineers working on SMU M-03A and each engineer interpreted the “7 inch casing point” PTD language to mean the TD of the intermediate hole section. The “gamma ray at bit” requirement was interpreted to start at the distance above the intermediate TD that would reasonably ensure the Kuparuk oil pool would not be penetrated. Mustang Holding LLC reasonably interpreted the conditions of approval. Prior to drilling the 7” Casing Point, Mustang Holding LLC notified AOGCC by email on July 11, 2024 of a plan to use a traditional motor assembly without “gamma ray at bit” to meet the intent of the PTD requirements. AOGCC’s initial emailed response is below. The only indication in this response is that the intent for “Gamma ray at bit” is to drill the 7” casing point. At no point prior to permit approval or after permit approval did AOGCC personnel indicate verbally, or in writing, a desire for Mustang Holding LLC to use “Gamma ray at bit” for the shallower intermediate formations. AOGCC writes that the permit intent is “clearly stated”, indicating the language from the “Conditions of Approval” section of the permit to drill and the language reiterated below was the clear intent of the AOGCC Petroleum Engineer who authored the PTD conditions and sent the below email. AOGCC Response – Copied from email sent by AOGCC Petroleum Engineer on July 12, 2024 at 3:41PM What was AOGCC’s Meaning? AOGCC’s “clearly stated” requirement reflects Mustang Holding LLC’s reasonable interpretation. When does drilling the 7” Casing Point start? Intermediate Hole KOP to TD Kalubik Shale Kuparuk Sand K1 Marker HRZ Shale 1) The top of the HRZ Shale is the earliest that “drilling the 7” casing point” would start. The HRZ is a clear transition, it is the top of the sealing formations for the reservoir, and it is more than 200 feet from the 7” casing point. 2)Mustang Holding LLC had an email from AOGCC granting permission to proceed prior to drilling the top of the HRZ shale. 3)At any point above the HRZ shale Mustang Holding LLC could have stopped drilling and picked up a “gamma ray at bit” assembly if either Mustang Holding LLC or AOGCC believed it was unsafe to proceed. AOGCC never indicated to Mustang Holding LLC that it was unsafe to proceed, nor did Mustang Holding LLC think it was unsafe. Kalubik Shale Kuparuk Sand HRZ Shale Depth (MD) Date and Time Correspondence and Events Surface July 11th 4:57pm Initial Mustang Email – At Surface after drilling the Kick Off. 3365’July 12th 3:41pm AOGCC Initial Response – Email July 12th 4:57pm July 12th 5:36pm AOGCC Geologist requested information about geological uncertainty, pressures, and faulting in the area. (2 emails) July 12th 5:52pm Mustang Holding LLC’s Geologist replied with detailed information showing little geologic uncertainty in the area. 3700’July 12th 11:17pm AOGCC verbally indicated permission would be coming to drill to the 7” casing point without “Gamma ray at bit”. 4532’July 13th 12:17pm AOGCC sent written approval for drilling the 7” casing point without “Gamma ray at bit” ~2000’ and 1 day of drilling remaining to the Top of the HRZ during which a “gamma ray at bit” assembly could have been picked up if AOGCC felt it was needed. 6560’July 14th ~12:00pm Penetrated Top of HRZ 6678’ 6791’July 14th ~6:30pm Drilled to TD (7” Casing Point) per Plan 6862’ 7” Casing Point Mustang Holding LLC had written permission to drill the 7” casing point without “gamma ray at bit” Summary of Mustang Holding LLC’s response to the “Findings and Conclusion” section of Other Order 214 •Mustang Holding LLC disagrees with AOGCC’s findings and conclusions. The condition of approval related to gamma ray at bit was clearly for drilling the 7” casing point, and at no point was the 7” casing point drilled without explicit written AOGCC approval. •Mustang Holding LLC received written approval to proceed; and Mustang Holding LLC believed that the emailed communication between AOGCC and Mustang Holding LLC served in place of the requested 10-403. •Historically, AOGCC has allowed changes to approved programs by written email instead of by 10-403. •Mustang Holding LLC now recognizes this assumption may no longer be AOGCC’s practice. Mustang Holding LLC has implemented a Standard Operating Procedure for Regulatory Change Management. MustangHolding MustangHolding Penalty: Factors in determination of penalties a.“The most significant factor is AS 31.05.150(g)(3) (“the extent and seriousness of the violation and the actual or potential threat to public health or the environment”) because of Mustang’s disregard for well control risks as evidenced by” i.The well’s low kick tolerance ii.The uncertainty in the target oil pool’s high pore pressure iii.The uncertainty regarding the extent of the overburden b.Mustang’s history of compliance c.Mustang’s cooperation with the investigation d.the need to deter similar behavior(s) Mustang Holding LLC maintains the language in “Factors in determination of penalties” is in conflict with the engineering that went into the well, the outcomes of the well, Mustang Holding LLC’s history, and AOGCC’s written statements. Mustang Holding LLC’s prognoses for pore pressures, geology, and frac gradients were all proven to be accurate. The mitigations Mustang implemented were based on sound engineering and on an extensive review of the prior Mustang Pad wells and a review of the surrounding wells near Mustang Holding LLC’s leases. The thorough attention placed on well control during planning and drilling resulted in overcoming the well control problems the prior operator encountered. Other Order 214: Penalty Section a. “The most significant factor” : At no time during the planning or drilling of SMU M-03A was there disregard for well control risk or was there an actual or potential threat to public health or the environment. It is unclear to Mustang Holding LLC why this statement was made within the violation language. If AOGCC personnel had perceived such a threat existed they had both the power and opportunity to stop the operation, the operation was never stopped because, at all times, Mustang Holding LLC operated with high regard for safety and well control risk. i.Kick Tolerance: The implication seems to be that drilling a well with a relatively low kick tolerance is considered a “disregard for well control risk”. Mustang Holding LLC does not believe this is accurate. We believe that wells with similar kick tolerances can be safely drilled and that this view is supported by industry practices. Furthermore, AOGCC was fully aware of the intermediate hole section’s kick tolerance when the permit was approved, and AOGCC was fully aware of the well’s kick tolerance when sending the email authorizing drilling the 7” Casing Point without “Gamma ray at bit”. ii.Uncertainty in Pore Pressure: Mustang Holding LLC had accurate and timely pore pressure information. As described in the Permit to Drill, and in verbal and email communications with AOGCC, a SBHP (static bottom hole pressure) survey of the reservoir was taken 12 days prior to drilling the 7” casing point. The pore pressure estimate was then updated, which was the plan in the PTD and in repeated conversations and emails with AOGCC. Mustang’s final prognosis of the pore pressure was accurate and is further affirmed by successfully drilling the production section of the well while always maintaining well control and at no time creating an “actual or potential threat to public health or the environment”. iii.Uncertainty in the Overburden: Mustang had high certainty regarding the extent of the overburden formations at the 7” casing point. The geologic data from the prior M-03 wellbore supports this certainty. The M-03 wellbore was drilled in the same fault block within 65 feet of the new M-03A wellbore. The actual depths of the K1 marker and the top of the Kuparuk were within the planned margin of error, reflecting the accuracy of Mustang’s careful planning. Our geologic interpretation is further affirmed by AOGCC’s own analysis and by AOGCC granting written approval to proceed. a.“The most significant factor is AS 31.05.150(g)(3) (“the extent and seriousness of the violation and the actual or potential threat to public health or the environment”) because of Mustang’s disregard for well control risks as evidenced by” i.the well’s low kick tolerance, ii.the uncertainty in the target oil pool’s high pore pressure, iii.and the uncertainty regarding the extent of the overburden Other Order 214: Penalty Section (Most significant factor) AOGCC Analysis of Geologic Uncertainty Included within written approval AOGCC agreed with Mustang Holding LLC’s geologic prognosis. AOGCC would not have granted written permission to proceed if they did not believe there was high certainty in the geologic prognosis. MustangHolding b.History of Compliance: SMU M-03A was the first well drilled by Mustang Holding LLC. Mustang Holding LLC was formed in September 2020 when AIDEA held the Mustang Pad assets after the judicial foreclosure of the prior operator. Mustang Holding LLC was acquired by Finnex Operating LLC from AIDEA in October 2023. Mustang Holding LLC has very little history, and no history of non-compliance. The consideration of “Mustang’s history of compliance” seems unjustified in this context. During in-person meetings, AOGCC personnel repeatedly asked about the well control incidents of the prior operator in a way that seemed to indicate Mustang Holding LLC held some responsibility for the prior operator’s actions. The prior operator is no longer in existence. Mustang Holding LLC owns the assets of the prior operator, but is not responsible for the prior operator’s drilling history, or for the prior operator’s compliance. Given the severity of the language within the Violation, the severity of the penalty, the past confusion about operatorship, and Mustang Holding LLC’s record of drilling the 2 most successful wells to date at Mustang Pad with no well control or safety incidents, we question whether this violation was written with consideration for the prior operator’s “history of compliance” rather than consideration for Mustang Holding LLC’s “history”. c.Cooperation: Mustang Holding LLC has fully cooperated with AOGCC’s investigation into this matter. d.The need to deter similar behavior(s): As previously discussed, Mustang Holding LLC believed the written communication with AOGCC that resulted in an emailed, written, approval from AOGCC to proceed was accepted in place of form10-403 as is sometimes AOGCC’s practice. Based on this experience, Mustang Holding LLC has implemented a Standard Operating Procedure for Regulatory Compliance and Change Management. b.Mustang’s history of compliance c.Mustang’s cooperation with the investigation d.The need to deter similar behavior(s) Other Order 214: Penalty Section (additional factors) Mustang Holding LLC abided by the conditions of AOGCC’s PTD approval and by the written approval to change the permit. SMU M-03A •Well Control Incidents - Zero•Safety Incidents - Zero•Pressure Prognosis - Accurate•Geologic Prognosis - Accurate•Drilling Risk Mitigations – Successful SMU M-01B•The follow on well SMU M-01B was equally successful, further reinforcing Mustang Holding LLC’s safe operating practices and accurate prognoses. SMU M-03A was a success! Deepest and safest well drilled in the history of Mustang Pad. MustangHolding Moving Forward With Respect and Transparency •Mustang Holding LLC presents this information so that AOGCC has a complete understanding of our interpretation of the PTD requirements and the communications that occurred during the well. •Mustang Holding LLC acknowledges that AOGCC would like communications for Permit to Drill changes to look different in the future – we will ensure this happens and we have implemented a Standard Operating Procedure for this purpose. •Mustang Holding LLC’s intent is to have a professional and mutually respectful relationship with all AOGCC personnel based on transparency, honesty, and sound engineering practices. •Mustang Holding LLC is committed to adhering to regulatory compliance at all times. Based on the information in this presentation, we request Other Order 214 be rescinded. We are here to answer any questions. Conclusion MustangHolding Backup Slides After This Point Penalty Determination AS 31.05.150. Penalties. MustangHolding MustangHolding Intermediate Kick Tolerance From approved SMU M-03A PTD Using AOGCC recommended method Intermediate Kick Tolerance As Drilled parameters Reservoir pressure AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Request by Mustang ) Holding, LLC, for a hearing pursuant to ) 20 AAC 25.535(d) regarding the decision ) and order number 214 issued on August 29 ) 2024, for the Southern Miluveach Unit ) M-03A well, permit to drill 224-070. ) _________________________________________) Docket No.: 24-025 PUBLIC HEARING November 5,2024 10:00 o'clock a.m. Anchorage, Alaska BEFORE: Jessie Chmielowski, Commissioner Greg Wilson, Commissioner AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Wilson 03 3 Testimony by Mr. Rixse 07 4 Testimony by Mr. Temple 14 5 Testimony by Mr. Duncan 52 6 Testimony by Ms. Keaton 69 7 Testimony Mr. Fox 72 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 3 1 P R O C E E D I N G S 2 (On record - 10:00 a.m.) 3 COMMISSIONER WILSON: I will call this hearing 4 to order. It is approximately 10:00 a.m. on Tuesday, 5 November 5th, 2024. I am Commissioner Gregory Wilson 6 and with me is Commissioner Jessie Chmielowski. 7 Today's hearing is being held in person and via 8 Microsoft Teams. The in-person location is the Alaska 9 Oil and Gas Conservation Commission office at 333 West 10 7th Avenue, Anchorage, Alaska. 11 For those on Teams please be mindful of any 12 background noise and make sure you are muted when 13 you're not testifying or addressing the AOGCC. 14 If you require any special accommodation please 15 contact Samantha Coldiron. She can be reached at 907- 16 793-1223 or send her a message through the Microsoft 17 Teams chat icon and she will do her best t accommodate 18 you. 19 Samantha Coldiron will be recording the 20 hearing. Computer Matrix will be preparing the 21 transcript. Upon completion and preparation of the 22 transcript anyone desiring a copy will be able to 23 obtain it by contacting Computer Matrix. 24 This hearing is being held in accordance with 25 Alaska statute 44.62 and 20 AAC 25.540 of the Alaska AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 4 1 Administrative Code. 2 The notice of hearing was published on the 3 state of Alaska online notices website as well as the 4 AOGCC's website and was sent through the AOGCC email 5 listserv on September 17, 2024. The AOGCC also 6 published the notice in the Anchorage Daily News on 7 September 18th, 2024. To date the AOGCC has received 8 no public comments on this matter. 9 The background. On July 26th, 2024, AOGCC 10 issued a notice of proposed enforcement action to 11 Mustang regarding the M-03A well. The notice proposed 12 a $50,000 civil penalty under AS 31.05.150(a). On July 13 31st, 2024, Mustang requested an informal review which 14 was held at the AOGCC office on August 14th, 2024. 15 AOGCC issued the decision and order, other order 214, 16 for the Southern Miluveach Unit M-03A well, permit to 17 drill 224-070 on August 29th, 2024, assessing a civil 18 penalty of $50,000. On September 6th, 2024, Mustang 19 filed a request for hearing. 20 The Commissioners will ask questions during 21 testimony. We may also take a recess to consult with 22 Staff to determine whether additional information or 23 clarifying questions are necessary. 24 Mel Rixse, Senior Petroleum Engineer for AOGCC, 25 are you ready to make your presentation and come AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 5 1 forward? 2 (No comments) 3 COMMISSIONER WILSON: And representatives from 4 Mustang, are you ready to make your presentation? 5 (No comments) 6 COMMISSIONER WILSON: Then I will now swear in 7 the witnesses. Will all of you please raise your right 8 hand and respond. 9 (Oath administered) 10 IN UNISON: I do. 11 COMMISSIONER WILSON: Let the record reflect 12 the witnesses all responded in the affirmative. 13 Do any of you presenting today wish to be 14 recognized as experts. If so please identify your 15 field of expertise and credentials. 16 MR. RIXSE: Mel Rixse, I am a Senior Petroleum 17 Engineer here at..... 18 MS. COLDIRON: (Indiscernible - away from 19 microphone). 20 MR. RIXSE: It's on. 21 MS. COLDIRON: Okay. 22 MR. RIXSE: Are you good? 23 MS. COLDIRON: (Indiscernible - away from 24 microphone). 25 MR. RIXSE: Mel Rixse. Is that better? AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 6 1 (No comments) 2 MR. RIXSE: I'm an expert in petroleum 3 engineering at AOGCC. I'm a licensed professional 4 engineer in the state of Alaska. I've got 40 years of 5 experience working in the drilling and oil industry. 6 Oh, I have a BS in mechanical engineering from Colorado 7 State University. 8 COMMISSIONER WILSON: And with Mustang. 9 MR. TEMPLE: Josh Temple, I'm a Drilling 10 Engineer in the state of Alaska. I'm a licensed 11 engineer in the state of Alaska as well with a degree 12 in mechanical engineering. 13 COMMISSIONER WILSON: Okay. Commissioner 14 Chmielowski, are you satisfied with the expertise and 15 credentials as presented? 16 COMMISSIONER CHMIELOWSKI: Yes, I have no 17 objections. 18 COMMISSIONER WILSON: You will all be 19 recognized as experts in the field you identified. 20 Before asking witnesses to begin their 21 testimony, Commissioner Chmielowski, do you have any 22 questions. 23 COMMISSIONER CHMIELOWSKI: No, thank you. 24 COMMISSIONER WILSON: And then a reminder once 25 again for those testifying please remember to speak AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 7 1 into the microphone, turn the microphone on and speak 2 into the microphone. Also reference any slides by 3 number or title so that someone reading the public 4 record can follow along. State your names and job 5 titles clearly for the record. 6 Mel Rixse, we will begin with you. 7 MR. RIXSE: Thank you. 8 MEL RIXSE 9 previously sworn, called as a witness on behalf of the 10 AOGCC, testified as follows. 11 MR. RIXSE: I have the following testimony 12 regarding docket OTH-24-025 for which I was the primary 13 liaison between AOGCC and Mustang Holding, LLC. 14 AOGCC administers drilling permits for drilling 15 new wells. Mustang Holding, LLC submitted an initial 16 version of the permit to drill request for a well in 17 Southern Miluveach Unit, SMU M-03A well, permit to 18 drill 224-070 to AOGCC on May 22nd, 2024, for an 19 expected spud date noted on the submission of June 20 17th, 2024. AOGCC's responsibility is to review the 21 drilling program to ensure that it is compliant to 22 regulations and that the plan is written in a way to 23 manage risk to acceptable industry standards. 24 Several revisions to permit to drill were 25 submitted to AOGCC with final approved version of AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 8 1 permit to drill received on June 18th, 2024. The 2 approved M-03A drilling plan submitted by Mustang 3 described a surface casing shoe strength test to 13.0 4 pounds per gallon equivalent. The approved plan for 5 the intermediate open hole was to be drilled from the 6 surface casing shoe approximately 2,565 measured depth 7 to 2,497 -- 2,565 measured depth or 2,497 TVD to 53 8 feet above the top of the Kuparuk River oil pool 9 prognosed at 6,853 measured depth or 6,117 TVD. The 10 Kuparuk River oil pool had been subjected to an 11 enhanced oil injection so it was AOGCC's opinion that 12 there was certainly uncertainty in the anticipated 13 reservoir pore pressure. From the AOGCC review of the 14 SMU unit Kuparuk reservoir pressure uncertainties 15 ranged from 10.3 pounds per gallon equivalent to 12.4 16 pounds per gallon equivalent. The previous operator 17 prognosed a possible 12.4 pound per gallon equivalent 18 Kuparuk reservoir pressure. 19 AOGCC determined that the ability of the rig 20 operations to detect an influx of higher pressure 21 reservoir gas if the intermediate hole was drilled into 22 the Kuparuk could result in an influx that could be 23 difficult to control within the wellbore utilizing 24 standard well control methods. To manage this influx 25 risk AOGCC determined and Mustang agreed that drilling AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 9 1 should be stopped 53 feet measured depth above the 2 Kuparuk River oil pool where intermediate casing would 3 be run and cemented. Industry typically attempts to 4 place the intermediate casing shoe across troublesome 5 drilling zones and as close to the reservoir as 6 possible. To ensure that drilling would be stopped 7 above the risk zone Mustang agreed to provide a 8 formation gamma ray sond (ph) at the bit to profile the 9 overburden to aid in assurance the total depth of the 10 intermediate hole would be stopped above the Kuparuk 11 oil pool. The gamma ray at bit sond (ph) is a tool 12 that measures gamma rays near the bit to identify 13 changes in the formation at the drill bit and improve 14 well placement rather than placing a gamma ray sond 15 (ph) 75 feet behind the bit and drilling 75 feet 16 without knowing the stratigraphy accurately. 17 It should be noted that industry guidance for 18 the amount of reservoir fluid that can enter the 19 wellbore at prognosed reservoir pressures is referred 20 to as kick tolerance. For typical eight and three- 21 quarter intermediate hole sections as described in a 22 technical paper and at least one regulatory publication 23 that value is routinely set at 25 barrels or greater of 24 gas influx for most road redrilling operations with 25 typical fluids handling equipment and sensors. An AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 10 1 AOGCC best practices document, February, 2016, suggests 2 15 barrels minimum. The AOGCC will allow drilling of 3 intermediate hole sections with smaller kick tolerances 4 if the operator can demonstrate mitigations to increase 5 the rig cruisability to detect an influx early and 6 manage it. For M-03A the kick tolerance was determined 7 by Mustang and agreed to by AOGCC to be 11.7 barrels 8 modeled drilling with a 10.5 pound per gallon mud 9 weight taking an 11.0 pound per gallon kick. That 10 modeling was aggressive because of AOGCC's concern that 11 12.0 pound per gallon equivalent plus reservoir 12 pressure could be possible. 13 On July 11th, 2024, 4:57 p.m., the day drilling 14 tools entered the well for the first time, AOGCC 15 received an email from AOGCC -- from Mustang Holding 16 stating the following. I just tried calling and didn't 17 get through. So I'm writing to let you know that on 18 the immediate hole (ph) section for M-03A we switched 19 out the intermediate BHA from -- to a motor to ensure 20 we could get kicked off from the cement plug below the 21 surface casing shoe. The motor assembly has the gamma 22 sensors 75 feet behind the bit. The permit to drill 23 states that gamma at bit is required for drilling the 24 intermediate section. My understanding from our 25 conversations is that gamma at bit was added to permit AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 11 1 -- to the permit to avoid drilling into the top of the 2 Kuparuk. Since we are not using RSS which stands for 3 rotary steerable, for this hole section we will 4 accomplish the same goal by using the top of the 5 Kalubik in the prior M-03 intermediate hole section. 6 We will accomplish the same goal by using the top of 7 the Kalubik in the prior M-03 intermediate wellbore as 8 the final marker. AOGCC clearly stated that gamma ray 9 at bit was to be utilized placing the gamma ray sensor 10 75 feet behind the bit, a distance greater than the 11 height of a five story building could result in 12 inadvertently drilling into the Kuparuk River oil pool. 13 The overburden stratigraphy thickness could have 14 significant uncertainty. 