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HomeMy WebLinkAboutCO 076CONSERVATION ORDER 76 Pressure Maintenance Project, Field Rules and Beneficial Use of Gas Granite Point Field Middle Kenai Oil Pool 1. July 19, 1969 Mobil Oil's letter of joint application for Granite Point waterflood hearing 2. August 15, 1969 Granite Point Field - Secondary Recovery Hearing 3. July 28, 1970 Mobil Oil's request for conversion of Pan American operated Granite Point wells to water injection 4. August 14, 1970 Pan American's application for administrative approval to convert ten wells to water injection 5. December 21, 1977 Amoco's application for spacing exception 6. December 30, 1977 Location plat 7. March 20, 1981 Amoco's application for spacing exception — Granite Point 18742 well 40 8. August 27, 1997 Unocal's proposal to amend AIO 11 and CO 53 9. May 7, 2015 Hilcorp's application for spacing exception — Granite Point State well 18742 17A 10. June 19, 2017 Hilcorp's application for spacing exception — Granite Point State Granite Point 22-13RD3 ORDERS r 40 STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Re: The motion of the Alaska Oil and Gas Conservation Com- mittee to determine if waste is occurring, to hear testi- mony on the initiation of a pressure maintenance project, the beneficial use of gas and other relevant matters; and the application of Mobil Oil Corporation and Pan American Petroleum Corporation for an order authorizing water in- jection for pressure mainten- ance or secondary recovery purposes and for the consoli- dation and revision of Con- servation Orders No. 59 and No. 60; Granite Point Field. IT APPEARING THAT: Conservation Order No. 76 Granite Point Field: Pressure Maintenance Project, Field Rules and Beneficial Use of Gas Granite Point Middle Kenai Oil Pool September 12, 1969 1. The Alaska Oil and Gas Conservation Committee moved to hold a public hearing to hear testimony by the operators of the Granite Point Field to determine if waste is occurring as a result of producing the Middle Kenai_ Pool and to hear testimony on the initiation of a pressure maintenance project for the Middle Kenai Pool, the beneficial use of gas produced as the result of crude oil production and any other matters relevant to the proper development and operation of this pool. 2. Notice of the hearing was published in the Anchorage Daily News on July 17, 1969. 3. Mobil Oil Corporation and Pan American Petroleum Corporation, as operators of the Granite Point Field, by application received July 22, 1969, petitioned the Committee for an order authorizing water injection for pres- sure maintenance or secondary recovery purposes in the Granite Point Field and for the consolidation and revision of Conservation Orders No. 59 and No. 60. 4. A public hearing was held in the City Council Chambers of the Z. J. , Loussac Library, Anchorage, Alaska, on August 15, 1969. Testimony was pres- ented in response to the motion and in support of the petition, and affected and interested parties were heard. it CONSERVATION ORDER NO. 76 Page 2 September 12, 1969 AND IT FURTHER APPEARING THAT: 1. The Middle Kenai Pool should be re -named the Granite Point Middle Kenai Oil Pool. 2. Development of the Granite Point Middle Kenai Oil Pool is essentially complete and the pool limits have been reasonably well defined. 3. The reservoir fluids are undersaturated and maximum recovery of oil will not be achieved unless some additional recovery method is used. 4. Water injectivity tests indicate the feasibility of injecting fluids into the Granite Point Middle Kenai Oil Pool to supplement the natural reservoir energy and thereby achieve increased oil recovery. 5. There is a substantial variance in permeability between crestal wells and downdip or flank wells and more than one injection pattern may be advisable. 6. Lease line injection wells should confine reservoir fluids to each operator's leases and thereby protect correlative rights. 7. The value of the additional recovery from a fluid injection project will exceed the cost of such a project. 8. The operators have increased their use of produced gas but some gas is being flared. 9. Negotiations with potential purchasers of produced gas indicate there is no market for the flared gas and the findings of Conservation Order No. 61 with respect to the Granite Point Field have not materially changed. 10. Conservation Orders No. 59 and No. 60 should be revised and consoli- dated herein. CONSERVATION ORDER NO. 76 Page 3 September 12, 1969 NOW, THEREFORE, IT IS ORDERED that the rules herein set forth apply to the following described area: Township 10 North, Range 11 West, S. M. Sections 5, 6, 7, 8, 18 and 19: All Township 10 North, Range 12 West, S. M. Sections 1, 2, 11, 12, 13, 14, 23 and 24: All Section 15: E 1/2 SE 1/4 Section 22: NE 1/4 NE 1/4, S 1/2 NE 1/4, SE 1/4, SE 1/4 SW 1/4 Township 11 North, Range 11 West, S. M. Sections 29, 30, 31 and 32: All Township 11 North, Range 12 West, S. M. Section 25: E 1/2 NE 1/4, SE 1/4 Section 35: E 1/2 Section 36: All Rule 1. Definition of Pool. The Granite Point Middle Kenai Oil Pool is defined as the accumulation of oil common to and which correlates with the accumulation found in the Mobil -Union Granite Point No. 1 well between the drilled depths of 7,725 feet and 10,800 feet. Rule 2. Spacing. (a) Not more than two completed wells shall be allowed in any govern- mental quarter section. (b) No pay opened to the well bore shall be nearer than 500 feet to any property line nor nearer than 1,000 feet to any well drilling to or capable of producing from the same pool. Rule 3. CasinR and Cementing Requirements. Surface casing must be set and cemented to a depth of at least 1600 feet. Sufficient cement must be used to circulate to the surface. The production string must be cemented with a sufficient volume of cement to extend at least 500 feet above the shoe or a volume sufficient to cover 100 feet above the top of the uppermost producing zone encountered in the well, whichever is greater. Rule 4. Bottom Hole Pressure Surveys. A key well bottom hole pressure survey shall be made upon Committee request; provided, however, such surveys shall not be required more often than twice in any calendar year. The time and length of survey, number and location of wells, datum and other details will be determined by the Committee upon consultation with the operators. CONSERVATION ORDER NO. 76 Page 4 September 12, 1969 Rule 5. Gas -Oil Ratio Tests. A gas -oil ratio test of 24 hours duration shall be made annually on each producing well. The tests will be made during the months of June and July and the results will be reported on Committee Form P-9 prior to September of each year. The requirements,of this rule will be waived if monthly reported oil and gas production is based on a gas -oil ratio test made at least every six months in each producing well. Rule 6. Pressure Maintenance Project. The injection of water for the purpose of pressure maintenance, secondary recovery or of conducting injectivity tests is hereby permitted in the Granite Point Middle Kenai Oil Pool. A semi-annual progress report detailing project operations and results shall be submitted to the Committee in January and July of each year. Rule 7. Administrative Approval. Upon request of the applicants and a showing that the affected parties have been notified of such request, the Committee may authorize the conver- sion or drilling of any well at any location, the termination or suspension of the project, or any operation reasonably designed to further the purposes of the project. Rule 8. Other Conservation Orders. Conservation Orders No. 59 and No. 60 are hereby revoked. All other Conservation Orders affecting the Granite Point Middle Kenai Oil Pool shall remain in full force and effect, except as modified hereby. DONE at Anchorage, Alaska, and dated September 12, 1969. "T ;. 1 1'7 74 lldllvwt� )A Thomas R. Marshall, Jr., Executiv Secretary Alaska Oil and Gas Conservation Committee Concurrence: '�'�Z/ , Z &"'� Homer L. Burrell, Chairman Alaska Oil and Gas Conservation Committee 0. K. Gilbreth, Jr., MdWer Alaska Oil and Gas Conservation Committee AA-7C.1 ALAS OIL A61) GAS CONSERVA710N COMITTER August 25, 1970 Re: Administrative Decision 76.1 Application to Convert 10 Wells to Water Injection, Granite Point Field Mr. R. b. Giles Pan American Petroleum Corporation Security Life building Deuver, Colorado 80202 Dear Mr. Giles. tvdministrative approval is hereby granted to convert the follmring wells to water injection in accordance with Rule 7 of Conservation Order 76. ADL 17586 Well No. 5 - 2164' FSL, 454' FEL, Section 36, TllN-1i12W, S.M. ADL 17587 Well No. 3 - 647' FSL, 729' FWL, Section 30, T11-14-R11w, S.M. ALL 18742 Well No. 6 - 2046' FSL, 590' YWL, Section 31, T11N-RllW, S.1.11. ADL 13742 Well tio. 7 - 1641' FSL, 386' FWL, Section 6, 1lUN-Rl1W, S.M. ADL 18742 Well No. 10 - 631' FNL, 517' FWL, Section 6, TlON-RllW, S.141. ADL 18742 Well No. 12 - 2185' FSL, 2110' FEE, Section 31, TlIN-RllW, S.M. ADL 18742 Well No. 13 - 1649' FNL, 2014' FWIL, Section 12, TION-R12W, S.M. ADL 18742 Wel-1 No. 16 - 631' FNL, 1390' FEL, Section 1, TlON-Rl2W, S.M. ADL 18742 Well No. 19 - 1912' F-UL, 933' TEL, Section 12, TION-F-12W, S.M. Mr. R. B. Giles -2- ,august 25, 1970 ADL 18742 Well No. 27 - 2134' FSL, 12431 FEL, Section 1, TION-RI2W, S.M. 3scerely, T'homm R. Marshall, Jr. Executive Secretary TRK:jm Division of Oil and Gas ;: " • 3001 Porcupine Drive, Anchorage, Alaska 99501 ALASKA OIL AND GAS CONSERVATION COMMITTEE July 27, 1976 4 A D M I N I S T R A T I V E APPROVAL N0.76.2 Re: Application of Amoco Production Company to drill the Granite Point State 18742 well No. 28 from Platform Anna as part of the pressure maintenance project approved by Conservation Order No. 76. Mr. George J. Ross Area Superintendent Amoco Production Company P. 0. Box 779 Anchorage, Alaska 99510 Dear Mr. Ross: On July 23, 1976, the referenced application was received which stated that the proposed well would provide improved field water injection balance in the C-8 sand. The Oil and Gas Conservation Commitee hereby authorizes the drilling of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Very truly yours, Thos. R. Marshall, Jr. Executive Secretary TRM:bJm ,r � Conser ntion ALASKA OIL AND GAS C014SERVATION COMMITTEE March 21, 1977 A O M I N I S T RA T I V E A P P R O V A L N 0. 76.3 Re: Application of Amoco Production Company to re -drill the Granite Point State 1 742 well No. 27 Redrill from Platform Anna as part of the pressure maintenance project approved by Conservation Order No. 76. r. L. A. Darsow Area Superintendent Amoco Production Company P. O. Box 779 Anchorage, Alaska 99510 Dear fir. Oarsow: On I -larch 13, 1977, the referenced application was received which stated that the proposed well would serve as a water injection well in the C-8 Sand. The (ail and Gas Conservation Comittee hereby authorizes the drilling of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Very truly yours, Thos. R. Marshal l , Jr. Executive Secretary 0 �7 SE_J OF pnLIr13 KG�? DEPARTMENT OF NATURAL RESOURCES DIVISION Of OIL AND GAS Conservation June 9, 1977 ADMINISTRATIVE APPROVAL JAY s HAMMOHD, GOVERNOR 3901 PORCUPINE DRIVE -ANCHORAGE 99501 N O. 76.4 Re: Application of Amoco Production Company to drill the Granite Point State 18742 well No. 33 from Platform. Anna as part of the pressure maintenance project approved by Conservation Order No. 76. Mr. L. A. Darsow Area Superintendent Amoco Production Company P. O..Box 779 Anchorage, Alaska 99510 Dear Mr. Darsow: On June 6, 1977, the referenced application was received which stated that the proposed well would serve to recover trapped oil from the west flank of the Granite Point structure. This well is the fourth to be canpleted in the southwest quarter of Section 12. The Oil and Gas Conservation Committee hereby authorizes the drilling of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Very truly yours, i Wirs all , Jr . Executive Secretary � JAY S HAMMOND, GOVERNOR iv .. ] �. t 1/14,1RA tTM ENT OF NATURAL Itt:. MTitCvs DIVISION Of OIL AND GAS r` 3001 PORCUPINE DRIVE-- ANCHORAGE 99501 Conservation ALASKA OIL AND GAS CONSFWATION CONr' ,1= November 30, 1977 ADMINISTRATIVE APPROVAL NO. 76.5 Re: Application of Amoco Production Company to drill the Granite Point State 18742 well No. 17 from Platform Anna as part of the pressure maintenance project approved by Conservation Order No. 76. rIr. . L . A. Dar soil Area Superintendent Amoco Production Cor-parry P. O. Box 779 Anchorage, Aaska 99510 Dear r4r. Darsow: On November 23, 1977, the referenced application was received. The proposed raell would serve to recover oil from the east flank of -the Granite Point structure. This well is the third to be ccc�pleted in the southeast quarter o,` Section 12. The Oil and Gas Conservation Corr-ittee hereby authorizes the drilling of the referenced well Pursuant to Rule 7 of Conservation order No. 76. Ve � truly yours, ,1� , Cl 'nos . R. Marshall, dr. Executi�:e Secretary Conserv.-ation ALA. KA OIL AND GNS COMISMIUATION MIMI =I—; January 10, 1978 A D 11 1 N I S T R A " I V E A P P P 0 V A T, A-0. 76.6 -i ��� --- � I ---- Re: Application of Arx= Pro tic Ccripany to d1rill the .4r 116. 1-3 as part of the pressure maintenance project approved by Cmservation Order No. 76. M T� r. R. Giles 2Production CayVany Security Life Building Denver, Colorado 80202 Dear Mr. Giles: On Decerter 30, 1977, the referenced application was receivexl.. The cl)erator states that the purpose of this prcposed lease line injection well is to irprove waterflood efficiency liciencv and oil recovery frcrr, each ccupetitive prqrpe. T Ihe Oil and Gas Cm-s-ervation Ccrrattee has reviewd this wVlication and -'hereby authorizes the drilling of tiv-- referenced well T)urusant to Rule 7 of Caiservation Order No. 76. Very truly yours, ems. R. Ma=hall, Jr. EN-cecutive Secretary TiV.,J)jr, cc: 1,1r. L. A. Darsow Area Superintendent 7tuco Production Ccr-pony Conservation AIASKA OIL AND W CqJMn7A'PJCtJ CCP-fn:TnM April 26, 1978 ADMI NI S T RAT I VE AP P ROVAL No. 76.7 Pj--: Application of Arinco Production Cc rpmy to drill the Granite Point State 18742 well No. 23PD frm Platform Anna as part of the pressure maintenance project approved by Consecration order Ib. 76. Mr. L. A. Darsow Area Superintendent P. o. Boy. 779 Andiorage., Alaska 99510 Dear P°Ir. Darsow: on April 25, 1978 the referenced application Was received. The proposed well would serve to reomer trapped reserves frcr the crestal area of the Granite Point structure. This %,A--Il is the fourth to be ccupleted. in the southeast cAkirter of Section 12. The 01.1 and (-,as Cmservatim cffxnittee hereby authorizes the drilling of the refer d well pursuant to Rule 7 of Conservation Order No. ' 6. mexy bnxly yours, C V t- �4 -� � Z- * 417 o. X. Gilbreth, Jr. Chairman 0 0 Conservation AUASKA OIL AND GAS CONSERVATION COWiITTEF July 29, 1978 ADMINISTRATIVE APPROVAL NO. 76.3 Re: Application of Amoco Production Comr.any to drill the Granite Point State 18742 :.ell No. 12RD frogs. Platform. Bruce as part of the pressure maintenance project approved by Conservation Order I -To. 76. Mr. L. A. Darsow Area Superintenaent V Amoco Production Company P. 0. Box 779 Anchoraqe, Alaska 99510 Dear Mr. Darsow: On July 27, 1978 the referenced application was received. The proposed well would serve to increase sweep efficiency and there- by enhance recovery of trapped reserves froze the east flank of the Granite Point structure. This we11 is the fourth to be completed in the southwest quarter of Section 31. The Oil and Gas Conservation Committee hereby authorized the Jrilling of the referenced urell pursuant to Rule 7 of Conserva- tion Order No. 76. Very truly yours, 1!. 11 ami 1 ton chairman T1111i -.be Calservalktial AUSM OM AND GAS CCUlan-WICN CC?ITII=T, October 4, 1973 ADMINISTRATIVE APPROVAL NO. 76.9 Re: Applicatim of Arm Proc3ucticn Cmrpany to drill the Granite Point State 18742 well No. 30 frcr. Platform Bkruce as part of the pressure maintenwnce i-Toject approved by conservation order lio. 76. Mr. L. A. Darsaw District SWerintendent Ammm Production Ccrpany ,./ P. O. Box 779 Anchorage, Alaska 99510 Dear Mr. Darsaw: On october 3, 1973 the refexenced application was received. The rrqxr,ed well would serve to recover trarTed reserves from the northeast flank area of the Granite Point structure. Ihis well is the fourth to be acrpleted in the soutImve-st caiarter of Sectim 31. ne Oil and Gas conservatim Comittee hereby autl-torizes the drilling of the referemmd well Ixwsuant to Rule 7 of Consez"vatim Order 1b. 76. Very truly yours, X�:27 uarry W. iwgler Dcc--.-cutive se-cretary ATIASRA OIL AM GA.S CCUSEEMATIM CCTD4I= Decsex27, 1978 A D M 1 14 1 STRATIVR A P P R 0 V A L NO. 76.10 -R-- - App '3ranitp licaticn �2-tker Mow I y to drill thp du or' 0'_'� 'd Point State t1b.cU31 frcri Platform, Bruce as part of the pressure rmintenanoe project approved by Conservation Order lb. 76. 40 Mt. L. A. Darsow District Superintendent Ar-,oco Production Cc rTany P.O. 779 Anchorage, Alaska 99510 Dear Mr. Darsow: On Dec enber 21, 1978 the referenced. a M., lication vyas received. the proposed well %Anuld serve to recover trapped' reserves frcr the northeast flank area of the Granite Point structure. This well is the -third to he crupleted in the 7brthwest quarter of Section 6. The Oil and Gas Conservation CaTnIttee hereby authorizes the drilling of the referenccKI well r.Awsuant to Pule 7 of Conservation Order !--10. 76. Vex* truly -yours, 7 6, Ha=r W. ]KWler Fxec�utive Secretary FIVIR : tc, • t April 19, 1979 A D M I N I S T R A T I V E APPROVAL NO. 76. 11 RE: The application of Amoco Production Company to drill the Granite Point 18742 No. 34 well as a redrill of the Cranite Point 17586 No. 4 well as part of the pressure maintenance project approved by Conservation order Vo. 76. Mr. L. A. Darsow District Superintendent Amoco Production Company P. O. Box 779 Anchorage, Alaska 99510 Dear Mr. Darsow: The application was received on April 18, 1979 and stated that the referenced well would be located in a more favorable loca- tion to recover additional reserves in the area. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the referenced well pursuant to Rule 7 of Conservation order No. 76. Yours very truly, Harry W. Kugler Commissioner BY THE ORDER OF THE COMMISSION June 26, 1979 A D 1 T "I ,T I r"RAT IVE APPROVAL a - 11 NO. 76.12 Re: Application of Amoco Production Company to deepen the Granite Point 18742 No. 14 well as a part of the pressure maintenance project approved by Conservation Order No. 76. fir. L. A. Darsow District Superintendent P. O. Box 779 Anchorage, Alaska 99510 Dear Mr. Darsow: The referenced application was received on June 21, 1979 and stated that the No. 14 well would be the fourth well completed in the northwest quarter of Section 31, T11N, R1114, S.M. and would be an injection well to provide increased sweep efficiency at the north end of the Granite Point structure. The Alaska Oil and Gas Conservation Commission hereby authorizes the deepening and completion of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, Harry 14. Kugler Commissioner BY THE ORDER, OF THE COI-IIIIIISSION I:nly -. be September 4, 1979 AlDrIl III S TRAT. 1, VE APPROVAL NO. 76.13 Re: The application of Amoco Production Company to redrill the Granite Point 18742 No. 20 well as part of the pressure maintenance pro"Ilect approved by Conservation Order No. 76. Mr. L. A. Darsow District Superintendent Amoco Production Company P. O. Box 779 Anchorage, Alaska 99510 Dear Mr. Darsow: The application was received on August 31, 1979 and stated that the referenced well would be located in a more favorable loca- tion to iriprove ultimate recovery in the northeast portion of the field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, Harry 447. Kugler Commissioner BY THE ORDER OF THE COMMISSION 1111K.- k* +r M October 6f 1980 A D M I N I ST RAT I VE AP P R O V A L .,"'NO. 76.14 Re: The application of Amoco Production Company to drill the Granite Point 18742 No. 37 well as part of the pressure maintenance project approved by Conservation Order No. 76. Mr. L. A. Darsow District Superintendent Amoco Production Company P. 0. Box 779 Anchorage, Alaska 99510 Dear Mr. Darsow,- The application was received on October 3, 1980 and stated that the referenced well would be located in a more favorable loca- tion to improve ultimate recovery from the east flank of the Granite Point reservoir. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, Harry W. Kugler'7 Commissioner BY THE ORDER OF THE COMMISSION f H r f VIK - be • February 13, 1961 6 4 ,_ A D 11 I 11 I S T R A T I V F A P P R O V A L NO. 76.15 Re: The application of Union Oil Company of California for an exception to 20 AAC 25.030(b)(5)(B) and (C) for Granite Point State well 31-14P.D, that all cemented liners have a minimum of 100 feet of lap and be pressure tasted. Mr. Jim R. Callender District Drilling Supervisor Union Oil Company of California P. 0. Box 6247 Anchorage, Alaska 99502 Dear mr. Callender: The application received. on February 11, 1981 stated that an exception is necessary because a 7" liner was set 0 10505' which, according to the logs in G.P.S. 433-14's original hole, would have been only to the ton of the "R" zone, but in the redrill it is 110' into the "B" zone sand. This was not dis- covered until the 7" had been set and cased hole logs had been run. No open hole logs were run because of the poor hole conditions existing which required the 7" liner to be set at less than total depth. You proposed to set a 5" liner in 6 1/8" hole from 10480' to 11500' and cement with a minimum of 100 saxs of cer:ent. This would allow perforating they "B" zono fron ± 10320' to ± 104P0' and from ± 10505' to ± 106201 and the subsequent completion as a water injector. (The "A" and "C" zones will perforated as originally proposed in the permit to drill and. will not require an exception). You stated that if an exception is not granted, the "B" zone completion would be limited to perforations from ± 10505' to ± 10620' resulting in the loss of 100' of perfora- tions and 156,000 barrels of oil which would otherwise be recovered. In regards to the pressure testing of the liner lap, if the 7" casing is from ± 1.0380' to ± 10480' and the: 5" casing from ± 10505' to ± 10020', for injection into the zone you state that it is not required to have isolation }�- tween the 5" and 7" liners as any fluid escapinn down the 5" x 7" annulus would he iniected in the "P" zone also. mr. Jim R. Callender Page 2 February 13, 1981 The Alaska Oil ar.d Gas Conservation Commission hereby grants the requested exception for the reference well pursuant to Rule 7 of Conservation Order No. 76. Very truly yours, r Fioyl6 III. Hamilton Chairman BY ORDER OF THE COMMISSION march 23, 1981 ADMINI S T R A T I V E APPROVAL NO. 76.16 Re: The application of Amoco Production Company to drill the Granite Point 18742 No. 40 well as part of the pressure maintenance project approved by Conservation Order No. 76. Mr. L. A. Darsow District Superintendent Amoco Production Company P. O. Box 779 Anchorage, Alaska 99510 Dear Mr. Darsow: The application was received on March 23, 1981 and stated that the referenced. well would be located to determine productivity in an area of the west flank of the Granite Point reservoir. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling, completion and production of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, Harry W. Kugler Commissioner BY THE ORDER OF THE COMMISSION HWK:be December 14, 1981 A D MI I 1N I S T 11 A T I V E A P P P 0 V A 1, /NO. 76.17 Re: The application of Amoco Production Cor.,)pany to drill the Granite Point 18742 t1o. 39 well as part of the pressure maintenance project approved by Conservation Order No. 76. I, L. A. Darsow Listriet Superintendent Amoco Production Company P. C. Box 779 Anchorage, Alaska 99510 Dear 1:,.r. Darsow: The application was received on December 11, 1921 and stated that the referenced well would be located, to improve oil recovery from the east flank of the Granite Point reservoir. The Alaska Oil and Gas Conservation Coramission hereby authorizes the drilling, completion and production of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, 'eo- Barry W. Kugler Corrimi as i one r BY THE ORDER OF THE WRI&IISSICI N HINK : be a 0 - 6 ::'Ay 17, 1981 Af.',�! I N I STRAT I VE APPROVAL NO. 76.18 Re: The application of Amoco Production Company to drill the Granite Point 1042 '.No. 46 viell as part of the pressure maintenance project approved by Conservation Order -No. 76. Mr. L. A. Darsow. District Superintendent Amy Production Company P. 0. Box 77.9 Anchorage, Alaska 99510 fear Mr. Darsow: The application was received. on II.T.3y 7. 1981 and stated that the referenced well would be located to improve oil recovery frog, the crestal area of the Granite Point reservoir. The Alasks Oil ane. Cas Conservation Commission hereby authorizes the drilling, completion and injection of water Into the referenced well pursuant to Rule 7 of Conservation Order 1 , T 1o. 76. Yours very truly, Harry W. 1,-ugl6r Commi s a I one r BY THE MER OF THE MI'MIS51017 11MV : be March 11, 1955 ADM!NT STRATTVE APPROVAL NO. 76.19 Re: The application of Amoco Production Companv to drill the Granite Point 18742 No. 35 well as part of the pressure maintenance project approved by Conservation. Order No. 76. 74r. r,, G. Smith District Manager Amoco Production Company P. O. Box 1.00779 Anchorage, Alaska. 99510-0779 Dear Mr. Smith: The application was received on March 8, 1985 and stated that the referenced well would be located to improve oil recovery from the west flank of the Granite Point Field. The Alaska Oil and Gas Conservation Coission hereby authorizes the drilling, completion and production of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, Marry W. Kugler Commissioner BY ORDER OF THE COMITSSTON be:3.AA 76 September 9, 1955 ADNTNI STRATIV:F: APPROVAL NO. 76.20 Re: The application of Amoco Production Cor.panv to drill the Granite Point 18742 No. 36 well as part of the pressure maintenance project approved by Conservation Order No. 76. Mr. W. G. Smith District t",anager Amoco Production Company P. 0. Box 100779 Anchorage, Alaska 99510-0779 Dear Mr. Smith: The application was received on September 6, 1955 and stated that the referenced well would be located to improve oil recovery from the east flank of the Granite Point Field. The Alaska Oil and Gas Conservation Commission herebv authorizes the drilling, completion and production of the referenced well pursuant to Rule 7 of Conservation Order No. 76. Yours very truly, Harry U7. Kugler. Commissioner BY ORDER OF THE COMMISSION be: 3.AA 76 Telecopy No. (907) 276-7542 April 28, 1987 A DM I N I S T RAT I V I APPROVAL NO. 76.2I Re: The application of Amoco Production Company to drill the Granite Point 18742 No. 13RD well as part of the pressure maintenance project approved by Conservation Order No. 76. Pir. W. G. Smith District Manager Amoco Production Company P. 0. Box 100779 Anchorage, AK 99510-0779 Dear Mr. Smith: The application was received on April 24, 1987, and stated that the referenced well would be located to improve oil recovery from the west flank of the Granite Point Field. The Alaska Oi,l and Gas Conservation Commission hereby authorizes the drilling, completion and injection of water into the referenced well pursuant to Rule 7 of Conservation Order No. 76. Sincerely, W W. W. Barnwell Commissioner BY ORDER OF THE: COM14ISSION jo/3.AA76 0 Od Qsm WALTER J. H/CKEL, GOVERNOR ALASKA OIL AND GAS 3001 PORCUPINE DRIVE CONSERVATION CODIAIISSION ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276.7542 February 12, 1991 ADMINISTRATIVE APPROVAL NO. 76.22 Re: The application of Union Oil Company of California, to drill and complete the Granite Point 18742 No.20RD well as part of the pressure maintenance project approved by Conservation Order No. 76. Gary S. Bush Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Bush: Your application of February 6, 1991 for a permit to drill and complete the Granite Point 18742 No.20RD requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point 18742 well is expected to provide additional oil recovery from the Middle Kenai Oil Pool. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point 18742 No.20RD well pursuant to Rule 7 of Conservation Order No. 76. Sincerely, Russell A. Douglass Commissioner BY ORDER OF THE COMMISSION '0 6 0L S N Q WALTER J. HICKEL, GOVERNOR ALASKA OIL AND GAS 3001 PORCUPINE DRIVE CONSERVATION COMMISSION ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 April 5, 1991 ADMINISTRATIVE APPROVAL NO. 76.23 Re: The application of Union Oil Company of California to drill and complete the Granite Point 17586 No. 41 well as part of the pressure maintenance project approved by Conservation Order No. 76. Gary S. Bush Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Bush: Your application of March 28, 1991 for a permit to drill and complete the Granite Point 17586 No. 41 requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point 17586 No. 41 well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point 17586 No. 41 well pursuant to Rule 7 of Conservation Order No. 76. Sincerely, Russell A. Douglass Commissioner BY ORDER OF THE COMMISSION 0 no I L S N 0 WALTER J. HICKEL, GOVERNOR ALASKA OIL AND GAS 3001 PORCUPINE DRIVE CONSERVATION COMMISSION ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 December 2, 1991 ADMINISTRATIVE APPROVAL NO. 76.24 Re: The application of Union Oil Company of California to drill and complete the Granite Point 11-13RD well as a Middle Kenai Oil Pool production well. Gary S . Bush Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Bush: Your application of November 5, 1991 for a permit to drill and complete the Granite Point 11-13RD requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point 11-13RD well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby,, authorizes the drilling and completion of the Granite Point 11-13RD well' pursuant to Rule 7 of Conservation Order No. 76. Sincerely, Russell A. Douglass Commissioner BY ORDER OF THE COMMISSION printed on recycled paper by C•n. ALASKA OIL AND GAS CONSERVATION CO11I21IISSION April 8, 1992 ADMINISTRATIVE APPROVAL NO. 76.25 WALTER J. H/CKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Re: The application of Union Oil Company of California to drill and complete the Granite Point 50 well as a Middle Kenai Oil Pool production well. Gary S . Bush Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Bush: Your application of April 7, 1992 for a permit to drill and complete the Granite Point 50 well requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point 50 well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point 50 well pursuant to Rule 7 of Conservation Order No. 76. Sincerely, Russell A. Douglass Commissioner BY ORDER OF THE COMMISSION ALASK►A OIL AND GAS CONSCRVATION COMMISSION July 15, 1992 ADMINISTRATIVE APPROVAL NO. 76.26 WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Re: The application of Union Oil Company of California to drill and complete the Granite Point 51 well as a Middle Kenai Oil Pool production well. Gary S. Bush Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Bush: Your application of July 14, 1992 for a permit to drill and complete the Granite Point 51 well requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point 51 well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point 51 well pursuant to Rule 7 of Conservation Order No. 76. Sincerely, Russell A. Douglass Commissioner BY ORDER OF THE COMMISSION nA rf E Go'r L SN WALTER J. HICKEL, GOVERNOR ALASKA OIL AND GAS 3001 PORCUPINE DRIVE CONSERVATION COMMISSION ANCHORAGE, ALASKA99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 September 19, 1994 ADMINISTRATIVE APPROVAL NO. 76.27 Re: The application of Union Oil Company of California to drill and complete the Granite Point 11RD well as a Middle Kenai Oil Pool production well. G . Russell Schmidt Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Schmidt: Your application of September 13, 1994 for a permit to drill and complete the Granite Point 11RD well requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point 11RD well is expected to increase oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point 11RD well pursuant to Rule 7 of Conservation Order No. 76. Sincerely, Russell A. Douglass Commissioner BY ORDER OF THE COMMISSION �K� printed on recycled papr;r h y " '.± r ALASKA OIL A" GAS CONSERVATION COMMISSION -` January 13, 1995 ADMINISTRATIVE APPROVAL NO. 76.28 TONY KNOWLES, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 Re: The application of Union Oil Company of California to drill and complete the Granite Point State 18742 No. 50 well as a Middle Kenai Oil Pool production well. G. Russell Schmidt, Reg Drlg Mgr UNOCAL Corp P. O. Box 190247 Anchorage, AK 99502-0247 Dear Mr. Schmidt: Your application of December 30, 1994, for a permit to drill and complete the Granite Point State 18742 No. 50 well requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of this well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point State 18742 No. 50 well pursuant to Rule 7 of Conservation Order No. 76. DONE at Anchorage, Alaska and dated January 13, 1995. David W. Johnston, Conrmissiot cr Alaska Oil and Gas ConservatiorkCommission 4d 1�1 L-� Russell A. Douglass, Commi over Alaska Oil and Gas Conservation Commission *0 TONY KNOWLES, GOVERNOR OIL AND GAS 7 'CONSERVATION COMUSS O,* J ANCHORAGE, '995 - 3001 PORCUPINNEE DDRIRIVE 1 PHONE^ (907) 279-1433 01 3192 FAX: (907) 276-7542 January 13, 1995 ADMINISTRATIVE APPROVAL NO. 76.29 Re: The application of Union Oil Company of California to drill and complete the Granite Point State 18742 No. 51 well as a Middle Kenai Oil Pool production well. G. Russell Schmidt Regional Drilling Manager UNOCAL Corp. P. O. Box 190247 Anchorage, Ak 99502-0247 Dear Mr. Schmidt: Your application of December 30, 1994 for a permit to drill and complete the Granite Point State 18742 No. 51 well requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point State 18742 No. 51 well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point State 18742 No. 51 well pursuant to Rule 7 of Conservation Order No. 76. DONE at Anchorage, Alaska and dated January 13, 1995. gyp, oti Davi . Johnston, Comm' er C Alaska Oil and G Conservatio Commission AM p- .r.. r 0 �TtnN Co ze�. 11 Russell A. Douglass, Commissi r Alaska Oil and Gas Conservation Commission ,ramI1j� c 1. TONY KNOWLES GOVERNOR ILAS K/ 1 I* ALASKA OIL AND GAS 3001 PORCUPINE DRIVE CONSERVATION COMM1SSION � ANCHORAGE, ALASKA 99501-3192 ttt PHONE: (907) 279-1433 FAX: (907) 276-7542 June 8, 1995 ADMINISTRATIVE APPROVAL NO. 76.30 Re: The application of Union Oil Company of California to drill and complete the Granite Point State 18742 No. 28 RD 2 well as a Middle Kenai Oil Pool production well. Kevin A Tabler Land Manager Alaska Business Unit UNOCAL Corp. P. O. Box 196247 Anchorage, Ak 99519-6247 Dear Mr. Tabler: Your application of May 18, 1995 for a permit to drill and complete the Granite Point State 18742 No. 28RD 2 well requires exception to spacing requirements set forth in Conservation Order No. 76. The drilling and completion of the Granite Point State 18742 No. 28RD 2 well is expected to provide additional oil recovery from the Middle Kenai Oil Pool in the Granite Point Field. The Alaska Oil and Gas Conservation Commission hereby authorizes the drilling and completion of the Granite Point State 18742 No. 28RD 2 well pursuant to Rule 7 of Conservation Order No. 76. DONE at Anchorage, Alaska and dated June 8, 1995. Alaska Oil and Gas Conservation Commission ALASFA OIL AND GAS CONSERVATION COMMISSION October 23. 1997 ADMINISTRATIVE APPROVAL NO. 76.32 TONY KNOWLES, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 Re: The application of Union Oil Company of California to expand the affected area of Conservation Order No. 76. Rick D. Cross Landman Unocal Alaska Resources UNOCAL Corporation P. O. Box 196247 Anchorage, AK 99519-6247 Dear Mr. Cross: The drilling and completion of well Granite Point No. 53 (GP No. 53) has demonstrated that the originally established affected area of Conservation Order No. 76 did not include the southern extent of the Granite Point Middle Kenai Oil Pool. The portion of the accumulation penetrated by GP No. 53 has been depleted; however, operation of the well as an injector will increase ultimate recovery from the Granite Point Middle Kenai Oil Pool. Pursuant to your written request dated August 27, 1997, and subsequent correspondence from UNOCAL dated September 23, 1997, the Alaska Oil and Gas Conservation Commission hereby authorizes the expansion of the affected area of Conservation Order No. 76 to include the north half of Sections 25 and 26 and the northeast quarter of Section 27 in Township 10 North, Range 12 West, Seward Meridian. DONE Alaska this day October 23, 1997. Dav W. Johnst)n Robert N. Christenson, P.E. Chairm Commissioner Cammy echsli Commissioner • STATE OF ALASKA • ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp ) Docket No. CO-15-005 Alaska, LLC to re -complete the Granite ) Conservation Order No. 76.33 Point State 18742-17A development oil ) well within 1,000 feet of, and within the ) Granite Point State 18742-17A same governmental quarter section as, ) Granite Point Field wells that are, or may be capable of, ) Middle Kenai Oil Pool producing from the same pool. ) May 26, 2015 IT APPEARING THAT: By a letter received May 11, 2015, Hilcorp Alaska, LLC (Hilcorp) requests an order allowing re - completion of the Granite Point State 18742-17A development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. FINDINGS: 1. Hilcorp is the operator of the Granite Point Field (GPF) and is the operator of the GPF State (ST) 18742-17A development oil well that is located on the west side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. The GPF ST 18742-17A well is an offshore, deviated development oil well with a surface location of 798 feet from the north line and 596 feet from the east line of Section 12, Township 10 North, Range 12 West, Seward Meridian (S.M.). The bottom hole location is 898 feet from the south line and 1,994 feet from the west line of Section 12, Township 10 North, Range 12 West, S.M. 3. The GPF ST 18742-17A well is located entirely within State of Alaska Oil and Gas Lease ADL 18742. 4. The GPF ST 18742-17A well is currently completed in the undefined Hemlock Oil Pool. This well has been unsuccessful as a Hemlock producer. Hilcorp proposes to plug the well back and re -complete it in the Middle Kenai Oil Pool within an area governed by Conservation Order No. 76. 5. The GPF ST 18742-17A will be the fourth well within the southeast quarter of Section 12 capable of producing from the Middle Kenai Oil Pool. 6. The GPF ST 18742-17A will be within 1,000 feet to the GPF ST 18742-21, 23RD and 09 development wells that produce or are capable of producing from the Middle Kenai Oil Pool. 7. Conservation Order 76, Rule 2. Spacing provides a. not more than two completed wells shall be allowed in any governmental quarter section; and b. no pay opened to the well bore shall be nearer than 500 feet to any property line nor nearer than 1,000 feet to any well drilling to or capable of producing from the same pool. 8. Conservation Order 76, Rule 7. Administrative Approval specifies in part that the Alaska Oil and Gas Conservation Commission (AOGCC) "...may authorize the conversion or CO 76.33 • • May 26, 2015 Page 2 of 2 drilling of any well at any location... reasonably designed to further the purposes of the project." 9. The re -completion of GPF ST 18742-17A is designed to maximize recovery from the Middle Kenai Oil Pool at Granite Point Field by accessing un-drained reserves in oil reservoirs that cannot be reached by wells conforming to applicable spacing restrictions. 10. In conformance to Rule 7 of Conservation Order No. 76, Hilcorp gave notice of this request to all potentially affected landowners, owners and operators —those within 1,000- foot radius of the GPF ST 18742-17A well —the State of Alaska, Department of Natural Resources (DNR) and Hilcorp Alaska, LLC. Hilcorp sent notice of its application to the DNR. DNR received the notification on May 11, 2015. The AOGCC received no objection or comment regarding Hilcorp's request. CONCLUSIONS: 1. An exception to the well spacing provisions of Rule 2, CO 76 is necessary to allow re - completion of the GPF development oil well in order to maximize recovery of reserves. 2. A spacing exception to allow re -completion of the GPF ST 18742-17A development oil well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. NOW THEREFORE IT IS ORDERED: Hilcorp's May 11, 2015 application for an order granting an exception to the well spacing requirements of 20 AAC 25.055(a)(3) to allow re -completion of the GPF ST 18742-17A development oil well is APPROVED. Hilcorp may proceed as long as it complies with the terms of the applicable Alaska laws, and all other legal requirements. _s 0,OILa1,7 DONE at Anchorage, Alaska and dated May 26, 2015. �X/2 _;�� (D/ Cathy . Foerster Daniel T. Seamount, Jr. Chair, Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Singh, Angela K (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, May 27, 2015 1:10 PM To: Christopher Pike (cpike6@alaska.edu); gwen.holdmann@alaska.edu; Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Guhl, Meredith D (DOA); Hunt, Jennifer L (DOA); Kair, Michael N (DOA); Loepp, Victoria T (DOA); Mumm, Joseph (DOA sponsored); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K (DOA); Wallace, Chris D (DOA); AKDCWellIntegrityCoordinator, Alex Demarban; Alexander Bridge; Allen Huckabay; Andrew Vandedack; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Bob Shavelson; Brian Havelock; Bruce Webb; Burdick, John D (DNR); Carrie Wong; Cliff Posey, Colleen Miller, Crandall, Krissell; D Lawrence; Dave Harbour, David Boelens; David Duffy, David House; David McCaleb; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallegos; Delbridge, Rena E (LAS); Donna Ambruz; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Frank Molli; Gary Oskolkosf, George Pollock; ghammons; Gordon Pospisil; Greg Duggin; Gregg Nady; gspfoff, Hulme, Rebecca E (DNR); Jacki Rose; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Williams, Jennifer L (LAW); Jerry Hodgden; Jerry McCutcheon; Solnick, Jessica D (LAW); Jim Watt; Jim White; Joe Lastufka; news@radiokenai.com; John Adams; Easton, John R (DNR); Jon Goltz; Juanita Lovett; Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty, Kazeem Adegbola; Keith Wiles; Kelly Sperback; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker, Louisiana Cutler, Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Kremer, Marguerite C (DNR); Mary Cocklan-Vendl; Michael Calkins; Michael Duncan; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; MJ Loveland; mkm7200; Morones, Mark P (DNR); Munisteri, Islin W M (DNR); knelson@petroleumnews.com; Nichole Saunders; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky; Shellenbaum, Diane P (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Sternicki, Oliver R; Moothart, Steve R (DNR); Suzanne Gibson; Sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Terry Templeman; Thor Cutler, Tim Mayers; Todd Durkee; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater; Anne Hillman; Bajsarowicz, Caroline J; Brian Gross; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Dickenson, Hak K (DNR); Heusser, Heather A (DNR); Holly Pearen; Hyun, James J (DNR); Jason Bergerson; jill.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Kenneth Luckey, King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Pete Dickinson; Peter Contreras; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, William Hutto; William Van Dyke Subject: AOGCC Orders Attachments: co76-033.pdf, other103.pdf 0 0 CO 76-033 Hilcorp Alaska, LLC Granite Point State 18742-17 Other Order No. 103, University of Fairbanks, ACEP Decision and Order 0 • James Gibbs Jack Hakkila Bernie Karl P.O. Box 1597 P.O. Box 190083 K&K Recycling Inc. Soldotna, AK 99669 Anchorage, AK 99519 P.O. Box 58055Fairbanks, AK 99711 Gordon Severson Penny Vadla George Vaught, Jr. 3201 Westmar Cir. 399 W. Riverview Ave. P.O. Box 13557 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 Denver, CO 80201-3557 Judy Stanek Richard Wagner Darwin Waldsmith Landman P.O. Box 60868 P.O. Box 39309 Hilcorp Alaska, LLC Fairbanks, AK 99706 Ninilchik, AK 99639 P.O. Box 244027 Anchorage, AK 99524-4027 r�2 'le Angela K. Singh STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC to drill and complete the Granite Point State 22-13RD3 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. IT APPEARING THAT: Docket No. CO 17-013 Conservation Order No. 76.34 Granite Point State 22-13RD3 Granite Point Unit Granite Point Field Middle Kenai Oil Pool July 11, 2017 By a letter received June 21, 2017, Hilcorp Alaska, LLC (Hilcorp) requests an order allowing drilling and completion of the Granite Point State 22-13RD3 development oil well within 1,000 feet of and within the same governmental quarter section as wells that are or may be capable of producing from the same pool. FINDINGS: l . Hilcorp is the operator of the Granite Point Field, Granite Point Unit and the proposed Granite Point State (GPS) 22-13RD3 development oil well to be located on the west side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. The GPS 22-13RD3 well will be an offshore, deviated development oil well with a surface location of 2,383 feet from the north line and 1,371 feet from the west line of Section 13, Township 10 North, Range 12 West, Seward Meridian (S.M.). The top of the Middle Kenai producing interval location is 2,412 feet from the north line and 1,995 feet from the east line of Section 13, Township 10 North, Range 12 West, S.M. The bottom hole location is 958 feet from the south line and 75 feet from the west line of Section 18, Township 10 North, Range 12 West, S.M. 3. GPS 22-13RD3 well will be located entirely within State of Alaska Oil and Gas Lease ADL 18761. 4. GPS 22-13RD3 well will be completed within the Middle Kenai Oil Pool within an area governed by Conservation Order No. 76. 5. GPS 22-13RD3 will be the second well capable of producing from the Middle Kenai Oil Pool within the southeast quarter of Section 13 and southwest quarter of Section 18. 6. GPS 22-13RD3 will be the third well within the northeast quarter of Section 13 capable of producing from the Middle Kenai Oil Pool. 7. GPS 22-13RD3 will be within 1,000 feet to the GPS 32-13RD development well that produces from the Middle Kenai Oil Pool. 8. Conservation Order 76, Rule 2. Spacing provides a. not more than two completed wells shall be allowed in any governmental quarter section; and b. no pay opened to the well bore shall be nearer than 500 feet to any property line nor nearer than 1,000 feet to any well drilling to or capable of producing from the same pool. 9. Conservation Order 76, Rule 7. Administrative Approval specifies in part that the Alaska Oil and Gas Conservation Commission (AOGCC) "...may authorize the conversion or drilling of any well at any location... reasonably designed to further the purposes of the project." CO 76.34 July 11, 2017 Page 2 of 2 10. The drilling and completion of GPS 22-13RD3 is designed to maximize recovery from the Middle Kenai Oil Pool at Granite Point Field by accessing un-drained reserves in oil reservoirs that cannot be reached by wells conforming to applicable spacing restrictions. 11. In conformance to Rule 7 of Conservation Order No. 76, Hilcorp gave notice of this request to all potentially affected landowners, owners and operators within 1,000-foot radius of the GPS 22-13RD3 well: the State of Alaska, Department of Natural Resources (DNR) and Hilcorp Alaska, LLC. On June 19, 2017, Hilcorp sent notice of its application to the DNR. The AOGCC received no objection or comment regarding Hilcorp's request. CONCLUSIONS: 1. An exception to the well spacing provisions of Rule 2, CO 76 is necessary to allow drilling, completion, and production of the GPS 22-13RD3 development oil well to maximize recovery of reserves. 2. A spacing exception to allow drilling, completion, and production of the GPS 22-13RD3 development oil well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. NOW THEREFORE IT IS ORDERED: Hilcorp's June 19, 2017 application for an order granting an exception to the well spacing requirements of 20 AAC 25.055(a)(3) to allow drilling, completion, and production of the GPS 22-13RD3 development oil well is approved. Hilcorp may proceed as long as it complies with the terms of the Granite Point Unit agreement, applicable Alaska laws, and all other legal requirements. 1 Zolil DONE at Anchorage, Alaska and dated July 11, 2017. k-110 Hollis French Daniel T. SeAtf ount, Jr, Chair, Commissioner Commissioner 1 Cathy P/Foer'ster \,, V Commissioner �Ifaz 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. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC by the application for reconsideration." In computing a period of time above, the date of the event or defaultafter 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. Cody T. Terrell Landman Hilcorp Alaska, LLC P.O. Box 244027 Anchorage, AK 99524-4027 " \a lio a STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7" Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC to drill and complete the Granite Point State 22-13RD3 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. IT APPEARING THAT: Docket No. CO 17-013 Conservation Order No. 76.34 Granite Point State 22-13RD3 Granite Point Unit Granite Point Field Middle Kenai Oil Pool July 11, 2017 By a letter received June 21, 2017, Hilcorp Alaska, LLC (Hilcorp) requests an order allowing drilling and completion of the Granite Point State 22-13RD3 development oil well within 1,000 feet of and within the same governmental quarter section as wells that are or may be capable of producing from the same pool. FINDINGS: 1. Hilcorp is the operator of the Granite Point Field, Granite Point Unit and the proposed Granite Point State (GPS) 22-13RD3 development oil well to be located on the west side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. The GPS 22-13RD3 well will be an offshore, deviated development oil well with a surface location of 2,383 feet from the north line and 1,371 feet from the west line of Section 13, Township 10 North, Range 12 West, Seward Meridian (S.M.). The top of the Middle Kenai producing interval location is 2,412 feet from the north line and 1,995 feet from the east line of Section 13, Township 10 North, Range 12 West, S.M. The bottom hole location is 958 feet from the south line and 75 feet from the west line of Section 18, Township 10 North, Range 12 West, S.M. 3. GPS 22-13RD3 well will be located entirely within State of Alaska Oil and Gas Lease ADL 18761. 4. GPS 22-13RD3 well will be completed within the Middle Kenai Oil Pool within an area governed by Conservation Order No. 76. 5. GPS 22-13RD3 will be the second well capable of producing from the Middle Kenai Oil Pool within the southeast quarter of Section 13 and southwest quarter of Section 18. 6. GPS 22-13RD3 will be the third well within the northeast quarter of Section 13 capable of producing from the Middle Kenai Oil Pool 7. GPS 22-13RD3 will be within 1,000 feet to the GPS 32-13RD development well that produces from the Middle Kenai Oil Pool. 8. Conservation Order 76, Rule 2. Spacing provides a. not more than two completed wells shall be allowed in any governmental quarter section; and b. no pay opened to the well bore shall be nearer than 500 feet to any property line nor nearer than 1,000 feet to any well drilling to or capable of producing from the same pool. 9. Conservation Order 76, Rule 7. Administrative Approval specifies in part that the Alaska Oil and Gas Conservation Commission (AOGCC) "...may authorize the conversion or drilling of any well at any location... reasonably designed to further the purposes of the project." CO 76.34 July 11, 2017 Page 2 of 2 10. The drilling and completion of GPS 22-13RD3 is designed to maximize recovery from the Middle Kenai Oil Pool at Granite Point Field by accessing un-drained reserves in oil reservoirs that cannot be reached by wells conforming to applicable spacing restrictions. 11. In conformance to Rule 7 of Conservation Order No. 76, Hilcorp gave notice of this request to all potentially affected landowners, owners and operators within 1,000-foot radius of the GPS 22-13RD3 well: the State of Alaska, Department of Natural Resources (DNR) and Hilcorp Alaska, LLC. On June 19, 2017, Hilcorp sent notice of its application to the DNR. The AOGCC received no objection or comment regarding Hilcorp's request. CONCLUSIONS: 1. An exception to the well spacing provisions of Rule 2, CO 76 is necessary to allow drilling, completion, and production of the GPS 22-13RD3 development oil well to maximize recovery of reserves. 