15 In a follow-up email to Mustang on July 12th, 16 2024, at 3:41 p.m., AOGCC stated the following. Please 17 do not violate the conditions of approval as clearly 18 stated in the approved permit to drill regarding gamma 19 ray at bit. Gamma ray at bit was required to ensure 20 Mustang does not drill eight and three-quarter inch 21 open hole into the Kuparuk oil pool. As discussed in 22 meetings and emails this whole section has a very small 23 kick tolerance with possible high variability to 24 overpressure in the Kuparuk oil pool. And if Mustang 25 Holding, LLC would like to submit a 10-403 for review AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 12 1 for the possibility of a change to the approved program 2 please do so. I cannot offer a verbal approval without 3 the full AOGCC review. Roughly 30 minutes after 4 sending the above email to Mustang, Mustang's 5 representative, Michael Duncan, called me to see if 6 there was any way they could keep the rig operating and 7 not shut down for Mustang's failure to have a gamma ray 8 at bit available to drill. At no time during that 9 conversation did Mr. Duncan propose picking up gamma 10 ray at bit. 11 On July 12th, 2024, 4:39 p.m., Mustang formally 12 proposes a plan to call TD at spec -- to call TD at a 13 specific -- TVD estimated 61 feet above Kuparuk C (ph). 14 On the same day from 4:57 to 5:52 p.m., the AOGCC 15 geologist and Mustang geologist communicated in an 16 attempt to keep Mustang's rig operating, but drilling 17 to a depth shallower that would provide higher 18 assurance that Kuparuk would not be penetrated. 19 Mustang personnel at no time stated they would pick up 20 a gamma -- gamma ray at bit sond (ph) even though they 21 had been warned not to violate the conditions of 22 approval. Instead Mustang worked with the AOGCC to 23 find a shallower casing point that would help assure 24 that Kuparuk was not penetrated. Mustang clearly 25 ignored the conditions of approval stated on their AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 13 1 approved permit. This is a violation of AOGCC 2 regulation 20 AAC 25.507 which requires AOGCC approval 3 before change can be made to an approved drilling 4 program. AOGCC approves drilling permits that 5 demonstrate the operator is aware of the uncertainties 6 and has controls to ensure the well will remain secure. 7 If drilling had penetrated the Kuparuk River oil pool 8 with possible overpressure and the influx went 9 undetected, early in the influx, the surface casing 10 shoe integrity could have been compromised resulting in 11 a possible uncontrolled release of hydrocarbons to the 12 shallow overburden and possible broach at surface. 13 The enforcement action was based on the 14 following criteria. No serious attempt to notify AOGCC 15 other than email late in the day; low kick tolerance 16 for well control risk; Mustang benefited by the cost 17 difference of a drilling BHA without gamma ray at bit; 18 and finally to deter similar behavior in the future. 19 This concludes my testimony. 20 COMMISSIONER WILSON: Commissioner Chmielowski, 21 do you have any questions. 22 COMMISSIONER CHMIELOWSKI: Not at this time. 23 COMMISSIONER WILSON: And I have none at this 24 time either. Thank you for your testimony. 25 Mustang witnesses, would you like to begin your AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 14 1 testimony and presentation. 2 JOSH TEMPLE 3 previously sworn, called as a witness on behalf of 4 Mustang Holding, LLC, testified as follows. 5 MR. TEMPLE: Good morning, Commissioners. My 6 name is Josh Temple, I'm a Drilling Engineer. I work 7 for Fair Weather. Fair Weather was contracted on this 8 well for the drilling and project management by Mustang 9 Holding, LLC and I'll be presenting on behalf of 10 Mustang Holding, LLC. To my left is the President of 11 Finnex which is the company that owns Mustang Holding, 12 LLC, Harry Backmeulen and then we have representatives 13 from both Fair Weather and Mustang Holding, LLC, in the 14 crowd. 15 Starting the -- out on our presentation. This 16 presentation is regarding -- the reason we're here 17 docket number OTH-24-25, other order 214. The intent 18 of Mustang Holding's hearing request today is that 19 Mustang Holding, LLC believes many assertions within 20 other order 214 are incorrect and reputationally 21 damaging. We are here today to add additional 22 information to the areas that are incorrect and to ask 23 that other order 214 be rescinded. 24 Mustang Holding, LLC wishes to reaffirm our 25 intent to maintain a professional, transparent, honest AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 15 1 and mutually respectful relationship with AOGCC. 2 Here's the well that other order 214 3 references. It's SMU M-03A. This well was drilled 4 safely through the Kuparuk..... 5 COMMISSIONER CHMIELOWSKI: Excuse me. Sorry to 6 interrupt. If you could just remember to reference 7 your slides by number or title that will help the 8 record. 9 Thank you. 10 MR. TEMPLE: Yes, Commissioner, we can do that. 11 This is slide 3. Mustang Holding, LLC safely and 12 responsibly drilled through the Kuparuk and into the 13 Alpine. Well SMU M-03A was drilled with no well 14 control incidents, no safety incidents. The pressure 15 prognosis were all proven to be accurate, the geologic 16 prognosis were all proven to be accurate and the 17 drilling risk mitigations were successful. SMU M-03A 18 was a success. It was the deepest and safest well 19 drilled in the history of Mustang pad. 20 Slide 4, presentation outline. The first thing 21 we'll cover is M-03 and the well condition prior to rig 22 arrival. We'll cover M-03A, the sequence of events 23 prior to the permit to drill change. We'll then go 24 into AOGCC's points made in other order 214 including 25 the violation section, the findings and conclusions AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 16 1 section and the penalty section, factors in 2 determination of penalties that were listed in other 3 order 214. Under the findings and conclusions section 4 we'll discuss AOGCC's written approval to change the 5 permit to drill conditions of approval, discuss permit 6 to drill requirements and standard for interpretation, 7 Mustang Holding, LLC's interpretation of the conditions 8 of approval, AOGCC's meaning when writing the 9 conditions of approval, what the seven inch casing 10 point is and how it relates to the conditions of 11 approval, the timeline and events leading to AOGCC 12 approving the change to the conditions of approval and 13 the permit to drill and we'll summarize the findings 14 and conclusions section. For the penalty section the 15 factors in determination of the penalty we'll discuss 16 well control and safety which AOGCC lists as the most 17 significant factor, then we'll discuss the three other 18 factors that AOGCC lists including history of 19 compliance, cooperation with the investigation and the 20 need to deter similar behavior. Then we'll conclude 21 the presentation. 22 This is slide 5. This is an as-built of SMU M- 23 03 which is the well that Mustang Holding moved a rig 24 over in July of this year. This is the well that 25 Mustang Holding, LLC acquired from the original AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 17 1 operator. The original operator had drilled surface 2 hole, they had set the surface casing, they drilled 3 eight and three-quarter inch intermediate hole to the 4 seven inch casing point, they attempted to get seven 5 inch casing to bottom, they were unable to get the 6 seven inch casing to bottom. They pulled out of hole 7 with it and they ran a clean out assembly. They then 8 reattempted to run seven inch casing, they weren't able 9 to get it to bottom and they abandoned the hole 10 section. They abandoned the hole section with weighted 11 and viscous pills as well as cement plugs. That top 12 cement plug goes from below the surface casing shoe to 13 above the surface casing shoe and when Mustang Holding, 14 Fair Weather reviewed this we deemed that top plug to 15 -- initially we thought that top plug was competent. 16 We kept reviewing it and we just couldn't get to a 17 point where we felt that that top plug would -- would 18 be drillable with a rotary steerable and that we would 19 get successful sidetrack. It was deemed as a high risk 20 in our operation by getting sidetrack at that depth and 21 not having to set another open hole plug or kick off 22 deeper in the wellbore. 23 Moving on to slide 6, Mustang Holding, LLC, SMU 24 M-03A sequence of events. These were the events that 25 happened from the time Mustang Holding moved a rig over AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 18 1 to the well to the time that the hole section, the 2 seven inch casing point, was drilled. When we moved a 3 rig over the well we displaced diesel freeze protect, 4 we pulled the tubing, we moved the cement to the shoe 5 using a dumb miner assembly of just a bit and heavy 6 weight drilled pipe, then we went in with our first 7 intermediate drilling assembly which was a kick off 8 assembly and 1.83 band motor and WD, gamma ray and 9 resistivity. We very, very conservatively sidetracked 10 this well with that kick off assembly and we started 11 drilling the first portion of our intermediate hole. 12 We came out of the hole and at that point we realized 13 that the second intermediate drilling assembly did not 14 have a gamma ray bit with it. There was a decision 15 made to change out that assembly and the gamma ray bit 16 portion was missed. 17 We sent an email as quickly as we could to 18 AOGCC just to let -- start the conversation and let the 19 engineers and geologists know that this was our 20 situation. We believed we had about three days of 21 drilling to go before we TD'd the hole section and 22 started drilling to the seven inch casing point and we 23 believed that during that time we would have time to 24 either have conversations with AOGCC to get an approval 25 to proceed, we believed we had a safe plan to proceed AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 19 1 drilling that would achieve the same intent without 2 having to (indiscernible) and pick up rotary steerable. 3 If AOGCC disagreed we were able to come out of hole and 4 pick up a rotary steerable. It would have resulted in 5 a time delay, but we were able to do that we appreciate 6 AOGCC working with us on that. 7 COMMISSIONER WILSON: A question at this point. 8 Did you have the appropriate hardware on location at 9 that time? 10 MR. TEMPLE: No, we didn't. There would have 11 been a significant delay to operations if we had to 12 come out of hole. 13 COMMISSIONER CHMIELOWSKI: What kind of delay, 14 where was the tool, the gamma ray? 15 MR. TEMPLE: The tools were in Deadhorse and it 16 was currently unclear what the delay was or what the 17 timeline for the delay was. We believed it would be at 18 least a couple of days. 19 COMMISSIONER CHMIELOWSKI: Okay. Was there any 20 misunderstanding about the condition of approval to 21 have gamma ray at bit? 22 MR. TEMPLE: Commissioner, I'd like to address 23 that in follow on slides if that's acceptable. 24 COMMISSIONER CHMIELOWSKI: Okay. So you're 25 saying that even though the tool's in Deadhorse it AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 20 1 wasn't available for days? 2 MR. TEMPLE: We -- our belief was that it would 3 be days before we were able to or there was a good 4 probability it would be days before we could pick up a 5 rotary steerable from Deadhorse. 6 COMMISSIONER CHMIELOWSKI: Okay. 7 COMMISSIONER WILSON: I guess -- yeah, before 8 we proceed and if you address it later we can do that, 9 but before we proceed was it an oversight at this point 10 that the hardware was not on location or was there 11 intent to drill without the hardware? 12 MR. TEMPLE: That was an oversight, 13 Commissioner. That was -- we had focused on that kick 14 off assembly and getting kicked off. And the -- we had 15 -- the focus was on keep -- keeping the operation as 16 simple as possible. All we had to do from that kick 17 off assembly was dial down the motor from 1.83 to 1.5 18 -- 1.5 degrees. Our belief is the simpler we keep 19 operations the safer they tend to be and the better 20 they tend to go. So within a there decision was made 21 to just continue using that motor and we -- we just 22 make made a mistake about not having the gamma ray bit 23 tool on there for the seven inch casing point. We did 24 attempt to contact AOGCC as quickly as possible to come 25 up with another acceptable solution. And there was an AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 21 1 option. Those -- those tools are available from a 2 couple different vendors on the Slope, rotary steerable 3 tools are available on the Slope from a couple 4 different vendors and there was an option there to TD 5 the hole section seven inch casing point with a rotary 6 steerable if we had to. It would have been a time 7 delay. 8 COMMISSIONER WILSON: So an additional question 9 then. I guess with what you just said -- so it wasn't 10 just an oversight then that the tools weren't on 11 location, but it was an oversight of the plan that the 12 tools weren't contracted? 13 MR. TEMPLE: The rotary steerable tool? 14 COMMISSIONER WILSON: That's correct. 15 MR. TEMPLE: We had initially talked to our 16 vendor about contracting the rotary steerable tool and 17 then we had switched that when we looked closer at that 18 top cement plug and the competency of it. And at that 19 point that was the oversight that had happened. 20 COMMISSIONER WILSON: Okay. Thank you. 21 MR. TEMPLE: And if there are no further 22 questions there I'll finish this slide and then I'll 23 move on to the following slides. 24 (No comments) 25 MR. TEMPLE: So after sending the initial email AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 22 1 to AOGCC we ran in with the second intermediate 2 drilling BHA and we started or we continued to drill 3 intermediate hole, eventually receiving approval to 4 proceed with the alternative plan one day prior to 5 drilling the seven inch casing point. And again if we 6 had not received permission to proceed the -- with an 7 alternative plan the backup option would have been to 8 pick up a rotary steerable. 9 AOGCC points made in other order 214, slide 7. 10 This covers -- this covers the -- this summarizes other 11 order 214. The violation portion includes Mustang 12 violated 20 AAC 25.507, change of an approved program 13 by not submitting a 10-403 sundry to change the permit 14 to drill and by not submitting the required information 15 to AOGCC for review and approval. 16 The findings and conclusions section. Mustang 17 did not acquire either verbal or written approval to 18 deviate from the conditions of approval included in the 19 permit to drill. 20 Under the penalty section factors in 21 determination of penalties. The most significant 22 factor is AS 31.05.150(g)(3), the extent and 23 seriousness of the violation and the actual or 24 potential threat to public health or the environment 25 because of Mustang's disregard for well control risk as AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 23 1 evidenced by the well's low kick tolerance, the 2 uncertainty and the target oil pool's high pore 3 pressure, the uncertainty regarding the extent of the 4 overburden. It goes on to state three other factors in 5 determination of penalties including Mustang's history 6 of compliance, Mustang's cooperation with the 7 investigation and the need to deter similar behaviors. 8 9 Moving on to slide 8 we break down the 10 violation section of other order 214. The title of 11 this slide is other order 214, violation section. 12 The violation. Mustang violated 20 AAC 25.507, 13 change of an approved program by not submitting a 10- 14 403 sundry to change the permit to drill by not 15 submitting the required information to AOGCC for review 16 and approval. Mustang Holding, LLC acknowledges that 17 form 10-403 was not submitted to AOGCC to change permit 18 to drill 224-070 as per 20 AAC 25.507. However Mustang 19 Holding, LLC received written approval to change the 20 program by email on July 13, 2024 at 12:17 p.m. In the 21 future all changes to approved permits to drill will be 22 submitted at 10-403 unless an AOGCC representative has 23 explicitly stated in writing that a 10-403 is not 24 required. We have also implemented a standard 25 operating procedure for regulatory compliance and AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 24 1 changed management. 2 COMMISSIONER CHMIELOWSKI: Quick question. Was 3 a 403 submitted at anytime, even after, you know, you 4 received written approval. 5 MR. TEMPLE: A 403 -- 10-403 was not submitted 6 and we acknowledge that it was not..... 7 COMMISSIONER CHMIELOWSKI: Okay. 8 MR. TEMPLE: .....submitted. Our..... 9 COMMISSIONER CHMIELOWSKI: Okay. 10 MR. TEMPLE: .....understanding was that 11 written approval was in place of the 10-403, we now 12 understand that that was incorrect. 13 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 14 COMMISSIONER WILSON: A question. I -- 15 according to the testimony of Mr. Rixse it was clearly 16 communicated at that time that they were in violation 17 of their permit based on the conditions of approval to 18 include gamma ray at bit. Do you acknowledge that 19 there was an awareness at that time that Mustang was in 20 violation of the permit? 21 MR. TEMPLE: We do not believe we were in 22 violation. We'll -- if the Commission's okay with it 23 we'll address the question on some follow-on slides if 24 that's acceptable. 25 COMMISSIONER WILSON: Very good. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 25 1 MR. TEMPLE: Moving on to slide 9, other order 2 214, findings and conclusions section. Regarding the 3 findings and conclusions, other order 214 states 4 Mustang did not acquire either verbal or written 5 approval to deviate from the conditions of approval 6 included in the permit to drill. The findings and 7 conclusions are in conflict with AOGCC's communications 8 with Mustang Holding, LLC. On July 13 at 12:17 p.m. 9 Mustang Holding, LLC received written approval from 10 AOGCC to deviate from the conditions of approval. 11 Slide 10, here's a phone log -- titled phone 12 log from AOGCC verbally indicating approval will be 13 coming, Here's a phone log from July 12th at 11:17 14 p.m. in which Mr. Rixse and Mr. Duncan had a verbal 15 conversation which I understand that AOGCC indicated 16 verbal -- verbally indicated approval would be coming 17 to allow drilling to the seven inch casing point 18 without gamma ray at bit. 19 And then on the follow-on slide, slide 11, that 20 is AOGCC's written approval 13 hours later. Here's 21 where the written approval was received. I'm going to 22 read this full email and then discuss a couple of 23 sections within the email and the follow-on slide 24 starts addressing your questions, Commissioner. 25 Given that Mustang Holding, LLC decided to AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 26 1 ignore a condition of approval on well SMU M-03A, 2 permit to drill 224-070 that explicitly requires the 3 drill string include gamma ray at bit on a well with 4 sub-optimal kick tolerance AOGCC will limit the 5 drilling of the eight and three-quarter inch open hole 6 section to drill no deeper than 50 true vertical feet 7 above the forecasted top of the Kuparuk reservoir sand 8 with 50 true vertical feet above the forecasted top of 9 the anticipated zone of increased pressure if 10 different, whichever is shallower. This -- if this 50 11 foot safety buffer is unacceptable to the operator then 12 gamma ray at bit must be employed. 13 The AOGCC geologist agrees after reviewing 14 offset data with the operator's assessment that the 15 geologic section beneath the very prominent K1 gamma 16 ray resistive D marker appears to be of relatively 17 uniform thickness in this area, about 70 to 75 feet. 18 This adds some certainty, but not conclusive 19 predictability to the thickness and depth of the 20 overburden to the Kuparuk reservoir sands. AOGCC will 21 require the following. Well control drills be 22 performed and documented by each of the Doyon 141 23 drilling crews as drilling approaches 500 foot MD at 24 the top of the Kuparuk oil pool. Communication to rig 25 personnel and the MPD team if the current kick AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 27 1 tolerance may be below a 10 barrel influx, the current 2 FIT and the expected reservoir pressure of the Kuparuk 3 reservoir and the expected reservoir pressure of the 4 Kuparuk reservoir sand. Communication to the rig crew 5 for increased awareness to the possibility of swabbing 6 during tripping which may result in circulating drill 7 pipe while pulling out of hole. The high -- the 8 section highlighted in yellow, that's our highlighting, 9 we believe gave us written approval to proceed to drill 10 up a seven inch casing point without gamma ray at bit. 11 AOGCC will limit the drilling of the eight and three- 12 quarter inch open hole section to drill no deeper than 13 50 true vertical feet above the forecasted top of the 14 Kuparuk reservoir sand or 50 true vertical feet above 15 the forecasted top of the anticipated zone of increased 16 pressure if different, whichever is shallower. If this 17 50 foot safety buffer is unacceptable to the operator 18 then gamma ray at bit must be employed. 19 There are two other parts in this email that we 20 want to address. First the second paragraph says the 21 AOGCC geologist agrees with the geologic assessment. 22 We'll talk about that later in the slide, but I just 23 want to highlight that section or later in the 24 presentation, but I want to highlight that section now. 25 AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 28 1 The thing we'd like to address next is the 2 first line that says given that Mustang Holding, LLC 3 decided to ignore a condition of approval on well SMU 4 M-03A, permit to drill 224-070 that explicitly requires 5 the drill string include gamma ray at bit on a well 6 with sub-optimal kick tolerance. Mustang Holding 7 disagrees that we were in violation at this point or at 8 any other time in the well in violation of the 9 conditions of approval. We do acknowledge the 10-403. 10 COMMISSIONER WILSON: I have a question on that 11 point. Although Mr. Rixse had clearly communicated 12 that he felt Mustang was in violation and there may 13 have been an interpretation that Mustang felt they were 14 not was obtaining the gamma ray at bit at this point a 15 viable option for Mustang and did they have the intent 16 to do that to complete the well? 17 MR. TEMPLE: The gamma ray at bit rotary 18 steerable assemblies with gamma ray at bit are 19 available on the North Slope, Alaska from some 20 companies. We believe that it was a viable option. We 21 -- when this happened we wanted to move forward without 22 using gamma ray at bit. We believed that it was safe 23 to do so and we proved that it was safe to do so 24 because we did it. And we wanted to work with AOGCC to 25 change the permit to drill to do so. The note about AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 29 1 violation in here was a surprise to us. We decided to 2 wait until later to have that discussion and to focus 3 on drilling a safe and effective well which we did. 4 Does that answer your question, Commissioner? 5 COMMISSIONER WILSON: It does. I guess we 6 don't have Mr. Duncan here..... 7 MR. DUNCAN: We do. 8 COMMISSIONER WILSON: We do. Does Mr. Duncan 9 wish to be recognized as a witness today? 10 MR. DUNCAN: I do. 11 COMMISSIONER WILSON: Okay. We will bring you 12 -- we'll do that when we finish with the presentation 13 here and recognize you as a witness and ask some 14 questions. 