2. A spacing exception to allow drilling, completion, and production of the GPS 22-13RD3 development oil well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. NOW THEREFORE IT IS ORDERED: Hilcorp's June 19, 2017 application for an order granting an exception to the well spacing requirements of 20 AAC 25.055(a)(3) to allow drilling, completion, and production of the GPS 22-13RD3 development oil well is approved. Hilcorp may proceed as long as it complies with the terms of the Granite Point Unit agreement, applicable Alaska laws, and all other legal requirements. DONE at Anchorage, Alaska and dated July 11, 2017. //signature on file// //signature on file// //signature on file// Hollis French Daniel T. Seamount, Jr. Cathy P. Foerster Chair, Commissioner Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC by the application for reconsideration." In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Bernie Karl K&K Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 0055 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639-0309 Fairbanks, AK 99706-0868 7- \2- 20 \-Z Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Tuesday, July 11, 2017 12:40 PM To: DOA AOGCC Prudhoe Bay; Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Foerster, Catherine P (DOA); French, Hollis (DOA); Frystacky, Michal (DOA); Guhl, Meredith D (DOA); Kair, Michael N (DOA); Link, Liz M (DOA); Loepp, Victoria T (DOA); Mumm, Joseph (DOA sponsored); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Quick, Michael J (DOA); Regg, James B (DOA); Roby, David S (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K (DOA); Wallace, Chris D (DOA); AK, GWO Projects Well Integrity; AKDCWellIntegrityCoordinator; Alan Bailey; Alex Demarban; Alexander Bridge; Alicia Showalter; Allen Huckabay; Andrew VanderJack; Ann Danielson; Anna Raff; Barbara F Fullmer; bbritch; bbohrer@ap.org; Ben Boettger; Bill Bredar; Bob Shavelson; Brandon Viator; Brian Havelock; Bruce Webb; Caleb Conrad; Candi English; Cocklan-Vendl, Mary E; Colleen Miller; Connie Downing; Crandall, Krissell; D Lawrence; Dale Hoffman; Darci Horner; Dave Harbour; David Boelens; David Duffy; David House; David McCaleb; David McCraine; ddonkel@cfl.rr.com; DNROG Units (DNR sponsored); Donna Ambruz; Ed Jones; Elizabeth Harball; Elowe, Kristin; Elwood Brehmer; Evan Osborne; Evans, John R (LDZX); George Pollock; Gordon Pospisil; Greeley, Destin M (DOR); Gretchen Stoddard; gspfoff, Hunter Cox; Hurst, Rona D (DNR); Hyun, James J (DNR); Jacki Rose; Jason Brune; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Jerry Hodgden; Jill Simek; Jim Watt; Jim White; Joe Lastufka; Radio Kenai; Burdick, John D (DNR); Easton, John R (DNR); Larsen, John M (DOR); John Stuart; Jon Goltz; Chmielowski, Josef (DNR); Juanita Lovett; Judy Stanek; Kari Moriarty; Kasper Kowalewski; Kazeem Adegbola; Keith Torrance; Keith Wiles; Kelly Sperback; Frank, Kevin J (DNR); Kruse, Rebecca D (DNR); Kyla Choquette; Gregersen, Laura S (DNR); Leslie Smith; Lori Nelson; Louisiana Cutler; Luke Keller; Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Mealear Tauch; Michael Bill; Michael Calkins; Michael Moora; Mike Morgan; MJ Loveland; mkm7200; Motteram, Luke A; Mueller, Marta R (DNR); Munisteri, Islin W M (DNR); knelson@petroleumnews.com; Nichole Saunders; Nick Ostrovsky; Nikki Martin; NSK Problem Well Supv; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Renan Yanish; Richard Cool; Robert Brelsford; Sara Leverette; Scott Griffith; Shahla Farzan; Shannon Donnelly; Sharon Yarawsky; Skutca, Joseph E (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Stephanie Klemmer; Stephen Hennigan; Sternicki, Oliver R; Moothart, Steve R (DNR); Steve Quinn; Suzanne Gibson; sheffield@aoga.org; Ted Kramer; Teresa Imm; Tim Jones; Tim Mayers; Todd Durkee; Tom Maloney; trmjrl; Tyler Senden; Umekwe, Maduabuchi P (DNR); Vinnie Catalano; Well Integrity; Well Integrity; Weston Nash; Whitney Pettus; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andy Bond; Bajsarowicz, Caroline J; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; Corey Munk; Don Shaw; Eppie Hogan; Eric Lidji; Garrett Haag; Smith, Graham O (DNR); Hak Dickenson; Heusser, Heather A (DNR); Fair, Holly S (DNR); Jamie M. Long; Jason Bergerson; Jesse Chielowski; Jim Magill; Shine, Jim M (DNR); Joe Longo; John Martineck; Josh Kindred; Keith Lopez; Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Melonnie Amundson; Franger, James M (DNR); Morgan, Kirk A (DNR); Umekwe, Maduabuchi P (DNR); Pat Galvin; Pete Dickinson; Peter Contreras; Rachel Davis; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); Tostevin, Breck C (LAW); William Van Dyke Subject: CO 76-34 (Hilcorp) Attachments: co76.34.pdf Please see attached. Re: THE APPLICATION OF Hilcorp Alaska, LLC to drill and complete the Granite Point State 22-13RD3 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. Jody J. Colombie AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7" Avenue .anchorage, Alaska 99501 Office: (907) 793-1221 Fax: (907) 276-7542 Docket No. CO 17-013 Conservation Order No. 76.34 Granite Point State 22-13RD3 Granite Point Unit Granite Point Field Middle Kenai Oil Pool July 11, 2017 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 Jody Colombie at 907.793.1221 or iody.colombie@alaska.gov. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7" Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC to drill and complete the Granite Point State 24-13RD2 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. IT APPEARING THAT: Conservation Order No. 76.35 Granite Point State 24-13RD2 Granite Point Unit Granite Point Field Middle Kenai Oil Pool November 8, 2017 By a letter received November 3, 2017, Hilcorp Alaska, LLC (Hilcorp) requests an administrative approval under Conservation Order 76, Rule 7 to allow drilling and completion of the Granite Point State 24-13RD2 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. FINDINGS: 1. Hilcorp is the operator of the Granite Point Field, Granite Point Unit and the proposed Granite Point State (GPS) 24-13RD2 development oil well to be located on the west side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. The GPS 24-13RD2 well will be an offshore, deviated development oil well with a surface location of 2,392 feet from the south line and 1,376 feet from the east line of Section 13, Township 10 North, Range 12 West, Seward Meridian (S.M.). The top of the Middle Kenai producing interval location is 565 feet from the south line and 1,939 feet from the west line of Section 13, Township 10 North, Range 12 West, S.M. The bottom hole location is 2,599 feet from the north line and 2,363 feet from the west line of Section 24, Township 10 North, Range 12 West, S.M. 3. GPS 24-13RD2 well will be located entirely within State of Alaska Oil and Gas Lease ADL 18761. 4. GPS 24-13RD2 well will be completed within the Middle Kenai Oil Pool within an area governed by Conservation Order No. 76. 5. GPS 24-13RD2 will be the third well within the southwest quarter of Section 13 and northwest quarter of Section 24 open to, or capable of producing, from the Middle Kenai Oil Pool. 6. GPS 24-13RD2 will be within 1,000 feet to the GPS 11-24RD development well completed in the Middle Kenai Oil Pool. Conservation Order 76, Rule 2. Spacing provides a. not more than two completed wells shall be allowed in any governmental quarter section; and b. no pay opened to the well bore shall be nearer than 500 feet to any property line nor nearer than 1,000 feet to any well drilling to or capable of producing from the same pool. CO 76.35 November 8, 2017 Page 2 of 2 8. Conservation Order 76, Rule 7. Administrative Approval specifies in part that the Alaska Oil and Gas Conservation Commission (AOGCC) "...may authorize the conversion or drilling of any well at any location... reasonably designed to further the purposes of the project." 9. The drilling and completion of GPS 24-13RD2 is designed to maximize recovery from the Middle Kenai Oil Pool at Granite Point Field by accessing un -drained reserves in discontinuous, lenticular oil reservoirs that cannot be reached by wells conforming to applicable spacing restrictions. 10. The potentially affected landowners, owners and operators within a 1,000 foot radius of the GPS 24-13RD2 well are Hilcorp and the State of Alaska, Department of Natural Resources (DNR). In conformance to Rule 7 of Conservation Order No. 76, Hilcorp gave notice of this request. On November 3, 2017, Hilcorp sent notice of its application to the DNR. The AOGCC received no objection regarding Hilcorp's request. CONCLUSIONS: 1. An exception to the well spacing provisions of Rule 2, CO 76 is necessary to allow drilling, completion, and production of the GPS 24-13RD2 development oil well to maximize recovery of reserves. 2. A spacing exception to allow drilling, completion, and production of the GPS 24-13RD2 development oil well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. NOW THEREFORE IT IS ORDERED: Hilcorp's November 3, 2017 application for an order granting an exception to the well spacing requirements of Rule 2 of Conservation Order No. 76 to allow drilling, completion, and production of the GPS 24-13RD2 development oil well is approved. Hilcorp may proceed as long as it complies with the terms of the Granite Point Unit agreement, applicable Alaska laws, and all other legal requirements. DONE at Anchorage, Alaskavsdated November 8, 2017. �( Hollis French aniel T. Se unt, Jr. Cathy I. Foerster Chair, Commissioner Commissioner Commissioner 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 bine 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 pan 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 supenor 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. As provided in AS 31.05.080(6),"[Qhe questions reviewed on appeal are limited to the questions presented to the AOGCC by the application for reconsideration" In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 711 Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC to drill and complete the Granite Point State 24-13RD2 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. IT APPEARING THAT: Conservation Order No. 76.35 Granite Point State 24-13RD2 Granite Point Unit Granite Point Field Middle Kenai Oil Pool November 8, 2017 By a letter received November 3, 2017, Hilcorp Alaska, LLC (Hilcorp) requests an administrative approval under Conservation Order 76, Rule 7 to allow drilling and completion of the Granite Point State 24-13RD2 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. FINDINGS: 1. Hilcorp is the operator of the Granite Point Field, Granite Point Unit and the proposed Granite Point State (GPS) 24-13RD2 development oil well to be located on the west side of the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. The GPS 24-13RD2 well will be an offshore, deviated development oil well with a surface location of 2,392 feet from the south line and 1,376 feet from the east line of Section 13, Township 10 North, Range 12 West, Seward Meridian (S.M.). The top of the Middle Kenai producing interval location is 565 feet from the south line and 1,939 feet from the west line of Section 13, Township 10 North, Range 12 West, S.M. The bottom hole location is 2,599 feet from the north line and 2,363 feet from the west line of Section 24, Township 10 North, Range 12 West, S.M. 3. GPS 24-13RD2 well will be located entirely within State of Alaska Oil and Gas Lease ADL 18761. 4. GPS 24-13RD2 well will be completed within the Middle Kenai Oil Pool within an area governed by Conservation Order No. 76. 5. GPS 24-13RD2 will be the third well within the southwest quarter of Section 13 and northwest quarter of Section 24 open to, or capable of producing, from the Middle Kenai Oil Pool. 6. GPS 24-13RD2 will be within 1,000 feet to the GPS 11-24RD development well completed in the Middle Kenai Oil Pool. Conservation Order 76, Rule 2. Spacing provides a. not more than two completed wells shall be allowed in any governmental quarter section; and b. no pay opened to the well bore shall be nearer than 500 feet to any property line nor nearer than 1,000 feet to any well drilling to or capable of producing from the same pool. CO 76.35 November 8, 2017 Page 2 of 2 8. Conservation Order 76, Rule 7. Administrative Approval specifies in part that the Alaska Oil and Gas Conservation Commission (AOGCC) "...may authorize the conversion or drilling of any well at any location... reasonably designed to further the purposes of the project." 9. The drilling and completion of GPS 24-13RD2 is designed to maximize recovery from the Middle Kenai Oil Pool at Granite Point Field by accessing un -drained reserves in discontinuous, lenticular oil reservoirs that cannot be reached by wells conforming to applicable spacing restrictions. 10. The potentially affected landowners, owners and operators within a 1,000 foot radius of the GPS 24-13RD2 well are Hilcorp and the State of Alaska, Department of Natural Resources (DNR). In conformance to Rule 7 of Conservation Order No. 76, Hilcorp gave notice of this request. On November 3, 2017, Hilcorp sent notice of its application to the DNR. The AOGCC received no objection regarding Hilcorp's request. CONCLUSIONS: 1. An exception to the well spacing provisions of Rule 2, CO 76 is necessary to allow drilling, completion, and production of the GPS 24-13RD2 development oil well to maximize recovery of reserves. 2. A spacing exception to allow drilling, completion, and production of the GPS 24-13RD2 development oil well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. NOW THEREFORE IT IS ORDERED: Hilcorp's November 3, 2017 application for an order granting an exception to the well spacing requirements of Rule 2 of Conservation Order No. 76 to allow drilling, completion, and production of the GPS 24-13RD2 development oil well is approved. Hilcorp may proceed as long as it complies with the terms of the Granite Point Unit agreement, applicable Alaska laws, and all other legal requirements. DONE at Anchorage, Alaska and dated November 8, 2017. 1. //signature on file// //signature on file// //signature on file// Hollis French Daniel T. Seamount, Jr. Cathy P. Foerster rhair (`nmmiccinnar CnmmiccinnPr (nmmiccinnPr AND APPEAL 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 tune 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 pan 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 wart. 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 atter 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 ifthe AOGCC otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(6), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC by the application for reconsideration" In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, November 08, 2017 1:44 PM To: DOA AOGCC Prudhoe Bay, Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Davies, Stephen F (DOA); Foerster, Catherine P (DOA); French, Hollis (DOA); Frystacky, Michal (DOA); Guhl, Meredith D (DOA); Kair, Michael N (DOA); Link, Liz M (DOA); Loepp, Victoria T (DOA); Mumm, Joseph (DOA sponsored); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Quick, Michael J (DOA); Regg, James B (DOA); Roby, David S (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Wallace, Chris D (DOA); AK, GWO Projects Well Integrity; AKDCWeIIIntegrityCoordinator, Alan Bailey; Alex Demarban; Alicia Showalter, Allen Huckabay; Andrew Vandedack; Ann Danielson; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Ben Boettger; Bill Bredar, Bob Shavelson; Brandon Viator; Brian Havelock; Bruce Webb; Caleb Conrad; Candi English; Cocklan-Vendl, Mary E; Cody Gauer; Colleen Miller, Connie Downing; Crandall, Krissell; D Lawrence; Dale Hoffman; Danielle Mercurio; Darci Horner; Dave Harbour, David Boelens; David Duffy; David House; David McCaleb; David McCraine; ddonkel@cfl.rr.com; Diemer, Kenneth J (DNR); DNROG Units (DNR sponsored); Donna Ambruz; Ed Jones; Elizabeth Harball; Elowe, Kristin; Elwood Brehmer; Evan Osborne; Evans, John R (LDZX); Brown, Garrett A (DNR); George Pollock, Gordon Pospisil; Greeley, Destin M (DOR); Gretchen Stoddard; gspfoff, Hurst, Rona D (DNR); Hyun, lames J (DNR); Jacki Rose; Jason Brune; Jdarlington oarlington@gmail.com); Jeanne McPherren; Jerry Hodgden; Jill Simek; Jim Watt; Jim White; Joe Lastufka; Radio Kenai; Burdick, John D (DNR); Easton, John R (DNR); Larsen, John M (DOR); John Stuart; Jon Goltz; Chmielowski, Josef (DNR); Juanita Lovett; Judy Stanek; Kari Moriarty; Kasper Kowalewski; Kazeem Adegbola; Keith Torrance; Keith Wiles; Kelly Sperback; Frank, Kevin J (DNR); Kruse, Rebecca D (DNR); Kyla Choquette; Gregersen, Laura S (DNR); Leslie Smith; Lori Nelson; Luke Keller; Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt, Mark Wedman; Michael Bill; Michael Calkins; Michael Moora; Michael Schoetz; Mike Morgan; MJ Loveland; mkm7200; Motteram, Luke A, Mueller, Marta R (DNR); Nathaniel Herz; knelson@petroleumnews.com; Nichole Saunders; Nick Ostrovsky; NSK Problem Well Supv; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Renan Yanish; Richard Cool; Robert Brelsford; Robert Warthen; Sara Leverette; Scott Griffith; Shahla Farzan; Shannon Donnelly, Sharon Yarawsky; Skutca, Joseph E (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Stephanie Klemmer; Stephen Hennigan; Sternicki, Oliver R; Moothart, Steve R (DNR); Steve Quinn; Suzanne Gibson; sheffield@aoga.org; Tanisha Gleason; Ted Kramer; Teresa Imm; Tim Jones; Tim Mayers; Todd Durkee; Tom Maloney; trmjr1; Tyler Senden; Umekwe, Maduabuchi P (DNR); Vinnie Catalano; Well Integrity; Well Integrity; Weston Nash; Whitney Pettus; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andy Bond; Bajsarowicz, Caroline J; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; Corey Munk; Don Shaw; Eppie Hogan ; Eric Lidji; Garrett Haag; Smith, Graham 0 (DNR); Heusser, Heather A (DNR); Fair, Holly S (DNR); Jamie M. Long; Jason Bergerson; Jesse Chielowski; Jim Magill; Joe Longo; John Martineck, Josh Kindred; Keith Lopez; Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Melonnie Amundson; Franger, James M (DNR); Morgan, Kirk A (DNR); Umekwe, Maduabuchi P (DNR); Pat Galvin; Pete Dickinson; Peter Contreras; Rachel Davis; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); William Van Dyke Subject: co76.35 (Hilcorp) Granite Point State 24-13RD2 Attachments: co76.35.pdf Please see Attached. Re: THE APPLICATION OF Hilcorp Alaska, LLC to drill and complete the Granite Point State 24- 1311132 development oil well within 1,000 feet of, and within the same governmental quarter section as, wells that are, or may be capable of, producing from the same pool. Jody J. Co(ombie AOGCC Syecia(Assistant ACaska Oi(andCGas Conservation Commission 333 west yF Avenue Anchorage, ACaska 99501 Office: (907) 793-1221 Fax: (907) 276-7542 Conservation Order No. 76.35 Granite Point State 24-13RD2 Granite Point Unit Granite Point Field Middle Kenai Oil Pool 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 Jody Colombie at 907.793.1221 or iody.colombie@alaska.aov. Bernie Karl Gordon Severson Penny Vadla K&K Recycling Inc. 3201 Westmar Cir. 399 W. Riverview Ave. P.O. Box 58055 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 Fairbanks, AK 99711 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 INDEXES 11 Hilcorp Alaska, LLC November 7, 2017 Hollis French, Chair Alaska Oil and Gas Conservation Commission 333 West 7`^ Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception Granite Point 24-13RD2 Well Dear Commissioner French, Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone: 907/777-8300 Fax: 907/777-8301 RECEIVED NOV 0 7 M7 AOGGG Pursuant to Rule 7 of Conservation Order No. 76, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Granite Point Unit, hereby requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to take administrative action to approve a spacing exception required to drill the Granite Point 24-13RD2 Well ("GP 24-13RD2"), in the Middle Kenai Oil Pool. Hilcorp submitted to AOGCC, the Permit to Drill GP 24-13RD2 on October 3`d, 2017. The application is pending AOGCC approval. This well will be drilled from the Granite Point Platform to the south, with a bottom hole depth of 13,501' MD. Drilling operations are expected to commence approximately November 11 d', 2017. The anticipated productive interval and location of the Middle Kenai Oil Pool in the GP 24-13RD2 Well is depicted on the attached plat, Exhibit A, and is further indicated as follows below: Surface Location: • State Lease ADL 018761 • 2,392' FSL, 1,376' FEL • Section 13, T10N-R12W, SM Top of the Middle Kenai Producing Interval: • State Lease ADL 018761 • 400' FNL, 1,654' FWL • Section 24, T10N-R12W, SM Bottom Hole Location: • State Lease ADL 018761 • 2,599' FNL, 2,363' FWL • Section 24, TION-R12W, SM Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 7, 2017 Page 2 of 4 Well spacing within the Granite Point Middle Kenai Oil Pool is governed by Rule 2 of Conservation Order 76: Rule 2. Saacing. (a) Not more than two completed wells shall be allowed in any governmental quarter section. (b) No pay opened to the well bore shall be nearer than 500 feet to any property line nor near that 1,000 feet to any well drilling to or capable of producing from the same pool. This spacing exception is necessary because the proposed drilling of GP 24-13RD2 will be the third (3rd) well within a governmental quarter section capable of producing from, or open to, the Middle Kenai Oil Pool. The GP 12-24, an idle water injector well, and GP 11-24RD are both located in the northwest quarter of Section 24. GP 24-13RD2 will also be less than 1,000 feet from the GP 11-24RD Well, as shown on Exhibit A. The proposed drill well will target undrained Middle Kenai Oil Pool reserves that cannot be reached by existing wells conforming to the existing applicable spacing restrictions. Hilcorp is the sole operator and working interest owner of the Granite Point Unit. The State of Alaska is the sole landowner. There are no other owners or operators affected by this proposed application. As such, correlative rights of all affected owners, landowners and operators will be protected by exception approval. Pursuant to 20 AAC 25.055 (d)(3), an affidavit, Exhibit B, is enclosed stating the undersigned is acquainted with the facts and verifying that all facts, set forth herein, are true. It is requested that the Commission approve, by Administrative Approval, pursuant to Rule 7 of Conservation Order No. 76, an exception to the well spacing for drilling the GP 24- 13RD2 Well. If you require additional information or would like to have a technical meeting regarding the GP 24-13RD2 Well, please contact Thomas Nenahlo, Reservoir Engineer, at (907) 777-8424 or me at (907) 777-8414. Sincerely, Mic ae ft/�etz ann odman Hilcorp Alaska, LLC cc: Kevin Pike, Unit Manager, State of Alaska, DNR (via email) Chantal Walsh, Director, Division of Oil and Gas (via email) Jody Colombie, Assistant, AOGCC (via email) Samantha J. Carlisle, AOGCC (via email) Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 7, 2017 Page 3 of 4 EXHIBIT A APPLICATION FOR SPACING EXCEPTION GRANITE POINT 24-13RD2 WELL Alaska State Plane Zone 4, NAD27 Map Date: 11-£-2017 Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 7, 2017 Page 4 of 4 EXHIBIT B APPLICATION FOR SPACING EXCEPTION GRANITE POINT 24-13RD2 WELL VERIFICATION OF APPLICATION FOR SPACING EXCEPTION COOK INLET, ALASKA ADL 018761 GP 24-13RD2 Well Granite Point Unit I, Michael W. Schoetz, Landman, Hilcorp Alaska, LLC do hereby verify the following: I am acquainted with the application submitted for the drilling of the GP 24-13RD2 Well in the Granite Point Unit. I have reviewed the application submitted for the exception to 20 AAC 25.055 (a)(3) and all facts therein are true. I have reviewed the plat attached to said application, and it correctly portrays pertinent and required data. DATED at Anchorage, Alaska, this 6"' day of November 2017. Michael W. Schoetz C/// Landman STATE OF ALASKA ) THIRD JUDICIAL DISTRICT) SUBSCRIBED TO AND SWORN before me this 6th day of November 2017 STATE OF ALASKA G�� / / NOTARY PUBLIC NOTARY PUBLIC IN AND FOR THE CODY T. TERRELL STATE OF ALASKA MV COMMISSION EMPIRES SEP 6. 2020 My commission Expires:94-d.pa-O GP -44-11 SHL / AN -99 BHL' AN -17 BH MUGI-01 SH CJ.y3 � ADLO18742 '�� @@@ 1\ UGI -02 BHL GP-31-14PB BHLGP-31-14 BHL GP -51 BHL \, BHL 4-33-14 BHL / ADLO18761 / / •CP!31-23 BHL i i i GP32-23 / GP54PB BH r / I I I r P-54 BHL BHL `\ WC -1-03 BHL 1 GRANk`E_PT 1 BHLGP-11-13 BHL GP -31-13 BHL \\ \i GP-11-13RD BHL �\ 1 ate,' G�31-141FZ141�HL1 GP -22-13 P 2-13 BHL ' GP -13 BHL / 8 B' - P33-13 BHLN` GP+V813RD3 PB1 B1 /'/' I • `` GP -22-1`3( 1 P132 BI P55 HL GP-22-13RD3 bk GP32-13RDPB Bh -24-13 8HL `o IGP 12-24 TPH I E[oil R GP A of Prod GPI See 18 GP-32-13RD BHL Legend ■ Granite Point Platform QGranite Point Unit Boundary purr GP 12-24 Wellbore (idle injector) • GP 11-24RD Wellbore • GP 24-13RD2 Wellbore 1 ' GP 24-13RD2 1 000f buffer S -- - Miles for Application for Spacing Exception Alaska State Plane Zone 4, NAD27 itL Granite Point 24-13RD2 Map Date: 11-6-2017 HiI.0 1+1 Hilcorp Alaska, LLC November 3, 2017 Hollis French, Chair Alaska Oil and Gas Conservation Commission 333 West 7" Avenue, Suite 100 Anchorage, Alaska 99501 RE: Application for Spacing Exception Granite Point 24-13RD2 Well Dear Commissioner French, Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone: 907/777-8300 Fax: 907/777-8301 RECEIVED NOV 0 3 2017 AOGCC Pursuant to Rule 7 of Conservation Order No. 76, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Granite Point Unit, hereby requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to take administrative action to approve a spacing exception required to drill the Granite Point 24-13RD2 Well ("GP 24-13RD2"), in the Middle Kenai Oil Pool. Hilcorp submitted to AOGCC, the Permit to Drill GP 24-13RD2 on October 3rd, 2017. The application is pending AOGCC approval. This well will be drilled from the Granite Point Platform to the south, with a bottom hole depth of 13,501' MD. Drilling operations are expected to commence approximately November 8th, 2017. The anticipated productive interval and location of the Middle Kenai Oil Pool in the GP 24-13RD2 Well is depicted on the attached plat, Exhibit A, and is further indicated as follows below: Surface Location: • State Lease ADL 018761 • 2,391' FNL, 1,372' FWL • Section 13, T10N-R12W, SM Top of the Middle Kenai Producing Interval: • State Lease ADL 018761 • 400' FNL, 1,654' FWL • Section 24, T10N-R12W, SM Bottom Hole Location: • State Lease ADL 018761 • 2,599' FNL, 2,363' FWL • Section 24, TION-R12W, SM Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 3, 2017 Page 2 of 3 Well spacing within the Granite Point Middle Kenai Oil Pool is governed by Rule 2 of Conservation Order 76: Rule 2. Spacing. (a) Not more than two completed wells shall be allowed in any governmental quarter section. (b) No pay opened to the well bore shall be nearer than 500 feet to any property line nor near that 1,000 feet to any well drilling to or capable of producing from the same pool. This spacing exception is necessary because the proposed drilling of GP 24-13RD2 will be the third (3rd) well within a governmental quarter section capable of producing from, or open to, the Middle Kenai Oil Pool. The GP 12-24, an idle water injector well, and GP 11-24RD are both located in the northwest quarter of Section 24. GP 24-13RD2 will also be less than 1,000 feet from the GP 11-24RD Well, as shown on Exhibit A. The proposed drill well will target undrained Middle Kenai Oil Pool reserves that cannot be reached by existing wells conforming to the existing applicable spacing restrictions. Hilcorp is the sole operator and working interest owner of the Granite Point Unit. The State of Alaska is the sole landowner. There are no other owners or operators affected by this proposed application. As such, correlative rights of all affected owners, landowners and operators will be protected by exception approval. It is requested that the Commission approve, by Administrative Approval, pursuant to Rule 7 of Conservation Order No. 76, an exception to the well spacing for drilling the GP 24- 13RD2 well. If you require additional information or would like to have a technical meeting regarding the GP 24-13RD2 well, please contact Thomas Nenahlo, Reservoir Engineer, at (907) 777- 8424 or me at (907) 777-8414. Sincerely, Michael W. Schoetz, Landman Hilcorp Alaska, LLC cc: Kevin Pike, Unit Manager, State of Alaska, DNR (via email) Chantal Walsh, Director, Division of Oil and Gas (via email) Jody Colombie, Assistant, AOGCC (via email) Samantha J. Carlisle, AOGCC (via email) Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 3, 2017 Page 3 of 3 EXHIBIT A APPLICATION FOR SPACING EXCEPTION GRANITE POINT 24-13RD2 WELL \ \rr -i3 eHL •�__.._--__ �� #Yeti` _-- K24-13RD2 SHL Ji 19A MlEeR • I � � 1� PBl Cx:l%A) ' C,P311{ eil J r r r 1 � GP32-t 31R)'s 1 r 1 ♦ Gp-3]-f 3rIDPe GP24-13RD2_TPH r! c�ao-t3rs SO.tieK Jr GP 11-24RD_TPH r vx J ` eN c-n3izv eK � I } v GP 11-24RD_8HL ADLO18761 f , r t GP 12-24 Top of Open Pert _r`kw'azxa� rte, � � 1`. Ca.tt tm PB elt �36a3-naa , ( i GP 12-24B HL 4 _ 1 ` t r GP 24-13RD2 BHL r r \tea, i l + r l t � r r 1 1 GPSteK ' t yma, r Legend 1 Granite Point Platform 1 1 O Granite Point Unit Boundary ADL374045 j --- GP 12-24 Wellbore (idle iniectorl t r 1 C GP 11-24RD Wellbore i r O GP 24-13RD2 Wellbore t r�sae a • �_' GP 24-13RD2 1000fl buffer GP -51 BHL ♦---------- GP 24-13RD2_SHL i r PURD BHL \ • SGP -33-14 BHL GP -44-140 •-7 rr GP 24-13RD2 TIPH / / r r / C,941-23 BHL / ADL01876,1 GP 12-24 Top of Open Perf �r rr dP32-23 V �0-33-23 BHL r' GP-54PB BHk,, 2p i GP 12-24_BHL 1 GP2 ! ! ! ! SGP -54 BHL • �V ADL374045 QQi -92-13 BHL \ v � ------- _________-- GP32-2 s' F'2-0 GP -13 BHL L/ .. GP- i Il�g 9 B��P-33-13 BHL -13RD3 PB1 BH r/// f 1 i�♦♦ GP -22-1 3PH2 BHI�� rr j I � ♦♦ ti �� P55 BHL �. \ GP-22-13RD3 1 1 GP32-13RDP6 BFff GIFT-24-13R� -24-13 BHL / GP 11-24RD TPH GP 11-24RD_BHL I � ! 0 \ 24 PB BHL [Se_6 MIM 1 I Legendra ■ I Granite Point Platform I I O Granite Point Unit Boundary GP 12-24 Wellbore (idle injector) I • GP 11-24RD Wellbore • GP 24-13RD2 Wellbore P-53 BHL L -----i GP 24-13RD2 1 000f buffer rf I Hilcorp Alaska, LLC November 3, 2017 Patricia Bettis Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Transmittal of Application for Spacing Exception Granite Point 24-13RD2 Well Dear Ms. Bettis, Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone: 907/777-8300 Fax: 907/777-8301 RECEIVE® NOV 0 3 2017 AOGCC Enclosed for your consideration is an Application for Spacing Exception for Hilcorp Alaska, LLC's (Hilcorp) upcoming Granite Point 24-13RD2 well. Hilcorp is submitting this transmittal explaining the unusual circumstances regarding the Granite Point Platform drilling program, permitting and its timing and sequence of well drilling. Hilcorp is in the final stage of drilling and completing the approved Granite Point 11-24RD Well. This well was perforated November 2, 2017, with an anticipated completion date of November 7, 2017, and did not require a Spacing Exception. On October 3, 2017, Hilcorp submitted an Application for Permit to Drill well GP 24- 13RD2 targeting undrained Middle Kenai Oil Pool reserves that cannot be reached by any existing wells thinking it was in conformance with current applicable spacing restrictions. The GP24-13RD2 Application for Permit to Drill is currently pending Alaska Oil and Gas Conservation Commission (AOGCC) approval. As for timing, the GP 24-13RD2 well should be rigged up by November 8, 2017. Approximately three days of work will be performed under approved AOGCC Sundry 317-164 with drilling operations capable of commencing November 11, 2017. At the time the GP 24-13RD2 Application for Permit to Drill was filed, Hilcorp did not consider the Granite Point 12-24 well as being a completed well targeting, capable of producing from, or having open pay to, the Middle Kenai Oil Pool, because it's an idle water injection well. In our mind the need for a spacing exception was solely dependent on the results of the GP 11-24RD Well. Should GP 11-24RD be successful, and the productive horizon fall within a 1,000' of the planned 24-13RD2 Well, then a spacing exception would have been required. Hilcorp planned to submit an application for Spacing Exception to AOGCC at such time. Should GP 11-24RD be unsuccessful or the productive horizon falls outside of 1,000' of 24-13RD2, then no spacing exception would have be required for GP 24-13RD. Bottom line, Hilcorp did not believe the above conditions would prevent us from obtaining a Permit to Drill. Had we known a Permit to Drill would not be approved until a Spacing Exception was approved, we would have submitted an Application for Spacing Exception with the Application for Permit to Drill October 3, 2017. Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 3, 2017 Page 2 of 3 Part of Hilcorp's reasoning for not prematurely filing an Application for a Spacing Exception in anticipation of a successful well completion in GP 11-24RD was the uncertainty of the actual completion being within the 1,000 foot offset. In the past, on other matters, Hilcorp has been discouraged from prematurely submitting requests and Sundries until it was known exactly what approval was needed, as this caused unnecessary work and confusion for AOGGCC staff. Additionally, Hilcorp felt the AOGCC's Administrative Approval under Rule 7 would be the appropriate vehicle for approval of the Application for Permit to Drill given the completion uncertainty of GP 11-24RD. On November 2, 2017, after consultation with AOGCC staff, Hilcorp was advised that it was AOGCC policy to not approve an Application for Permit to Drill until an Application for Spacing Exception was approved, should one be required. Hilcorp was also advised that the idle injection well, GP 12-24, would count as the 3`a well in the quarter section and therefore be outside of the existing Pool Rules, thus requiring a Spacing Exception. Hilcorp learned from the meeting that AOGCC staff is receptive to Hilcorp applying for Spacing Exceptions for targeted zones in anticipation of potential well plan deviations in the future. In light of this matter, Hilcorp will be submitting a proposed Amendment to Conservation Order 76 seeking revisions to the Granite Point Pool Rules to address future spacing concerns. In the meeting, Hilcorp advised the AOGCC, if standby is required while waiting on an approved spacing exemption, economic waste will occur costing approximately $85,000/day with personnel onboard the platform and $35,000/day to maintain the rig in a warm stack mode. Rig crews will be released during standby and a restart of the rig will be required. Waste will occur in other forms of lost reserves and royalties to the State of Alaska. A successful GP 24-13RD2 well is anticipated to add an additional 400 bbls/day production to the Granite Point Platform. There are no future plans to activate another drill rig to the platform as it would be uneconomic to re -mob a rig to the platform to drill GP 24-13RD2 as a standalone well. Therefore, this well will be a lost opportunity. Additionally, and maybe the most important extenuating circumstance, is the rig is contracted to another operator on the North Slope December 1, 2017. There is not enough time to publish, receive approval of a Spacing Exception, permit to drill, and drill GP 24- 13RD2 prior to the rig's departure. Another component in this matter is notice to all affected parties. Hilcorp is the only working interest owner, and the State of Alaska (DNR) is the only landowner. Hilcorp has been in contact with the DNR and they have verbally agreed to provide a non -objection letter or acknowledgement of their non -objection to the issuance of a Spacing Exception for the drilling of the GP 24-13RD2 Well. Hilcorp will transmit the non -objection upon receipt. For the above stated reasons, and pursuant to Rule 7 of Conservation Order No. 76, Hilcorp requests Administrative Approval of the Application for Permit to Drill for GP 24-13RD2 submitted October 3, 2017, prior to receiving an approved Spacing Exception. Hilcorp Alaska, LLC Spacing Exception GP 24-13RD2 Well November 3, 2017 Page 3 of 3 The enclosed Application for Spacing Exception is filed herewith for appropriate processing and subsequent approval. A letter or acknowledgment of non -objection from the DNR will be forthcoming and a proposed amendment to Conservation Order 76 is being generated for subsequent submittal to address spacing requirements among other matters. Hilcorp understands these unusual circumstances are outside of the normal protocol for AOGCC approval of the Permit to Drill. However, approval mechanisms are in place to facilitate this matter allowing for the drilling of GP 24-13RD2. Hilcorp also understands any such approval will be conditioned upon ultimate approval of the enclosed Application for Spacing Exception, a letter or acknowledgement of non -objection from DNR to the Spacing Exception Application, and the inability to perforate or open the wellbore to production, until all are approved. Allowing Hilcorp to proceed with the timely drilling of the well will not affect the correlative rights of the parties and will facilitate the recovery of additional reserves that will be lost if the rig is removed from the platform. Thank you for your consideration. Should you have any questions regarding this transmittal letter or the Application for Spacing Exception enclose herewith, please contact Thomas Nenahlo, Reservoir Engineer, at (907) 777-8424 or Michael W. Schoetz at (907) 777-8414. Sincerely, �� 4.'lA� Michael W. Schoetz, Landman Hilcorp Alaska, LLC THE STATE 01ALASKA GOVERNOR BILI. WALKER November 3, 2017 Cody Terrell Hilcorp Alaska, LLC 3800 Centerpoint Drive, Suite 1400 Anchorage, AK 99503 Department of Natural Resources Re: Non -Opposition to Granite Point Unit Spacing Exception Dear Mr. Terrell: DIVISION OF OIL & GAS 550 W 7"' Avenue, Suite 1100 Anchorage, AK 99501-3560 Main: 907.269.8800 Fax: 907.269.8939 The Department of Natural Resources Division of Oil & Gas (Division) received Hilcorp Alaska, LLC's November 3, 2017 application to the Alaska Oil and Gas Conservation Committee for a spacing exception to drill the Granite Point 24-13RD2 Well (GP 24-1311132). The drilling of the GP 24-13RD2 was part of Hilcorp LLC's 2017 Plan of Development, approved by the Division on April 17, 2017). The Division does not oppose Hilcorp's spacing exception application. Sincerely, Jam Beckham Deputy Director 10 Post Office Box 244027 Anchorage, AK 99524-4027 Hilcorp Alaska, LLC300 Suite 100terpoint Drive Anchorage, AK 99503 Phone:907/777-8300 June 19, 2017 Fax:907/777-8301 Cathy Foerster, Chair RECEIVED Alaska Oil and Gas Conservation Commission 333 West 7t' Avenue, Suite 100 JUN 21 2017 Anchorage, Alaska 99501 A0GGG RE: Application for Spacing Exception Granite Point 22-13RD3 Well Dear Commissioner Foerster, Pursuant to Rule 7 of Conservation Order No. 76, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Granite Point Unit, hereby requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to take administrative action to approve a spacing exception required to re -drill the Granite Point 22-13RD3 well ("GP 22-13RD3"), in the Middle Kenai Oil Pool. Hilcorp submitted to AOGCC, the Permit to Drill GP 22-13RD3 on June 6th, 2017. The application is pending AOGCC approval. This well will be re -drilled from the Granite Point Platform in a south-easterly direction to a bottom hole depth of 13,169' MD. Hilcorp will utilize the existing Granite Point 22-13RD2 well casing down to 8,500' MD. Drilling operations are expected to commence approximately July 15'', 2017. The anticipated productive interval and location of the Middle Kenai Oil Pool in the GP 22-13RD3 well is depicted on the attached plat, Exhibit A, and is further indicated as follows below: Surface Location: • State Lease ADL 18761 • 2,383' FNL, 1,371' FWL • Section 13, T10N-R12W, SM Top of the Middle Kenai Producing Interval: • State Lease ADL 18761 • 2,412' FNL, 1,995' FEL • Section 13, T10N-R12W, SM Bottom Hole Location: • State Lease ADL 18761 • 958' FSL, 75' FWL • Section 18, T10N-R12W, SM Hilcorp Alaska, LLC Spacing Exception GP 22-13RD3 Well June 12, 2017 Page 2 of 3 Well spacing within the Granite Point Middle Kenai Oil Pool is governed by Rule 2 of Conservation Order 76: Rule 2. Spacing. (a) Not more than two completed wells shall be allowed in any governmental quarter section. (b) No pay opened to the well bore shall be nearer than 500 feet to any property line nor near that 1,000 feet to any well drilling to or capable of producing from the same pool. This spacing exception is necessary because the proposed re -drill of GP 22-13RD3 will be the third (3`d) well within the northeast quarter of Section 13, and the second (2°d) well within the southeast quarter of Section 13, capable of producing the Middle Kenai Pool. Also, the GP 22-13RD3 will be less than 1,000 feet from the Granite Point 32-13RD well as shown on Exhibit A. However, the proposed re -drill will target undrained Middle Kenai Oil reserves that cannot be reached by existing wells conforming to applicable spacing restrictions. Hilcorp is the sole operator of the Granite Point Unit. The State of Alaska is the sole landowner. There are no other owners or operators affected by this proposed application. As such, correlative rights of all affected owners, landowners and operators will be protected by exception approval. It is requested that the Commission approve, by Administrative Approval, pursuant to Rule 7 of Conservation Order No. 76, an exception to the well spacing for re -drilling the GP 22-13RD3 well. If you require additional information or would like to have a technical meeting regarding the GP 22-13RD3 well, please contact Reid Edwards, Reservoir Engineer, at 907-777- 8421 or you may contact the undersigned at 907-777-8432. Sincerely, Cody T. Terrell, Landman Hilcorp Alaska, LLC cc: Kevin Pike, Unit Manager, State of Alaska, DNR (via email) Chantal Walsh, Director, Division of Oil and Gas (via email) Jody Colombie, Assistant, AOGCC (via email) Hilcorp Alaska, LLC Spacing Exception GP 22-13RD3 Well June 12, 2017 Page 3 of 3 EXHIBIT A APPLICATION FOR SPACING EXCEPTION GRANITE POINT 22-13RD3 WELL 99 9�3 ADLO18742 @Gav 4Kl GP 31-13 Well Plan GP 22-13RD3 SHL Plan GP 22-13RD3_TPII @� GP32-13RD Well ADLO18761 Plan GP 22-13RD3 13111, Legend -- Middle Kenai Oil Pool Productive Interval Granite Point Platform } Q Granite Point Unit Boundary • Hilcorp Alaska, LLC May 7, 2015 Cathy P. Foerster, Chair Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue, Suite 100 Anchorage, AK 99501 0 RECEIVED MAY 11 2015 AOGCC RE APPLICATION FOR SPACING EXCEPTION Granite Point State 18742 17A Well Dear Ms. Foerster: Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone: 907-777-8341 Fax: 907-777-8580 jstanek@hilcorp.com Pursuant to Rule 7 of Conservation Order 76, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Granite Point Unit, hereby requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to take administrative action to approve a spacing exception required to re -complete the Granite Point State 18742 17A well ("AN-17A"), in Middle Kenai Oil Pool. AOGCC submitted the Permit to Drill AN-17A on March 19, 2013. AOGCC approved the Permit to Drill on April 25, 2013. Subsequently, this well was drilled and completed in the Granite Point Undefined Hemlock Oil Pool. To date, this well has been unsuccessful and it is necessary to plug - back and abandon the Hemlock perforations and recomplete the well up -hole in the Granite Point Middle Kenai Oil Pool. The anticipated productive interval and location of the Middle Kenai Oil Pool in the wellbore of AN- 17 is depicted on the attached plat, Exhibit A, and is further indicated as follows below: Surface Location: - State Lease ADL 18742 - 798' FNL, 596' FEL - Section 12, T10N-R12W SM Top of the Middle Kenai Producing Interval: - State Lease ADL 18742 - 256' FEL, 2702' FSL - Section 12, T10N-R12W SM Bottom of the Middle Kenai Producing Interval - State Lease ADL 18742 - 3044' FWL, 1380' FSL - Section 12, T10N-R12W SM Granite Pt St 18742 17A Well Spg Exception May 5, 2015 Page 2 of 2 Bottom Hole Location - State Lease ADL 18742 898' FSL, 1,994' FWL - Section 12, T10N-R12W SM Well spacing within the Granite Point Middle Kenai Oil Pool is governed by Rule 2 of Conservation Order 76: Rule 2. Spacing_ (a) Not more than two completed wells shall be allowed in any governmental quarter section. (b) No pay opened to the wellbore shall be nearer than 500 feet to any property line nor near that 1,000 feet to any well drilling to or capable of producing from the same This spacing exception is necessary because the proposed recompletion of AN- 17A will be the fourth (4t') well within the southeast quarter of Section 12 capable of producing the Middle Kenai Pool. Also, the AN-17A will be less than 1,000 feet to the AN-21, AN-23RD and the AN-09 wells as shown on Exhibit A. However, the proposed perforation will target un-drained Middle Kenai reserves that cannot be reached by existing wells conforming to applicable spacing restrictions. Hilcorp is the sole operator of the Granite Point Unit/Field. The State of Alaska is the sole landowner. There are no other owners or operators affected by this proposed application. As such, correlative rights of all affected owners, landowners and operators will be protected by exception approval. It is requested that the Commission approve, by Administrative Approval, pursuant to Rule 2 of Conservation Order No. 76, an exception to the spacing for re -completing the AN- 17A well. If you require additional information or would like to have a technical meeting regarding the AN- 17A well, please contact Mr. Dan Taylor, Reservoir Engineer, at 907-777-8319 or you may contact the undersigned at 907-777-8341. Sincerely, 54-4� 'V—� Judy Stanek Landman cc: Corrie Feige, Director, Division of Oil and Gas, DNR (hardcopy) Kyle Smith, Unit Manager, Division of Oil and Gas (via email) Patricia Bettis, Senior Petroleum Geologist, AOGCC (via email) T10N T12W AN-23RD nj�AN-33 916' i i I AN AN- 17A A I MUC W2 I I :TRA 5/5/2015 10:21:23 AM I 190' 675' I I � AN- FEET Spacing Exception Application Exhibit A Granite Point State 18742 17A (aka AN-17A) 1 0 0 Hilcorp Alaska, LLC May 7, 2015 Cathy P. Foerster, Chair Alaska Oil and Gas Conservation Commission 333 West 7°i Avenue, Suite 100 Anchorage, AK 99501 RE APPLICATION FOR SPACING EXCEPTION Granite Point State 18742 17A Well Dear Ms. Foerster: Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone:907-777-8341 Fax:907-777-8580 jstanek@hilcorp.com Pursuant to Rule 7 of Conservation Order 76, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Granite Point Unit, hereby requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to take administrative action to approve a spacing exception required to re -complete the Granite Point State 18742 17A well ("AN-17A"), in Middle Kenai Oil Pool. AOGCC submitted the Permit to Drill AN-17A on March 19, 2013. AOGCC approved the Permit to Drill on April 25, 2013. Subsequently, this well was drilled and completed in the Granite Point Undefined Hemlock Oil Pool. To date, this well has been unsuccessful and it is necessary to plug - back and abandon the Hemlock perforations and recomplete the well up -hole in the Granite Point Middle Kenai Oil Pool. The anticipated productive interval and location of the Middle Kenai Oil Pool in the wellbore of AN- 17 is depicted on the attached plat, Exhibit A, and is further indicated as follows below: Surface Location: - State Lease ADL 18742 - 798' FNL, 596' FEL - Section 12, T10N-R12W SM Top of the Middle Kenai Producing Interval: - State Lease ADL 18742 - 256' FEL, 2702' FSL - Section 12, T10N-R12W SM Bottom of the Middle Kenai Producing Interval - State Lease ADL 18742 - 3044' FWL, 1380' FSL - Section 12, T10N-R12W SM M. ER T!A 04 MAY 1 1 Z015 OIL AND GAS 0 0 Granite Pt St 18742 17A Well Spacing Exception May 5, 2015 Page 2 of 2 Bottom Hole Location - State Lease ADL 18742 898' FSL, 1,994' FWL - Section 12, TION-R12W SM Well spacing within the Granite Point Middle Kenai Oil Pool is governed by Rule 2 of Conservation Order 76: Rule 2. Spacing (a) Not more than two completed wells shall be allowed in any governmental quarter section. (b) No pay opened to the wellbore shall be nearer than 500 feet to any property line nor near that 1,000 feet to any well drilling to or capable of producing from the same "Phis spacing exception is necessary because the proposed recompletion of AN- 17A will be the fourth (4°i) well within the southeast quarter of Section 12 capable of producing the Middle Kenai Pool. Also, the AN-17A will be less than 1,000 feet to the AN-21, AN-23RD and the AN-09 wells as shown on Exhibit A. However, the proposed perforation will target un-drained Middle Kenai reserves that cannot be reached by existing wells conforming to applicable spacing restrictions. Hilcorp is the sole operator of the Granite Point Unit/Field. The State of Alaska is the sole landowner. There are no other owners or operators affected by this proposed application. As such, correlative rights of all affected owners, landowners and operators will be protected by exception approval. It is requested that the Commission approve, by Administrative Approval, pursuant to Rule 2 of Conservation Order No. 76, an exception to the spacing for re -completing the AN- 17A well. If you require additional information or would like to have a technical meeting regarding the AN- 17A well, please contact Mr. Dan Taylor, Reservoir Engineer, at 907-777-8319 or you may contact the undersigned at 907-777-8341. Sincerely, Judy Stanek/ Landman cc: Corrie Feige, Director, Division of Oil and Gas, DNR (hardcopy) Kyle Smith, Unit Manager, Division of Oil and Gas (via email) Patricia Bettis, Senior Petroleum Geologist, AOGCC (via email) C T10N T12W ADL 18742 AN25 - - Section 1 AN-13 AN D -_.�. AN-23 - .A . AN-52 AN-23RDTWO ' AN-33 916 AN-� AN17A AN-09 A mu 1-01 MUC 1-02 FEET ETRA 5/5/2015 10:21:23 AM Spacing Exception Application Exhibit A Granite Point State 18742 17A (aka AN-17A) Is 0 Unocal Alaska Resou0 1 B' Unocal Corporation U' 909 West 9th Avenue, P.O. Box 196247 Anchorage, Alaska 99519-6247 Telephone (907) 276-7600 UNOCAL* August 27, 1997 Mr. Bob Crandall ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, AK 99501-3192 ORIGINAL Granite Point Field PROPOSED CHANGE TO AREA INJECTION ORDER #I I & CONVERSION OF GRANITE POINT #53 ADL 374045 Dear Mr. Crandall: On September 29, 1986 the AOGCC issued Area Injection Order No. 11 establishing area wide injection covering Section 18 & 19 of T10N, RI I W, S.M., and Section 2,11,13, 14, 23, &24, and E/2 SE/4 of Section 15, NE/4 NEA, S/2 NE/4, SE/4, & SEA SW/4 of Section 22 of T1ON, R12W, S.M. Unocal, as operator of the Granite Point Field, requests that Area Injection Order No. 11 be amended to include the N/2 of Sections 25 & 26, and the NE/4 of Section 27 of T10N, R12W, S.M. The additional area is needed to encompass a structural high that dips southwesterly across a portion of Sections 25 & 26 and into Section 27. Injection of produced water into this area will enhance the recovery of hydrocarbons, and may eliminate the need to drill additional wells. Enclosed in triplicate is our "Application for Sundry Approvals" (form 10-403) to covert the Granite Point #53 development well to an injection service well. Also enclosed is a "Verification of Application" by the undersigned stating that the applicant is acquainted with the facts pursuant to 20 ACC 25.280. Enclosures Sincerely, UNION OIL COMPANY OF CALIFORNIA, d.b.a. UNOCAL � a Dick 15. Cross Landman y, ,! J 9 f�r �, G RAN ITE POINT FIELD I 28 27 26 25 30 29 20 27 26 25'' LEASE # Aft tS 5-f LEASE # ADL 19584 LEASE # A L 19587 ARMIUM i!! MP) L (NSP) UNOCAL ( P) (UNOCAL OPT 33 34 35 36 31 3 33 34 35 36 4 3 2 1 6 5 4 3 2 1 9 f0 11 12 7 B 9 f0 11 12 LEASE # AK M F5-2 LEASE # ADL 19 P42 ARMIMARATNO (N8P) UNOCAL (NoP) AREA INJEC110N (UNOCAL OPR) ' ORDER NO. I f 17 16 15 14 16 15 14 13 f 13 LEASE # OL 19761 • UNOCALI 081L W P) 21 , • a2 23 24 1 20 21 22 23 24 ORAN A FE POINT #53 PROPOSED ADDITION TO AREA '' INJECTION ORDER NO. 11 30 29 20 27 26 20 1 27 26 25 7 25 1 %� M— —�—s® oM—as ww LEASE # A L 374044 LEASE # ADL 374045 UNOCAL/ 81L (3131190) UNOCALMMO /L (313119p) T 11 N :7 T 10 N R 12 W R 11 W UNOCAL, ,76 1 0 a t997 GRANITE POINT DRILLING PROGRAM C-5 STRUCTURE MAP .' c, [ Lease w<\l s. 3-4 �# 71 wa; 204/ � Lease 3P 7wa; k±-7a , ' -4 � a§+ ! ww£! \ kAgS � l �j \ > q. � A + * -ir#' w,rs' -mr> ! _ IN _ k 8 2/? C. Ruff a _ COMM �, ' COr�1/Uf �_. COMM_ �OC�ES LNG Amoco Production Compan I 1 F%G Post Office Box 779 2 ENG Anchorage, Alaska 99510 13 907 - 272-8471 14 ENG L. A. Darsow 17 GEOL District Superintendent I _ 2 GEOL 13 GFOL I STAT TEC I STAT TEC March 20, 1981 CONFER:— — FfLF: -- File: LAD-386-WF Mr. Hoyle H. Hamilton, Commissioner Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 Dear Sir: Application for Exception - Well Spacing Regulation Granite Point 18742 Well No. 40 Platform Bruce, Cook Inlet, Alaska With regard to our recent telephone conversation on February 23, 1981, regarding the drilling permit (dated February 13, 1981) for the subject well, we wish to obtain an exception to the provisions of Conservation Order No. 76 (dated September 12, 1969) of the Alaska Oil and Gas Conservation Commission. Rule 2-A of this order states: "Not more than two completed wells shall be allowed in any govern- mental quarter section..." Please refer to the attached structure map of the C-5 Sand showing the proposed C-5 location of Granite Point 18742 Well No. 40 and the actual C-5 locations of the following wells in the quarter section: Granite Point 18742 Well No. 11 - Producer (Anna) Granite Point 18742 Well No. 24 - Producer (Anna) Granite Point 18742 Well No. 16 - Injector (Bruce) Please note that there are no affected operators on the adjacent sections. �ECE1VED VAR 3 1 J €3 t Alaska Oil & Gay cons. GOtn +issdq,� Anchoraga • 0 March 20, 1981 LAD-386-WF Page 2 It is our desire to initially complete Well No. 40 (C-5 target: 2300' FEL, 600' FNL, Section 1, T10N, R12W, S.M.) as a producer to accurately determine additional drilling opportunities on the west flank of the Granite Point Field. Granite Point 17586 Well No. 8 (see attached map) has given us an indication that this part of the field is economical to develop; however, no conclusive production figures have been established. We will convert Well No. 40 to water injection after testing its productivity. We wish to thank you and your staff for the prompt attention we received on the drilling permit for Well No. 40 (approval granted February 23, 1981) and look forward to your approval of this exception. Please contact T. W. McKay in our Anchorage office with any questions or comments you may have. Yours very truly, L. A. Darsow District Superintendent Attachment TWM/klt RECEIVED I981 Alaska oll & Ga:, Cons. Comm)ssror Anchorage -- 8514: -8392 4( 200-5) 6 -8587 31 36 5(44). F 12 RD 12 (2-' -8054 - A-8753 IIrE BR" U -307 LEGEND: -" -8108 -8336 ELV. 107 KB • CURRENTPRODUCER P♦ CURRENT INJECTOR V PROPOSED PRODUCER PROPOSED INJECTOR IB (31J) P&A PROUECER 8 P 3 8-6j:::( 6 0(3 8) 8630 T P,A INI(C IOR (� 2 ---• INACTIVEPRODE'CLR -8029 --8285 ♦ INACTIVE IN1tCTU35R 8432 - 7994 Qp / 10 (3-6) o I Q c , ' Cb a3 �aa IA • -7649 280-4) 7875 I6 (4-5) -7930 11(I-1) 24(2-3) -8156 1 27R0-i 270-3) A 8239 -8110' -8060 4(4-7) / 32(2-1) of.11rxfj (I-3�RD� i -8546 -8590 co 1 I 31(3 4) 36 ® /-8861 37 38 _9 , Oif Gas ons. Con Anc Orag T 11 N 35 AMOCO ADL 17586 M t W8• R11W 4 • 20 31 at 6& ,' 3✓ /18 16 10 24 11 32 2 1 • 6 28& 27& 7® 26 • 4 • 25 A �3 �f- 15 13 / 19® T 11 3 12 7 10 N 21 m 17 33 9• • Grp f<1UC-2 �97 5 TARGET AREA MU -1 AMOCO r� n 100' RADIUS ADL 18742 IF-3000' MOBIL -UNION ADL 18761 0 11-13 31-13 w Z 31-14 N Q 22-1 Z 32-13 I Q Y 14 13 18 Q • 13-13 • a 33-13 LL AMOCO PRODUCTION CO. p 44-14 LOCATION PLAT MUC-1-3 ul 33-14 • 1" = 2000' H • - PRODUCING WELL 0 24-13 INJECTION WELL 11-24 �- LEASE LINE • December 21, 1977 0. K. Gilbreth, Director Division_ of Oil and Gas Conservation 3001 Porcupine Drive Anchorage, Alaska 99501 File: VDP-1573-986.511 0 Amoco Production Company Security Life Building Denver, Colorado 80202 `J Application for Exception to Spacing, Rule 2 of Conservation Order No. 76 Granite Point Field Amoco Production Company requests that an order of exception to the spacing provisions of Rule 2 of Conservation Order No. 76 be issued regarding the drilling of Well MUC No. 1-3 in the Granite Point Field. The well, proposed as a joint operation between Mobil as operator for Mobil - Union and Amoco as operator for Amoco, Phillips, Getty, Arco and Chevron, will be located on or near the lease line between State leases ADL 18742 and ADL 18761. The subject well is to be drilled as a joint Mobil-Union- Chakachatna ;MUC) Middle Kenai zone :cater injector, The well will not be produced as a producing well prior to use as an injector. The target location at 10,500' + MD, which is the approximate mid -point of the Middle Kenai producing zone, is 3000' from the east line and on the south line of Section 12-T10N-R12W, SM as shown on the enclosed plat. The purpose of this third lease line injection well, part of a field -wide injection program conducted by cooperative agreement between all interested parties, is to improve waterflood efficiency and oil recovery from each competitive property, thereby preventing waste of recoverable hydrocarbons not otherwise recoverable through the use of the present two line injectors, yet preserving the correlative rights of the affected parties. it is contemplated that up to 31000 s PD wili be injected at MOO No. 1-3 at a maximum wellhead pressure of 5500 psia. D E G 3 0 1977 D'V'SiOn of G 1 8 ^a,a GIU„3' 'A . 