15 Thank you. 16 COMMISSIONER CHMIELOWSKI: I'd just like to 17 clarify what you said earlier that whether by oversight 18 or otherwise there was no tool, gamma -- you know, 19 there wasn't a tool on contract or on location at 20 anytime? 21 MR. TEMPLE: That's correct. 22 COMMISSIONER CHMIELOWSKI: Okay. 23 MR. TEMPLE: That's correct. So continuing on 24 with the presentation we'll move on to the next slide, 25 slide 12, what was required in the permit to drill. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 30 1 Within the drilling procedure gamma ray at bit, the 2 words gamma ray at bit which we highlighted, were 3 placed next to the only spot in the drilling procedure 4 that describes the intermediate drilling BHA. Within 5 the conditions of approval portion of the permit to 6 drill that gamma ray at bit note is expanded to say 7 gamma ray at bit to assure seven inch casing point 8 prior to drilling into Kuparuk oil pool. Gamma ray at 9 bit to assure seven inch casing point prior to drilling 10 into Kuparuk oil pool. 11 Moving on to slide 13 titled what is the 12 standard for interpreting AOGCC permit requirements. 13 We believe it falls under the reasonable person 14 standard, how would a reasonable and qualified drilling 15 engineer interpret the conditions of approval. Mustang 16 Holding, LLC had three qualified drilling engineers 17 working on SMU M-03A. Each engineer interpreted the 18 seven inch casing point permit to drill language to 19 mean the TD of the intermediate hole section. The 20 gamma ray at bit requirement was interpreted to start 21 at the distance above the intermediate TD that would 22 reasonable ensure the Kuparuk oil pool would not be 23 penetrated. 24 Moving to slide 14 titled what was AOGCC's 25 meaning. Prior to drilling the seven inch casing point AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 31 1 Mustang Holding, LLC notified AOGCC by email on July 2 11, 2024 a plan to use a traditional motor assembly 3 without gamma ray at bit to meet the intent of the 4 permit to drill requirement. AOGCC's initial email 5 response is below. The only indication in this 6 response is that the intent for gamma ray at bit is to 7 drill the seven inch casing point. At no point prior 8 to permit approval or after permit approval did AOGCC 9 personnel indicate verbally or in writing a desire for 10 Mustang Holding, LLC to use gamma ray at bit with a 11 shallower, intermediate formation. 12 AOGCC writes that the permitted intent is 13 clearly stated indicating the language from the 14 conditions of approval section of the permit to drill 15 and the language reiterating -- reiterated below was 16 the clear intent of the AOGCC petroleum engineer who 17 authored the permit to drill conditions and sent the 18 below email. This is copied directly out of the email 19 that -- from Mr. Rixse that he referenced in his -- in 20 his introduction in his presentation. It was sent she 21 said on July 12, 2024 in response to the email that we 22 sent when we were out of the hole getting ready to run 23 in with the second intermediate drilling BHA. It 24 states please do not violate the conditions of approval 25 as clearly stated in the approved permit to drill AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 32 1 regarding gamma ray at bit. The conditions of approval 2 are then pasted into the email and again the second 3 line under the conditions of approval or the second 4 line from the bottom the conditions of approval states 5 gamma ray at bit to assure seven inch casing point 6 prior to drilling into Kuparuk oil pool. The -- Mr. 7 Rixse further expanded on his meaning when he said 8 below gamma ray at bit was required to ensure Mustang 9 does not drill eight and three-quarter inch open hole 10 into the Kuparuk oil pool. As discussed in meetings 11 and emails this hole section has a very small kick 12 tolerance with possible high variability to 13 overpressure in the Kuparuk oil pool. If Mustang 14 Holding, LLC would like to submit a 10-403 for review 15 for the possibility of a change to the approved program 16 please do so. I cannot offer a verbal approval without 17 the full AOGCC review. 18 Moving on to slide 15, when does drilling the 19 seven inch casing point start. The top of the HRZ 20 shale is the earliest that drilling the seven inch 21 casing point would start. The HRZ is a clear 22 transition, it is the top of the ceiling formation for 23 the reservoir and it is more than 200 feet from the 24 seven inch casing point. Mustang Holding, LLC had an 25 email from AOGCC granting permission to proceed prior AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 33 1 to drilling the top of the HRZ shale. At any point 2 above the HRZ shale Mustang Holding, LLC could have 3 stopped drilling and picked up a gamma ray at bit 4 assembly, rotary steerable, if either Mustang Holding, 5 LLC or AOGCC believed it was unsafe to proceed. AOGCC 6 never indicated to Mustang Holding, LLC that it was 7 unsafe to proceed nor did Mustang Holding, LLC think it 8 was unsafe. 9 COMMISSIONER CHMIELOWSKI: I have a question. 10 So you're indicating that Mustang understood the need 11 for the gamma ray at bit prior -- to avoid entering the 12 Kuparuk prematurely..... 13 MR. TEMPLE: No. 14 COMMISSIONER CHMIELOWSKI: .....correct. 15 MR. TEMPLE: No, I'm not indicating that, 16 Commissioner. That was included by the -- by AOGCC 17 within the permit to drill. 18 COMMISSIONER CHMIELOWSKI: Yes. 19 MR. TEMPLE: We believed we could safely drill -- 20 even in planning we believed we could safely drill 21 with a standard motor assembly. There are many wells 22 in this area that have been TD'd, their intermediate 23 hole sections have been TD'd with..... 24 COMMISSIONER CHMIELOWSKI: I'll rephrase. 25 MR. TEMPLE: .....others. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 34 1 COMMISSIONER CHMIELOWSKI: I'll rephrase. You 2 understood that AOGCC required it in the permit to 3 drill conditions of approval? 4 MR. TEMPLE: That's correct. And..... 5 COMMISSIONER CHMIELOWSKI: And you -- do 6 you..... 7 MR. TEMPLE: .....and the..... 8 COMMISSIONER CHMIELOWSKI: .....you understand 9 that regulations are the law and conditions of approval 10 in a permit to drill are also the law? 11 MR. TEMPLE: Commissioner, we fully understand 12 that..... 13 COMMISSIONER CHMIELOWSKI: Okay. 14 MR. TEMPLE: .....conditions of approval are 15 within the law. We also understand that the AOGCC can 16 change those conditions of approval while -- during an 17 operation and after a -- an approved permit. 18 COMMISSIONER CHMIELOWSKI: Right. 19 MR. TEMPLE: And we believed we had that 20 written approval to change those conditions of 21 approval. 22 COMMISSIONER CHMIELOWSKI: I have a question 23 about that. So you say that you could have at anytime 24 gotten the gamma ray at bit. Yeah, it wasn't under 25 contract and it wasn't on location. And so why did AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 35 1 Mustang put itself in a position that in order to 2 comply with the law it had to shut its rig down for 3 several days? 4 MR. TEMPLE: As I said before, Commissioner, it 5 was a mistake that happened and we appreciated the 6 Commission working with us to identify another safe way 7 to drill this well. And -- and we did drill this well 8 safely and effectively. It was the safest well drilled 9 with the fewest well control issues in the history of 10 Mustang pad. 11 COMMISSIONER WILSON: On the bottom of this 12 slide is the text, AOGCC never indicated to Mustang 13 Holding that it was unsafe to proceed nor did Mustang 14 Holding think it was unsafe. Do you think that it was 15 already communicated by the conditions of approval that 16 the AOGCC considered it an issue? 17 MR. TEMPLE: Commissioner, no, I don't think 18 the conditions of approval, the gamma ray at bit 19 requirement was a statement that it's unsafe to drill 20 this well without gamma ray at bit. I think that would 21 be -- I think that would be pretty major precedent if 22 that were the case and there are many, many wells 23 drilled with a motor assembly with gamma ray about 75 24 feet back or somewhere near that that have been 25 successfully and safely TD'd on the intermediate hole AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 36 1 section in this area. 2 COMMISSIONER WILSON: I guess part of that 3 discussion is the -- are those wells with a similar 4 range of uncertainty of the pressure you would -- you 5 would encounter and also with the kick tolerance that 6 this well had? 7 MR. TEMPLE: I would need to do a little more 8 research for you on the kick tolerance. I suspect yes, 9 if we have that surface to casing shoe and there are 10 many, many wells drilled in this area there would be a 11 similar situation. The second part is -- I'm sorry, 12 repeat the second part of your question please, 13 Commissioner. 14 COMMISSIONER WILSON: Well, just with -- you 15 said there's many wells drilled with the rotary 16 steerable safely in this area and I was just I guess 17 asking you to qualify that. Were those wells drilled 18 with a similar range of uncertainty in the pressure you 19 would encounter and then also did they have a similar 20 kick tolerance which is, you know, essentially getting 21 to the unsafe issue? 22 MR. TEMPLE: Commissioner, we'll address both 23 points more later. We believe that the uncertainty and 24 pore pressure wasn't an accurate portrayal and we have 25 had those discussions -- we had those discussions in AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 37 1 writing and in person with AOGCC prior. We believe we 2 had accurate pore pressure predictions and that was 3 proven when we drilled the well. And if it's okay with 4 Commissioners we'll end up discussing that a little bit 5 later in further slides. 6 COMMISSIONER WILSON: I'm ready for you to 7 proceed, yeah. 8 MR. TEMPLE: Okay. The next slide is slide 16 9 which is the sequence of events, it covers the sequence 10 of correspondence related to the depth. So it's after 11 laying down the first intermediate drilling assembly 12 and since we were at surface it starts prior to picking 13 up the second assembly. On July 11th at 4:57 p.m., the 14 initial email was sent from us saying -- stating that 15 we did not have the gamma ray at bit and we wanted to 16 proceed with a different -- with an alternative method 17 that we felt met the Commission's intent. On July 12, 18 a day later we received AOGCC's initial response. 19 Shortly after that we received two emails from AOGCC 20 geologist requesting information about geologic 21 uncertainty, pressures resulting in the area. And 22 going back once that initial response was a response 23 that Mr. Rixse both read and that we discussed earlier. 24 And that said the -- that stated AOGCC's clear intent 25 was and then further described the seven inch casing AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 38 1 point. 2 About less -- well, less than half an hour 3 after receiving AOGCC's geologist's email, second 4 email, Mustang Holding, LLC's geologist replied with 5 detailed information showing there was little geologic 6 uncertainty in the area. Near midnight that night, 7 July 12th, 11:17 p.m., AOGCC verbally indicated 8 permission would be coming to drill the seven inch 9 casing point without gamma ray at bit. That was that 10 call log we showed. And then 13 hours later on July 11 13th at 12:17 p.m. AOGCC sent written approval for 12 drilling a seven inch casing point without gamma ray at 13 bit. And that was sent with about 2,000 feet and one 14 day of drilling remaining to the top of the HRZ during 15 which a gamma ray at bit assembly could have been 16 picked up if the AOGCC felt it was needed. And that 17 would have resulted in time delays to the operation, 18 potentially significant time delays, but that would 19 have been a path forward. On July 14 at 12:00 p.m. we 20 penetrated the top of the HRZ and then about six and a 21 half hours later we drilled to TD, the seven inch 22 casing point per plan. 23 Slide 17 is a summary of Mustang Holding, LLC's 24 response to the findings and conclusions section of 25 other order 214. Mustang Holding, LLC disagrees with AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 39 1 AOGCC's findings and conclusions. The conditions of 2 approval related to gamma at bit was clearly for 3 drilling the seven inch casing point. At no point was 4 the seven inch casing point drilled without explicit 5 written AOGCC approval. Mustang Holding, LLC received 6 written approval to proceed and Mustang Holding, LLC 7 believed that the email communication between AOGCC and 8 Mustang Holding, LLC served in place of the requested 9 10-403. Historically AOGCC has allowed changes to 10 approved programs by written email instead of by 10- 11 403. Mustang Holding, LLC now recognizes this 12 assumption may no longer be AOGCC's practice. Mustang 13 Holding, LLC has implemented a standard operating 14 procedure for regulatory change management. 15 COMMISSIONER WILSON: I guess I -- I don't know 16 if it's a comment or a question, but on the previous 17 slide where you said the assembly could have been 18 picked up if AOGCC felt it was needed. It was already 19 in the permit to drill and so I guess I would say that 20 AOGCC felt it was needed at the point of writing of the 21 permit to drill. Do you disagree with that? 22 MR. TEMPLE: Commissioner, I believe that AOGCC 23 felt it was needed when they wrote the permit to drill. 24 I also believe that AOGCC wouldn't have approved us 25 continuing to drill ahead to the seven inch casing AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 40 1 point if they thought it was needed to drill that 2 safely. 3 COMMISSIONER WILSON: Okay. You can proceed. 4 MR. TEMPLE: Slide 18. I'll move then to the 5 penalty section of other order 214. The title is other 6 order 214 penalty section. 7 Penalty. Factors in determination of 8 penalties. The most significant factor is AS 9 31.05.150(g)(3), the extent and seriousness of the 10 violation and the actual or potential threat to public 11 health or the environment because of Mustang's 12 disregard for well control risks as evidenced by the 13 well's low kick tolerance, the uncertainty and the 14 target oil pool's high pore pressure, the uncertainty 15 regarding the extent of the overburden. You go on to 16 state three other factors. Mustang's history of 17 compliance, Mustang's cooperation with the 18 investigation and the need to deter similar behaviors. 19 Mustang Holding, LLC maintains the language and factors 20 in determination of penalties is in conflict with the 21 engineering that went into the well, the outcomes of 22 the well, Mustang Holding, LLC's history and AOGCC's 23 written statements. Mustang Holding, LLC's prognosis 24 for pore pressure, geology and frack gradients were all 25 proven to be accurate. The mitigations Mustang AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 41 1 implemented were based on sound engineering and on an 2 extensive review of the prior Mustang pad wells and a 3 review of the surrounding wells near Mustang Holding, 4 LLC's leases. The thorough attention placed on well 5 control during planning and drilling resulted in 6 overcoming the well control problem the prior operator 7 encountered. 8 From here we're going to move forward and 9 discuss the most significant factor regarding well 10 control, safety first and then we will discuss B, C and 11 D, the other three factors together. 12 Moving on to slide 19 titled other order 214, 13 penalty section, most significant factor. The most 14 significant factor is AS 31.05.150(g)(3), the extent 15 and seriousness of the violation and the actual or 16 potential threat to public health or the environment 17 because of Mustang's disregard for well control risks 18 as evidenced by the well's low kick tolerance, the 19 uncertainty and the target oil pool's high pore 20 pressure and the uncertainty regarding the extent of 21 the overburden. 22 Regarding the most significant factor. At no 23 time during the planning or drilling of SMU M-03A was 24 there disregard for well control risk or was there an 25 actual or potential threat to public health or the AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 42 1 environment. It is unclear to Mustang Holding, LLC why 2 this statement was made within the violation language. 3 If AOGCC personnel had perceived such a threat existed 4 they had both the power and opportunity to stop the 5 operation. The operation was never stopped because at 6 all times Mustang Holding, LLC operated with high 7 regard for safety and well control risk. 8 Regarding kick tolerance. The implication 9 seems to be that drilling a well with a relatively low 10 kick tolerance is considered a disregard for well 11 control risk. Mustang Holding, LLC does not believe 12 this is accurate. We believe that wells with similar 13 kick tolerances can be safely drilled and that this 14 view is supported by industry practices. Furthermore 15 AOGCC was fully aware of the intermediate hole 16 section's kick tolerance when the permit was approved 17 and AOGCC was fully aware of well's kick tolerance when 18 sending the email authorizing the seven inch casing 19 point -- drilling the seven inch casing point without 20 gamma ray at bit. 21 Regarding uncertainty and pore pressure. 22 Mustang Holding, LLC had accurate and timely pore 23 pressure information. As described in the permit to 24 drill and in verbal and email communications with AOGCC 25 a static bottom hole pressure survey of the reservoir AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 43 1 was taken 12 days, 12 days prior to drilling the seven 2 inch casing point. The pore pressure estimate was then 3 updated which was the plan in the permit to drill and 4 in repeated conversations in emails with AOGCC. 5 Mustang's final prognosis of the pore pressure was 6 accurate and is further affirmed by successfully 7 drilling the production of the well while always 8 maintaining well control and at no time creating an 9 actual or potential threat to public health or the 10 environment. 11 Regarding uncertainty in the overburden. 12 Mustang had high certainty regarding the extent of the 13 overburden formation at the seven inch casing point. 14 The geologic data from the prior M-03 wellbore supports 15 this certainty. The M-03 well bore was drilled in the 16 same false lock within 65 feet of the new M-03A 17 wellbore. Within 65 feet of the new M-03A wellbore. 18 The actual depth of the K1 marker and the top of the 19 Kuparuk were within the planned margin of error 20 reflecting the accuracy of Mustang's careful planning. 21 Our geologic interpretation is further affirmed by 22 AOGCC's own analysis and by AOGCC granting written 23 approval to proceed. 24 In slide 20 we show -- titled AOGCC analysis of 25 geologic uncertainty included within the written AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 44 1 approval. This was a paragraph included in the email 2 that allowed Mustang Holding to continue drilling to 3 the seven inch casing point without gamma ray at bit. 4 It states the AOGCC geologist agreed after reviewing 5 offset data with the operator's assessment that the 6 geologic section beneath a very prominent K1 gamma ray 7 resistivity marker appears to be of relatively uniform 8 thickness in this area, about 70 to 75 feet. This adds 9 some certainty, but not conclusive predictability to 10 the thickness and depth of the overburden to the 11 Kuparuk reservoir sand. I also want to note that the 12 well was TD'd in about a foot of what was submitted 13 within the permit to drill TVD wise and what was 14 required within the written approval to proceed was 15 effectively the same as what was submitted in the 16 permit to drill. AOGCC agreed with Mustang Holding, 17 LLC's geologic prognosis and AOGCC would not have 18 granted written permission to proceed if they did not 19 believe there was high certainty in the geologic 20 prognosis. 21 Moving on to slide 21, other order 214, penalty 22 section, additional factors including Mustang's history 23 of compliance, Mustang's cooperation with the 24 investigation and the need to deter similar behaviors. 25 AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 45 1 Regarding history of compliance. SMU M-03A was 2 the first well drilled by Mustang Holding, LLC. 3 Mustang Holding, LLC was formed in September, 2020 when 4 AIDA held the Mustang pad assets after the judicial 5 foreclosure of the prior operator. Mustang Holding, 6 LLC was acquired by Finnex Operating, LLC from AIDA in 7 October, 2023. October, 2023. This well was drilled 8 in July, 2024. Mustang Holding, LLC has very little 9 history and no history of noncompliance. The 10 consideration of Mustang's history of compliance seems 11 unjustified in this context. During in-person meetings 12 AOGCC personnel repeatedly asked about the well control 13 incidents of the prior operator in a way that seemed to 14 indicate Mustang Holding, LLC held some responsibility 15 for the prior operator's actions. The prior operator 16 is no longer in existence. Mustang Holding, LLC owns 17 the assets of the prior operator, but is not 18 responsible for the prior operator's drilling history 19 or for the prior operator's compliance. Given the 20 severity of the language within the violation, the 21 severity of the penalty, the past confusion about 22 operatorship and Mustang Holding, LLC's record of 23 drilling the two most successful wells to date at 24 Mustang pad with no well control or safety incidents, 25 we question whether this violation was written with AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 46 1 consideration for the prior operator's history of 2 compliance rather than consideration for Mustang 3 Holding, LLC's history. 4 Regarding cooperation. Mustang Holding, LLC 5 has fully cooperated with AOGCC's investigation into 6 this matter. We believe that's true. 7 Regarding the need to deter similar behaviors. 8 As previously discussed Mustang Holding, LLC believed 9 the written communication with AOGCC that resulted in 10 an emailed written approval from AOGCC to proceed was 11 accepted in place of form 10-403 as is sometimes 12 AOGCC's practice. Based on this experience Mustang 13 Holding, LLC has implemented a standard operating 14 procedure for regulatory compliance and change 15 management. Mustang Holding, LLC abided by the 16 conditions of AOGCC's permit to drill approval and by 17 the written approval to change the permit. 18 Next slide is 22, titled SMU M-03A. It reviews 19 the well again. This well was drilled with no well 20 control incidents, no safety incidents. Our pressure 21 prognoses were accurate, our geologic prognoses were 22 accurate, our drilling risk mitigations were 23 successful. The follow-on well, SMU M-01B was equally 24 successful, further reenforcing Mustang Holding, LLC's 25 safe operating practices and accurate prognoses. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 47 1 Slide number 23 titled moving forward with 2 respect and transparency. Mustang Holding, LLC 3 presents this information so that AOGCC has a complete 4 understanding of our interpretation of the permit to 5 drill requirements and the communications that occurred 6 during the well. Mustang Holding, LLC acknowledges 7 that AOGCC would like communications for permit to 8 drill changes to look different in the future. We will 9 ensure this happens and we have implemented a standard 10 operating procedure for this purpose. Mustang Holding, 11 LLC's intent is to have a professional and mutually 12 respectful relationship with all AOGCC personnel based 13 on transparency, honesty and sound engineering 14 practices. Mustang Holding, LLC is committed to 15 adhering to regulatory compliance at all times. Slide 16 number 24, conclusion. Based on the information in 17 this presentation we request other order 214 be 18 rescinded. 19 We are here to answer any further questions. 20 COMMISSIONER CHMIELOWSKI: So if an 21 unexpectedly high pore pressure was encountered, right, 22 with a low kick tolerance, what would be the 23 consequence of that? 24 MR. TEMPLE: An unexpectedly high pore pressure 25 with a low kick tolerance..... AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 48 1 COMMISSIONER CHMIELOWSKI: If it was on the 2 high end. You know, the previous operator had said as 3 high as 12, 12.4 I think the pore pressure estimates by 4 Mustang varied between 10.3 and 11; is that correct, so 5 in the case that the well encountered higher than 6 expected pore pressure with a low kick tolerance what 7 would be the consequence? 8 MR. TEMPLE: Commissioner, referencing the 9 prior operator's -- the prior operator's pore pressure 10 predictions, we find that challenging because the prior 11 operator had many well control issues. And those well 12 control issues were a direct result and we had this 13 conversation with AOGCC with the engineers and 14 geologists a couple different times, but the prior 15 operator consistently overpredicted their pore 16 pressures. And it consistently resulted in them -- in 17 the wellbore breathing and losses and in well control 18 incidents. 19 COMMISSIONER CHMIELOWSKI: Yeah, so that's my 20 question. What would be the consequence of it, could 21 it be a well control incident or a blowout? 22 MR. TEMPLE: Absolutely. Anywhere..... 23 COMMISSIONER CHMIELOWSKI: Yeah, okay. 24 MR. TEMPLE: .....across the Slope, any 25 operator..... AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 49 1 COMMISSIONER CHMIELOWSKI: Thank you. 2 MR. TEMPLE: .....if a formation is drilled 3 into that is a -- that is a risk. And that is a risk 4 we acknowledge on every well as does every drilling 5 engineer that is drilling acknowledges that we need to 6 take well control seriously, we need to drill these 7 wells safely. And that we did drill this well safely, 8 we had no well control incidents. All the other wells 9 drilled on this pad had well control incidents and that 10 was reviewed by AOGCC prior to permit to drill approval 11 and discussed with AOGCC prior to permit approval. 12 AOGCC -- it was also -- those incidents were also 13 mentioned in a way that they were our incidents as 14 opposed to the prior operator's. We accounted for 15 those risks and we mitigated them and we were 16 successful. We were successful on two different wells 17 and on both of those wells the pore pressures were 18 accurate, they were proven to be accurate that we went 19 in there with and that was taken as a direct reading 20 from the reservoir 12 days prior to drilling that 21 section. And again both wells that was proven accurate 22 and that was the plan going into the well, that was the 23 plan communicated with AOGCC's engineers and geologists 24 was to take that reading prior to drilling that. So 25 while yes, there's always a potential on every well AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 50 1 that's drilled to drill into something unexpected, it 2 was very, very minimal on this well. 3 And then additionally the geologic uncertainty 4 also ensured that and that we were very capable of not 5 drilling into the reservoir and we did not. As I 6 mentioned we drilled within about one foot of our TVD 7 of our planned depth. 8 COMMISSIONER CHMIELOWSKI: You..... 9 MR. TEMPLE: For..... 10 COMMISSIONER CHMIELOWSKI: Oh, go ahead. You -- 11 well, you mentioned that there's a -- was a prior 12 operator history of well control issues. So is it 13 appropriate in that situation to take a close look at 14 well control for future wells? 15 MR. TEMPLE: Commissioner, I would say it's 16 always appropriate to take a close look at well control 17 for future wells. 18 COMMISSIONER CHMIELOWSKI: And you indicate 19 that because there were no incidents that maybe the -- 20 you know, the end justifies the means. So because 21 everything was fine at the end there really was no risk 22 to begin with. Is that -- is that what you're 23 implying? 24 MR. TEMPLE: Commissioner, I'm implying that we 25 safely drilled this well and we can safely drill this AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 51 1 well in the same way again with a motor assembly. It's 2 been proven thousands of times on the North Slope that 3 this type of well can safely be drilled with a motor 4 assembly. 5 COMMISSIONER CHMIELOWSKI: Go ahead. 6 COMMISSIONER WILSON: Just -- yeah. For the 7 record from a predrill perspective and what was your 8 range of uncertainty on the pore pressure? 9 MR. TEMPLE: From a predrill perspective a 10 range of uncertainty, we dialed it in to 10.6 taking a 11 static bottom hole pressure survey of the reservoir 12 12 days prior. So we believe there was virtually no range 13 of uncertainty when we drilled the seven inch casing 14 point. 15 COMMISSIONER WILSON: Thank you. That 16 concludes your presentation? 17 MR. TEMPLE: Yes, it does, Commissioner. 18 COMMISSIONER WILSON: Commissioner Chmielowski, 19 any further questions. 20 COMMISSIONER CHMIELOWSKI: Not at this time. 21 Thank you. 22 COMMISSIONER WILSON: Then if Mr. Duncan would 23 like to come forward. I appreciate you joining us. 24 I'll swear in you as a witness as I did the others. So 25 will you please raise your right hand and respond. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 52 1 (Oath administered) 2 MR. DUNCAN: I do. 3 COMMISSIONER WILSON: Let the record reflect 4 that the witness responded in the affirmative. 5 MICHAEL DUNCAN 6 having been first duly sworn under oath, called as a 7 witness on behalf of Mustang Holding, LLC, testified as 8 follows. 9 COMMISSIONER WILSON: Do you wish to be 10 recognized as an expert today? 11 MR. DUNCAN: I do. 12 COMMISSIONER WILSON: Please identify your 13 field of expertise and credentials. 14 MR. DUNCAN: (Indiscernible - away from 15 microphone). 16 MS. COLDIRON: (Indiscernible - away from 17 microphone). 18 MR. DUNCAN: There we go. 19 COMMISSIONER WILSON: Yeah, just lean in. 20 MR. DUNCAN: Yes, my expertise is in drilling 21 and operations and engineering. I have a bachelor of 22 mechanical engineering from Colorado State University 23 and am a licensed professional engineer in the state of 24 Alaska. I have 20 years of industry experience, much 25 of which is an exploration driller here on the North AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 53 1 Slope of Alaska. 2 COMMISSIONER WILSON: And, Mr. Duncan, were you 3 the onsite engineer while this well was being drilled? 4 MR. DUNCAN: I was not. I was the project 5 manager. 6 COMMISSIONER WILSON: Okay. As project manager 7 were you the decision maker for the operation? 8 MR. DUNCAN: I was. 9 COMMISSIONER WILSON: And it's been stated 10 previously that it was an oversight, that the rotary 11 steerable and gamma ray at bit was not on location and 12 not under contract at that time. So my question for 13 you is was there ever an intent to drill that section 14 of the well with the rotary steerable and gamma ray at 15 bit as the -- as articulated in the permit? 16 MR. DUNCAN: I would disagree with the term 17 oversight in describing that situation. And when we 18 speak of intent, the intent that we had and always have 19 is to drill it safely in accordance with and 20 collaboration with the AOGCC in an efficient manner. 21 Though the tools were not under contract they were 22 available in Deadhorse and they were available at 23 anytime. 24 There were some comments that were made that 25 I'd like to address please, if you -- if you don't AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 54 1 mind. 2 COMMISSIONER WILSON: Please do. 3 MR. DUNCAN: One, I want to just speak 4 technically about the decision making. First, in the 5 choice of motor assembly or rotary steerable with gamma 6 at bit, because you're putting the bit on a motor and 7 turning the entirety of the assembly you cannot put a 8 gamma near the bit. So that is -- it's not an 9 oversight to miss gamma at bit, that configuration of 10 tools does not afford the opportunity for gamma at bit. 11 That particular configuration of tools was chosen as 12 Mr. Temple indicated and shown to assure kick off from 13 the cement plug is top. That was identified as an 14 operational risk if the cement was placed poorly, if 15 the kick off plug was of low integrity or even had 16 contamination then it would not afford an easy kick 17 off. The more aggressive bend of a motor assembly can 18 help assure that kick off in comparison to a rotary 19 steerable which has a gentle bend to -- well, doesn't 20 have a bend, you're slightly pushing the bit, but is a 21 more gentle turn, the more aggressive motor can make 22 that. So it wasn't an oversight to not have gamma at 23 bit, the tool configuration does not allow it. That 24 tool configuration was chosen for the kick off to get 25 off into new hole. The most important thing to ensure AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 55 1 early success was new formation and not mess with the 2 compromised integrity -- potential compromised 3 integrity of an old wellbore. 4 Once again on the intent side, that tool was 5 chosen for kick off, we had rotary steerable available, 6 we spoke of delays. We've all been around North Slope 7 drilling, anything takes time. Tripping out of a hole 8 takes multiple hours to do the trip if it goes smooth, 9 it takes time to rack back or stand down tools, it 10 takes time to mobilize new connections, it takes time 11 to pick up test tools and put those back in the hole 12 and retest them. 13 We speak of delay of picking up tools. It's 14 not that there was delay that the tools were available, 15 it's a delay that it takes a while to switch. We don't 16 mobilize and decide a contract because we have time 17 typically. When you decide to switch tools you can 18 call the guys in the shop, say please mobilize them. 19 Two hours to location, we'll be far more than that 20 coming out of the hole, stacking back the pipe, laying 21 down the old tools, picking up the new tools. So I 22 agree that there's a delay, I would like to add that 23 clarification that it's not a delay in accessing the 24 tools, it's a delay in the process with which we 25 switch. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 56 1 You spoke of contracting the tools. That's a 2 common practice here in Alaska, but I wouldn't conflate 3 contracting the tools with the availability of the 4 tools. There's lots of equipment we have within reach 5 that's not contracted. We don't often contract spare 6 equipment because of the cost associated with it, but 7 we know the -- we know the companies, we know the 8 tools, we know the people both in the office and in the 9 field. We know where the tools are, we know the 10 condition of them, we know that they're available. We 11 say things like please let us know if another operator 12 has interest, we'd like to know that we have access to 13 those tools. And that's common practice. This is a 14 common practice I've used on many wells I've drilled in 15 the past. I don't often contract spare material. I 16 like to know it's available, I like to know what my 17 options are, but I like to pick up the tools that are 18 used at that time, I don't like to pay for spare 19 equipment sitting on standby, I don't like to pay for 20 tools in a -- in a warehouse that aren't meant to be 21 used. 22 But I do want to assure the Commission, I want 23 to assure everybody today that we did identify the 24 tools as available, they were within reach and we had 25 access to them. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 57 1 And once again you spoke of our intent, did we 2 intend to drill with rotary steerable, did we intend to 3 drill with the motor. Truth is we intended to drill in 4 accordance with and -- and collaboration with AOGCC 5 personnel in a safe and efficient manner. So when the 6 kick off tool was used and we did kick off, an email 7 was sent and communication was started about a new 8 method. I with Mr. Temple share the belief that at bit 9 gamma is not necessary to safely drill this well. 10 There are many methods with which you can TD'd a hole 11 section. One is using geologic markers and the closer 12 your gamma ray is to your bit the closer you will 13 understand where you're drilling when you see those 14 markers. My understanding is that is the intent of the 15 at bit gamma. That's a good method and a reliable 16 means of doing it, but there are other ones and we 17 proposed other safe methods to TD the hole section with 18 the AOGCC. We worked closely with the AOGCC to 19 evaluate those methods. One of the big ones is the 20 geologic uncertainty of it. And as stated by the 21 emails of AOGCC we agree that there was very little 22 geologic uncertainty because this was essentially a 23 redrill of a well. I've never had an offset log closer 24 in my life 65 feet over, we knew where the formations 25 were. So there was no geologic uncertainty, AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 58 1 negligible. If the formations 65 feet over come out 2 dramatically out of whack none of our methods are 3 working. So I've yet to see that, it came in exactly 4 as prognosed, everything on the geologic side seemed 5 clear and we discussed this thoroughly with AOGCC 6 before even approaching that section of the hole. 7 There's -- forgive me, my notes are on my phone 8 here. There's been a question about understanding the 9 drilling regs and understanding the consequences of 10 this. This well was designed to address the geology of 11 the region, there's two clear intervals of varied pore 12 pressure and varied rock, they're segregated by one 13 very thick and clear shale. The top intervals 14 conveniently are often referred to as the Brookian 15 section, in this case overburden is used, various 16 terms. Below that is the HRZ shale, a thick, very 17 recognizable shale, regionally known and below that is 18 the Kuparuk. 19 The main geologic hazard, the main drilling 20 hazard that's associated with the low kick tolerance is 21 in connecting the potential pore pressure of the 22 Kuparuk to the potential weaker formations well above. 23 The only means of doing that is by drilling through the 24 HRZ without setting casing and thus the effort for true 25 accuracy in our measurements. Really that's -- that AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 59 1 was the communicated goal, that was our understanding 2 of a safety measure we needed to pursue was land that 3 casing in the HRZ period. Do not connect the Kuparuk 4 with above. This isn't a worry of anomalous pressure 5 higher up, this isn't a worry of weak formations lower, 6 this is connect the high pressure below to the 7 potential weak -- weaker formations above. 8 As Mr. Temple mentioned before proceeding in 9 the well we actually did get pore pressure measurement 10 of the Kuparuk and so we knew that it was -- it was not 11 the potential high pressure that had been feared or 12 hypothesized before. But really the intent, the 13 safety, the goal, the effort that was agreed upon 14 collectively was do not cut the Kuparuk until casing is 15 set, cemented and pressure tested above. 16 So we worked with the AOGCC to ensure that that 17 was something that was done. We ensured that we have 18 the geologic certainty, we talked about how close we 19 were to the offset logs, we spoke of them on a Friday 20 and to that I express my apologies to take the 21 personnel's evening and my thanks that they're willing 22 to do that in such an effort. But that is the method 23 with which we're mitigating the identified risk, that's 24 the -- that's why I assert and we've safely conducted 25 that this well can be safely drilled without gamma at AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 60 1 bit, we have -- we knew where the rock was, 65 feet 2 over, we had a log. We knew where the pore pressure 3 was, those before us had drilled in the area, we could 4 see their data and we had measurement of the pore 5 pressure in the Kuparuk. The key was land the casing 6 before you drill the Kuparuk. 7 And we worked with the AOGCC to make sure we 8 had a reliable and trustworthy way of doing that 9 without using gamma at bit. If we didn't believe that 10 that method was reliable, if we hadn't worked with 11 AOGCC to do that, if we hadn't vetted that on a 12 geologic and operational side we did have the 13 opportunity to revert back to the old method which is 14 gamma ray at bit and look for marker. It would not be 15 my preferred method if I were to move forward today, it 16 is a viable and safe method as lined out by the AOGCC 17 and in the permit to drill. But we sought the 18 alternative because it proceeded -- it afforded the 19 opportunity to ensure kick off using the right tool to 20 kick off and proceed forward in an efficient manner, to 21 avoid the delays of bringing out tools, of tripping out 22 of the hole, of switching your gear, of running back 23 in, of testing gear, of all the -- all the effort and 24 the time that it takes to do that. We had that 25 opportunity available at anytime and we absolutely had AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 61 1 that opportunity long before we got anywhere near the 2 casing shoe, long before we got near the HRZ or long 3 before we had possibility of risk of connecting the 4 pressure of the Kuparuk to the formations above. 5 So our effort was and will always be to move 6 forward in accordance with collaboration with the AOGCC 7 in a safe and efficient manner. 8 There was a question about the consequences of 9 a kick. Mr. Temple answered it well and I wanted to 10 reemphasize we're always aware as drilling engineers, 11 as driller, as operators, there are drilling hazards 12 and we need to apply prudent methods to them and will 13 continue to do so. If there's further question needed 14 on that one I can address it, but in this case the 15 absolute mitigating factor was do not drill into the 16 Kuparuk without casing done -- without casing set. And 17 we identified it, we worked with it and we made sure it 18 happened. 19 I believe that addresses my notes and the 20 questions you brought up, but I'm certainly more than 21 willing to answer any other questions. 22 COMMISSIONER WILSON: I have one I guess. In 23 the plan of operations and then of course in the 24 conditions of approval that we've been discussing it 25 called for the gamma ray at bit. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 62 1 MR. DUNCAN: Uh-huh. 2 COMMISSIONER WILSON: And given the discussion 3 that you just went through and the discussions that you 4 had kind of real time with the AOGCC, did any of those 5 discussions happen before you entered that section of 6 the well once you received the permit with the 7 condition of approval? 8 MR. DUNCAN: When you say that section of the 9 well if you mean the intermediate hole no, we were 10 working from the..... 11 COMMISSIONER WILSON: Yes. 12 MR. DUNCAN: .....kick off. I believe the 13 email went out about the time when the kick off was 14 started. My conversations the kick off was happening, 15 but when we say that section of the hole we were a long 16 ways from the TD or any of the critical portions of 17 that with which the gamma at bit would apply. 18 COMMISSIONER WILSON: Okay. Yeah, and I am 19 referencing that intermediate section of the hole 20 because it was in the plan of operations in the permit 21 that's submitted by Mustang. Okay. 22 COMMISSIONER CHMIELOWSKI: Mr. Duncan, could 23 you clarify something for me. In the presentation it 24 showed I think that the window was milled..... 25 MR. DUNCAN: Uh-huh. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 63 1 COMMISSIONER CHMIELOWSKI: .....and then pulled 2 up -- let's pull out of hole and then a different BHA. 3 You're saying that's still the same bottom hole 4 assembly that could not have a gamma ray at bit? 5 MR. DUNCAN: Right. If the motor..... 6 COMMISSIONER CHMIELOWSKI: And..... 7 MR. DUNCAN: .....was pulled out and dialed 8 back so you can adjust the severity of the motor with 9 which it turns, is pulled out and adjusted..... 10 COMMISSIONER CHMIELOWSKI: Was that a bottom 11 hole assembly that could have drilled this whole 12 intermediate section? 13 MR. DUNCAN: That was the bottom hole assembly 14 that did drill..... 15 COMMISSIONER CHMIELOWSKI: Right. 16 MR. DUNCAN: .....the intermediate section, 17 yes. 18 COMMISSIONER CHMIELOWSKI: Okay. So there was 19 really -- I -- that's fine. That's all the questions I 20 have. 21 Thanks. 22 COMMISSIONER WILSON: Commissioner Chmielowski, 23 do you wish to take a recess? 24 COMMISSIONER CHMIELOWSKI: Yes, please. 25 COMMISSIONER WILSON: All right. So what we AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 64 1 will do is take a 20 minute recess. If the witnesses 2 could remain and we will -- we will gavel back in at 3 11:50. 4 (Off record) 5 (On record - 11:51 a.m.) 6 COMMISSIONER WILSON: It's 11:51. I will call 7 the meeting back to order. 8 We do have a couple of additional questions. I 9 think I have a question, one for Mustang and then a 10 second question for Mr. Duncan if you don't mind coming 11 forward again. 12 For Mustang I guess I'm just curious at what 13 point do you consider that the plan was changed, the -- 14 by the plan, I mean, deviation from what was permitted 15 in the permit to drill, at what point do you think the 16 plan was changed? 17 MR. TEMPLE: I believe the plan was changed 18 when we received written approval that the plan for 19 drilling to the seven inch casing point was changed to 20 drill without gamma ray at bit. 21 COMMISSIONER WILSON: And then, Mr. Duncan, I 22 appreciate you testifying today. Did either Mustang or 23 yourself, Mr. Duncan, ever offer to pick up the gamma 24 ray at bit during the real time discussions after Mr. 25 Rixse had stated the operation was in violation of the AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 65 1 condition of approval? 2 MR. DUNCAN: I don't recall. I don't recall 3 explicitly offering it, no. 4 COMMISSIONER WILSON: That's fair enough. 5 COMMISSIONER CHMIELOWSKI: I'll start with you, 6 Mr. Duncan. You said that it's not your practice 7 necessarily to have a tool under contract or did you 8 specifically call about the availability of this tool? 9 MR. DUNCAN: I did. 10 COMMISSIONER CHMIELOWSKI: And what was the 11 availability? 12 MR. DUNCAN: It was available. 13 COMMISSIONER CHMIELOWSKI: Okay. 14 MR. DUNCAN: Good to go. 15 COMMISSIONER CHMIELOWSKI: Now on the timeline 16 that you presented at what time did the second BHA, the 17 one that ultimately drilled the intermediate section, 18 what time did that enter the wellbore? 19 MR. TEMPLE: Commissioner, I would need to look 20 back to find the exact time within the drilling log, 21 but it was shortly after we sent that email at about 22 5:00 o'clock p.m. on that Thursday. 23 COMMISSIONER CHMIELOWSKI: Okay. Could you 24 please confirm when that BHA entered the well? 25 MR. TEMPLE: We'll get back with you..... AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 66 1 COMMISSIONER CHMIELOWSKI: Yeah. Great. That 2 would be great. 3 COMMISSIONER WILSON: We'll leave the record 4 open. 5 MR. TEMPLE: Could I ask a clarification on 6 that? 7 COMMISSIONER CHMIELOWSKI: Yeah. 8 MR. TEMPLE: When you speak of that BHA there's 9 been two BHAs described. One was the BHA with the 1.83 10 bend used for the kick off and the other was with the 11 degree and a half bend used for the continued drilling. 12 Which of those two were you referring to? 13 COMMISSIONER CHMIELOWSKI: The second one, the 14 one that ultimately completed the intermediate. 15 MR. TEMPLE: Thank you. 16 COMMISSIONER CHMIELOWSKI: So you talked about 17 the parent well M-03 being 65 feet away. Did that well 18 penetrate the Kuparuk? 