0. K. Gilbreth, Director December 20, 1977 Page 2 There are no affected operators other than Mobil and Amoco, the operators respectively of the ADL 18761 and ADL 18742 leases. The State of Alaska unleased tract approximately 1-1/2 miles to the east and southeast is the nearest affected property to the subject Mobil -Amoco leases. The attached Verification and Affidavit of certified mailing is a part of this application. We ask that the Alaska Conservation Committee authorize administratively this application pursuant to Rule 7 of Conservation Order No. 76 unless the Committee or any interested party feels a hearing is advisable or necessary. If a hearing is scheduled, please try to arrange it on the 19th of January, 1973. R. B. Giles Enclosures cc: A. P. Lobrecht Mobil Oil Corporation P. 0. Box 5444 Denver, Colorado 80217 E. F. Griffin Union Oil Company of Calif. P. 0. Box 6247 Anchorage, Alaska 99502 Mr. J. P. Denny Phillips Petroleum Company 1300 SecIrity Life Eldg. Denver, Colorado 80202 Mr. Walter J. Newman Getty Oil Company Three Park Central, Suite 700 1515 Arapahoe Street Denver, Colorado 30202 Mr. J. W. Hart Atlantic Richfield Company P. O. Box 360 Anchorage, Alaska 99510 Mr. C. F. Kirkwold Chevron U.S.A., Inc. P. 0. Box 7839 Anchorage, Alaska 99510 ECEIVED VERIFICATION AND AFFIDAVIT STATE OF COLORADO ) ss COUNTY OF DENVER ) R. B. Giles, of lawful age, being first duly sworn on his oath, deposes and says: That he is employed in an engineering capacity by Amoco Production Company in its Denver, Colorado office; that he has been qualified as an expert engineering witness by the Alaska Conservation Committee and his qualifications have been made of record; that he has testified numerous times before the Alaska Conservation Committee on well spacing matters; that Amoco's application for approval to drill MUC - I-3 as a joint Mobil-Union-Chakachatna (MUC) Middle Kenai zone water injector on or near the lease line between State leases ADL 18742 and ADL 18761 in Granite Point Field, as an exception to Rule 2 of Conservation Order No. 76, was prepared under his direction and supervisicn; that the matters and things therein set forth are true and correct to the best of his knowledge and beliefs; and that a copy thereof was sent by certified mail from Applicant's. Denver, Colorado office on December 21, 1977 to the following parties, at the addresses shown herein, co wit: A.P. Lobrecht E.F. Griffin Mobil Oil Corporation Union Oil Co. of California P.O. Box 5444 P.O. Box 6247 Denver, Colorado 80217 Anchorage, Alaska 99502 and to the best of his information, knowledge and belief, the parties above named are the only affected parties to whom notice of such application is required to be given in accordance with Rule 7 of Granite Point Conservation Order No.76 . a R. A GILE Subscribed and sworn to before me this 21st day of December, 1977. My ,c6iEimission expires: NOTARY PUBLIC RFcp�' � r 0 0 PAN AMERICAN PETROLEUM CORPORATION SECURITY LIFE BUILDING DENVER, COLORADO 80202 K August 14, 1970 File: AMR-1470-986.511 Re: Application for Administrative Approval to Convert Ten Wells to Water Injection, Granite Point # Field, Cook Inlet, Alaska %4 pl►n►��o+1 �oY �d �uiN�, .,�,�c A/ram t `�• 1 r Mr. Thomas R. Marshall, Jr. (3) Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Dear Mr. Marshall: Pursuant to Rule 7 of Conservation Order No. 76 entered September 12, 1969, we are applying, on behalf of the Chakachatna Group, for your administrative approval to convert ten wells (eight producing and two shut-in) to water infection service as needed to obtain water injection facility capacity. Enclosed is a letter from Mobil Oil Corporation, as operator for itself and Union Oil Company, the only other affected parties-, which expresses concurrence with the request made in this Appli- cation. Actual water injection start-up will be dependent upon receipt of the injection pump -prime mover packages which have been delayed due to vibration problems. -The vendor's best estimate for solving the problem is currently mid -September, which means that the earliest we can now expect to achieve injection start-up will be late October, 1970. The bottom -hole locations of the wells which are proposed for conversion to water injection into the Middle Kenai Oil Pool are: ADL 17586 Well No. 5 - 21641 FSL, 4541 FEL, ` Section 36, T11N-R12W, S.M. ; ADL 17587 Well No. 3 - 6471 FSL, 7291 FWL, AUG 17 WO Section 30, T11N-RllW, S.M. DIVISION OF OIL AND GAS ANCNORAGI 0 Mr. Thomas R. Marshall, Jr. August 14,, 1970 Page 2 ADL 18742 Well No. 6 - 204:61 FSL, 590' FWL, Section 31, TlIN'-RllW, S.M. ADL 18742 Well No. 7 16411 FSL, 3861 FWL, Section 6, TION-RllW, S.M. ADL 18742 Well No. 10 - 681' FNL, 517' FWL, Section 6, TIUN-RllW, SoMo ADL 18742 Well No. 12 - 2185' FSL, 21101 FEL, Section 31, TUN-R11W, S.M. ADL 18742 Well No, 13 - 1649' FNL, 2014' FWL, Section 12, TlON-R12W, SoM� ADL 18742 Well No. 16 - 631' FNL. 1390' FEL, Section to T1ON-R12W, S.M. ADL 18742 Well No. 19 19121 FNL, 933° FEL,. Section 12, TIUN-R12W, S.M. ADL 18742 Well No. 27 - 2134' FSL, 1243' FEL, Section 1, TlON-R12W, S.M. The producing wells which we may convert to ultimate water injection will be converted by removing the hydraulic pumping equipment (if installed), reperforating with a casing gun at 2 SPF, followed by rerunning a singie'tubing string and a single packer which will be set above the uppermost perforations. Water injections into the entire Middle Kenai oil Pool will continue through the single tubing string until subsequent injection profile work indicates that dual injection would be more appropriate. Expansion joints will be .incorporated into the injection string. ADL 18742 Wells No. 6 and No. 12 have been used for injection test purposes and are currently in a shut-in status. When tests into Well No. 6 terminated, pressure communication existed between the tubing strings and the casing annuluso Prior to its use as a full-time water injector, Well No. 6 will be worked over by pulling and rerunning dual tubing strings and packers to allow the best water injection distribution as revealed during infec- tivity tests. Well No. 12, the original water injection test well, suffered some type of failure during testing. At that time, the enact problem was not defined and tests simply were transferred to Well No. 6 and resumed there. We intend to repair and use Well No. 12 in the water -injection program if repairs can be made at reasonable cost and if injection volume is needed, Mr. Thomas R. Marshall, Jr. August 14, 1970 Page,3 Each of the ten wells enumerated in this Application con- tains appropriate and adequate.casing, which has been properly cemented and testedo These ten wells, incidentally, are the identical ten locations shown as proposed injectors on our Exhibit No. I at the August 15, 1969, Granite Point waterflood hearing. Attachments cc: See Attached List STATE OF COLORADO SS COUNTY OF DENVER Yours ve truly, 3 R. B. GILES being first duly sworn upon oath deposes and says that he is employed by Pan American Petroleum Corporation, that the foregoing Application has been prepared under his super- vision and direction, that he is familiar with the information contained in the Application and that the matters and the things therein set forth are true and correct to the best of his know- ledge and belief. Ra B Giles Subscribed and sworn to before me this 14th day of August, 1970o Notar My Commission expires July 24, 1974. MAILING LIST Mr. Howard Slack Atlantic Richfield Company Po 0. Box 360 Anchs�zage, Alaska 99501 Mr. H. W. Patterson Phillips -Petroleum Company 1300 Security Life Building Denver, Colorado 80202 Mr. F. L. Franz Skelly oil Company 1088 Lincoln Tower Building Denver, Colorado 80203 Mr. Co Co Woodruff Mobil Oil Corporation P. Oo Box 1743 Anchorage, Alaska 99501 Mr. E. F. Griffin Union Oil Company 507 West Northern Anchorage, Alaska of California Lights Boulevard 09503 Mr. F. K. Krebill Pan American Petroleum Corporation P. 0. Box 779 Anchorage, Alaska 99501 Mr. T. J,, Files Pan American Petroleum Corporation Security Life Building Denver, Colorado 80202 i Mobil Coil Corporation Mr. W. M. Jones Pan American Petroleum Corporation Security Life Building Denver, Colorado 802.02 A 0 ., Alaska Division . P. 0. Box 1734 Anchorage, Alaska 9950' July 28, 1970 File: AMR-1271-986.51 Re: Conversion of Pan /1..,., ..-..1 r 44-. P. ..t molls to Water Injection Dear Mr. Jones: In response to your letter of June 30, 1970, you have our concurrence, as operator for Mobil -Union in the Granite Point Field, to convert the following 10 wells from producing to water injection status. State ADL 17586 Well No. 5 State ADL 17587 Well No. 3 State ADL 18742 Well No. 6 j State ADL 18742 Well No. 7 State ADL 18742 Well No. 10 State ADL 18742 Well No. 12 State ADL 18742 Well. No. 13 State ADL 18742 Well No. 16 State ADL 18742 Well No. 19 State ADL 18742 Well No. 27 Very truly yours, el ` L yl L C. C. Woodruff Division Engineer rp cc: Eugene F. Griffin Union 1 GRANITE POINT FIELD SECONDARY RECOVERY HEARING (AUGUST 15,1969) A.V. BARNETT TESTIMONY / m f TT(T PT T.T During testimony before this committee in February 1968 Mobil and others detailed the many complications involved in providing for 100% utilization of the natural gas produced with the oil from the Granite Point Field. This is a matter of record and we will not belabor the committee by reiterating that testimony at this time. We will however, bring you up to date on our latest thinking and endeavors on this subject. 'I would like to refer to Exhibit F, a graph of gas production and gas usage with respect to time. A similar exhibit was submitted to this committee during testimony presented in February 1968. It has now been updated and is presented so that both our previous and our current estimates are shown. The data presented during previous testimony is shown by the dashed lines. Our current estimates are illustrated using the solid lines. Initially; after only nine months of production history, Mobil_ anticipated producing 71 million MCF of gas from the Granite Point Field during the twenty year period through 1987. Now, eighteen months later and with the limits of the reservoir more clearly defined, we find that total produced gas during this same period A.V. BARNETT TESTIMONY Page 2 GRANITE POINT FIELD SECONDARY RECOVERY HEARING AUGUST 15, 1969 will amount to about 36 million MCF. Also during our 1968 testimony we anticipated that the daily gas usage requirement would exceed the daily produced gas volume during mid -year 1979. As indicated on the exhibit, we now feel that the gas produced with the oil will be sufficient to supply our needs through 1987. We now forsee a use for approximately 1900 MCF/D as compared to the 6000 MCF/D previously anticipated. This difference is the result of analyzing our needs based on reduced oil rates and information gained from the production histories of the 8 wells completed at Granite Point since our last meeting. It was originally anticipated that 1.75 million MCF per year would be used for fuel and other purposes. Current analysis indicates that 0.6 million MCF per year will be sufficient to meet our requirements. RECOVERY OF GAS LIQUIDS With regard to the recovery of natural gas liquids from the produced gas, statements made by Mobil during the February 1968 hearings are essentially the same today. A recent feasibility study indicates the installation of equipment at the Granite Point Shore Site necessary to recover additional natural gas liquids, over and A.V. BARNETT TESTIMONY Page 3 GRANITE POINT FIELD SECONDARY RECOVERY HEARING AUGUST 1.5, 1969 above that now being recovered from the gas lift compression cycle, is definitely uneconomic. SURPLUS GAS DISPOSAL At present there are no known markets available for surplus gas production from the Mobil -Union Granite Point Platform. During the past year the following markets were investigated: 1. Phillips East Forelands Consideration was given to the transport of gas via a sub sea line to the Pan Am Platform and transport through their sub sea line to the Phillips East Forelands LNG plant. The cost of a 7800 foot line to Pan Am and additional compression at the Mobil -Union platform made the project uneconomic. 2. Marathon West Forelands Consideration was given to compression of gas at the Mobil shore site for transport to Marathon's gas liquid extraction plant located at the West Forelands. Cost of compression facilities and the 25 mile transport line would have exceeded the gas liquid income from the entire gas reserve. j A.V. BARNETT TESTIMONY Page 4 3. Sale to Other Platforms GRANITE POINT FIELD SECONDARY RECOVERY HEARING AUGUST 15, 1969 Possible temporary sales to Texaco and Atlantic Richfield Platforms were investigated , however, the cost of facilities for short term sales precluded any economics. We have and will continue in our efforts to derive the most beneficial use of all the natural resources placed in our charge. GRANITE POINT FIELD SECONDARY RECOVERY HEARING (AUGUST 15, 1969) A.V. BARNETT TESTIMONY GAS USAGE During testimony before this committee in February 1968 Mobil and others detailed the many complications involved in providing for 100/ utilization of the natural gas produced with the oil from the Granite Point Field. This is a matter of record and we will not belabor the committee by reiterating that testimony at this time. We will -however, bring you up to date on our latest thinking and endeavors on this subject. 'I would like to refer to Exhibit F, a graph of gas production and gas usage with respect to time. A similar exhibit was submitted to this committee during testimony presented in February 1968. It has now been updatedand is presented so that both our previous and our current estimates are shown. The data presented during previous testimony is shown by the dashed lines. Our current estimates are illustrated using the solid lines. Initially; after only nine months of production history, Mobil anticipated producing 71 million MCF of gas from the Granite Point Field during the twenty year period through 1987.. Now, eighteen months later and with the limits of the reservoir more clearly defined, we find that total produced gas during this same period A.V. BARNETT TESTIMONY Page 2 GRANITE POINT FIELD SECONDARY RECOVERY HEARING AUGUST 15, 1969 will amount to about 36 million MCF. Also during our 1968 testimony we anticipated that the daily gas usage requirement would exceed the daily produced gas volume during mid -year 1979. As indicated on the exhibit, we now feel that the gas produced with the oil will be sufficient to supply our needs through 1987. We now forsee a use for approximately 1900 MCF/D as compared to the 6000 MCF/D previously anticipated. This difference is the result of analyzing our needs based on reduced oil rates and information gained from the production histories of the 8 wells completed at Granite Point since our last meeting. It was originally anticipated. that 1.75 million MCF per year would be used for fuel and other purposes. Current analysis indicates that 0.6 million MCF per year will be sufficient to meet our requirements. RECOVERY OF GAS LIQUIDS With regard to the recovery of natural gas liquids from the produced gas, statements made by Mobil during the February 1968 hearings are essentially the same today. A recent feasibility study indicates the installation of equipment at the Granite Point Shore Site necessary to recover additional natural gas liquids, over and • • A.V. BARNETT TESTIMONY Page 3 GRANITE POINT FIELD SECONDARY RECOVERY HEARING AUGUST 15, 1969 above that now being recovered from the gas lift compression cycle, is definitely uneconomic. SURPLUS GAS DISPOSAL At present there are no known markets available for surplus gas production from the Mobil -Union Granite Point Platform. During the past year the following markets were investigated: 1. Phillips East Forelands Consideration was given to the transport of gas via a sub sea line to the Pan Am Platform and transport through their sub sea line to the Phillips East Forelands LNG plant. The cost of a 7800 foot line to Pan Am and additional compression at the Mobil -Union platform made the project uneconomic. 2. Marathon West Forelands Consideration was given to compression of gas at the Mobil shore site for transport to Marathon's gas liquid extraction plant located at the West Forelands. Cost of compression facilities and the 25 mile transport line would have exceeded the gas liquid income from the entire gas reserve. r A.V. BARNETT TESTIMONY Page 4 .. ..... ...... 3. Sale to Other Platforms 1� u GRANITE POINT FIELD SECONDARY RECOVERY HEARING AUGUST 15, 1969 Possible temporary sales to Texaco and Atlantic Richfield Platforms were investigated , however, the cost of facilities for short term sales precluded any economics. We have and will continue in our efforts to derive the most beneficial use of all the natural resources placed in our charge. ti ,�, �✓ire PeIAIT / 9 _ ..G✓��r.rd cv — .5���"0.�� ��r' /"PCo v �r r> /.S �C.�'J'/ ��,� . 3,�0 oPs i ,y r `Aaalevr--61 Jw/ d'CJ// .f�G�PGi %!f4 �// < <f'Cifvi P• c�0 ®O .S / �7-- /lQ1�� i�►rr/ems r�'� ZSI�© ��c� J , ,QpC �i�4/" � • �,j 'OOD/ps /� � j �®✓%aJ�S/ / /1. 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Js^s7�' < �� •�-� � � 1` P.� J /�I �! /G� �•O�r" �/-��.; .✓� •< r•C to a rr"•=, G��:d �i� �'% �' i' � +;1� C/.'®C��fi� o � 9 / .6 �0 .5/C��� O., Cl Il a � Ge1� �0 7/ J� C e n7 rsr i •I u� �'%/�i C7 • SeC c a� l�ro� as / was /7 c-,e cle cl :4v -- Qoo ,g! P - r. .S/3?� C�Pr�' a•d.� t fat �! �i � �✓ ��/ram' ,Q O SSi 11i �/ •T/ rJ' � ,� U,i/rdP,�' �,�t'� r✓ ��/," �®�f�S �r p ®�S� /. G //%9I TS o � ���� � %`!� ems' . �� G/?dP� s.�r�1,7'l4'/'1��.�✓ �O�JG��/� � — !�/ �',S'T e/v'� �•�`� r� 7 ,1��+ 4��J f o'�'17/fJ U17� L/oofj!eci'' .?0/ d a o ,lool 401 q Sa 5,2.,' A TaJJe,cA/et7 -le0 7-1S /`JeriCdT/ MOBIL -UNION GRANITE POINT FIELD SECONDARY RECOVERY OPERATIONS STATE HEARING AUGUST 15, 1969 Pan American as operator for the Chakachatna Group has presented basic data in their application and testimony for conducting secondary recovery operations in the Gran J_te Point Field, Middle Kenai pool. We are in agreement with all presented data in so far as Mobil -Union are directly affected. Our testimony at this time is for the purpose of supporting the Chakachatna Group in this joint application. Although the field is not v'n tized we believe that the Middle Kenai pool can be effectively produced and flooded by the joint effort afforded by the line well agreement between Mobil -Union and the Chakachatna Group with equitable results and the protection of correlative rights of all affected parties. As can be seen from Exhibit #1 which has been previously submitted the injection pattern involving the Mobil -Union acreage utilizes four Mobil -Union wells 33-14, 42-23x, 12-24'and 24-13. Two line injection wells, MUC I-1 and MUC I-2 are operated by Mobil from the Mobil -Union Platform and are covered by the Granite Point Mobil-Union-Chakachatna Line Well Agreement. Data gathered during the secondary recovery period will be constantly analyzed. Future data may indicate that a shift in the injection points are necessary. However, analysis to date favors the pattern we have proposed and we feel that it will afford an effective sweep of the reservoir. Some degree of flexibility would be desirable during the course of the flood to enable the operators to shift the injection points, and drill wells for additional recovery in the event such changes appear advisable as the flood progresses. It is therefore requested that approval of changes in operation of the flood be by administrative order of the State when applied for by either or, both of the Granite Point operators as per Section VI of the Secondary Recovery Hearing, application. Water injection equipment that is to be installed on the Mobil -Union platform and under full scale operation by February 1970 is capable of injection rates of approximately 30,000 B/D at 4500 psi and 14,000 B/D at 7500 psi. Filtered and treated inlet water will be used as the injection medium durin`; the life- of the secondary recovery.operation. Exhibit A. shows the Mobil -Union Granite Point State 24-13 water injection test history. Analysis of this injection history in conjunction with breakdown rate tests shown on Exhibit B indicates that water injection operations are feasible. The injection rates under full scale operations are indeterminate at this time. However, it is our contention that rates as high as 5000 B/D per well may be obtained and sustained rates as low as 1,500 B/D per well average would be satisfactory for an efficient economic sweep of the reservoir. Our waterflood equipment is designed to operate at high pressure if necessary. However, we believe that normal operations and satisfactory injection rates will be obtained below 4500 psi, with only short periods of high pressure injection when and if necessary. Exhibit C is a schematic drawing of the well bore of our injection well 24-13 showing the casing and cementing depths and the type of tubing -packer config- uration we intend to utilize in our injection wells. Surface casing (13-3/8") has been set to at least 4000± with cement circulated to the surface. The setting depths of subsequent strings of. casing (9-5/8") and liner (7" & 5") are controlled mainly by drilling problems encountered when the wells are being drilled. The liners are circulated with cement. The cement jobs are verified by temperature surveys, cement bond logs or water shut-off tests or a combination of these methods and where necessary or question- able, perforating and squeeze cementing operations are 'conducted to assure isolation of the productive interval. Cementing procedures utilized in our completions will prevent communication not only between the Middle Kenai zone and upper water sands, but also between individual sands within the Middle Kenai zone. Our injection well completions will utilize packers and one string of tubing. The adjustment of positive chokes opposite each interval will enable us to monitor and regulate injection into the three main intervals. Although a satisfactory injection profile in all sands may be possible by the use of only one packer at the top of the zone, we feel that the configuration as shown on the exhibit will give us maximum flexibility in conducting the fluid injection operation. At this time we are submitting Exhibit D, an electrical log of our injection well #24-13 and Exhibit E, individual well production test data. This completes our direct Secondary Recovery testimony. GRANITE POINT CHAKACHATNA GROUP LATEST WELL TESTS Test Well Date BOPD BWPD MCFD GOR 17586-3 6/11/69 1182 0 1478 1250 17586-4 7/10/69 645 6 482 747 17586-5 6/30/69 381 0 210 551 17587-3 7/14/69 566 14 321 567 17587-5 6/2/69 116 56 68 586 18742-3 7/9/69 968 3 516 533 18742-4 7/1/69 539 40 270 501 18742-5 6/8/69 1995 10 3266 1637 18742-6 Shut-in 18742-7 7/13/69 261 26 230 881 18742-8 7/14/69 535 40 362 677 18742-9 7/15/69 700 168 418 597 18742-10 6/7/69 858 62 710 828 18742-11 6/15/69 1212 20 858 708 13742-12 Shut-in 18742-13 