19 MR. TEMPLE: That well was drilled deeper than 20 we set our seven inch casing point. And it was -- it 21 didn't penetrate the Kuparuk. I think there's 22 potential it could have penetrated the Kuparuk. We 23 don't have -- you know, what, I'm -- I'm -- I probably 24 need to pull that statement back and bring up one of 25 our geologists who..... AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 67 1 COMMISSIONER CHMIELOWSKI: Okay. 2 MR. TEMPLE: .....would be better suited..... 3 COMMISSIONER CHMIELOWSKI: Sure. 4 MR. TEMPLE: .....to answer this question, 5 Commissioner. 6 COMMISSIONER CHMIELOWSKI: Well, let me ask 7 another question first. You talked about gathering a 8 pressure survey in an offset well. And what well was 9 that and how far away was it from M-03A and was it in 10 the same fault block? 11 MR. TEMPLE: The well that was collected was 12 from North Tarn 1A and I probably am not the best 13 person to respond to that as well, but we can certainly 14 bring up some people -- people..... 15 COMMISSIONER CHMIELOWSKI: Okay. 16 MR. TEMPLE: .....who are better qualified than 17 me to answer that. 18 COMMISSIONER CHMIELOWSKI: Sure. 19 MR. TEMPLE: I will say that we believed we had 20 high confidence that it was in communication, that 21 those fault blocks were in communication. And there 22 was plenty of time for that communication to happen 23 from the last time that or from the time that the well 24 hadn't been or the pad hadn't been produced on so there 25 was ample opportunity for pressures to be transmitted. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 68 1 COMMISSIONER CHMIELOWSKI: Okay. So it wasn't 2 a different fault block..... 3 MR. TEMPLE: (Indiscernible - simultaneous 4 speech). 5 COMMISSIONER CHMIELOWSKI: .....but how far 6 away was it? 7 MR. TEMPLE: I don't remember that..... 8 COMMISSIONER CHMIELOWSKI: Okay. 9 MR. TEMPLE: .....here. 10 COMMISSIONER CHMIELOWSKI: Are you able to get 11 that information for us? 12 MR. TEMPLE: We absolutely can..... 13 COMMISSIONER CHMIELOWSKI: Great. 14 MR. TEMPLE: .....Commissioner. 15 COMMISSIONER CHMIELOWSKI: And we can leave the 16 record open, there's no need to do everything today if 17 you need more time. 18 MR. TEMPLE: Okay. 19 COMMISSIONER CHMIELOWSKI: So I guess I had -- 20 there were I guess three things just to -- just to 21 summarize. It's the timeline for the BHA entering the 22 hole, that offset pressure distance from M-03A and did 23 the parent penetrate the Kuparuk. That's what I have 24 is outstanding, is that what you have, Commissioner 25 Wilson. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 69 1 COMMISSIONER WILSON: But it's apparent they 2 have a..... 3 COMMISSIONER CHMIELOWSKI: Okay. 4 COMMISSIONER WILSON: .....geologist here that 5 can..... 6 COMMISSIONER CHMIELOWSKI: Okay. 7 COMMISSIONER WILSON: .....be sworn in and we 8 can get the answer on did it penetrate..... 9 COMMISSIONER CHMIELOWSKI: Sure. 10 COMMISSIONER WILSON: .....the Kuparuk if..... 11 COMMISSIONER CHMIELOWSKI: Yeah. 12 COMMISSIONER WILSON: .....we want to do that 13 at this time. Okay. 14 So you've seen the routine a couple of times. 15 MS. KEATON: Yes. 16 COMMISSIONER WILSON: Will you please raise 17 your right hand and respond. 18 (Oath administered) 19 MS. KEATON: I do. 20 COMMISSIONER WILSON: Let the record reflect 21 the witness responded in the affirmative. 22 GABRIELLA KEATON 23 having been first duly sworn under oath, called as a 24 witness on behalf of Mustang Holding, LLC, testified as 25 follows. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 70 1 COMMISSIONER WILSON: I guess at this point we 2 should also have you identify yourself by name, your 3 expertise and if you wish to be recognized as an expert 4 witness. 5 MS. KEATON: Okay. My name is Gabriella 6 Keaton, I am the geologist for Finnex. I do wish to be 7 recognized as an expert. I got my degree from -- my 8 master's in geology from CU, University of Colorado at 9 Boulder. Worked about 10 years in exploration, 10 development and operations and now I'm the geologist 11 for Finnex. 12 And regarding your question if it went into the 13 Kuparuk, it did not. And I can give you the exact log 14 of where it stopped, but we had offset data that we 15 could predict the thickness between our marker of TD 16 intermediate and the top of the Kuparuk. 17 And regarding the distance from North Tarn 1A 18 which is where we got the pressure test and M-03 I will 19 get back to you guys, but it's in the same fault block, 20 less than a mile away within the same fault block. 21 COMMISSIONER CHMIELOWSKI: Thank you. 22 MS. KEATON: Yeah. 23 COMMISSIONER WILSON: Any further questions for 24 the witness? 25 COMMISSIONER CHMIELOWSKI: No. Thank you. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 71 1 COMMISSIONER WILSON: Something that we omitted 2 before the break and that we weren't corrected on 3 before we left the room, but we would like to offer any 4 member of the public the opportunity to testify or 5 provide comments. 6 Is there anyone online, Ms. Coldiron. 7 (No comments) 8 COMMISSIONER WILSON: Has there been any 9 indication that..... 10 (No audible response) 11 COMMISSIONER WILSON: Okay. We will wait 60 12 seconds. While we're waiting for those on Teams to 13 respond is there anyone else in the room that would 14 like to testify today. 15 COMMISSIONER CHMIELOWSKI: And just as -- oh, 16 there's someone. Just as a reminder for those on Teams 17 the code to unmute yourself the code is star, six, if 18 you need that. But we'll still hold our 60 seconds. 19 COMMISSIONER WILSON: I saw your hand. So 20 we'll wait our 60 seconds for those on Teams and then 21 you can come forward. 22 (Pause) 23 COMMISSIONER WILSON: Any indication from those 24 on Teams. 25 (No audible response) AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 72 1 COMMISSIONER WILSON: And we do have one 2 witness present that would like to testify. 3 MR. FOX: (Inaudible - away from microphone). 4 COMMISSIONER WILSON: I'd prefer to swear you 5 in. 6 MR. FOX: Okay. 7 COMMISSIONER WILSON: Would you please raise 8 your right hand and respond. 9 (Oath administered) 10 MR. FOX: Absolutely. Yes. 11 COMMISSIONER WILSON: Let the record reflect 12 the witness responded in the affirmative. Do you wish 13 to be recognized as an expert witness? 14 MR. FOX: No. 15 COMMISSIONER WILSON: Then please proceed. 16 RICK FOX 17 having been first duly sworn under oath, called as a 18 witness on behalf of himself, testified as follows. 19 MR. FOX: Okay. I'm -- I'm Rick Fox, I'm the 20 President and General Manager..... 21 COMMISSIONER CHMIELOWSKI: Sorry to interrupt 22 you, but we'll need you to speak into the microphone, 23 please. 24 MR. FOX: Thank you. 25 COMMISSIONER CHMIELOWSKI: Yeah. Thank you. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 73 1 MR. FOX: I'm Rick Fox, I'm the President and 2 General Manager for Fairweather and I've been in the 3 business about 50 years. I -- first I'd just like to 4 thank AOGCC for -- for having this hearing, let us get 5 a chance to talk out what we -- from our perspective 6 what we saw. And I'd like to thank Mr. Rixse, the -- 7 the engineer that was involved with us and I appreciate 8 how serious this is to you. 9 Thank you very much. 10 You know, I'm -- I'm here today in a way to 11 support our team and -- and Finnex. This is a new 12 operator in the state taking over what has been a 13 problem field and it's very challenging. We've been 14 working closely with the Finnex team for quite a while 15 and supporting their efforts to develop this 16 challenging field because I think it's good for Alaska 17 and that's what we do, we -- we help -- help those that 18 come and don't have the -- all the resources yet. And 19 I want to just convey that my experience with Finnex, 20 with Mustang Holding, is that they are a serious 21 operator who want to do it right. Of course we're a 22 company in Alaska since 1976, we always want to get it 23 right. And I -- and I -- I guess it's -- I love 24 engineers, they work hard, they think a lot and -- and -- 25 and they -- they believe they're right and they want AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 74 1 to get it right. And honestly I'm -- I'm sorry about 2 the misunderstanding, I think it is a shame, but that's 3 what I see this as. 4 So thank you for your time. That's all I had. 5 COMMISSIONER WILSON: We appreciate the 6 comments. Any further testimony from the room. 7 (No comments) 8 COMMISSIONER WILSON: And the Teams chat is 9 still empty. 10 Well, hearing no other business, the time is -- 11 oh. 12 COMMISSIONER CHMIELOWSKI: Yeah, just wanted to 13 check if we need to grant a little extra time to answer 14 questions and how much time you might need. 15 MR. TEMPLE: Commissioner, help me understand a 16 little bit more what you mean by (indiscernible - 17 simultaneous speech). 18 COMMISSIONER CHMIELOWSKI: Oh. So we asked you 19 a couple of questions. One of them I think -- I think 20 the last remaining one is the timeline for that BHA 21 entering the well. I just want to make sure that's on 22 the record because we don't want to close the record 23 before that information has been provided. So 24 depending on how long it will take you we can give you 25 as much time as you need to provide that information. AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 Page 75 1 Otherwise the record closes right now. So we want to 2 give you extra time. 3 MR. TEMPLE: I understand now. Can we have 4 until tomorrow? 5 COMMISSIONER WILSON: Oh, absolutely. 6 COMMISSIONER CHMIELOWSKI: Absolutely. Close 7 of business tomorrow. 8 MR. TEMPLE: Okay. 9 COMMISSIONER CHMIELOWSKI: Okay. Yeah. 10 MR. TEMPLE: Thank you. 11 COMMISSIONER WILSON: Well, I'll try one more 12 time. Hearing no other business the time is 12:05 p.m. 13 This hearing is now adjourned. 14 (Hearing adjourned - 12:05 p.m. 15 (END OF PROCEEDINGS) 16 17 18 19 20 21 22 23 24 25 AOGCC 11/5/2024 ITMO: REQUEST BY MUSTANG HOLDING, LLC. Docket No. 24-025 329 F Street, Ste. 222., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Computer Matrix, LLC Phone: 907-227-5312 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 02 through 76 are a true, 4 accurate, and complete transcript of proceedings in 5 Docket No.: 24-025, transcribed under my direction from 6 a copy of an electronic sound recording to the best of 7 our knowledge and ability. 8 9 _________________ _______________________________ 10 DATE SALENA A. HILE, (Transcriber) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket Number: OTH-24-025 Mustang Holding, LLC (Mustang), by letter dated September 6, 2024, filed a request for hearing pursuant to 20 AAC 25.535(d) with the Alaska Oil and Gas Conservation Commission (AOGCC) regarding the Decision and Order (Other Order 214) for the Southern Miluveach Unit M-03A well, PTD 224-070, issued by the AOGCC on August 29, 2024. A public hearing on the matter has been scheduled for November 5, 2024, at 10:00 a.m. The hearing, which may be changed to full virtual, if necessary, will be held in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501. The audio call-in information is (907) 202-7104 Conference ID: 300 538 19#. Anyone who wishes to participate remotely using MS Teams video conference should contact Ms. Coldiron at least two business days before the scheduled public hearing to request an invitation for the MS Teams. In addition, written comments regarding this matter may be submitted to the AOGCC, at 333 west 7th Avenue, Anchorage, AK 99501 or samantha.coldiron@alaska.gov. Comments must be received no later than the conclusion of the November 5, 2024, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact Samantha Coldiron, at (907) 793-1223, no later than October 29, 2024. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.09.17 13:26:40 -08'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.09.17 13:43:27 -08'00' From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Public Hearing Notice (Mustang) Date:Tuesday, September 17, 2024 1:51:10 PM Attachments:OTH-24-025 Public Hearing Notice SMU M-03A.pdf Mustang Holding, LLC (Mustang), by letter dated September 6, 2024, filed a request for hearing pursuant to 20 AAC 25.535(d) with the Alaska Oil and Gas Conservation Commission (AOGCC) regarding the Decision and Order (Other Order 214) for the Southern Miluveach Unit M-03A well, PTD 224-070, issued by the AOGCC on August 29, 2024. Samantha Coldiron AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v 4 Mustang Holding LLC 301 Calista Court, Suite 103 Anchorage, AK 99518 Tel. (907) 865 5800 Fax (907) 339 9961 MustangHolding September 6, 2024 Mrs. Jessie Chmielowski & Mr. Greg Wilson Alaska Oil and Gas Conservation Commission 333 West 7th Ave., Suite 100 Anchorage, Alaska 99501 RE: Docket Number: OTH-24-025 Other Order 214 Failure to notify of changes to approved permit for Southern Miluveach Unit well M-03A (PTD 224-070) Dear Commissioners, This letter is in response to the Decision and Order dated August 29, 2024 and received by Mustang Holding LLC via email on September 3, 2024. Request for Hearing Mustang Holding LLC respectfully requests a hearing pursuant to 20 AAC 25.535(d), 20 AAC 25.540, and the Reconsideration and Appeal Notice instructions. If there is any further information needed to schedule a hearing, please let us know. Sincerely, Dr. Harry Bockmeulen Chief Operating Officer By Samantha Coldiron at 3:51 pm, Sep 06, 2024 3 CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Blake Ardrey To:Rixse, Melvin G (OGC) Subject:Docket Number OTH-24-024 Date:Wednesday, July 31, 2024 3:25:01 PM You don't often get email from bardrey@glacieroil.com. Learn why this is important Good Afternoon Mel, CIE has submitted a response to the NOV received (OTH-24-024). As part of that response we would like to request an informal meeting with AOGCC staff to discuss the content of the NOV and our response. We are available Thursday and Friday morning or early next week. The response was submitted this afternoon to Samantha. If you would like I would be happy to send a copy to you as well directly for review prior to any meeting. Thank you, Blake Ardrey 2 Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov July 26, 2024 CERTIFIED MAIL – RETURN RECEIPT REQUESTED 7017 2400 0000 5648 0961 Blake Ardrey Drilling Manager Mustang Holding, LLC 301 Calista Ct. Ste. 103 Anchorage, AK 99518 Re: Docket Number: OTH-24-025 Failure to Notify of Changes to Approved Permit Southern Miluveach Unit M-03A (PTD 2240700) Dear Mr. Ardrey: Pursuant to 20 AAC 25.535, the Alaska Oil and Gas Conservation Commission (AOGCC) hereby notifies Mustang Holding, LLC (Mustang) of a proposed enforcement action. Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(1)). Mustang has violated the provisions of 20 AAC 25.507 (“Change of an approved program”) while performing open hole drilling operations at Southern Miluveach Unit (SMU) M-03A. Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)). Development well SMU M-03A was drilled in July 2024. The Permit-to-Drill – approved by the AOGCC on June 24, 2024 – required a gamma ray sonde at bit measurement to assure drilling would not enter the Kuparuk sand. The Mustang Drilling Engineer sent an email to AOGCC on July 11, 2024 at 4:57 PM stating the following: I just tried calling and didn’t get through so I’m writing to let you know that on the intermediate hole section for M-03A we switched out the intermediate BHA from to a [sic] motor to ensure we could get kicked off from the cement plug below the surface casing shoe. The motor assembly has the gamma sensor 75’ behind the bit. The PTD states that “gamma at bit” is required for drilling the intermediate section. My understanding from our conversations is that “gamma at bit” was added to the permit to avoid drilling into the top of the Kuparuk. Since we are not using a RSS for this hole section, we will accomplish the same goal by using the top of the Kalubik in the prior M-03 intermediate wellbore as the final marker. Docket Number: OTH-24-025 Notice of Proposed Enforcement July 26, 2024 Page 2 of 3 Per 20 AAC 25.507 an operator may not undertake a change to an approved program or activity without AOGCC approval. Paragraph (a) of 20 AAC 25.507 further describes the information that must be submitted to AOGCC. To make a change, the well’s current condition and proposed change must be provided to AOGCC for review and approval. Investigation by AOGCC included a review of well records and correspondence regarding the gamma ray at bit requirements that are clearly documented as conditions of approval on the Permit to Drill, Form 10-401. AOGCC’s investigation concluded that Mustang failed to obtain approval for drilling the intermediate hole section without a gamma ray sonde at bit. Changes to approved programs require submission and AOGCC approval of an Application for Sundry Approvals, Form 10-403. Proposed Action (20 AAC 25.535(b)(3)). For violating 20 AAC 25.507 the AOGCC intends to impose a civil penalty on Mustang under Alaska Statutes 31.05.150(a) in the amount of $50,000 for drilling intermediate hole section without gamma ray at bit measurement on SMU M-03A.1 In addition to the imposed civil penalty, AOGCC intends to require Mustang to provide a detailed written explanation that describes how Mustang intends to prevent recurrence of this violation. Rights and Liabilities (20 AAC 25.535(b)(4)) Within 15 days after receipt of this notification – unless the AOGCC, in its discretion, grants an extension for good cause shown – Mustang may file with the AOGCC a written response that concurs in whole or in part with the proposed action described herein, requests informal review, or requests a hearing under 20 AAC 25.540. If a timely response is not filed, the proposed action will be deemed accepted by default. If informal review is requested, the AOGCC will provide Mustang an opportunity to submit documentary material and make a written or oral statement. If Mustang disagrees with the AOGCC’s proposed decision or order after that review, it may file a written request for a hearing within 10 days after the proposed decision or order is issued. If such a request is not filed within that 10-day period, the proposed decision or order will become final on the 11th day after it was issued. If such a request is timely filed, the AOGCC will hold its decision in abeyance and schedule a hearing. If Mustang does not concur in the proposed action described herein, and the AOGCC finds that Mustang violated a provision of AS 31.05, 20 AAC 25, or an AOGCC order, permit or other approval, then the AOGCC may take any action authorized by the applicable law including ordering one or more of the following: (i) corrective action; (ii) suspension or revocation of a permit or other approval; and (iii) imposition of penalties under AS 31.05.150. In taking action after an informal review or hearing, the AOGCC is not limited to ordering the proposed action described herein, as long as Mustang received reasonable notice and opportunity to be heard with 1 AS 31.05.150(g) requires AOGCC to consider nine criteria in setting the amount of a civil penalty. The proposed amount is a $50,000 initial penalty. Docket Number: OTH-24-025 Notice of Proposed Enforcement July 26, 2024 Page 3 of 3 respect to the AOGCC’s action. Any action described herein or taken after an informal review or hearing does not limit the action the AOGCC may take under AS 31.05.160. Sincerely, Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner cc: Phoebe Brooks AOGCC Inspectors Mel Rixse Josh Tempel, Fairweather (Josh.Tempel@fairweather.com) Michael Duncan, Fairweather (Michael.Duncan@fairweather.com) Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.07.26 13:51:52 -08'00' Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.07.26 14:13:46 -08'00' 1 From:Davies, Stephen F (OGC) To:Dewhurst, Andrew D (OGC) Subject:RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Date:Wednesday, June 19, 2024 4:17:00 PM Attachments:image002.png image003.png Andy, Maybe we should clarify that continuous monitoring and recording of measurements will be used for both sections of holes. Cheers From: Josh Tempel <josh.tempel@fairweather.com> Sent: Wednesday, June 19, 2024 3:33 PM To: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Andy, We will be using a gas chromatograph for continuous gas monitoring in both the intermediate and production hole sections. Regards, Josh From: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Sent: Wednesday, June 19, 2024 3:08 PM To: Josh Tempel <josh.tempel@fairweather.com> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, One thing I forgot to ask before, related to the Iceberg topic: are you planning to have continuous gas monitoring by depth (similar to what is used in a standard mudlogging unit) through the production hole? Andy From: Josh Tempel <josh.tempel@fairweather.com> Sent: Wednesday, June 19, 2024 2:19 PM To: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: FW: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Hi Andy, Thank you for the quick response, and for progressing the complimentary NT-1A sundry. 1. 3276psig is the reservoir pressure from the M-03A PTD which is based off more recent Kuparuk wells drilled in the area. 2. Please use the submitted 10.3ppg in the Kuparuk. 3. Anytime MPD is in use, back pressure will be used to provide a minimum of 0.2ppg overbalance. When MPD is not in use then static mud weight will provide a minimum of 0.2ppg overbalance. 4. Yes, please keep the seismic confidential. Thank you for asking. In addition to email, please always feel free to give me/us a call for any quick clarification questions. Regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US From: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Sent: Tuesday, June 18, 2024 2:14 PM To: Josh Tempel <josh.tempel@fairweather.com> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, Thank you for this information. Regarding isolating the Iceberg, we agree; no decision will be made regarding significant hydrocarbon until after reviewing the logs. Thank you for the detailed description of the 2012 DST. This explains what the historical ~12 ppg EMW anticipated pressures were based on. I was also able to find the approved Sundry (323-323) for re-entering the North Tarn-1A well. From that Sundry application, I saw that the anticipated reservoir pressure was stated as 3,276 psig @ 6,106’TVD. That is a little lower than the ~3,320 psi bottom hole pressure from the 2017 well test (from the graphic you provided). Would you explain where the 3,276 psig value came from and confirm I am reading the 2017 value correctly? I had written from our last meeting that the 2017 NT- 1A test resulted in a 10.6-10.8 ppg EMW for the Kuparuk C. Would you confirm that range? Do you still think the M-03A will see 10.3 ppg in the Kuparuk or a higher 10.6-10.8 range? Finally, would you confirm that the plan will be to drill with a fluid program overbalanced to pore pressure? CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. Andy PS: Would you like us to mark the seismic image provided in the previous email as confidential? From: Josh Tempel <josh.tempel@fairweather.com> Sent: Tuesday, June 18, 2024 10:09 AM To: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Good morning Andrew, Following up on the requested information from our meeting on June 11, 2024 regarding the M-03A PTD. 1. Iceberg Formation Analysis Let’s plan on a two-stage cement job so you know we mean to work with you, but please keep an open mind as we haven’t seen the logs yet. If the drilling logs indicate a significant hydrocarbon bearing zone is present then Mustang Holding will use a stage collar to cement from 100’ below to 100’ above the Iceberg formation. Additionally, please find the data you requested below showing the Iceberg formation on seismic. 