7/18/69 251 0 175 697 18742-15 7/16/69 998 0 674 675 18742-16 7/13/69 1178 0 1804 1531 18742-18 7/12/69 1020 26 574 563 18742-19 6/14169 260 118 158 608 18742-20 6/5/69 404 17 286 708 18742-23 6/6/69 193 7 197 1021 18742-25 7/17/69 480 0 354 738 13742-27 6/9/69 101 74 46 455 • J- w PROCEEDINGS OF HEARING - CONSERVATION FILE NO. 76 GRANITE POINT FIELD Pk S:iUi2E MAINTENANCE, FIELD RULES AND BENEF" IC;AL USE OF GAS CONSERVATION FILE NO. 76 DATE OF HEARING AUGUST 15, 1969 PAN AMERICAN TESTIMONY - Page 2 - MOBIL TESTIMONY - Page 52 - P R O C E E D I N G S CHAIRMAN BURRELL: It's 9:30 gentlemen. Good morning, and we'll call this hearing to order. This hearing was called by the Alaska Oil and Gas Conservation Committee, Conservation File No. 76, on motion of the Committee for the public hearing to hear the testimony by the operators of the Granite Point Field to determine if waste is occurring as the result of producing the Middle Kenai Pool, and hear testimony on the initiation of the pressure maintenance project for the Middle Kenai Pool; and beneficial use of gas produced as the result of crude oil production, and any other matters relative to the proper development and operation of this pool. Notice of this hearing was hand -delivered to the operators on July 16 in local offices and published in the Anchorage Daily News on July 17 in 169. If anybody hasn't done so, I'll have you sign the register or do so at the break, before you leave, any time. For those of you that don't know, I'm Homer Burrell, Chairman of the Oil and Gas Conservation Committee. On the end there is Tom Marshall, Executive Secretary; next to me on my right is Mr. 0. K. Gilbreth. These are the members of the Committee. Mr. Bob Hartig of the Attorney General's office here as advisor; Mr. Harry Kugler of the Division of Oil and Gas here as an advisor; and Mr. Bob Larson of the Division of Oil and Gas here also as an advisor. Would those intending to give testimony please stand and introduce themselves and who they represent and remain standing so that Mr. Marshall may administer with you at one shot. MR. DARSOW: Leonard Darsow,with Pan American Petroleum Corporation. MR. GILES: Bart Giles, with Pan American Petroleum Corporation. MR. FITZPATRICK: Terry Fitzpatrick, with Pan American Petroleum. MR. MEYER: Jack Meyer, Mobil Oil Corporation. -2- 0 0 MR. BARNETT: Art Barnett, Mobii Oil Corporation. MR. MARSHAL: V4;'0 you all please raise your right hand. In the matter now at hearing, do you swear to tell the truth, the whole truth, and nothing but the truth so help You God? ANSWERS: i do. CHAIRMAN BURRELL: In order that we can get a transcript that we can hang on to here which would ne of some vaue, will you attempt to speak, whether anybocy's asking questions or givinq testimony, will you attempt to speak there from the podium or at least from a microphone around the room so that we will have a transcript of this. MR. CREWS: Mr. Chairman, my name is Ralph Crews and I'm local counsel for Pan American Petroleum Corporation. On my left here is Mr. Oscar Swan who will be handling the interrogation of Pan American's witnesses; and our witnesses, who have already been sworn, will be Mr. Leonard Darsow, reservoir engineer; Mr. Terry Kirkpatrick, geologist; and Mr. Bart Giles, reservoir engineer. CHAIRMAN BURRELL: Some of The witnesses have qualified before; and, as we come to those, we will acknowlege Their previous qualifications. Those That have not, we will ask to state their qualifications. Mr. Swan, you may proceed. MR. SWAN: Mr. Chairman, I'm Oscar Swan and appearing for Pan American Petroieum Corporation. As Mr. Crews has stated, we have three witnesses. I would cike to suggest that we put each kitness on and then after he has testified that the Committee then, or any other person who wishes, to cross examine that witness rather than wait until conclusion of the case for cross examination. Our case has been prepared in cooperation with Mobil. They have two witnesses to testify after our testimony. We have tried to avoid,as far as possible, having duplication of the testimony of the two companies. CHAIRMAN BURRELL: That would be acceptable as long as we don't exclude the Committee and others from coming up with afterthoughts. -3- C�] MR. SWAN: No, sir. All I'm getting at is, we have asked in the past that you wait until we put the entire case; on before cross examination. I think that it would be better at this time not to do this. Our first witness is Mr. Darsow, and Mr. Darsow has testified before this Committee previously. use is a qualified engineer. CHAIRMAN BURRELL: Mr. Darsow's qualifications nave been accepted. MR. SWAN: Would you state your name please? MR. DARSOW: My name is Leonard Darsow. I work with Pan American Corporation, stationed in our Denver Division office, Denver, Colorado. MR. SWAN: Are you familiar with Pan American's operations in the Granite Point Field, which is the subject of this hearing today? MR. DARSOW: Yes, I am. field? MR. SWAN: Do you have an exhibit, Mr. Darsow, which will show us this MR. DARSOW: I do. On the wall I have our Exhibit No. I which I'd like to define for you. We have here a operating plat depicting the Granite Point Field, located in the Cook Inlet of Alaska. We're actually depicting acreage lines between ne Ranges ll and 12 West, in Townships l0 and 11 North of the Seward Meridian. On This map, our Exhibit No. I, we have contours to show you the structural relation- ship at the top of the "C" Unit, which is a geological marker immediately over- lying the Middle Kenai Oil Pool, the reservoir in question, and concerned with today's hearing. Also, on this Exhibit No. 1, we have depicted the platform locations, the Mobil platform located to the south that Mobil operated for the Mobil Unit Group, the Pan American operated platforms operated to the north, two in number, operated for the Cnakac.hatna Group. From these platforms the operators nave conducted their development drillinq operations. The individual wells are Illustrated on this exhibit. Their well bore traces and bottom hole locations a-e shown. Aiso, to depict the cornplete story for the area around this field and for further reference as we proceed with our testimony, we have shown on .this -4- exhibit the pipeline confscruration from the various platforms. The twin eight - inch lines proceeding from the Mobil platform to the west shore, the Drift River system, and then also the twin pipeline system connecting the Pan American operator's platform, pipelines proceeding, on to the east shore, East Foreland facilities. I might mention here that we actually constructed this map on a smaller scale, and then using camera work, blew it up to this size for exhibit purposes. As a result, you'll see a little bit of blurring here, and our twin pipelines look like a single line; but we do have twin submarine pipelines. We also depict on this exhibit a possible injection, water injection scheme, illustrating the wells that may be converted to water injection To pursue our secondary recovery system. These wells are depicted by blue triangles. Also, we show by color scheme, yellow representing the Ohakachatna, some of the Chakachatna Group acreage; a pinkish -red representing some of the Mobil -Union acreage; to illustrate the fact that we do have a common lease line in the midst of this structure. We're pointing this out to point out the fact that this field is not a unitized project; but that the two groups have met, have gotten together and discussed the situation; and have reached agreement for a cooperative -type operation to pursue the future operation of this field in oraer That correlative rights could be protected in the vicinity of this line. The actual means will be pointed out later. MR. SWAN: There is then, in effect now, an agreement between the iperators for the cooperative conducting of a waterflood? MR. DARSOW: Yes, there is. MR. SWAN: And one of the purposes of this hearing is to present to the Committee sufficient testimony so that they can approve that waterflood opera- tion, is that right? MR. DARSOW: That is correct. I would like to add one more point that R omitted. In describing our Exhibit No. 1 you will note that we have so marked the exhibit to indicate the Pan American structural position or interpretation is or the Chakachatna Group acreage. The structural interpretation on the south end of this reservoir is the Mobil structural interpretation. We have prepared this exhibit as a joint exhibit to depict the Structure as the two groups see it. MR. SWAN: Have sTudies been conducted by Pan American for the purpose of determining whether secondary recovery operations by means of a waterflood are feasible in this field? VR. DARSOW: Yes, we have. MR. SWAN: In your opinion, to get right to the point, are they feasible? MR. DARSOW: Yes, they are. MR. SWAN: Would you describa some of the work that has been conducted or tested, have been performed in order to determine that such an operation was feasible. Bar-, while Mr. Giles is putting an exhibit up there, Exhibit No. 2, what is that Mr. Carsow? MR. DARSOW: Our Exhibit No. 2, which I would like to present now in our Testimony, is a plot of the water injection rate and pressure from infectivity tests that we have conducted into one of the wells on our (ease. This particular well is known as our 18742 lease, Well No. 6, located on the north portion of the structure. To ascertain what type of secondary recovery mechanism should be used :r ,his reservoir, it was deemed to be necessary to actually go into an injection scheme to determine whether or not a secondary project would be feasible for tnis Type of reservoir. For the Chdkachaina Group, Pan American, as operator, began infectivity tests bacK in May of 19t6. As depicted on my exhibit, I am showing a daily injection rate in thousands of barrels of water per day, versus I'm also showing appropriate pressure in thousands of pounds per square inch surface pressure accompanying those injection rates. And finally on this exhibit, I am showing the cumulative water injected during this Test period. MR. SWAN: These tests were conducted in accordance with authority W to The Committee previously given Pan American and Mobil, were they not? MR. DARSOW: Yes, sir; that is correct. MR. SWAN: Initially, wha7 did tht;e tests show? MR. DARSOW: As shown by our Exhibit No. 2, we can see that when ffm injections were started back in May of 163 we can see some rates of approximately 1,500 barrels of water per day were being injected into this well. We had accom- panying surface pressures of approximately 3,800 pounds, slightly less than a 4,000 pound range. The relativeiy low injection volume for that pressure was quite alarm- ing to everyone concerned with these tests and this is one of the reasons why the tests have been conducted for an eight -month period before a final decision was made on the type of secondary recovery mechanism. We have proceeded to inject under this means, using a pilot test injection system, if you will. To inject from these offshore platforms, we are utilizing Cook Inlet water; and in order to use Cook Inlet water, there is quite an elaborate method necessary to clean this water to remove the solids to get the water to a good enough purity or clarity low ppm solids so that it is good water to inject into the formation. As a result, you're definitely limited, when you are on a pilot system, to a low volume; and, consequently, you cannot proceed on an injection test as you would when you have a full-scale plant in operation. After injecting for some months -and seeing that the pattern was the same, that we would inject about 1,500 barrels per day, injec- tion rates would slightly decline as we held the pressure constant, we tried to undertake various means to stimulate: The infectivity. We attempted to improve the infectivity through acidization work. Th.;s gave us some short-term but insigni- ficant increases. We actually performed fracture treatments on the well where we exceeded frac pressure; and, also, as we reduced the pressure, we again saw that The injection rates would return to the 1,500 barrel per day range. Finally, at the conclus;on of our tests in December of 1968, we increased the pressure during the last days. We started up our rate when we had sufficient water volumes to run some high injection rate tests and actually conducted some infectivity at higher pressures; and found that, indeed, if we nave to, and couic sustain high injection surface pressures, we could put an ample ruantity of water away to pursue a water - food in this reservoir. MR. SWAN: Do you have an exhibit which would show the result of that last test that you were talking; about, Mr. Darsow? MR. DARSOW: Yes, I do. I have a step -rate test that we ran in mid - December on our Well No. 6. MR. SWAN: We're referrng now -o Exhibit 3 which Mr. Giles is attempting to put up. Would you explain that exhibit? MR. DARSOW: On Exhibit 3, as i mentioned, we have a step -rate test conducted on our Injection Well 18742, No. 6. I'm depicting a surface pressure in pounds -per -square -inch, versus inI6,ctivity ra-e. On my infectivity rate, 1 have it in two scales. I have it in a rate in barrels -per -minute; and, also, more under- standable, or easier to follow, I have it in a rate of barrels -per -day. What we found is tnat, as we would suspect when we maintain the pressure in the 4,000 pound range, as presented by the injection test history, we were indeed injecting approximately 1,500 barrels of water per day. We then increased the pressure to approximately 4,700 pounds range, at which time we found that we now could inject in ranges approaching 2,500 barrels of water per day. We found that, as we increased pressure further, that we had a fracture or parting -pressure at approximately ",C00 pounds surface pressure, exhibited by the change in slope on this plot. Above that pressure, the injection rate volume increased very rapidly in relation then to the increase in pressure. As an example from the point plotted at 6,000 pounds surface pressure, there were actually test measurements where we could inject in excess of 8,500 barrels of water per day. MR. SWAN: As the result of these tests, is Pan American and the group of operators it represents satisfied that water can be injected into this producing formation in sufficient quantities so that an effective secondary recovery operation can be conducted? MR. DARSOW: I quess we are. MR. SWAN: Perhaps this isn't relative; is equipment readily available for conducting injection operations or at the pressures that will be necessary in this field? MR. DARSOW: No, they are not. This is one of the primary concerns for the people involved, the oil companies involved in this particular reservoir, is the fact that in order to get sufficient vo�umes away, sufficient volumes of water away to pursue an economical secondary recovery project, we're talking surface pressures that normally are not encountered in any waterflood, let alone a water - flood located on a platform in the middle of Cook Inlet. As the result, a consid- erable amount of design, and topped by the manufacturers themselves, had to go into the equipment before waterflood could be pursued further. MR. SWAN: As a result of these tests, has equipment been designed, and is it on order, which can be used to conduct this waterflood? MR. DARSOW: Yes, it has. This again, though, because of the type of equipment, this is a long -delivery type equipment necessary due to the high pressure, due to the volume; and the equipment that we are ordering for the platform located on she Chakachatna Group leases requires a twelve-month delivery. The equipment has been orderer. MR. SWAN: We might like to know a little bit more in detail, Mr. Darsow, just what kind of equipment are you talking about? MR. DARSOW: Well, after conducting these tests into Well 6 and seeing that we couia put satisfactory rates away, seeing that we also would have to go to high pressures; in studying this, it came up that the best type of equipment that we saw to utilize would be centrifugal -type pumps driven by turbine prime movers. The turbine people and the centrifugal pump people became very active in ,.rsuing this when they saw that the potential, or use it might have in the Cook -J eT, and really took hold of it with a lot of fine work in developing their centrifugal pumps and turbines so they would be acceptable for this type use. This is a very versatile piece of equipment, small sized to where we can use it • -9- offshore; and, also, it has a great rang: of flexibility. We will be putting on our platforms two centrifugal pumps and two turbine drivers, that is on each of our platforms. These units are each 1,850 horsepower, so we will have 3,700 horsepower per platform in operation. The versatility is that as you would initiate your flood and inject at pressures at or below the fracture pressure of 5,000 pounds, this equipment, the two units together, could inject 25 to 30,000 barrels of water per day. As you increase that pressure though, and we have designed for a maximum pressure of 7,500 pounds, when we are operating at 7,500 pounds, those units will still inject 10,000 barrels of water per day. Or, in other words, should the in-'` jection pressure ever have to be maintained at that high a rate, we will still have the capability of injecting 20,000 barrels of water per day from our two platforms. MR. SWAN: I think you previously stated this is a rather unusual situation that were faced with here? MR. DARSOW: Yes, it is. MR. SWAN: Were tests conducted with the purpose of determining not only that you could get the water in the formation but that it was going into the for ration in a manner which would deplete the formation and help you recover the oil by a secondary method? MR. DARSOW: Yes, they were. MR. SWAN: What sort of tests were those, Mr. Darsow? MR. DARSOW: Well, actually, we have some injection profile tests which we ran in conjunction with our step -rate test to determine that we could indeed conduct the waterfiood at high pressure and still have an effective flood. In other words, contact the formation in question. This I have shown on Exhibit No. 4, which is an injection profile illustration for our Test Well 18742, Well No. 6. MR. SWAN: Before you go into the exhibit, would you describe what you mean by an injection profile test? How was this information obtained first, briefly? MR. DARSOW: Well, there are various types of injection profiles that can -10- be run; but, in this instance, the type of injection profile used was a radioactive tracer survey .... a means by which, as you are ,injecting your water with a down hole device, you can emit into the injection streams small amounts of radioactive material and then with a logging device determine where that particular slug of radioactive material leaves the well bore. From a continuous monitoring then, knowing when you release slugs of radioactive material, timing the flow, time it was released until it passes by your sensing device, you can determine where your water is leaving your well bore. MR. SWAN: And that is the type of test you have conducted to obtain the information on Exhibit 47 MR. DARSOW: That is correct. MR. SWAN: Now, would you just tell us what the exhibit shows? MR. DARSOW: O.K. On Exhibit 4, on the left hand side, I have shown a portion of the log in the well bore depicting the various sand members of the Middle Kenai Oil Pool, the area that we wish to flood; and then opposite that, opposite each sand member, I have illustrated by bar -graph the various injection rates at two pressures; namely, in a stiple bar 1 have shown the injection rates obtained when we were injecting at 4,150 pounds surface pressure, or below the frac pressure; and then, in a solid bar I have illustrated the injection rates obtained, and into which members that injectivity was accomplished while inject- ing at 5,400 pounds. We've shown first, in looking at the survey at 4,150 pounds, we saw a very uniform distribution of water into the upper -three members, upper - three sands of the Middle Kenai Pool; each of those three sands taking between 500 and 700, or 750 barrels of water per day each. We did note in this particular well, injecting as we were with a single tubing string, that the lower sand members which do have a lower permeability, that here we're injecting lower volumes more in the 100 to 200 barrels per day range; but that also these were uniformly spread over, in essence, the entire interval. Then, as we increased the pressure above frac pressure, there was naturally the element questioned here as to would we still have a gocc injection profile. Would --he water continue to go into all sand members or would we perhaps frac into one. We found here, as illustrated, that our injection profile, in essence, stayed in the same proportions into the same sands as it was wnen we injected below frac pressure. We now, in the upper sands, are injecting two to 3,000 as high as almost 4,000 barrels of water per day and into eacn of the sand stringers. And then, in our lower, tighter zones, we have improved the infectivity wne re some zones doubled in their rates of accept- ability; the one particular zone going as high as 750 barrels of water per day. MR. SWAN: In your opinion, wili the difference in rate between these... at which the upper zone and the lower zone take water, will that difference be a serious factor in conduction of waterfiood? Would it interfer in any way with the conduction? MR. DARSOW: It will not be a serious factor; however, it will present some operational problems in that if the injection profile is not real uniform, other mechanical measures will be taken to improve that profile. MR. SWAN: What sort of mechanical, for instance, will you have in the well that will be used for injection purposes, Mr. Giles? I mean, excuse me, Mr. Darsow. I'm so used to using Mr. Giles as a witness. MR. DARSOW: I have Exhibit No. 5 that I'd like to present, which shows two alternate plans that the Chakachatna Group has considered; alternate plans by which the water can be injected into the proposed water injection wells. MR. SWAN: In referring to Exhibit 5, why don't you just explain what it shows. MR. DARSOW: O.K. On Exhibit No. 5 we have a schematic injection well - bore diagram. Again, to properly or;ent ourselves, I have shown a section of the log from our injection well No. 6, depicting.; the various sand members of the Middle Kenai Pool. On the left of this log, I have depicted what we refer to as our Alternate No. I Injection Well Sore Scheme which simply has us positioning a packer within the seven inch liner in these wells when injecting down a single -12- i 0 string of 2 7/3 ;ncn tubing. As we will nject in this manner, we could very likely see an injection profile such as that shown on Exhibit No. 4. If that particular profile was noted,or the lower sand members were not taking high enough quantities of water, we could then proceed to our schematic Alternate No. 2, as shown on the ri-.:,ht side of the exhibit, where now we are running, two strings of tubing. Since we do have seven-inch liner, we would go down to two strings of 2 3/8-inch tubing because of the size limitations within that liner; we would now position two packers. We would, as with the first case, have the top packer above our uppermost pay zone. We would now position the lowermost packer at its optimum position, depending on the profile work that we have conducted. In the case as it is shown, we would position in between what we refer to as the C-5 and C-7 sand members. We would extend the short tubing string. We would have a perforated section extending between the two packers to allow us then to further monitor the waterflood in the future by being able to enter that string of tubing with wireline equipment to run injection profile surveys or.to conduct bottom hole pressure work. MR. SWAN: Mr. Darsow, I believe you covered, or at least pointed out, on Exhibit No. I, that the locations of some of the proposed injection wells were shown on that exhibit? MR. DARSOW: Yes, sir. MR. SWAN: Those are shown in the blue triangles. How many producing wells are we talking about in the Chakachatna operated part of this lease? MR. DARSOW: Under our existing operations now, we have 22 producing wells on the Chakachatna lease and is illustrated on our Exhibit No. I. The proposed injection scheme would call for conversion of ten of those wells to injection service. MR. SWAN: There will be ro wells drilled, at least in the initial stages, purely for injection purposes, will there? ,lz Ai MR. DARSOW: No, there will not. ' -13- MR. SWAN: One of *nc r<quiramcn-:s of the application is that we have a tabulation showing your leases, gas-ol ratio and water production tests for each of the producing wells. Do you have that for t$he Chakachatna acreage? MR. DARSOW: Yes, I do ...... I have Exhibit 5-A ......I do not have a wall exhibit prepared for those particular well tests. MR. SWAN: May we just simply furnish this tabulation to the Committee? don't think we need to go into any detail on it. CHAIRMAN BURRELL: That will be acceptable. MR. SWAN: Novi I'll offer all these exhibits with a conclusion. Mr. Darsow, maybe we ought to discuss a little bit what sort of an injection pattern is comtemplated at this time for the Chakachatna acreage. MR. DARSOW: Well, a particular exhibit....or pattern is illustrated on Exhibit No. 1. We could prooably refer to as a straight line pattern. To determine this pattern and to show it as our proposed injection scheme, we actually conductgd some reservoir model studies for the entire field and analyzed various injection schemes. We do find in this particular reservoir, particularly on the Chakachatna acreage, that as we go down on the flanks of the structure we get some reduction in reservoir rock permeability. As the result, this pretty much eliminates for this reservoir a pure peripheral type scheme on our acreage. In order for us to pursue the flood, we have to have sufficient injection rates so that we can obtain a posi- tive reservoir balance, maintain our reservoir pressure, and keep our producing rates up. We analyzed, then, as'a result, a pure crestal scheme where we took the crestal wells and converted those to injection. We also investigated what we call an askew line injection pattern where instead of our straight line pattern,as illustrated, proceeding east and west across the structure we actually askewed Those lines using some top structural wells and some lower structural wells. We found that for our particular acrea^le and the configurations we have there, that the straight line scheme,as illustrated, is probably a scheme which we will pursue. MR. SWAN: Well, it is planned to initiate it in this manner ..... is