2. Bottom hole pressures based on the two well tests performed (2012 and 2017) 2012 analysis indicates the initial static bottom hole reservoir pressure in NT1A was 3840psi (~3650 at the gauge depth) and at the time was assumed to be in direct communication with Conoco’s 2M injectors. Please see the below interpretation from 2012 as well as a comparison of the 2012 and 2017 bottom hole pressures showing lower pressures in 2017 than in 2012 indicating communication. Currently, Finnex has submitted a sundry request to remove the suspended status of the NT-1A and to both pull the plug and obtain current static bottom hole pressures. To mitigate the potential for either taking a kick (higher than expected pressure) or inducing a well control situation (breathing and losses), Finnex plans to analyze the NT-1A SBHP data and submit a final pore pressure determination prior to drilling the production section of M-03A. 2012 Flow Test North Tarn lA Well Test Analysis Early Production Test Period The production test from North Tarn 1A was separated into three sections. The first early period represented 2 -3 hours of flow. This initial flow was erratic and the fluids produced were dirty and mixed with solids. The well bore was designed with a downhole pressure/ temperature gauge approximately 450 MD feet above the perforated interval. The static pressure at the gauge was greater than 3650psi, indicating an initial reservoir pressure in the range of 3840psi. A normal water gradient applied to sand at this depth would result in an initial pressure of 2650psi. The Kuparuk oil field, discovered in 1969, is reported to have been over-pressured at 3150psi @6200'TVD datum (AOGCC Pool Statistics, Kuparuk River Unit, Kuparuk River oil pool).The original difference in over pressure, at the Kuparuk field, is 450psi over a normal water gradient. This value is significantly less over pressure than the 1190psi delta (water gradient versus actual downhole pressure) realized in North Tarn 1A. The significantly over-pressured results of North Tarn lA indicate the Kuparuk C sand is in pressure communication with the Kuparuk C sand to the east at Kuparuk River Unit (KRU) 2M pad. The KRU 2M pad has active injection support in the A and C sands. Regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570301 Calista Court | Anchorage, AK 99518 | US CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Josh Tempel To:Dewhurst, Andrew D (OGC) Cc:Rixse, Melvin G (OGC); Davies, Stephen F (OGC); Guhl, Meredith D (OGC); Roby, David S (OGC); Blake Ardrey; Michael Duncan Subject:RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Date:Wednesday, June 19, 2024 10:13:58 PM Attachments:image001.png image002.png No Tarn 1A Comparing 15 min data for Gauges 1 and 2.xlsx Hi Andy, Thank you and the rest of the team for taking time to meet this afternoon. Following up on our meeting: 1. Below are the ppg interpretations connected to the NT-1A 2012 and 2017 well tests. a. 2012 Gauge Data from Well Test / Interpolation i. Max Buildup Pressure = 3657psi ii. (3657 + 161)@6106’ TVD = 12.02ppg b. 2017 Gauge Data from Well Test / Interpolation (digital data attached) i. Max Buildup Pressure = 3327psi ii. (3327 + 161)@6106’ TVD = 10.99ppg c. Supporting Info i. Top Perforation Depth = 6130’ MD / 6106’ TVD ii. Gauge Depth = 5676’ MD / 5652’ TVD iii. Gauge to Top Perf = 454’ TVD iv. Assumed oil density = 6.8ppg v. Pressure from Oil Column = 161psi 2. Until updated SBHPs are obtained on NT-1A, the current best estimate for the Kuparuk pressure is 10.3ppg based off the most recent offsets. 3. Our current belief is the Kuparuk reservoir at Mustang pad is in some form of pressure communication with the surrounding leases and has resulted in pressure depletion at Mustang. 4. Based on today’s conversation, we plan to maintain mud weights above pore pressure while drilling M-03A. a. And as discussed, we also look forward to continuing the conversation on using MPD with a lower than pore pressure mud system for future wells at Mustang pad. With the right controls in place, we believe this combination has the potential to be a significantly safer way to drill in this area. As always, please feel free to call if needed. Regards, Josh From: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Sent: Tuesday, June 18, 2024 2:14 PM To: Josh Tempel <josh.tempel@fairweather.com> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, Thank you for this information. Regarding isolating the Iceberg, we agree; no decision will be made regarding significant hydrocarbon until after reviewing the logs. Thank you for the detailed description of the 2012 DST. This explains what the historical ~12 ppg EMW anticipated pressures were based on. I was also able to find the approved Sundry (323-323) for re-entering the North Tarn-1A well. From that Sundry application, I saw that the anticipated reservoir pressure was stated as 3,276 psig @ 6,106’TVD. That is a little lower than the ~3,320 psi bottom hole pressure from the 2017 well test (from the graphic you provided). Would you explain where the 3,276 psig value came from and confirm I am reading the 2017 value correctly? I had written from our last meeting that the 2017 NT- 1A test resulted in a 10.6-10.8 ppg EMW for the Kuparuk C. Would you confirm that range? Do you still think the M-03A will see 10.3 ppg in the Kuparuk or a higher 10.6-10.8 range? Finally, would you confirm that the plan will be to drill with a fluid program overbalanced to pore pressure? Andy PS: Would you like us to mark the seismic image provided in the previous email as confidential? From: Josh Tempel <josh.tempel@fairweather.com> Sent: Tuesday, June 18, 2024 10:09 AM To: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Good morning Andrew, Following up on the requested information from our meeting on June 11, 2024 regarding the M-03A PTD. 1. Iceberg Formation Analysis Let’s plan on a two-stage cement job so you know we mean to work with you, but please keep an open mind as we haven’t seen the logs yet. If the drilling logs indicate a significant hydrocarbon bearing zone is present then Mustang Holding will use a stage collar to cement from 100’ below to 100’ above the Iceberg formation. Additionally, please find the data you requested below showing the Iceberg formation on seismic. 2. Bottom hole pressures based on the two well tests performed (2012 and 2017) 2012 analysis indicates the initial static bottom hole reservoir pressure in NT1A was 3840psi (~3650 at the gauge depth) and at the time was assumed to be in direct communication with Conoco’s 2M injectors. Please see the below interpretation from 2012 as well as a comparison of the 2012 and 2017 bottom hole pressures showing lower pressures in 2017 than in 2012 indicating communication. Currently, Finnex has submitted a sundry request to remove the suspended status of the NT-1A and to both pull the plug and obtain current static bottom hole pressures. To mitigate the potential for either taking a kick (higher than expected pressure) or inducing a well control situation (breathing and losses), Finnex plans to analyze the NT-1A SBHP data and submit a final pore pressure determination prior to drilling the production section of M-03A. 2012 Flow Test North Tarn lA Well Test Analysis Early Production Test Period The production test from North Tarn 1A was separated into three sections. The first early period represented 2 -3 hours of flow. This initial flow was erratic and the fluids produced were dirty and mixed with solids. The well bore was designed with a downhole pressure/ temperature gauge approximately 450 MD feet above the perforated interval. The static pressure at the gauge was greater than 3650psi, indicating an initial reservoir pressure in the range of 3840psi. A normal water gradient applied to sand at this depth would result in an initial pressure of 2650psi. The Kuparuk oil field, discovered in 1969, is reported to have been over-pressured at 3150psi @6200'TVD datum (AOGCC Pool Statistics, Kuparuk River Unit, Kuparuk River oil pool).The original difference in over pressure, at the Kuparuk field, is 450psi over a normal water gradient. This value is significantly less over pressure than the 1190psi delta (water gradient versus actual downhole pressure) realized in North Tarn 1A. The significantly over-pressured results of North Tarn lA indicate the Kuparuk C sand is in pressure communication with the Kuparuk C sand to the east at Kuparuk River Unit (KRU) 2M pad. The KRU 2M pad has active injection support in the A and C sands. Regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US From:Rixse, Melvin G (OGC) To:Davies, Stephen F (OGC); Dewhurst, Andrew D (OGC) Cc:Guhl, Meredith D (OGC); Roby, David S (OGC); McLellan, Bryan J (OGC) Subject:RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Date:Thursday, June 20, 2024 8:53:27 AM Attachments:image004.png image006.png image007.png From their current PTD: Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). From: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Sent: Wednesday, June 19, 2024 3:30 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Maybe it would be clearest to add something like this to the conditions of approval and also include within the cover letter: During drilling and casing operations, drilling mud shall have static weight greater than expected pore pressure. Cheers, Steve From: Josh Tempel <josh.tempel@fairweather.com> Sent: Wednesday, June 19, 2024 3:11 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Hi Mel and Andy, Do you have time for a quick phone conversation? Thanks, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US From: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Sent: Wednesday, June 19, 2024 2:59 PM To: Josh Tempel <josh.tempel@fairweather.com>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com>; bryan.mclellan <bryan.mclellan@alaska.gov> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, Does this imply you plan to drill with a mud weight less than pore pressure? Mustang is NOT approved to drill with an underbalanced mud system that utilizes MPD to maintain overbalance. Mustang is approved to drill with a mud system that utilizes MPD to maintain constant BHP with a mud weight above expected pore pressure. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Wednesday, June 19, 2024 2:19 PM To: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: FW: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Hi Andy, Thank you for the quick response, and for progressing the complimentary NT-1A sundry. 1. 3276psig is the reservoir pressure from the M-03A PTD which is based off more recent Kuparuk wells drilled in the area. 2. Please use the submitted 10.3ppg in the Kuparuk. 3. Anytime MPD is in use, back pressure will be used to provide a minimum of 0.2ppg overbalance. When MPD is not in use then static mud weight will provide a minimum of 0.2ppg overbalance. 4. Yes, please keep the seismic confidential. Thank you for asking. In addition to email, please always feel free to give me/us a call for any quick clarification questions. Regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US From: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Sent: Tuesday, June 18, 2024 2:14 PM To: Josh Tempel <josh.tempel@fairweather.com> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: RE: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, Thank you for this information. Regarding isolating the Iceberg, we agree; no decision will be made regarding significant hydrocarbon until after reviewing the logs. Thank you for the detailed description of the 2012 DST. This explains what the historical ~12 ppg EMW anticipated pressures were based on. I was also able to find the approved Sundry (323-323) for re-entering the North Tarn-1A well. From that Sundry application, I saw that the anticipated reservoir pressure was stated as 3,276 psig @ 6,106’TVD. That is a little lower than the ~3,320 psi bottom hole pressure from the 2017 well test (from the graphic you provided). Would you explain where the 3,276 psig value came from and confirm I am reading the 2017 value correctly? I had written from our last meeting that the 2017 NT- 1A test resulted in a 10.6-10.8 ppg EMW for the Kuparuk C. Would you confirm that range? Do you still think the M-03A will see 10.3 ppg in the Kuparuk or a higher 10.6-10.8 range? Finally, would you confirm that the plan will be to drill with a fluid program overbalanced to pore pressure? Andy PS: Would you like us to mark the seismic image provided in the previous email as confidential? From: Josh Tempel <josh.tempel@fairweather.com> Sent: Tuesday, June 18, 2024 10:09 AM To: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Guhl, Meredith D (OGC) <meredith.guhl@alaska.gov>; Roby, David S (OGC) <dave.roby@alaska.gov>; Blake Ardrey <blake.ardrey@fairweather.com>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: SMU M-03A PTD - Follow up to questions for June 11, 2024 meeting. Good morning Andrew, Following up on the requested information from our meeting on June 11, 2024 regarding the M-03A PTD. 1. Iceberg Formation Analysis Let’s plan on a two-stage cement job so you know we mean to work with you, but please keep an open mind as we haven’t seen the logs yet. If the drilling logs indicate a significant hydrocarbon bearing zone is present then Mustang Holding will use a stage collar to cement from 100’ below to 100’ above the Iceberg formation. Additionally, please find the data you requested below showing the Iceberg formation on seismic. 2. Bottom hole pressures based on the two well tests performed (2012 and 2017) 2012 analysis indicates the initial static bottom hole reservoir pressure in NT1A was 3840psi (~3650 at the gauge depth) and at the time was assumed to be in direct communication with Conoco’s 2M injectors. Please see the below interpretation from 2012 as well as a comparison of the 2012 and 2017 bottom hole pressures showing lower pressures in 2017 than in 2012 indicating communication. Currently, Finnex has submitted a sundry request to remove the suspended status of the NT-1A and to both pull the plug and obtain current static bottom hole pressures. To mitigate the potential for either taking a kick (higher than expected pressure) or inducing a well control situation (breathing and losses), Finnex plans to analyze the NT-1A SBHP data and submit a final pore pressure determination prior to drilling the production section of M-03A. 2012 Flow Test North Tarn lA Well Test Analysis Early Production Test Period The production test from North Tarn 1A was separated into three sections. The first early period represented 2 -3 hours of flow. This initial flow was erratic and the fluids produced were dirty and mixed with solids. The well bore was designed with a downhole pressure/ temperature gauge approximately 450 MD feet above the perforated interval. The static pressure at the gauge was greater than 3650psi, indicating an initial reservoir pressure in the range of 3840psi. A normal water gradient applied to sand at this depth would result in an initial pressure of 2650psi. The Kuparuk oil field, discovered in 1969, is reported to have been over-pressured at 3150psi @6200'TVD datum (AOGCC Pool Statistics, Kuparuk River Unit, Kuparuk River oil pool).The original difference in over pressure, at the Kuparuk field, is 450psi over a normal water gradient. This value is significantly less over pressure than the 1190psi delta (water gradient versus actual downhole pressure) realized in North Tarn 1A. The significantly over-pressured results of North Tarn lA indicate the Kuparuk C sand is in pressure communication with the Kuparuk C sand to the east at Kuparuk River Unit (KRU) 2M pad. The KRU 2M pad has active injection support in the A and C sands. Regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Josh Tempel To:Rixse, Melvin G (OGC); McLellan, Bryan J (OGC) Cc:Dewhurst, Andrew D (OGC); Michael Duncan; Blake Ardrey Subject:M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Date:Thursday, July 11, 2024 4:57:23 PM Attachments:image002.png Good afternoon Mel, I just tried calling and didn’t get through so I’m writing to let you know that on the intermediate hole section for M-03A we switched out the intermediate BHA from to a motor to ensure we could get kicked off from the cement plug below the surface casing shoe. The motor assembly has the gamma sensor 75’ behind the bit. The PTD states that “gamma at bit” is required for drilling the intermediate section. My understanding from our conversations is that “gamma at bit” was added to the permit to avoid drilling into the top of the Kuparuk. Since we are not using a RSS for this hole section, we will accomplish the same goal by using the top of the Kalubik in the prior M-03 intermediate wellbore as the final marker. Please see below. Best regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US From:Gabriela Keeton To:Davies, Stephen F (OGC); Michael Duncan Cc:Josh Tempel; Rixse, Melvin G (OGC); Dewhurst, Andrew D (OGC) Subject:RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 5:52:11 PM You don't often get email from gabriela.k@thyssenusa.com. Learn why this is important Hi Steve, Yes, the M03-A is in the same fault block as the M-03 – in fact due to our very close proximity to the M03 (less than 100ft), there is very little uncertainty when it comes to the progged tops – they should come almost identical to the M03. The thickness below our key marker beds (HRZ, Kalubik and K1 marker – the high gamma spike you mentioned) is very consistent throughout – we see that in seismic as well as nearby wells. The thickness between the K1 (the marker you mentioned) and the top of the Kup C is approximately 75’ – and again there is no indication on seismic that we are to expect any faults in that section. Let me know if you have any other questions, Gaby From: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Sent: Friday, July 12, 2024 5:36 PM To: Michael Duncan <Michael.Duncan@fairweather.com>; Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Michael, Gabby: Will M-03A intersect the Kuparuk sand within the same fault block as the M-03 well? Are there any faults in this vicinity? Is the thickness of section beneath the base of the HRZ and the top of the Kup sand uniform throughout this area? What is the anticipated thickness of the shale between the top of the Kup sand and the prominent gamma-ray/resistivity marker that lies at about 5935’ TVD subsea in M-03? Thanks, Steve Davies AOGCC From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 5:19 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Gabriela <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Subject: Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Gabby - Thank you for discussing with me, could you please respond. Michael CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the Sent from my iPhone On Jul 12, 2024, at 5:13 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Mr. Davies, I will have an answer from our geologic team right away. Michael Sent from my iPhone On Jul 12, 2024, at 4:57 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC <image002.jpg> CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure sender and know the content is safe. Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M-03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh <image001.jpg> Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US <image001.jpg> <image002.jpg> CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Rixse, Melvin G (OGC) To:Chmielowski, Jessie L C (OGC); Wilson, Greg C (OGC); Dewhurst, Andrew D (OGC); Davies, Stephen F (OGC) Cc:Regg, James B (OGC); McLellan, Bryan J (OGC) Subject:FW: SMU M-03A (PTD-224-070) Date:Friday, July 12, 2024 4:42:22 PM Attachments:M-03A Intermediate Section.docx Steve is reviewing for a TVD depth that we would approve them drilling to. More to come. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 4:39 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Subject: SMU M-03A (PTD-224-070) Mr. Rixse - Please see attached write up. Thank you for your consideration. Michael Sent from my iPhone From:Davies, Stephen F (OGC) To:Michael Duncan; Gabriela Cc:Josh Tempel; Rixse, Melvin G (OGC); Dewhurst, Andrew D (OGC) Subject:RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 5:36:00 PM Michael, Gabby: Will M-03A intersect the Kuparuk sand within the same fault block as the M-03 well? Are there any faults in this vicinity? Is the thickness of section beneath the base of the HRZ and the top of the Kup sand uniform throughout this area? What is the anticipated thickness of the shale between the top of the Kup sand and the prominent gamma-ray/resistivity marker that lies at about 5935’ TVD subsea in M-03? Thanks, Steve Davies AOGCC From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 5:19 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Gabriela <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Subject: Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Gabby - Thank you for discussing with me, could you please respond. Michael Sent from my iPhone On Jul 12, 2024, at 5:13 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Mr. Davies, I will have an answer from our geologic team right away. Michael Sent from my iPhone On Jul 12, 2024, at 4:57 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC <image002.jpg> CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M-03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh <image001.jpg> Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US <image001.jpg> <image002.jpg> You don't often get email from gabriela.k@thyssenusa.com. Learn why this is important From:Davies, Stephen F (OGC) To:Gabriela Keeton Cc:Josh Tempel; Rixse, Melvin G (OGC); Dewhurst, Andrew D (OGC); Michael Duncan Subject:RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 7:04:00 PM Thank you for the quick response, Gaby. Steve Davies AOGCC From: Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Sent: Friday, July 12, 2024 5:52 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Hi Steve, Yes, the M03-A is in the same fault block as the M-03 – in fact due to our very close proximity to the M03 (less than 100ft), there is very little uncertainty when it comes to the progged tops – they should come almost identical to the M03. The thickness below our key marker beds (HRZ, Kalubik and K1 marker – the high gamma spike you mentioned) is very consistent throughout – we see that in seismic as well as nearby wells. The thickness between the K1 (the marker you mentioned) and the top of the Kup C is approximately 75’ – and again there is no indication on seismic that we are to expect any faults in that section. Let me know if you have any other questions, Gaby From: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Sent: Friday, July 12, 2024 5:36 PM To: Michael Duncan <Michael.Duncan@fairweather.com>; Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Michael, Gabby: Will M-03A intersect the Kuparuk sand within the same fault block as the M-03 well? Are there any faults in this vicinity? Is the thickness of section beneath the base of the HRZ and the top of the Kup sand uniform throughout this area? What is the anticipated thickness of the shale between the top of the Kup sand and the prominent gamma-ray/resistivity marker that lies at about 5935’ TVD subsea in M-03? Thanks, Steve Davies AOGCC From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 5:19 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Gabriela <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Subject: Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Gabby - Thank you for discussing with me, could you please respond. Michael Sent from my iPhone On Jul 12, 2024, at 5:13 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Mr. Davies, I will have an answer from our geologic team right away. Michael Sent from my iPhone On Jul 12, 2024, at 4:57 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC <image002.jpg> CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e- mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M-03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh <image001.jpg> Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US <image001.jpg> <image002.jpg> From:Michael Duncan To:Davies, Stephen F (OGC); Gabriela Cc:Josh Tempel; Rixse, Melvin G (OGC) Subject:Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 5:35:21 PM Mr. Davies - To address the pore pressure question, we view the Kalubik as the top seal and frac barrier for the Kuparuk reservoir. We have TD’d the wells around it with mud weights in the Kalubik of 9.6 in the North Tarn 1A, and 10.7 in the M-03. Though I do not have a direct measure of Kalubik pore pressure, I do not have an indication of Kalubik inflow even at mud weights at, near, or below what we intend to use (10.5). Thank you Michael Duncan 817-240-3865 Sent from my iPhone On Jul 12, 2024, at 5:19 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Gabby - Thank you for discussing with me, could you please respond. Michael Sent from my iPhone On Jul 12, 2024, at 5:13 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Mr. Davies, I will have an answer from our geologic team right away. Michael Sent from my iPhone On Jul 12, 2024, at 4:57 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpectedattachments or links.] Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC <image002.jpg> CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M-03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh <image001.jpg> Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US <image001.jpg> <image002.jpg> You don't often get email from gabriela.k@thyssenusa.com. Learn why this is important From:Davies, Stephen F (OGC) To:Rixse, Melvin G (OGC); Chmielowski, Jessie L C (OGC); Wilson, Greg C (OGC) Cc:Dewhurst, Andrew D (OGC); Regg, James B (OGC); McLellan, Bryan J (OGC) Subject:RE: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Date:Friday, July 12, 2024 7:45:00 PM Attachments:image001.png image002.png Mel, Jessie, and Greg: Given that the operator has flagrantly chosen to ignore AOGCC’s condition of approval that explicitly requires the drill string include gamma-ray-at-bit, continued drilling with the gamma ray sensor 75’ behind the bit increases the risk of this low-kick-tolerance operation but is probably still safe. My recommendation is that the operator be allowed to drill no deeper than 50 true vertical feet above the forecast top of the Kuparuk reservoir sand or 50 true vertical feet above forecast top of the anticipated zone of increased pressure (if different), whichever is shallower. If this 50’ safety buffer is unacceptable to the operator, then gamma-ray-at-bit must be employed. I also recommend issuing a Notice of Violation with attendant fine for the operator’s “act, then ask forgiveness” approach as the gamma-ray-at-bit requirement was clearly stated on the approved 401 form. Background: Based on my quick review of the sparse well data in Geographix, I concur with the operator’s assessment (below) that the geologic section beneath the very prominent K1 gamma ray / resistivity marker appears to be of relatively uniform thickness in this area (about 70’ - 75’). Coincidentally, this is exactly the separation distance of the gamma ray sensor from the drill bit. Another useful, but somewhat less reliable, marker in this area is the base of the HRZ shale as depicted on the gamma ray curve. Using this less reliable marker, the operator should be able to avoid drilling into the Kup reservoir prior to setting casing as the thickness between the base of the HRZ shale and the K1 marker also appears to be relatively uniform. However, given the level of uncertainty due to the few wells in the area, I recommend allowing drilling no closer than 50 true vertical feet to the forecast top of the reservoir or expected pressure increase (if different), whichever is shallower. Since it’s Friday night, please call me at 907-717-8229 if you have any questions. Thanks, Steve From: Gabriela Keeton Gabriela.K@ThyssenUSA.com Sent: Friday, July 12, 2024 5:52 PM To: Davies, Stephen F (OGC) steve.davies@alaska.gov; Michael Duncan Michael.Duncan@fairweather.com Cc: Josh Tempel josh.tempel@fairweather.com; Rixse, Melvin G (OGC) melvin.rixse@alaska.gov; Dewhurst, Andrew D (OGC) andrew.dewhurst@alaska.gov Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Hi Steve, Yes, the M03-A is in the same fault block as the M-03 – in fact due to our very close proximity to the M03 (less than 100ft), there is very little uncertainty when it comes to the progged tops – they should come almost identical to the M03. The thickness below our key marker beds (HRZ, Kalubik and K1 marker – the high gamma spike you mentioned) is very consistent throughout – we see that in seismic as well as nearby wells. The thickness between the K1 (the marker you mentioned) and the top of the Kup C is approximately 75’ – and again there is no indication on seismic that we are to expect any faults in that section. Let me know if you have any other questions, Gaby From: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Sent: Friday, July 12, 2024 5:36 PM To: Michael Duncan <Michael.Duncan@fairweather.com>; Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Michael, Gabby: Will M-03A intersect the Kuparuk sand within the same fault block as the M-03 well? Are there any faults in this vicinity? Is the thickness of section beneath the base of the HRZ and the top of the Kup sand uniform throughout this area? What is the anticipated thickness of the shale between the top of the Kup sand and the prominent gamma-ray/resistivity marker that lies at about 5935’ TVD subsea in M-03? Thanks, Steve Davies AOGCC From: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Sent: Friday, July 12, 2024 4:49 PM To: Chmielowski, Jessie L C (OGC) <jessie.chmielowski@alaska.gov>; Wilson, Greg C (OGC) <greg.wilson@alaska.gov> Cc: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; Regg, James B (OGC) <jim.regg@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Subject: RE: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Jessie, I received Mustang’s FIT of 13.0 ppg and their latest expected pore pressure of the Kuparuk (if they would drill into it) of 10.6 ppge. If they need to be 0.2 ppg over pore pressure and took a 0.5 ppg gas kick of 11.3 ppg by my calculator they have a 9.5 bbl kick tolerance. This is why we stated they would drill with gamma at bit, so they would have assurance they would not penetrate the Kuparuk. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). From: Rixse, Melvin G (OGC) Sent: Friday, July 12, 2024 3:43 PM To: Chmielowski, Jessie L C (OGC) <jessie.chmielowski@alaska.gov>; Wilson, Greg C (OGC) <greg.wilson@alaska.gov> Subject: FW: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. FYI. Possible violation for Mustang. Mel From: Rixse, Melvin G (OGC) Sent: Friday, July 12, 2024 3:41 PM To: 'Josh Tempel' <josh.tempel@fairweather.com> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com>; Blake Ardrey <blake.ardrey@fairweather.com>; Regg, James B (OGC) <jim.regg@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Subject: RE: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Josh, Please do not violate the conditions of approval as clearly stated in the approved Permit to Drill regarding gamma-ray at bit: Gamma ray at bit was required to assure Mustang does not drill 8-3/4” OH into the Kuparuk oil pool. As discussed in meetings and emails, this hole section has a very small kick tolerance with possible high variability to overpressure in the Kuparuk Oil Pool. If Mustang Holdings LLC would like to submit a 10-403 for review for the possibility of a change to the approved program, please do so. I cannot offer a verbal approval without the full AOGCC review. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). cc. Andy Dewhurst, Michael Duncan, Blake Ardrey, Jim Regg, Steve Davies, Bryan McLellan From: Josh Tempel <josh.tempel@fairweather.com> Sent: Thursday, July 11, 2024 4:57 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com>; Blake Ardrey <blake.ardrey@fairweather.com> Subject: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Good afternoon Mel, I just tried calling and didn’t get through so I’m writing to let you know that on the intermediate hole section for M-03A we switched out the intermediate BHA from to a motor to ensure we could get kicked off from the cement plug below the surface casing shoe. The motor assembly has the gamma sensor 75’ behind the bit. The PTD states that “gamma at bit” is required for drilling the intermediate section. My understanding from our conversations is that “gamma at bit” was added to the permit to avoid drilling into the top of the Kuparuk. Since we are not using a RSS for this hole section, we will accomplish the same goal by using the top of the Kalubik in the prior M-03 intermediate wellbore as the final marker. Please see below. Best regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570301 Calista Court | Anchorage, AK 99518 | US CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Rixse, Melvin G (OGC) To:Josh Tempel Cc:Dewhurst, Andrew D (OGC); Michael Duncan; Blake Ardrey; Regg, James B (OGC); Davies, Stephen F (OGC); McLellan, Bryan J (OGC) Subject:RE: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Date:Friday, July 12, 2024 3:41:32 PM Attachments:image002.png image001.png Josh, Please do not violate the conditions of approval as clearly stated in the approved Permit to Drill regarding gamma-ray at bit: Gamma ray at bit was required to assure Mustang does not drill 8-3/4” OH into the Kuparuk oil pool. As discussed in meetings and emails, this hole section has a very small kick tolerance with possible high variability to overpressure in the Kuparuk Oil Pool. If Mustang Holdings LLC would like to submit a 10-403 for review for the possibility of a change to the approved program, please do so. I cannot offer a verbal approval without the full AOGCC review. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). cc. Andy Dewhurst, Michael Duncan, Blake Ardrey, Jim Regg, Steve Davies, Bryan McLellan From: Josh Tempel <josh.tempel@fairweather.com> Sent: Thursday, July 11, 2024 4:57 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com>; Blake Ardrey <blake.ardrey@fairweather.com> Subject: M-03A (PTD 224-070) Intermediate Drilling BHA and Casing Point Good afternoon Mel, I just tried calling and didn’t get through so I’m writing to let you know that on the intermediate hole section for M-03A we switched out the intermediate BHA from to a motor to ensure we could get kicked off from the cement plug below the surface casing shoe. The motor assembly has the gamma sensor 75’ behind the bit. The PTD states that “gamma at bit” is required for drilling the intermediate section. My understanding from our conversations is that “gamma at bit” was added to the permit to avoid drilling into the top of the Kuparuk. Since we are not using a RSS for this hole section, we will accomplish the same goal by using the top of the Kalubik in the prior M-03 intermediate wellbore as the final marker. Please see below. Best regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Davies, Stephen F (OGC) To:Josh Tempel Cc:Rixse, Melvin G (OGC); michael.duncan@fairweather.com Subject:SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 4:57:00 PM Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M- 03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US You don't often get email from gabriela.k@thyssenusa.com. Learn why this is important From:Davies, Stephen F (OGC) To:Gabriela Keeton Cc:Josh Tempel; Rixse, Melvin G (OGC); Dewhurst, Andrew D (OGC); Michael Duncan Subject:RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 7:04:00 PM Thank you for the quick response, Gaby. Steve Davies AOGCC From: Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Sent: Friday, July 12, 2024 5:52 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Hi Steve, Yes, the M03-A is in the same fault block as the M-03 – in fact due to our very close proximity to the M03 (less than 100ft), there is very little uncertainty when it comes to the progged tops – they should come almost identical to the M03. The thickness below our key marker beds (HRZ, Kalubik and K1 marker – the high gamma spike you mentioned) is very consistent throughout – we see that in seismic as well as nearby wells. The thickness between the K1 (the marker you mentioned) and the top of the Kup C is approximately 75’ – and again there is no indication on seismic that we are to expect any faults in that section. Let me know if you have any other questions, Gaby From: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Sent: Friday, July 12, 2024 5:36 PM To: Michael Duncan <Michael.Duncan@fairweather.com>; Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Michael, Gabby: Will M-03A intersect the Kuparuk sand within the same fault block as the M-03 well? Are there any faults in this vicinity? Is the thickness of section beneath the base of the HRZ and the top of the Kup sand uniform throughout this area? What is the anticipated thickness of the shale between the top of the Kup sand and the prominent gamma-ray/resistivity marker that lies at about 5935’ TVD subsea in M-03? Thanks, Steve Davies AOGCC From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 5:19 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Gabriela <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Subject: Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Gabby - Thank you for discussing with me, could you please respond. Michael Sent from my iPhone On Jul 12, 2024, at 5:13 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Mr. Davies, I will have an answer from our geologic team right away. Michael Sent from my iPhone On Jul 12, 2024, at 4:57 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC <image002.jpg> CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M-03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh <image001.jpg> Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US <image001.jpg> <image002.jpg> From:Davies, Stephen F (OGC) To:Michael Duncan Cc:Rixse, Melvin G (OGC); Dewhurst, Andrew D (OGC) Subject:RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Date:Friday, July 12, 2024 5:48:00 PM Michael, To prevent confusion, Mel is AOGCC’s point of contact for any decisions regarding the well. I’ll await the response from your geology team and will discuss my recommendations with Mel and the Commissioners. Thanks, Steve Davies AOGCC From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 5:43 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Subject: Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty No problem. I do not have a good phone number for you outside of the office. I can be reached at 817.240.3865 Sent from my iPhone On Jul 12, 2024, at 5:40 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpected attachments or links.] Michael, I’m going to be offline for about an hour while I head home from the office. I’ll be back online about 7:00 PM Anchorage time and work remotely. Thanks, Steve Davies AOGCC From: Davies, Stephen F (OGC) Sent: Friday, July 12, 2024 5:36 PM To: Michael Duncan <Michael.Duncan@fairweather.com>; Gabriela <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Michael, Gabby: Will M-03A intersect the Kuparuk sand within the same fault block as the M-03 well? Are there any faults in this vicinity? Is the thickness of section beneath the base of the HRZ and the top of the Kup sand uniform throughout this area? What is the anticipated thickness of the shale between the top of the Kup sand and the prominent gamma-ray/resistivity marker that lies at about 5935’ TVD subsea in M-03? Thanks, Steve Davies AOGCC From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Friday, July 12, 2024 5:19 PM To: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Gabriela <Gabriela.K@ThyssenUSA.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Subject: Re: SMU M-03A (PTD 224-070) - Geologic Prognosis Uncertainty Gabby - Thank you for discussing with me, could you please respond. Michael Sent from my iPhone On Jul 12, 2024, at 5:13 PM, Michael Duncan <Michael.Duncan@fairweather.com> wrote: Mr. Davies, I will have an answer from our geologic team right away. Michael Sent from my iPhone On Jul 12, 2024, at 4:57 PM, Davies, Stephen F (OGC) <steve.davies@alaska.gov> wrote: [External Mail - CAUTION: Do not open unexpected attachments or links.] Josh, I haven’t worked directly on this Permit to Drill. What is Fairweather’s range of uncertainty regarding the geologic prognosis for the top of the Kup reservoir in this well? Is pressure expected to begin building prior to the top of the reservoir sand (i.e., in the Kup D or Kalubik shale)? If so, at what MD / TVD? Regards and Be Well, Steve Davies Senior Petroleum Geologist AOGCC <image002.jpg> CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From: Josh Tempel <josh.tempel@fairweather.com> Sent: Friday, July 12, 2024 4:19 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov>; Michael Duncan <Michael.Duncan@fairweather.com> Subject: M-03A (PTD 224-070) North Tarn 1A Pressure Hi Mel, Please find the North Tarn 1A pressure information attached for drilling the production section of M-03A. This reservoir pressure is 3378psi which equates to a 10.6ppg mud weight at the top of the Kuparuk C sand (6130’ tvd). Regards, Josh <image001.jpg> Josh Tempel | Drilling EngineerFairweather, LLC Cell (907) 891-5930 Receptionist (907) 346-3247 Ext. 52570 301 Calista Court | Anchorage, AK 99518 | US <image001.jpg> <image002.jpg> From:Rixse, Melvin G (OGC) To:Michael Duncan Cc:Josh Tempel; Ardrey, Blake - Fairweather Drilling Manager; Davies, Stephen F (OGC); Dewhurst, Andrew D (OGC); McLellan, Bryan J (OGC); Regg, James B (OGC) Subject:SMU M-03A PTD 224-070 8-3/4" Open Hole Maximum Depth Date:Saturday, July 13, 2024 12:17:10 PM Michael, Given that Mustang Holding LLC decided to ignore a condition of approval on well SMU M-03A (PTD 224-070) that explicitly requires the drill string include gamma-ray-at-bit on a well with suboptimal kick tolerance, AOGCC will limit the drilling of the 8-3/4” open hole section to drill no deeper than 50 true vertical feet above the forecasted top of the Kuparuk reservoir sand or 50 true vertical feet above the forecasted top of the anticipated zone of increased pressure (if different), whichever is shallower. If this 50’ safety buffer is unacceptable to the operator, then gamma-ray-at-bit must be employed. The AOGCC geologist agrees (after reviewing offset data) with the operator’s assessment that the geologic section beneath the very prominent K1 gamma ray / resistivity marker appears to be of relatively uniform thickness in this area (about 70’ - 75’). This adds some certainty, but not conclusive predictability to the thickness and depth of the overburden to the Kuparuk reservoir sand. AOGCC will require the following: 1. Well control drills be performed and documented by each of the Doyon 141 drilling crews as drilling approach 500’ MD of the top of the Kuparuk Oil Pool 2. Communication to rig personnel and the MPD team that the current kick tolerance may be below a 10 bbl influx, with the current FIT and the expected reservoir pressure of the Kuparuk reservoir sand. 3. Communication to the rig crew for increased awareness to the possibility of swabbing during tripping which may result in circulating drill pipe while POOH. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). cc. Josh Tempel, Blake Ardrey, Steve Davies, Bryan McLellan, Jim Regg, Andy Dewhurst CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Davies, Stephen F (OGC) To:Gabriela Keeton Cc:Daniel W Hughes; Majid Jourabchi; Rixse, Melvin G (OGC) Subject:RE: SMU M-03A PTD 224-070 8-3/4" Open Hole Maximum Depth Date:Monday, July 15, 2024 3:04:00 PM Attachments:image002.png Thank you Gabriella. Regards and Be Well, Steve Davies AOGCC From: Gabriela Keeton <Gabriela.K@ThyssenUSA.com> Sent: Monday, July 15, 2024 3:03 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Davies, Stephen F (OGC) <steve.davies@alaska.gov> Cc: Daniel W Hughes <dwhughes@thyssenusa.com>; Majid Jourabchi <majid@thyssenusa.com> Subject: RE: SMU M-03A PTD 224-070 8-3/4" Open Hole Maximum Depth Melvin, Just wanted to reach out as the operator of the M03-A well to let you know we reached our intermediate TD at 6059’TVD, 57’ above our progged Kup C top with no significant issues. We, as Finnex/Mustang Holding want to personally apologize for any miscommunications that were had – We take safety in our operations very seriously and very much value all of AOGCC’s input. Please know that have taken steps to ensure this type of miscommunication doesn’t happen again. If at any point you or your team have any technical questions, please feel free to reach out. Gabriela Gabriela I. Keeton Geologist Thyssen Petroleum | Finnex Alaska 917 Heights Blvd Houston, TX O: 907 865 5820 | C: 631 946 0163 From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Saturday, July 13, 2024 1:45 PM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Josh Tempel <josh.tempel@fairweather.com>; Blake Ardrey <blake.ardrey@fairweather.com>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; bryan.mclellan <bryan.mclellan@alaska.gov>; jim.regg <jim.regg@alaska.gov>; Gabriela Keeton <Gabriela.K@ThyssenUSA.com>; Jerry Otto <jerry.otto@fairweather.com> Subject: RE: SMU M-03A PTD 224-070 8-3/4" Open Hole Maximum Depth Mr. Rixse – Thank you for the response. We understand that the limit that the AOGCC requires, of drilling no deeper than 50 true vertical depth above the forecasted top of the Kuparuk. Signs have already been posted both in the driller console and in the doghouse stating the all stop limit. I see and understand the other conditions listed below, 1) the well control drill, 2) the communication with the MPD team, and 3) communication with the rig crew of swabbing awareness. We believe these conditions are safe, practical and fair. Steps are underway and I will confirm the completion of each step with you. Thank you, Michael Duncan 817.240.3865 From: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Sent: Saturday, July 13, 2024 12:17 PM To: Michael Duncan <Michael.Duncan@fairweather.com> Cc: Josh Tempel <josh.tempel@fairweather.com>; Blake Ardrey <blake.ardrey@fairweather.com>; Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov>; bryan.mclellan <bryan.mclellan@alaska.gov>; jim.regg <jim.regg@alaska.gov> Subject: SMU M-03A PTD 224-070 8-3/4" Open Hole Maximum Depth [External Mail - CAUTION: Do not open unexpected attachments orlinks.] Michael, Given that Mustang Holding LLC decided to ignore a condition of approval on well SMU M-03A (PTD 224-070) that explicitly requires the drill string include gamma-ray-at-bit on a well with suboptimal kick tolerance, AOGCC will limit the drilling of the 8-3/4” open hole section to drill no deeper than 50 true vertical feet above the forecasted top of the Kuparuk reservoir sand or 50 true vertical feet above the forecasted top of the anticipated zone of increased pressure (if different), whichever is shallower. If this 50’ safety buffer is unacceptable to the operator, then gamma-ray-at-bit must be employed. The AOGCC geologist agrees (after reviewing offset data) with the operator’s assessment that the geologic section beneath the very prominent K1 gamma ray / resistivity marker appears to be of relatively uniform thickness in this area (about 70’ - 75’). This adds some certainty, but not conclusive predictability to the thickness and depth of the overburden to the Kuparuk reservoir sand. AOGCC will require the following: 1. Well control drills be performed and documented by each of the Doyon 141 drilling crews as drilling approach 500’ MD of the top of the Kuparuk Oil Pool 2. Communication to rig personnel and the MPD team that the current kick tolerance may be below a 10 bbl influx, with the current FIT and the expected reservoir pressure of the Kuparuk reservoir sand. 3. Communication to the rig crew for increased awareness to the possibility of swabbing during tripping which may result in circulating drill pipe while POOH. Mel Rixse Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). cc. Josh Tempel, Blake Ardrey, Steve Davies, Bryan McLellan, Jim Regg, Andy Dewhurst 19 Phone 1 7.25.24 Phone 2 Tool Pusher (N): 25 API No: PTD: Field: 10 7,794 ft 7.9.24 7,794 ft 28.0 19 25.5 P.B.T.D.:23.3 From To Hrs iadc 0:00 2:00 2:00 23 2:00 5:30 3:30 12 5:30 10:30 5:00 6A 10:30 11:30 1:00 5 11:30 14:30 3:00 6A 14:30 15:30 1:00 5 15:30 16:00 0:30 23 16:00 17:00 1:00 5 17:00 17:30 0:30 12 17:30 18:00 0:30 23 18:00 19:00 1:00 23 19:00 21:30 2:30 23 21:30 22:00 0:30 12 22:00 23:00 1:00 5 23:00 24:00 1:00 12 0:00 0:00 0:00 0:00 0:00 0:00 Bit # Size Depth Depth Feet Bit hrs K-revs Avg. Nozzles TFA [in] In Out Drilled Run 50 rpm sq in RR#1 8.75 PDC 2572 6790 28 6.3 Time Drill 80 RR#2 8.75 PDC 2655 6791 4136 #3 6 pdc 6791 7794 1003 24.1 50 60 5x11 0.464 Time Depth MW PV YP Mud Gas Readings: 95 Used Available 9:00 6791 9 8 18 Rig:1266 15:00 6791 9.4 9 17 Total: 12:00 6791 9.4 8 16 Pump Type Liner Sz SPM Eff % Flow SPP Pump Depth SPM SPP MW 1 Triplex 6 98 1 7795 20 580 10.6 2 Triplex 6 98 2 7795 30 820 10.6 MD TVD Inc. AZ.OD ID Conn. Length 5910 5279.59 34.2 167.16 6005 5357.59 36.09 163.77 6098 5433.08 34.7 162.79 6195 5514.89 31.23 167.85 Supervisor (D): Austin Varnado 985-515-1199 Tool Pusher (D): Andrew Yochum Report Date: Daily Drilling Report Well Name:SMU M-03A Rig/Contractor: 141 Doyon Well Type: Development Report #: Supervisor (N): Jerry Otto 907-252-5297 Shane Michal Camp on location 50-103-20705-01-00 224-070 Southern Miluveach unit camp Off location KB-GL, ft Prog FTD md: Budget Amount: Actual Days since Spud: RKB,7 CS, LDS TD @ 06:00 Daily Cost: Planned Days (Spud to TD): GL, ft Progress: Cum. Cost: Spud Date: 7.9.24 Project Number:RKB,TBG. LDS Hole Size: 42" 12-1/4" 8-3/4" 6" Last BOP Test: 7/20/24 8/3/24 OD/Weight 20" / 91.5# 9-5/8" / 40# 7" / 29# 4.5"x 3.5" Last Safety Mtg: 7.23.24 AM/PM Casing: Conductor Surface Intermediate Production Next BOP TEST: 7.8.24 Actual Depth: 80' 2565 6779 FIRE DRILL 7.24.24 Plan Depth: 110' MD 2565' 6800 7350/7756 Last Rig Insp.: 24 hour Summary:RIH with 3.5x4.5 liner assembly. Circulate, Pump cement, set packer, R/D cement equipment, POOH Weather Gen Conditions: mostly sunny Shoe Test: N/A 13 14.1 24 hour Forecast: P/U 2 3/8 stinger Make clean/out and scraprer run, Displace Kalshield with Brine, POOH L/D Drill Pipe Wind Direction: SW AM Temp:50 Ops @ 06:00 hrs: P/U 2 3/8 stinger for clean out run Phase: Wind Speed:15 RIH with 3.5" 9.2# JFE Bear T/574' MD. Optimium Trq 3870. Continue with 4.5" 12.6# JFE Bear T/1173', P/U liner running tool as per baker rep[ and RIH T/1218'. Fill pipe every 10 joints. Monitering displacment on pit 5. TIH with DP out of derrick F/1218' T/3115'. Circulate B/U at 4bpm 330psi. Continue TIH F/3115' T/6780' Stage pumps and get circulation rates at the shoe. 1BPM-300PSI, 2BPM-400PSI, 3BPM-500PSI, 4BPM-650PSI, 5BPM- 870PSI, 6BPM-950PSI. CBU 1440 sks. Pumps on P/U-115K S/O-95K, NO Pumps P/U-115K S/O-90K Continue RIH with liner on 4" DP F/6780' T7794, Pump 20bbls every 300' 2.5BPM, 350PSI Circulate stage pumps up F/1BPM T/6BPM starting Pressure 300PSI fFnal 950PSI Space out for cement job HSE Events:None PM Temp: 72 Operational Details (06:00 - 06:00) R/U Doyon CSG equipment. PJSM for running liner. UN-Sting from hanger, circulate excess cement out and mudpush out EST 10 Bbls of Cement Re-turns to surface R/D cement lines and circulating head, Blow down all lines and related equipment SPR @ 7794 TVD 7001 MP#1 20SPM= 690PSI 30 SPM=900 PSI MP#2 20 SPM=590PSI 30SPM=900 PSIMW= 10.7 Continue to circulate, @ 4 BPM, PJSM with cementer, Swap over to SBLcementers, Test Lines to 4500PSI, Mix and pump 22Bbls @ 12 PPG Mud Push, Batch and pump 33 Bbls 15.8 Cement at 4Bbls Per Minute, ( Full Returns) Drop Plug, chase by 12Bbls of water and 70 Bbls of Drilling mud (Did not Bump Plug) Numerous attempts and techniques to set Packer and hanger, Set packer R/U Test Back side @1000 PSI hold 5 minutes ( Good Test) JV6775 1/2/CT/S/X/I/WT/TD JV6775 JN9697 1-2-CT-S-X-I-WT-TD Total Hours 24 Comments: Bit Type: Ser # Avg ROP IADC Dull Condition Mud Properties Gas Details Fuel Vis 45 Background (Avg) % 95 9,012 Pump Data Slow Pump Rates Model Continental Emsco-1300 Continental Emsco-1300 Surveys BHA 45 Connection % 100 46 Trip Gas % Volume Delivered:0 Item 3.5 x4.5 Liner MustangHolding 6290 5597.21 27.5 175.22 6385 5682.48 25.6 176.02 6478 5766.80 24.0 181.36 6573 5854.43 22.6 181.03 6667 5941.50 19.2 176.98 6747 6018.14 17.8 176.55 6791 6059.77 17.8 176.55 6812 6079.00 18.3 175.12 6907 6170.00 19.9 181.91 7003 6260.00 18.7 184.66 7097 6349.00 21.3 185.02 7190 6434.00 23.9 184.45 7284 6521.00 22.7 185.02 7473 6609.00 21.0 184.45 7567 6697.00 19.8 185.19 7663 6786.00 18.9 185.74 7757 6966.00 18.0 187.28 0.00Total Length (ft): From:Michael Duncan To:Davies, Stephen F (OGC) Cc:Rixse, Melvin G (OGC); Dewhurst, Andrew D (OGC); Josh Tempel; Majid Jourabchi; Muammer Alboamemah Subject:RE: SMU M-03A (PTD 224-070) - Frac Containment Date:Thursday, August 22, 2024 12:15:28 PM Attachments:image001.png image002.png 7.25.24 Mustang Morning Report.pdf Fairweather Mustang M-03 Production Liner Cement Plot & Report.pdf Steve – Requested reports are attached. It was just one day for the cementing. On the daily report, here is the section discussing the cement: Thank you, Michael Duncan 817.240.3865 From: Davies, Stephen F (OGC) <steve.davies@alaska.gov> Sent: Thursday, August 22, 2024 8:29 AM To: Michael Duncan <Michael.Duncan@fairweather.com> Cc: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: SMU M-03A (PTD 224-070) - Frac Containment [External Mail - CAUTION: Do not open unexpected attachments or links.] Michael, I’m reviewing this along with Mel. Could you please provide copies of all cementing reports for this well along with operations summaries/reports for those days that cementing operations were conducted? Thanks and Be Well, Steve Davies AOGCC From: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Sent: Thursday, August 22, 2024 8:17 AM To: Michael Duncan <Michael.Duncan@fairweather.com> Cc: Davies, Stephen F (OGC) <steve.davies@alaska.gov>; Dewhurst, Andrew D (OGC) <andrew.dewhurst@alaska.gov> Subject: RE: SMU M-03A frac containment Michael, Just want to be sure 6940 is cement outside the liner. Please confirm. Mel Rixse CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. Senior Petroleum Engineer (PE) Alaska Oil and Gas Conservation Commission 907-793-1231 Office 907-297-8474 Cell CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Mel Rixse at (907-793-1231 ) or (Melvin.Rixse@alaska.gov). From: Michael Duncan <Michael.Duncan@fairweather.com> Sent: Wednesday, August 21, 2024 11:42 AM To: Rixse, Melvin G (OGC) <melvin.rixse@alaska.gov> Cc: Majid Jourabchi <majid@thyssenusa.com>; David Ross <david.ross@ak-dc.com>; Susan Childs <susan.childs@fairweather.com> Subject: SMU M-03A frac containment Mel – Attached is the wellbore schematic and the CBL for the M-03A well. We believe that there is sufficient frac containment to reliably fracture stimulate the Kuparuk sands, as indicated in the PowerPoint slide attached. Please note, there is an earlier draft of the WBS in the Cement Bond Log, the attached WBS is updated and indicates the cement as seen on the CBL. We seek your early thoughts and a discussion prior to writing up the frac sundry. Thank you, Michael Duncan 817.240.3865 07/24/2024 23:07:48 Cementing Job Report CemCAT v1.7 Well Mustang M-03 Field Kaparuk Engineer Steve Bruning Country United States Client Fairweather SIR No. A.1058399.01.02 Job Type Production Liner Job Date 07-24-2024 Time 07/24/2024 14:29:41 07/24/2024 19:57:49 hh:mm:ss 14:29:41 14:40:06 16:32:05 16:47:00 17:02:00 17:17:00 17:32:00 17:47:00 18:02:00 18:17:00 18:32:00 18:47:00 19:02:00 19:17:00 19:32:00 19:47:00 19:57:49 Pressure PSI 0.00 1000 2000 3000 4000 5000 Rate B/M 0.00 2.0 4.0 6.0 8.0 10.0 Density LB/G 0.00 4.0 8.0 12.0 16.0 20.0 WHP PSI 0.00 1000 2000 3000 4000 5000 Messages Rate Check =Good Start Job Held Safety Meeting Flush Lines 5blls H2o Pressure Test Lines Low Psi Test = 500psi Test= Succesful High Psi Test=4500psi Test= Succesful Reset Total, Vol = 4.66 bbl Start Batch MudPUSH Start Pumping Spacer 20bbls MP @ 12.00ppg Take Wet Sample Sample =12ppg End Pumping Spacer End Mud Wash Out Tub Reset Total, Vol = 23.96 bbl Start Batch Mixing Slurry Bring to Wieght 15.8ppg Reset Total, Vol = 0.00 bbl Start Pumping Tail Slurry 33bbls @ 15.8ppg Take WetDry Sample Sample = 15.8ppg Good Returns End Tail Slurry Drop Top Plug Start Displacement 12bbls Fresh H2o Reset Total, Vol = 33.76 bbl End Displacement Rig Pumps To Displace 70bbls Mud Total Displacment 82bbls Max -84bbls Did Not Bump Top Plug Plug Did Not Bump End Rig Displacement End Job Customer Fairweather Job Number A.1058399.01.02 Well Mustang M-03 Location (legal) Kaparuk Schlumberger Location Prudhoe Other Job Start Jul/24/2024 Field Kaparuk Formation Name/Type Dirty-Sandstone Deviation deg Bit Size 6.0 in Well MD 7791.0 ft Well TVD 6982.0 ft County Colville State/Province Alaska Well Master API/UWI BHP psi BHST 189 degF BHCT 128 degF Pore Press. Gradient lb/gal Rig Name Doyon 141 Drilled For Oil Service Via Land Offshore Zone N/A Well Class Old Well Type Development Drilling Fluid Type Bentonite Max. Density 10.70 lb/gal Plastic Viscosity cP Service Line Cementing Job Type Production Liner Max. Allowed Tub. Press psi Max. Allowed Ann. Press psi WH Connection Service Instructions Cement 4.5" Production Liner Treat Down Casing Displacement 82.0 bbl Packer Type Packer Depth ft Tubing Vol. bbl Casing Vol. bbl Annular Vol. bbl Openhole Vol. 24.0 bbl Casing/Tubing Secured X 1 Hole Vol. Circulated prior to Cement X Casing Tools Squeeze Job Lift Pressure 200 psi Shoe Type Guide Squeeze Type Pipe Rotated Pipe Reciprocated Shoe Depth 7791.0 ft Tool Type No. Centralizers 31 Top Plugs 1 Bottom Plugs 0 Stage Tool Type Hanger Tool Depth ft Cement Head Type Single Stage Tool Depth 6577.3 ft Tail Pipe Size in Job Scheduled For Jul/24/2024 20:00 Arrived on Location Jul/24/2024 18:20 Leave Location Jul/24/2024 20:00 Collar Type Float Tail Pipe Depth ft Collar Depth 7177.5 ft Sqz. Total Vol. bbl Casing/Liner Depth, ft Size, in Weight, lb/ft Grade Thread 7217.0 4.5 13.5 N/A BUTT 0.0 0.0 0.0 Tubing/Drill Pipe T/D Depth, ft Size, in Weight, lb/ft Grade Thread D 6581.0 4.0 14.0 N/A N/A T 7791.0 3.5 9.3 N/A N/A Perforations/Open Hole Top, ft Bottom, ft shot/ft No. of Shots Total Interval ft ft ft ft ft Diameter in ft ft Cementing Service Report Date Time 24-hr clock Treating Pressure PSI Flow Rate B/M Volume BBL STG_VOL BBL Message 07/24/2024 14:29:41 -89 0.0 0.0 0.0 Started Acquisition 07/24/2024 14:31:21 -12 0.0 0.0 0.0 07/24/2024 14:33:01 -69 0.0 2.8 2.8 07/24/2024 14:34:30 -57 0.0 2.8 2.8 Rate Check =Good 07/24/2024 14:34:35 -57 0.0 2.8 2.8 Start Job 07/24/2024 14:34:41 -58 3.0 3.1 3.1 07/24/2024 14:36:21 -92 0.0 5.7 5.7 07/24/2024 14:38:01 -92 0.0 5.7 5.7 07/24/2024 14:39:41 -91 0.0 5.7 5.7 07/24/2024 14:41:21 -92 0.0 5.7 5.7 07/24/2024 14:43:01 -93 0.0 5.7 5.7 07/24/2024 14:44:41 -92 0.0 5.7 5.7 07/24/2024 14:46:21 -92 0.0 5.7 5.7 07/24/2024 14:48:01 -92 0.0 5.7 5.7 07/24/2024 14:49:41 -93 0.0 5.7 5.7 07/24/2024 14:51:21 -93 0.0 0.0 0.0 07/24/2024 14:53:01 -93 0.0 0.0 0.0 07/24/2024 14:54:41 -93 0.0 0.0 0.0 07/24/2024 14:56:21 -93 0.0 0.0 0.0 07/24/2024 14:58:01 -93 0.0 0.0 0.0 07/24/2024 14:59:41 -94 0.0 0.0 0.0 Page 1 of 6 Customer Fairweather Job Number A.1058399.01.02 Well Mustang M-03 Location (legal) Kaparuk Schlumberger Location Prudhoe Other Job Start Jul/24/2024 Field Kaparuk Formation Name/Type Dirty-Sandstone Deviation deg Bit Size 6.0 in Well MD 7791.0 ft Well TVD 6982.0 ft County Colville State/Province Alaska Well Master API/UWI BHP psi BHST 189 degF BHCT 128 degF Pore Press. Gradient lb/gal Rig Name Doyon 141 Drilled For Oil Service Via Land Offshore Zone N/A Well Class Old Well Type Development Drilling Fluid Type Bentonite Max. Density 10.70 lb/gal Plastic Viscosity cP Service Line Cementing Job Type Production Liner Max. Allowed Tub. Press psi Max. Allowed Ann. Press psi WH Connection Service Instructions Cement 4.5" Production Liner Treat Down Casing Displacement 82.0 bbl Packer Type Packer Depth ft Tubing Vol. bbl Casing Vol. bbl Annular Vol. bbl Openhole Vol. 24.0 bbl Casing/Tubing Secured X 1 Hole Vol. Circulated prior to Cement X Casing Tools Squeeze Job Lift Pressure 200 psi Shoe Type Guide Squeeze Type Pipe Rotated Pipe Reciprocated Shoe Depth 7791.0 ft Tool Type No. Centralizers 31 Top Plugs 1 Bottom Plugs 0 Stage Tool Type Hanger Tool Depth ft Cement Head Type Single Stage Tool Depth 6577.3 ft Tail Pipe Size in Job Scheduled For Jul/24/2024 20:00 Arrived on Location Jul/24/2024 18:20 Leave Location Jul/24/2024 20:00 Collar Type Float Tail Pipe Depth ft Collar Depth 7177.5 ft Sqz. Total Vol. bbl Casing/Liner Depth, ft Size, in Weight, lb/ft Grade Thread 7217.0 4.5 13.5 N/A BUTT 0.0 0.0 0.0 Tubing/Drill Pipe T/D Depth, ft Size, in Weight, lb/ft Grade Thread D 6581.0 4.0 14.0 N/A N/A T 7791.0 3.5 9.3 N/A N/A Perforations/Open Hole Top, ft Bottom, ft shot/ft No. of Shots Total Interval ft ft ft ft ft Diameter in ft ft Cementing Service Report Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Date Time 24-hr clock Treating Pressure PSI Flow Rate B/M Volume BBL STG_VOL BBL Message 07/24/2024 15:03:01 -93 0.0 0.0 0.0 07/24/2024 15:04:41 -94 0.0 0.0 0.0 07/24/2024 15:06:21 -93 0.0 0.0 0.0 07/24/2024 15:08:01 -94 0.0 0.0 0.0 07/24/2024 15:09:41 -94 0.0 0.0 0.0 07/24/2024 15:11:21 -93 0.0 0.0 0.0 07/24/2024 15:13:01 -93 0.0 0.0 0.0 07/24/2024 15:14:41 -94 0.0 0.0 0.0 07/24/2024 15:16:21 -94 0.0 0.0 0.0 07/24/2024 15:18:01 -94 0.0 0.0 0.0 07/24/2024 15:19:41 -94 0.0 0.0 0.0 07/24/2024 15:21:21 -94 0.0 0.0 0.0 07/24/2024 15:23:01 -94 0.0 0.0 0.0 07/24/2024 15:24:41 -94 0.0 0.0 0.0 07/24/2024 15:26:21 -94 0.0 0.0 0.0 07/24/2024 15:28:01 -94 0.0 0.0 0.0 07/24/2024 15:29:41 -94 0.0 0.0 0.0 07/24/2024 15:31:21 -94 0.0 0.0 0.0 07/24/2024 15:33:01 -94 0.0 0.0 0.0 07/24/2024 15:34:41 -94 0.0 0.0 0.0 07/24/2024 15:36:21 -94 0.0 0.0 0.0 07/24/2024 15:38:01 -94 0.0 0.0 0.0 07/24/2024 15:39:41 -94 0.0 0.0 0.0 07/24/2024 15:41:21 -94 0.0 0.0 0.0 07/24/2024 15:43:01 -93 0.0 0.0 0.0 07/24/2024 15:44:41 -94 0.0 0.0 0.0 07/24/2024 15:46:21 -94 0.0 0.0 0.0 07/24/2024 15:48:01 -94 0.0 0.0 0.0 07/24/2024 15:49:41 -94 0.0 0.0 0.0 07/24/2024 15:51:21 -94 0.0 0.0 0.0 07/24/2024 15:53:01 -94 0.0 0.0 0.0 07/24/2024 15:54:41 -94 0.0 0.0 0.0 07/24/2024 15:56:21 -94 0.0 0.0 0.0 07/24/2024 15:58:01 -94 0.0 0.0 0.0 07/24/2024 15:59:41 -94 0.0 0.0 0.0 07/24/2024 16:01:21 -94 0.0 0.0 0.0 07/24/2024 16:03:01 -94 0.0 0.0 0.0 07/24/2024 16:04:41 -95 0.0 0.0 0.0 07/24/2024 16:06:21 -94 0.0 0.0 0.0 07/24/2024 16:08:01 -94 0.0 0.0 0.0 07/24/2024 16:09:41 -94 0.0 0.0 0.0 07/24/2024 16:11:21 -94 0.0 0.0 0.0 07/24/2024 16:13:01 -93 0.0 0.0 0.0 07/24/2024 16:14:41 -94 0.0 0.0 0.0 07/24/2024 16:16:21 -94 0.0 0.0 0.0 07/24/2024 16:18:01 -94 0.0 0.0 0.0 07/24/2024 16:19:41 -94 0.0 0.0 0.0 07/24/2024 16:21:21 -94 0.0 0.0 0.0 07/24/2024 16:23:01 -94 0.0 0.0 0.0 07/24/2024 16:24:41 -94 0.0 0.0 0.0 07/24/2024 16:26:21 -94 0.0 0.0 0.0 07/24/2024 16:28:01 -94 0.0 0.0 0.0 07/24/2024 16:29:41 -94 0.0 0.0 0.0 07/24/2024 16:31:21 -7 0.0 0.0 0.0 Page 2 of 6 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Date Time 24-hr clock Treating Pressure PSI Flow Rate B/M Volume BBL STG_VOL BBL Message 07/24/2024 16:33:02 -10 0.0 0.0 0.0 Held Safety Meeting 07/24/2024 16:34:41 -10 0.0 0.0 0.0 07/24/2024 16:35:13 -10 0.0 0.0 0.0 Flush Lines 5blls H2o 07/24/2024 16:36:21 -11 0.0 0.0 0.0 07/24/2024 16:38:01 -12 0.0 0.0 0.0 07/24/2024 16:39:41 -14 0.0 0.0 0.0 07/24/2024 16:41:21 -14 0.0 0.0 0.0 07/24/2024 16:43:01 -14 0.0 0.0 0.0 07/24/2024 16:44:41 -15 0.0 0.0 0.0 07/24/2024 16:46:21 -16 0.0 0.0 0.0 07/24/2024 16:48:01 -16 0.0 0.0 0.0 07/24/2024 16:49:41 -17 0.0 0.0 0.0 07/24/2024 16:51:21 -17 0.0 0.0 0.0 07/24/2024 16:53:01 -17 0.0 0.0 0.0 07/24/2024 16:54:41 -12 1.1 0.3 0.3 07/24/2024 16:56:21 393 1.6 2.0 2.0 07/24/2024 16:58:01 124 0.0 4.6 4.6 07/24/2024 16:58:56 99 0.0 4.6 4.6 Pressure Test Lines 07/24/2024 16:58:59 98 0.0 4.6 4.6 Low Psi Test = 500psi 07/24/2024 16:59:41 91 0.0 4.6 4.6 07/24/2024 17:00:43 1275 0.0 4.6 4.6 Test= Succesful 07/24/2024 17:01:21 1228 0.0 4.6 4.6 07/24/2024 17:03:01 1209 0.0 4.6 4.6 07/24/2024 17:04:30 622 0.0 4.6 4.6 High Psi Test=4500psi 07/24/2024 17:04:41 643 0.0 4.6 4.6 07/24/2024 17:05:57 4352 0.0 4.6 4.6 Test= Succesful 07/24/2024 17:06:21 4328 0.0 4.6 4.6 07/24/2024 17:08:01 4285 0.0 4.7 4.7 07/24/2024 17:08:58 4197 0.0 4.7 4.7 Reset Total, Vol = 4.66 bbl 07/24/2024 17:09:23 -90 0.0 0.0 0.0 Start Batch MudPUSH 07/24/2024 17:09:29 -88 0.0 0.0 0.0 Start Pumping Spacer 07/24/2024 17:09:41 -86 0.0 0.0 0.0 07/24/2024 17:11:21 -36 0.0 0.0 0.0 20bbls MP @ 12.00ppg 07/24/2024 17:13:01 -7 0.0 0.0 0.0 07/24/2024 17:14:41 9 0.0 0.0 0.0 07/24/2024 17:16:21 13 0.0 0.0 0.0 07/24/2024 17:18:01 16 0.0 0.0 0.0 07/24/2024 17:19:41 19 0.0 0.0 0.0 07/24/2024 17:21:21 21 0.0 0.0 0.0 07/24/2024 17:21:56 22 0.0 0.0 0.0 Take Wet Sample 07/24/2024 17:21:57 22 0.0 0.0 0.0 Sample =12ppg 07/24/2024 17:23:01 791 3.5 2.7 2.7 07/24/2024 17:24:41 565 2.7 8.1 8.1 07/24/2024 17:26:21 534 2.8 12.7 12.7 07/24/2024 17:28:01 582 3.0 17.4 17.4 07/24/2024 17:29:41 413 2.2 22.5 22.5 07/24/2024 17:31:21 21 0.0 24.0 24.0 07/24/2024 17:33:01 -4 0.0 24.0 24.0 07/24/2024 17:33:12 -5 0.0 24.0 24.0 End Mud 07/24/2024 17:33:16 -6 0.0 24.0 24.0 Wash Out Tub 07/24/2024 17:33:24 -7 0.0 24.0 24.0 Reset Total, Vol = 23.96 bbl 07/24/2024 17:33:33 -7 0.0 0.0 0.0 Start Batch Mixing Slurry 07/24/2024 17:33:36 -7 0.0 0.0 0.0 Bring to Wieght 07/24/2024 17:34:41 -12 0.0 0.0 0.0 Page 3 of 6 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Date Time 24-hr clock Treating Pressure PSI Flow Rate B/M Volume BBL STG_VOL BBL Message 07/24/2024 17:38:01 -21 0.0 0.0 0.0 07/24/2024 17:38:21 -20 0.0 0.0 0.0 Reset Total, Vol = 0.00 bbl 07/24/2024 17:39:41 -23 0.0 0.0 0.0 07/24/2024 17:41:21 -23 0.0 0.0 0.0 07/24/2024 17:43:01 -24 0.0 0.0 0.0 07/24/2024 17:44:15 -24 0.0 0.0 0.0 Start Pumping Tail Slurry 07/24/2024 17:44:19 -24 0.0 0.0 0.0 33bbls @ 15.8ppg 07/24/2024 17:44:41 -24 0.0 0.0 0.0 07/24/2024 17:46:21 -24 0.0 0.0 0.0 07/24/2024 17:48:01 -24 0.0 0.0 0.0 07/24/2024 17:49:41 -25 0.0 0.0 0.0 07/24/2024 17:51:21 780 3.5 1.3 1.3 07/24/2024 17:51:34 744 3.5 2.1 2.1 Take WetDry Sample 07/24/2024 17:53:01 690 3.7 7.3 7.3 07/24/2024 17:54:41 529 3.8 13.5 13.5 07/24/2024 17:55:23 472 3.8 16.1 16.1 Sample = 15.8ppg 07/24/2024 17:56:21 415 3.8 19.8 19.8 07/24/2024 17:58:01 295 3.8 26.0 26.0 07/24/2024 17:59:41 188 3.8 32.3 32.3 07/24/2024 18:00:15 -59 0.0 33.8 33.8 End Tail Slurry 07/24/2024 18:00:27 -60 0.0 33.8 33.8 Drop Top Plug 07/24/2024 18:01:21 -61 0.0 33.8 33.8 07/24/2024 18:02:28 -61 0.0 33.8 33.8 Start Displacement 07/24/2024 18:02:32 -62 0.0 33.8 33.8 12bbls Fresh H2o 07/24/2024 18:02:45 -61 0.0 33.8 33.8 Reset Total, Vol = 33.76 bbl 07/24/2024 18:03:01 264 4.3 34.0 0.2 07/24/2024 18:04:41 53 4.7 42.0 8.2 07/24/2024 18:05:52 -87 0.0 45.6 11.8 End Displacement 07/24/2024 18:05:56 -88 0.0 45.6 11.8 Rig Pumps To Displace 07/24/2024 18:06:00 -88 0.0 45.6 11.8 70bbls Mud 07/24/2024 18:06:21 -89 0.0 45.6 11.8 07/24/2024 18:07:23 -90 0.0 45.6 11.8 Total Displacment 82bbls 07/24/2024 18:08:01 -91 0.0 45.6 11.8 07/24/2024 18:09:41 -91 0.0 45.6 11.8 07/24/2024 18:11:21 -90 0.0 45.6 11.8 07/24/2024 18:13:01 -90 0.0 45.6 11.8 07/24/2024 18:14:41 -89 0.0 45.6 11.8 07/24/2024 18:16:21 -55 0.0 45.6 11.8 07/24/2024 18:18:01 -101 0.0 45.6 11.8 07/24/2024 18:19:41 -103 0.0 45.6 11.8 07/24/2024 18:21:21 -102 0.0 45.6 11.8 07/24/2024 18:23:01 -102 0.0 45.6 11.8 07/24/2024 18:24:41 -102 0.0 45.6 11.8 07/24/2024 18:26:21 -102 0.0 45.6 11.8 07/24/2024 18:28:01 -102 0.0 45.6 11.8 07/24/2024 18:29:41 -102 0.0 45.6 11.8 07/24/2024 18:31:21 -102 0.0 45.6 11.8 07/24/2024 18:33:01 -102 0.0 45.6 11.8 07/24/2024 18:34:41 -102 0.0 45.6 11.8 07/24/2024 18:36:21 -101 0.0 45.6 11.8 07/24/2024 18:38:01 -102 0.0 45.6 11.8 07/24/2024 18:39:41 -101 0.0 45.6 11.8 07/24/2024 18:41:21 -101 0.0 45.6 11.8 07/24/2024 18:43:01 -24 0.0 45.6 11.8 Page 4 of 6 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Date Time 24-hr clock Treating Pressure PSI Flow Rate B/M Volume BBL STG_VOL BBL Message 07/24/2024 18:46:21 -98 0.0 45.6 11.8 07/24/2024 18:48:01 -102 0.0 45.6 11.8 07/24/2024 18:49:41 -79 0.0 45.6 11.8 07/24/2024 18:51:21 20 0.0 45.6 11.8 07/24/2024 18:53:01 15 0.0 45.6 11.8 07/24/2024 18:54:41 -103 0.0 45.6 11.8 07/24/2024 18:56:21 -102 0.0 45.6 11.8 07/24/2024 18:58:01 -103 0.0 45.6 11.8 07/24/2024 18:59:41 -103 0.0 45.6 11.8 07/24/2024 19:01:21 -103 0.0 45.6 11.8 07/24/2024 19:03:01 -102 0.0 45.6 11.8 07/24/2024 19:04:41 -102 0.0 45.6 11.8 07/24/2024 19:06:21 -61 0.0 45.6 11.8 07/24/2024 19:08:01 -102 0.0 45.6 11.8 07/24/2024 19:09:41 -101 0.0 45.6 11.8 07/24/2024 19:11:21 -101 0.0 45.6 11.8 07/24/2024 19:13:01 -103 0.0 45.6 11.8 07/24/2024 19:14:41 -103 0.0 45.6 11.8 07/24/2024 19:16:21 -100 0.0 45.6 11.8 07/24/2024 19:18:01 -41 0.0 45.6 11.8 07/24/2024 19:19:41 -102 0.0 45.6 11.8 07/24/2024 19:21:21 -103 0.0 45.6 11.8 07/24/2024 19:23:01 -92 0.0 45.6 11.8 07/24/2024 19:24:41 -82 0.0 45.6 11.8 07/24/2024 19:26:21 -81 0.0 45.6 11.8 07/24/2024 19:28:01 -80 0.0 45.6 11.8 07/24/2024 19:29:41 -80 0.0 45.6 11.8 07/24/2024 19:31:21 -81 0.0 45.6 11.8 07/24/2024 19:33:01 -99 0.0 45.6 11.8 07/24/2024 19:34:41 -100 0.0 45.6 11.8 07/24/2024 19:36:21 -97 0.0 45.6 11.8 07/24/2024 19:38:01 -101 0.0 45.6 11.8 07/24/2024 19:39:41 -101 0.0 45.6 11.8 07/24/2024 19:41:21 -102 0.0 45.6 11.8 07/24/2024 19:43:01 -101 0.0 45.6 11.8 07/24/2024 19:44:41 -100 0.0 45.6 11.8 07/24/2024 19:46:21 -100 0.0 45.6 11.8 07/24/2024 19:48:01 -100 0.0 45.6 11.8 07/24/2024 19:49:41 -99 0.0 45.6 11.8 07/24/2024 19:51:21 -100 0.0 45.6 11.8 07/24/2024 19:53:01 -100 0.0 45.6 11.8 07/24/2024 19:54:41 -100 0.0 45.6 11.8 07/24/2024 19:55:41 -100 0.0 45.6 11.8 Did Not Bump Top Plug 07/24/2024 19:55:45 -100 0.0 45.6 11.8 Plug Did Not Bump 07/24/2024 19:55:52 -101 0.0 45.6 11.8 End Rig Displacement 07/24/2024 19:56:00 -100 0.0 45.6 11.8 End Job Page 5 of 6 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02 Post Job Summary Volume of Fluid Injected, bbl N2 Maximum Rate 5.3 Average Pump Rates, bbl/min Slurry 3.0 Mud 2.8 Total Slurry 33.0 Mud 0.0 Spacer 22.0 N2 Treating Pressure Summary, psi Breakdown Fluid Maximum 4376 Final -99 Average 630 Bump Plug to Breakdown Type Volume bbl Density 10.70 lb/gal Avg. N2 Percent % Designed Slurry Volume 33.0 bbl Displacement 11.8 bbl Mix Water Temp 90 degF Cement Circulated to Surface?Volume bbl Washed Thru Perfs To ft Customer or Authorized Representative Fairweather Co Rep Schlumberger Supervisor Steve Bruning Circulation Lost Job Completed X -- Page 6 of 6 Post Job Summary Volume of Fluid Injected, bbl N2 Maximum Rate 5.3 Average Pump Rates, bbl/min Slurry 3.0 Mud 2.8 Total Slurry 33.0 Mud 0.0 Spacer 22.0 N2 Treating Pressure Summary, psi Breakdown Fluid Maximum 4376 Final -99 Average 630 Bump Plug to Breakdown Type Volume bbl Density 10.70 lb/gal Avg. N2 Percent % Designed Slurry Volume 33.0 bbl Displacement 11.8 bbl Mix Water Temp 90 degF Cement Circulated to Surface?Volume bbl Washed Thru Perfs To ft Customer or Authorized Representative Fairweather Co Rep Schlumberger Supervisor Steve Bruning Circulation Lost Job Completed X -- Well Mustang M-03 Field Kaparuk Job Start Jul/24/2024 Customer Fairweather Job Number A.1058399.01.02