it 1.J A -14- not? MR. DARSOW: That is correct. MR. SWAN: Is it entirely possible that modifications and changes will be necessary based on actual performance after the flood is undertaken? MR. DARSOW: Yes. MR. SWAN: In your opinion, would it be advisable if the Committee approves conduction of the water flood? That they include in the order approving it a provision allowing for administrative approval of these modifications or changes? I'm talking particularly about convertinq a producing well to an injection well or converting an injection well back to a producing well or maybe even drilling an additional producing well. MR. DARSOW: This would be very advisable. MR. SWAN: One thing we haven't covered yet .... You stated earlier that an agreement has been reached between the owners of the Chakachatna acreage to the north and the owners of the Mobil -Union acreage to the south for a cooperative flood here. As a part of that cooperative flood, have wells been drilled or are they being drilled on the lines between the two properties? MR. DARSOW: Yes, they have, and are. We actually, as a result of the agreement reached by the six major oil companies concerned in this reservoir, a lease line agreement was drafted and was acceptable whereby lease line proposed injection wells have been drilled. As iiiustrated on Exhibit 1, we have what we call the MUC 3-I, Mobil -Unions Chakachatna Injection Well No. 1, located on the eastern side of the reservoir on the common lease line separating the two leases. We also have the MUC I-2 or our second joint Mobil -Union Chakachatna injection well located on the west side of the structure. This is now drilling. MR. SWAN: Will injection into these two wells, in your opinion, be acequate to, in effect, separate the affects of operations on the Chakachatna acreage from the Mobil acreage? MR. DARSOW: Yes, they will. -15- 0 • MR. SWAN: In of^Gr worts, with injections along the lease line conducted under this cooperative flood it doesn't matter after you get away from the lease line a certain distance what one operator may do, what he does will not affect the operator in the other part of the field? MR. DARSOW: That is correC_ MR. SWAN: Well, then getting back again to this question of administra- tive approval. Let's say after an operator, or if an operator is conducting an operation a half mile or more away from that common lease boundary, in your opinion is there any necessity for obtaining approval of the other operator as to what is being carried out? MR. DARSOW: No, I feel definitely that the injection of water in those two locations on the lease line will establish a pressure high in that region, will very definitely protect the correlative rights and that any operation moved more than a half mile would be a matter that could be handled by administrative approval only. MR. SWAN: And, only upon application of the operator affected? MR. DARSOW: Yes. MR. SWAN: Within a half mile of the lease line, would you recommend that both operators should agree on whatever change in operation that is proposed? MR. DARSOW: Yes, 1 would. MR. SWAN: But you would recommend that that also be approved adminis- tratively if both operators did agree? MR. DARSOW: Yes. MR. SWAN: And if the Committee felt it was proper? MR. DARSOW: Yes. MR. SWAN: Do you have an exhibit which would show us what you might expect in the way of field performance here if this secondary recovery operation is approved and carried out? MR. DARSOW: Yes, I do. -16- MR. 5l,`,N: Referring to Exhi it 6, what do you show on it? Explain it to us please. MR. DARSOW: The Exhibit 6 that we've just put up is total field perfor- mance for the Granite Point Yield. On this exhibit 1 have illustrated two things, namely oil rate in barrels oil per day, and reservoir pressure in psi versus time. Point out that with our reservoir pressure and as we work with this reser- voir, we have accepted the datum of minus 8,780 feet mean -sea -level as our mid- point datum for this reservoir; and, consequently, all pressures referred to here are at that datum. I have shown th:t, first, on our oil rate, that we actually began operation, in the Granite Point Yield the first production occurred in March of 1967. The rate of oil production rapidly increased over the next twelve- month period as development drilling was conducted from the three platforms. We actually got a peak well rate of approximately 49,000 barrels of oil per day in February of 169. Since that time, there has been a rapid decline in oil producing rates, as you would expect from the undersaturated type reservoir that we have here. Coinciding with the oil production rates, I have shown the accompanying reservoir pressure decline. When we started out our original reservoir pressure was 4,200 pounds at datum. This reservoir pressure, as expected, in the undersaturated case, rapidly fell and actually has approached and crossed the bubble point pressure of 2,400 pounds. The last surveys conducted, which were in May of this year, indicate that we had at that time an average field -wide pressure of approximately 2,300 pounds, or around 100 pounds below bubble point pressure. Presently, this pressure has probably declined and we are now maybe in a 2,250 psi reservoir pressure range. The performance of an undersaturated reservoir, of course, when you reach the bubble point, will start to evolve some free gas; and, as the result of the free gas evolution, you will develcp a gas saturation in your reservoir and you will also have increased produced qas-oil ratio. As a result of this added lift mechanism, we can see that from the first part of 1969 on to June, as plotted in actual figures, the oil production decline has leveled off. This of course is a - i 7- result as illustrated on the pressure of the pressure falling slightly below bubble point condition. From June on, I have illustrated a predicted rates which show the anticipated oil and pressure performance in a dashea configuration. We would anticipate that the oil rates will continue to decline at a decline rate establi- shed during the fast six months and that in the month of February a small drop in oil rate will occur. This small drop there is built into the timing of the Mobil - Union Group. It is approximately February of '70 that they will begin water in- jection from their platform. After that time, the production will then continue to decline as shown until we get to the position of about July of 1970. This is the anticipated date at which injection start-up can begin from the Pan American operated platforms. I have shown a decline in oil production rates from July through December in that, as shown on Exhibit No. I, where we are converting ten wells to injection, that this will take some period of time and we will expect to see a decline in the oil rate as we convert these producing wells to injection service. The accompanying reservoir pressure for this anticipated oil rate is also illustrated where we will see a continuing decline in reservoir pressure. However, now that we are below the bubble point our reservoir pressure is not going to decline near as rapidly as has before and we will see; that we should probably establish a reservoir pressure low of 2,150 pounds before we are able to reverse that pressure trend with a positive injection balance and actually begin to increase reservoir pressure. MR. SWAN: I don't know whether we covered this in the previous hearing when we asked for approval of the initial waterflood test but do we have some idea, Mr. Darsow, as to by how much we might increase the recovery of oil by con- ducting these waterflood operations? MR. DARSOW: There is the possibility that here with the type rocks and the pressures we have that we can increase our primary recovery by somewhere in the range of 65 to 100 per cent. in other words, we may be able to double our recovery if we have a successful flood hire. E • MR. SWAN: If I understanc that right then, that secondary recovery in this field may account for as much oil production as primary recovery operations? MR. DARSOW: This is possible. MR. SWAN: It is difficult, is it not,to predict at this time, in view of the unusual nature of the reservoir, in the operating feasibility? MR. DARSOW: Yes, it is. And this is why I would..... mentioned the range that I did that secondary could fall within the 55 to 100 per cent of primary. The 100 per cent being the top end,in which case if everything went along very well and we got in good rates, had good performance, that we could actually doublet our primary recovery. MR. SWAN: Well, whether the additional oil is the lowest rate you antici- pate or the highest, will the value of that oil in your opinion be greater than the cost of conducting the operation? MR. DARSOW: Yes, it will. MR. SWAN: In other words, even at its.....let's say, if it performs at its poorest or if the poorest rate expected, we still consider it will be a profit- able operation? MR. DARSOW: Yes, we do. MR. SWAN: Could waterflood operations have been initiated in this field any sooner than they have been and are going to be initiated? MR. DARSOW: No, actually it is very doubtful that they could have been initiated any sooner; and this of course is pointed out by the fact that as we review the performance behind us that we've only been in this field for a matter of two years and within that period of time the reservoir has been defined and completely developed and a cooperative secondary recovery program has been approved by the six companies involved. Equipment is on order and with the type of equipment necessary for this somewhat unusual waterflood, that this operation will be in full swing in a matter of three years from the time first production, or in essence, the first production occurs in this reservoir. 0 0 MR. SWAN: Actually, that period of time then is ..... even by comparison with operations in the "Lower 48" where you don't have some of the problems you have here, that is not really a great length of time within which to start an operation is it? MR. DARSOW: No. For a reservoir of this size, this is extremely rood to have this stage of acceptance at this time. MR. SWAN: Would..... assuming perhaps if you could have started a little bit sooner, would it have affected the recovery of oil, either increased it or decreased it? MR. DARSOW: No. MR. SWAN: Actually, assuming maybe you don't get started quite as soon as you anticipate, will it have any serious affect on the total ultimate recovery? MR. DARSOW: No, there will not be any serious affects. MR. SWAN: You may defer it but eventually you'll get it.... MR. DARSOW: Yes, in fact there may be some improvement in recovery. MR. SWAN: Maybe you ought to explain why you think there might be some improvement by a little delay here. MR. DARSOW: 1 have another exhibit that I would like to show to illustrate this possibility, and the fact how recovery of oil.from an undersaturated reservoir can possibly be increased as you delay your initial start above your flood. This is caused by the fact of having some free gas saturation established in your reservoir. In other words, where you are undersaturated and you begin your flood and go to a positive injection balance before you have reached bubble point conditions you have no gas in the reservoir in place, there is no free gas saturation and you can con- duct your flood under those conditions. however, if you proceed below bubble point and start to evolve free qas into the reservoir you establish a free -gas phase. With that free -gas phase present, you them lh ve the opportunity as you pursue the waterflood operation of coming up with a trapped gas effect. In other words, as your injection water is moved through your reservoir, pressuring it up and moving no 0 10 -20- the oil ahead, you will actually trap sorr;^ of that free pas and as the result of the trapped gas you will have a better performance, better performance also of your flood front. As illustrated here on my Exhibit 6-A I have an exhibit entitled "Effective Trapped Gas Saturation on Waterflood Behavior." This exhibit shows residual oil saturation on the left versus a trapped gas saturation on the bottom. I would like to point out that I have taken this exhibit directly from a papor presented at the regional Rocky Mountain meeting of the Society of Petroleum Engineers this last spring. This paper was developed by two of our Pan American research reservoir engineers and was presented,as I stated, in the spring meeting. As a result, if we look at Exhibit 6-A, what we see is this: On the exhibit we have presented, taking this right from the text of that paper, two different con- ditions of reservoir rock. In green, we're showing oil wet conditions and in red we're showing the water wet conditions. The actual situation we have in Granite Point, we do have a water wet reservoir so we are concerned with the red curve. What this curve tells us is that if we have a zero trap gas saturation, which of course we would have if we were operating above bubble point pressure, from the curve we can see that residual oil saturation with the oil saturation left in the ground would be about 32 per cent. On the other hand, if we had a five per cent trapped gas saturation, the residual oil left then in the reservoir would be about 27 1/2 per cent, or a gain in recovery factor of about 4 1/2 per cent as the result of the trapped gas effect. MR. SWAN: From that curve, is there some more or less optimum point at which secondary recovery operations probably should be initiated? MR. DARSOW: Well, actually the optimum point would be to initiate your flood as soon as the free gas saturation begins to form in that where you are faced with the unpredictable nature of exactly how much injection rates you will attain,, how fast you will reverse your reservoir pressure, that perhaps, and probably If you maintained your free gas saturation less than 10 per cent would be the most optimum. 10 9 -21- MR. SWAN: Do you feel that if operations are commenced and carried out as we anticipate and about at the time we anticipate, that you will be able 'to stay within this optimum range? MR. DARSOW: Yes, I do. I've calculated that if we continue to operate this reservoir as I illustrated on Exhibit 6, and we obtain a reservoir pressure of 2,150 pounds or some 250 pounds below bubble point, that at that point we should have caused enough free gas to evolve from the oil that there would be about a maximum of 7 per cent gas saturation. Now, this calculation does not account for the amount of that free gas that would be produced. So, in actuality, if we perform as we anticipate and have full-scale injections going from all three plat- forms by the good part of next year, we should have a gas saturation in the reservoir somewhere between 5 and 7 per cent on a reservoir average. MR. SWAN: Well, just looking at your exhibit, it appears that actually;, the longer you wait to start your secondary recovery, the greater your ultimate recovery is going to be. Why don't you wait a little longer, in other words? MR. DARSOW: Well, the reason for that is this: Actually, if you do, as exhibited here from our Exhibit 6-A, you do get a continual reduction of residual: oil saturation, the more capped gas you have; however, as you generate more and mare free gas, you are changing the composition of your crude, you are changing the viscosity, you are effecting the mobility ratio, you are making your flood perform, as you change viscosity too much you have not as good a mobility and consequently you start to offset this trapped gas beneficial effect. Another important factor`° is that as you proceed and establish too much gas saturation, you simply then can count on your delay of fill -up as you inject your water, and you have a delayed response in your produced oil rate. MR. SWAN: Really, summing it up, isn't the point that while it would be physically possible, theoretically, to get the maximum recovery by waiting, let's say until you had this maximum gas saturation, as a matter of economic..... well, the hard facts of life.....it no longer is economic to do it. You simply can't conduct it. -22- MR. DARS3',�: 's correct. Ycj also have in effect your change of your shrinkage factor and you offset where you actually in theory do not come out with a better recovery factor. MR. SWAN: Getting back again, it is your opinion that injection opera- tions are being started here at tre opti::^um time, so within the ranee..... MR. DARSOW: Yes, we are. MR. SWAN: There isn't' any particular day or anything..... when you speak of an optimum time, you're speakina of several months or even a year in any direction, aren't you? MR. DARSOW: Yes, that is correct. MR. SWAN: Mr. Darsow, we proposed in the order here or in our application pursuant to witness each part of the hearing which Is being held, certain rules for the Granite Point Field.....1 think maybe if you don't mind, let me give these to you, ask you to read each one, and if you think there's any explanation as to the reason for that rule that's advisable, why don't you give it to us? MR. DARSOW: Rule No. 1, Pool Designation. The Middle Kenai Pool shall be designated as the interval which correlates with the interval 7,725 feet to 10,800 feet in the Mobil -Union Granite Point No. I well. MR. SWAN: That is the present designation? MR. DARSOW: That is the present pool designation, yes. MR. SWAN: What's the next proposed rule? MR. DARSOW: Rule 2, Spacing. No more than two completed oil wells should be allowed in the Middle Kenai Pool on any governmental quarter section or govern- mental log corresponding thereto. No oil well may be completed closer than 1,000 feet to any well drilled to or capable of producing from the Middle Kenai Pool. No well may be completed at a distance of less than 500 feet from the lease line where ownership changes unless agreed to by both the lease owners and the Committee. And that is existing spacing. MR. SWAN: And what is your next rule? -23- 1 11 MR. DARSOW: Rule 3 is the casing and cementing requirements which were established and have been in effect for development, and are: Surface casing must be set and cemented to a depth of at least 1,600 feet. Sufficient cement must be used to circulate to the surface. The production string must be cemented with a sufficient volume of cement to extend at least 500 feet above the shoe or a volume sufficient to cover 100 feet above the top of the uppermost producing zone encoun- tered in the well, whichever is greater. And that rule has been in effect for the development phase of this field. MR. SWAN: Then, in essence, this is the existing rule now? MR. DARSOW: Yes. MR. SWAN: Do you feel that any change would be made necessary by the secondary recovery operation? MR. DARSOW: No, I think that the existing Committee requirements are fine. MR. SWAN: Whatts the next proposed rule? MR. DARSOW: Rule 4, Bottom Hole Pressure Surveys. A key -well bottom hole pressure survey shall be made in the Middle Kenai Pool in the Granite Point Field upon Committee request, provided, however, the next survey shall not be required more often than twice in any calendar year. The time and length of survey, number and location of wells, datum and other details will be determined by the Committee upon consultation with the operators. MR. SWAN: That does represent a change in present rules, doesn't it? MR. DARSOW: Yes, it does. MR. SWAN: What reason .... for what reason do you recommend that change? MR. DARSOW: Recommend a slight change in the bottom hole pressure survey rule to allow a little more flexibility for the operators to pursue the waterflood. The existing rule calls for two surveys a year and the dates are established and this rule as written provides that a survey shall not be required more often than twice in any calendar year and it will be conducted upon Committee request. The point being is that as the operators pursue their waterflood and as they are -24- r � J converting weli ;o injec-,,ion, if this conversion may occur at a time different from that established in existing survey dates, we will ask the operators in this field and any field where a secondary project is being operated, monitor this project, like taking pressures as wells are converted and by continually watching these wells and the offset producing wells for pressure response. We think that there will be a vast amount of pressure data accumulated by the operators even without a called specific annual or semi-annual survey. And that change in wording here would let the Committee request this data as they see fit. MR. SWAN: That is the rule in effect in the Trading Bay and Swanson River Fields? MR. DARSOW: Yes, it is. MR. SWAN: And so far as you know, it is working satisfactorily? MR. DARSOW: Yes. MR. SWAN: What's your next proposed rule? MR. DARSOW: Rule 5 is a statement of the oil and gas ratio test. This rule is in existence. The oil .... a gas -oil ratio test of 24-hour duration shall be made annually on each producing well in the affected area. The test will be made during the months of June and July and the results to be recorded on Form 29 at the end of August of each year. The requirements of this rule be waived if monthly reported oil and gas production as based on qas-oil ratio tests made at least every six months by the operator. MR. SWAN: Do you recommend no changes? MR. DARSOW: No changes. MR. SWAN: What further rule do you have? MR. DARSOW: Rule 6, Pressure Maintenance Projects. The injection of water for the purpose of pressure maintenance, secondary recovery, or of conducting infectivity tests is hereby permitted in the Middle Kenai Pool in the Granite Point Field. A semi-annual progress report entailing project operations and results shall be submitted to the Committee in January and July of each year. MR. SWAN: And of course your whole testimony practically has been in accord with that? MR. DARSOW: Yes, it has. MR. SWAN: What's the next one? MR. DARSOW: Rule 7, Administrative Approval. Upon request of the applicants and a showing that the affected parties have been notified of said request, the Committee may authorize the conversion or drilling of any well at any location, the termination or suspension of the projects or any operation mutually designed to further the purposes of the project. MR. SWAN: And, you also covered the purpose of that in your testimony, did you not? MR. DARSOW: Yes, I did. MR. SWAN: Those are all the rules? MR. DARSOW: Yes. MR. SWAN: Excuse me, I think this concludes the testimony. I'll check with my advisors just a second here to make sure we haven't missed something. (pause) MR. SWAN: I think he's ready for cross examination. This concludes our direct testimony of this witness. CHAIRMAN BURRELL: Mr. Swan, have you offered these exhibits? MR. SWAN: No, I have not .... excuse me.... I'd better do that. Mr. Darsow, referring to the exhibits, you have exhibits what.... I through 6 .... Well, now wait a minute.... No. I through 6 were prepared by you or under your supervision, were they not? MR. DARSOW: Yes, they were. MR. SWAN: Exhibit 6-A, I think you testified, was taken from a paper and was actually not prepared by you? MR. DARSOW: Yes. It is a reproduction. MR. SWAN: You have furnished the Committee a copy of that paper? -26- • • MR. DARSOW: Yes, I have. MR. SWAN: At this time I offer our Exhibits No. I through 6-A. CHAIRMAN BURRELL: Does that include 5-A? MR. SWAN: Yes, excuse me, I forgot to put that in there. 5-A was also prepared under your supervision? MR. DARSOW: Yes, it was. CHAIRMAN BURRELL: We'll accept Exhibits I through 5-A, 6 and 6-A as evidence and since 5-A wasn't handed out, unless you have an objection, we will make it available on the counter to the people who are interested, the extra copies of it......it wasn't put on the board, I should say. MR. SWAN: Well, as testimony was long enough and I figured those were just statistics, I didn't want to go into them any further. CHAIRMAN BURRELL: We'll take a five minute stretch break now and appear again in five minutes. (break) CHAIRMAN BURRELL: Geltiemen, let's reconvene the hearing now, please. Go ahead and ask the Committee if they have any questions.....Mr. Gilbreth? MR. GILBRETH: Mr. Darsow, back earlier in your testimony, one of the exhibits covered up now showed injection tests on Well 18742 No. 6. Is this the only well that you made infectivity tests on? MR. DARSOW: No, sir, it is not. We actually initiated our initial injection tests into this field into 18742 Well No. 12, the immediate east offset to Well No. 6. We had a little bit of bad luck and encountered a mechanical failure in that well and then actually switched over to 18742 Well No. 6, and this was the well that we actually ran our test in. MR. GILBRETH: You say you had some bad luck in the other well, was the well tight? MR. DARSOW: The well, as I mentioned in testimony, we do see that as we go down the flank we get some reduction in permeability. Well 12 is tighter -27- than Well No. 6, with 6 being a crestai wr;il. We actually had a, I think probably, a combination plugging effect, possibly caused by material.....drilling material, what have you, left in the hole, combined with our surface pressures, we had a mechanical failure; it was more expeditious for us then to move to another well rather than go through the cost of trying to repair that well for injection purposes. We do intend, as we have indicated on Exhibit I, to utilize that Well 12 in our overall injection scheme, so the well will be repaired for future injection. MR. GILBRETH: On your Exhibit No. 4, which is the exhibit showing the infectivity results, do the —does the profile there reasonably represent what you know about the reservoir, that....you have injection fluid distribution in propor- tion to the permeable streaks? MR. DARSOW: Yes, this is pretty much the case. Again, and with depth, we do find that the lower intervals of the Middle Kenai oil pool have a little tighter permeability. There is one benefit here that I did mention that's in our favor, and this is the relatively low relative permeability to water. As you pursue a waterfiood with this type of rock, once you are able to put the volume of water away, the rock itself in its character causes your flood front to progress through the various stringers in a more uniform manner than if you had a higher permeable rock with a greater relative permeability to water. MR. GILBRETH: Do you feel that the profile that you have, for example, from this well, is representative of what you can expect throughout the reservoir? Where your injection wells are located? MR. DARSOW: We do, there is a .... now as we look at logs on various wells, we have a different configuration on some of your sand members but we would anticipate and point out here toothat our C-5 member and our C-7 member, illustrated, are our most extensive members in the field and these members should take water in this relationship. This is why in our schematic presentation, we feel that very possibly we may go to our Alternate No. 2 where we put a packer between those two zones to be able to control injection into the lower zone itself at a higher rate. M • 0 MR. G I LBRETFi .that w i I i ;rmi ne this then, s i r,, he volume that you're able to get into the Ic zone? MR. DARSOW: all a productive sand member Well No. 6. MR. GILBRET re Th. :ther members within the r- to Point Field or pool that are not she Thal :dr in other w^I Is? MR. DARSOk es, i namely poi: t the develoi r for instance of a C-6 Sand, which li :etwec :e 5 and 7 t re simply nu ed from top and these sand bodies a, antic; in nature a not have th me total area extent, but all of sand iers lie in t iddle Kenai P and I have shown those that are in., •• MR. GILB . We within they p, �n of our in ion wells then you will be inject in sa such as No. MR. DAR! Yes. will. All t and members :nt in the field will be receiving tar to e of these it ion patterns did not bring with me the individual aach of the stria of wells to you which wells will be injecting whirr e but they wi ,II be........ MR. GILD d: t )arsow, I didn uite understa rom your Exhibit I why you chose t artic pattern you You said t /ou had made studies of the various pr ns ti :ould be used had decided o; s one. Why is the one you've c I bett han the perip I for example"_ MR. DAi Wei found that, instance, wh have the peri- pheral scheme th imply i r model whe,r actually mac :omputer model of this reservoir ItAilt tt iodel as nea, possible to a conditions, in other words, fisted ti :rmeability , or every well —at reservoir and then kept adjusting the model until it matched our past history. Once we have a match on our past history we were relatively sure of ourselves that we had the proper model and then proceeded to investigate which pattern would work best on our lease. What we found was 4 if we stayed to only peripheral wells with the number of wells we have, we have fewer wells to convert and consequently we couldn't -79- get enough water away. We found that we had to make some type of combination of the better higher structure wells with the peripheral wells, and it turned out that of the patterns we studied, this pattern illustrated by our lease was best. Now, to point out that we will continue to analyze this, and as presented in testimony, and for the reason for the administrative approval flexibility, as we start convert- ing some of these ten wells we may find out that we need a slight modification to this pattern. And perhaps further model studies will tell us this too; but at this time Exhibit I depicts what we think will be the best in the way of recovery efficiency l and of operations efficiency the wells will give us the flexibility we need. MR. GILBRETH: Do you plan to start it....well, for example, the line between the Pan American property and the Mobil property and work uniformly northward? MR. DARSOW: I did not in direct testimony point out now on the drilling of the lease line well MUC 1-1 and MUC 1-2, 1 and 2, that these wells are being drilled with Mobil as operator from their platform. This is indicated on Exhibit I actually by well bore tracings. So, Mobil's waterflood facility becomes effective and operational in February, so they will be injecting into these lease line wells at this time. When we have our facility available we will try to convert these wells as rapidly as we can within that six month period. 1 have no concrete means by which I would convert them but at that time we will look at the producing rates and take our wells probably on the north end and move down here on the .... toward the lease line, and I would imagine work toward the middle. MR. GILBRETH: It would be your plan to go on with the entire program, not do part of it and wait a year or two to....? MR. DARSOW: No, we would go on with it. We would convert the wells until we were able to put away the water that our plant is capable of giving to us. Now, we would hope actually that we could put away the desired volumes with less wells intended. This is why we need this flexibility. MR. GILBRETH: On your Exhibit 5-A which was the table required by Regulation 2226. - 30- MR. DARSOW: Yes, sir. MR. GILBRETH: 2.226(a) No. ` wo have asked for a description of the intake wells casing or a proposed ccsi;".? program and proposed method for testing casing before use as an input well. What are your plans along this line to show that there's no channeling behind the casing? MR. DARSOW: Well, of course, the .... all of the wells drilled in that will be converted have been drilled in accordance with the development drilling casing and string procedure. In other words, they have been pressure tested and we do have cement behind pipe to adequately cover the entire zone. With that behind us and knowing that we have tested these wells that the further testing would actually occur as the water injection profiles are run. The constant monitoring of this would let us determine continued soundness of the cement. MR. GILBRETH: Do you know that you have cement across all producing zones and each well in the field in which you are going to convert? MR. DARSOW: Yes, in accordance with the existing rule, when we..... MR. GILBRETH: I don't mean according to the rule, do you know that this is physically present? MR. DARSOW: Do I know that is physically present? MR. GILBRETH: Or does your company? MR. DARSOW: Well, the ..... when the wells were originally cemented, yes, they pressure tested these wells and put in the volumes we have cement bond logs run..... MR. GILBRETH: You have information then that does show that there is cement above all producing intervals? MR. DARSOW: Yes, we do. MR. GILBRETH: Alright. With the pattern that has been chosen, I assume you feel that the....a pattern will protect the correlative rights of all the oper- ators as well as the state as royalty owner. -31- 0 0 MR. DARSOW: Yes, I do. !;ne combination of the two injection line wells and the two offset producing wells by each group, that we will have very definitely sufficient control to provide the protection of all correlative rights. MR. GILBRETH: On your Exhibit No. 6, 1 don't believe you specifically stated, but is the hatchered are6 shown on that exhibit within this range of 65 to 100 per cent recovery you were speaking of, does this represent the high and low of your estimates? MR. DARSOW: Yes, it does, but actually go into the hatchered area a little bit more. The reason for the hatchering is the fact that even with the inject- ivity data that we have and the flexibility of the equipment that we're putting in, we can't tell you today or predict for you what the final average injection rate will be. As you know, from our model studies, that depending upon that injection rate we will get a variance in your pressure and your oil response. And what I'm trying really to depict here is that if we have loser injection rates our pressure may merely follow the bottom of that hatchered area; on the other hand, if we can put away the water quantities that we would desire, more desire, we would approach the higher line. The same, of course, corresponds to our oil rates. The point here, as I mentioned, that even when we get these higher injection rates we're not going to get a, what is called an oil buzz, which a lot of us are familiar with, where maybe the steep rate under secondary would approach or equal, sometimes exceed primary. This type of rock this will not occur, and what we will get will be a pressure increase which will maintain our producing oil rate. I've only run this curve out to 1976 and then indicate that it will continue; but, depending upon the range and the actual performance in that shaded area, we will guess, get secondary in the 65 to 100 per cent range primary. MR. GILBRETH: According to your Exhibit No. 6, what is the latest actual pressure that you have plotted? MR. DARSOW: The latest actual pressure came about as the result of the survey that.... surveys of key wells taken in the month of May of this year at which time we have extrapolated these pressures from their build-up measurements, extrapolat- ing them out to reservoir conditions and looking at the surveys for the whole field, -32- 4 our average reservoir pressure at that time measured 2,300 pounds. MR. GIL13RETH: Is this an arithmetic average or a weighted average? MR. DARSOW: This is a weighted average, taking into account actually, to get back to this exhibit, I have plotted pressure versus cumulative oil production, and this gives you a more average weighted condition of your entire reservoir. MR. GILi3RETH: Would you have any objection of making this informa- tion available to the Committee? I believe the information the Committee has shows a much lower pressure. MR. DARSOW: Well, the information that is available to the Committee is a result of a survey or a 24-hour build-up ........ As an example, I might for the key wells that we surveyed, to give you an example, where I'm showing a 2,300 pound average pressure, our Well 17587 No. 3 which is ..... that well's extrapolated pressure came out to 2,619 pounds. We see when we look at this that particular well in the north end is considerably higher and then we had 2,510 pounds and 2,367, pounds so you put all these pressures into your cumulative pressure plot and your 2,300 pounds is a arithmetic average, or not an arithmetic average, weighted average pressure for this reservoir. MR. GILBRETH: Do you believe that a maximum build-up is measured in this reservoir within 24 hours as now required by the rules? Present rules require two or three options but one of them is a 24-hour build-up. Is the 24- hour build-up sufficient to reach maximum in this reservoir? MR. DARSOW: No, it's not sufficient to reach maximum, but it is sufficient with the build-up information we took, we can extrapolate this out and determine what your pressure is at the boundary level there. CHAIRMAN BURRELL: Mr. Marshall, do you have a question? MR. MARSHALL: Yes, Mr. Darsow, in looking at your injection pressures and your injection rates, 1 think you said that this injection pressure was one of the unique features of this particular program, it seems rather high. How unique is this injection pressure that you use in this figure here, or will be -32- 2 using? Could you give just a little history of how unique this type operation is? MR. DARSOW: Well, as we've looked at this and the way we would intend to operate, we ran the step -rate test to see what we could do, we would envision operating this flood not at the peek design of our equipment, in other words, 4, where I've stated we've designed our equipment to 7,500 pounds, we would not choose to operate our equipment there, but rather have a surplus capacity level should we want to pressure part these wells increase our rates. We will prefer and will operate our reservoir right below frac pressure provided that as we con- vert these wells we put away sufficient water volumes to propagate the flood and with our flood results. Normally, most water floods are conducted below bubble or below frac pressure; however, often times as infectivity declines, these wells are fractured using propers or they're acidized to increase that infectivity. Here, with the flexibility of the centrifugal equipment we can go up to and exceed a frac pressure and actually part them with our injection equipment itself. And then, hopefully, as you let your pressure back down you will have increased your injection rate. The thing that we have analyzed and studied quite thoroughly too is whether or not we could actually conduct this flood with injection being maintained above the frac pressure. We feel that this is possible if we have to go to that extreme. MR. MARSHALL: Do you have a, let's say, other similar oil field history where this has been done, where injection has been maintained above fracpressure for a sustained period? MR. DARSOW: No, sir, I do not, This is more or less, as far as I know, this is pioneering right here. MR. MARSHALL: I believe your testimony indicated that Rule No. 2 as proposed was identical with Rule 2 of Conservation Order 59 of the Granite Point Field rules. It appears that there is an additional sentence which you've added there whcih gives, looks like administrative discretion to the Committee to make a change where a well is cornpleted at a distance less than 500 feet from the lease -33- lines where ownership changes. Your additional sentence being "unless agreed to by both its owners and the Ccmmit1 ." MR. DARSOW: I may have . s-stated there, I believe that rule and that sentence was included in previous hearings on the Granite Point Field, was it not? MR. MARSHALL: It wasn't in 59, let me check 60. MR. DARSOW: It was my impression that we had had that into the field rules modified at earlier hearings. MR. SWAN: I think that probably the attorney is responsible for that, Mr. Marshall. I think what we were trying to do was to make that coincide with the later proposed rule on administrative changes. MR. MARSHALL: I see. MR. SWAN: So that it would not .....otherwise it would be interfering with conservation rules. MR. MARSHALL: Conservation Order 60 didn't change that particular added section. MR. SWAN: It was my fault not his. MR. MARSHALL: That concludes my questions. MR. GILBRETH: This is Gilbreth. Mr. Darsow, I'll ask another couple or so questions. The wells as you produce them in the Granite Point Field now have operating pressure, that is on a current basis far below the bubble point pressure, is this not true. MR. DARSOW: Yes, there are both producing pressure and below bubble pressure. MR. GILBRETH: They're drawn down considerably? MR. DARSOW: Yes. MR. GILBRETH: The pressure that you have plotted here is a weighted reservoir pressure away from the well bore? MR. DARSOW: Yes, sir, taking into account what the total reservoir weighted average would be. I* • -34- MR. GILDRETH: O.K. in yo4r o.inion, where should the reservoir pressure be maintained in this reservoir to prevent th'ss, at what point would you start loosing recoverable oil to be laft in the reservoir? MR. DARSOW: You ..... as we were talking from our Exhibit 6-A on the trapped -gas effect, now if you reduce your reservoir down to point where the weighted average pressure for your entire reservoir would build up a free gas saturation in excess of 10 per cent or you get out into the 15 per cent range, then you start to loose, even though your residual oil saturation is less because of the factors of shrinkage and some change in mobility, but up to 10 per cent is optimum. Now, actually, showing a recovery here is a matter of maintaining that oil rate as long as you can above your economic cut-off; and, here, even though you wouldn't get the recovery factors, say for instance you had a longer time period where you could initiate the flood above bubble point, this would also be a good flood. But the point here is that with our timing and with our withdrawals in the actual reservoir that we have, the fact that we are coming down here to a pressure fieldwide average, weighted average, of only some 250 pounds below bubble point is a favorable factor for us, and it should benefit our..... MR. GILBRETH: But, if pressure dropped low enough, if the free gas saturation started exceeding 10 per cent, then you probably get over in the range where you start..... MR. DARSOW: Then you have a problem of trying to get your fill -up, to get your gas back in the solution, this would be delays, and could be detrimental to your overall operation. You will have, and we are having now, localized free gas breaking out around some of our producing wells. Not all of then; this again takes into account the cumulative withdrawal from that particular well and the area of the reservoir it is affecting. This is pointed out on Exhibit 5-A, the well test. We see that some of the wells that have high cumuiatives that have been on production a maximum period of time are actually increasing in their gas -oil ratio, indicating some free gas. As indicated here on Exhibit 6 by the plot of oil rate and also by our computed average pressure, we are slightly below bubble point. MR. GILBRETH: The manner in which you calculated these pressures as you show on your plot, does this give a weighted reservoir pressure for the entire reservoir, or is it a limit pressure? MR. DARSOW: It would be more of a weighted average for the entire reservoir. I actually did not attempt to draw an isobar map and do any maneuvering that way. However, on plotting up the key well surveys which we based on our leases and which Mobil thinks, putting these key well surveys there, first I extrapolated the pressure out to the reservoir boundary positions, adjusted then for the spacing that we have in this field, in other words, the 80-acre main area. I have determined from each well what that pressure is in that range area; and then, plotting those pressures, versus cumulative production, I've come up with a pressure that represents what the field conditions are. If you're allowed to stabilize, stabilized conditions. MR. GILBRETH: Right. With volumes under day-to-day operations within the area immediately adjacent to the well bore you're exceeding the 10 to 15 per cent free -gas saturation..... MR. DARSOW: Yes, there is a local area around that well bore where your free -gas saturation would be high. MR. GILBRETH: And what you're telling us then is that the average for everything from the well bore out to the limit is still just below the saturation pressure? MR. DARSOW: Yes, sir. CHAIRMAN BURRELL: Are there any other questions? Mr. Larson? MR. LARSON: Going back to this trapped gas, does this trapped gas theory imply that the gas does not return into the solution once you restore your pressure to the bubble point or to some ..... to the equilibrium pressure of the oil and gas in the reservoir? MR. DARSOW: That is correct, you actually....you're trapping some of the -3b- gas where it does not come back into solution or back into the remaining oil in place. You're actually trapping off some of your reservoir space and you're taking away some of your poor volume in isolating it with this trapped gas effect, and as a result you then are conducting your flood on some other portion of the reservoir rather than, let's say 100 Per cent. MR. LARSON: Why wouldn't this trapped gas go back into solution? MR. DARSOW: It wouldn't be trapped if it was in. if it's.....if you trap it into a pore space that .... or pore spaces that are all saturated, yes, it would go into solution in that oil there. However, it's possible that with your free gas you could establish some permeability from gas where a portion of your reservoir would be gas filled. In that case you wouldn't have sufficient remain- ing residual oil maybe to take it into solution. CHAIRMAN BURRELL: I have a question on Rule 3 here, casing and cementing requirements. The latter part of that rule indicates that the cement should be at least 500 feet above the shoe in sufficient volume to cover 100 feet above the top of the uppermost producing zone. In view of the fact that we're going to talk about drilling, possibly drilling injection wells, I would prefer maybe that that said uppermost zone capable of producing since you wouldn't be producing an injection well. There would be no objection to that would there? MR. DARSOW: No, there is not. CHAIRMAN BURRELL: Is there anything else? Any further questions? Thanks very much Mr. Darsow. We may be back at you later. MR. DARSOW: All right. CHAIRMAN BURRELL: Mr. Swan, do you have another witness. MR. SWAN: Yes, sir. Mr. Giles. CHAIRMAN BURRELL: Mr. Giles has previously qualified before the Committee and his qualifications are acceptable. MR. SWAN: Mr. Giles' testimony will primarily be ..... will cover the question asked by the Committee as to beneficial use of the gas; and he has, I think, only one exhibit. Would you state your name please. -37- 9 • MR. GILES: R. B. Giles. MR. SWAN: Mr. Giles, you have previously testified. Your qualifica- tions have been admitted and as I've stated your testimony is primarily for the purpose of advising the Committee as to our prediction as to the gas which will be produced and the use which will be made. Do you have an exhibit which demonstrates this graphically? MR. GILES: Yes, I do, Exhibit No. 7, which is a comparison of old and new forecasts of produced gas and the eortion of that produced gas that we are able to beneficially reuse, just for the Anna and Bruce platforms of the Chakachatna Group in this field. I might point out that the two red curves are the old fore- casts of produced gas and the bottom red curve being the fuel gas consumption, and the green curve represents the respective new forecasts. All curves presume con- tinuous operations. We couldn't really develop a realistic forecast if we were to assume down -time and so this represents continuous operation and so for the produced gas it would be continuous well operation and for the fuel gas consumption it represents continuous operation of the equipment that has the portion of the produced gas dedicated to it for reuse. Let's go to the old forecast of produced gas. We had made three key assumptions when we developed this curve back in February of 1968 at that hearing. First, a pilot water infectivity test would Take place in mid-1968, and they did. Another assumption was that we would finish development drilling in the second half of 1969, this fall. Well, we actually finished such drilling last fall, so we missed that a year. The third key assumption was that we would start full-scale water injection during the second half of 1970. Now we had predicted September with this particular solid blue line vertically on this graph, and we think we can beat that by a couple of months and start our full- scale water infection, as Mr. Darsow has testified, along about mid-1970. Now on the red -colored fuel gas consumption old forecast curves, we had forecast a dip in 1970, because development drilling would have been completed and so we would have -JC)- 9 9 removed the four DC power generators from service. And, as I just explained, we missed that development drilling forecasT by a year, so we've already removed those four DC generators. We had testified prev 6;;sly that convergence of the two red curves, the produced gas and the fuel gas consumption would take place in 1979; and for some nine years thereafter, we'd ~,ave to get hold of some make-up gas for fuel from outside sources. Further, on the old forecast, we had predicted that the area under the red -colored fuel -gas consumption curve would represent 40 per cent of the area under the red -colored produced gas forecast. Although we were willing to admit back in February, 1968, that we were only equipped at that time to take care of 13 per cent of the produced ,,,as. The volume of surplus gas over -and -above what we figured we'd need for fuel gas consumption until conversion took place in 1979 was forecast to be 34 billion cubic feet of produced gas. And, finally, we had forecast that the ultimate produced gas from the Chakachatna lease holdings in Granite Point would be on the order of 80 BCF; Well, engineering forecasts, like sports records, seemingly are made to be changed later, so let's talk about new forecasts. On produced gas, the uppermost green curve, we can see from perfor- mance, the dark line here, that the decline has been quite a bit more rapid in oil rate, or has been quite rapid; and this is associated with a completion of a Middle Kenai Pool in this particular field that is somewhat smaller, this pool is some- what smaller than we had originally expected it would be. We've had a slight increase in produced gas in the last few months, because as Mr. Darsow has pointed out, some localized free gas is being produced and this will continue until re- servoir pressure decline is arrested and until reservoir pressure is thereafter increased by virtue of the waterflood program, when that operation gets into gear full-scale in mid-1970. Now, we have shown here a rather sharp drop in the middle of 1970 to anticipate the effect of converting our ten producing wells to injection if we need them. And I suppose in hindsight we really should have graded that curve a little bit to match his curve on Exhibit 6 rather than make it an abrupt drop there, because he did indicate, Mr. Darsow, that it might be up to six months, -39- the conversion of these wells. Then we show a gradual increase in produced gas until it peaks in 1972 and this is from a combination of increasing oil production through the waterflood response and gradually decreasing gas -oil ratios as the reservoir pressures increase. Then, after 1972, the gas -oil ratios continue to decrease 'till all gas everywhere throughout the pool is back in solution and the GOR would then be about 800. And from 1975 on, there's a constant GOR in combina- tion with a declining oil rate. And that's how we come upon this new forecast of produced gas. Now, let's turn to the lower green curve on our new forecast of fuel-qas consumption. The curve follows the original forecast fairly well if we were to include the shore facility gas at East Forelands. This is some one million a day of gas that can be used in the wintertime on East Forelands and it would be about 400 MCF a day for .just summertime use without the glycol heaters. So you add about a million and you come up pretty close to the old forecast. Now, the green curve says that we're predicting some 2,700 to 2,800 MCF a day as com- pared to .... this is hard to see on this graph....3,000 MCF a day we had forecast earlier, preceding the secondary recovery operations. Now after we start the waterflood program in mid-1970 on full-scale, the fuel needs with the four 1,850 horse power turbines for the waterflood operating under full load are expected to jump to 5,200 MCF a day; and except for some slight disturbances due to some seasonal adjustments of fuel consumption, we would expect it to roughly approximate the same 5,200 the rest of the life of the pool. And this doesn't compare too badly with the 5,400 MCF a day that we had forecast 18 months ago. Now, turning to convergence, where the two curves produced gas and fuel gas consumption meet, we now forecast that that will happen in early 1982, some two -plus years beyond our previous forecast and of course thereafter we will need to obtain fuel gas from outside source as make up. Now, consider alternate usage. The area under the green colored fuel gas consumption curve represents about 50 per cent of the area under the green colored produced gas curve. Now, right now we're equipped to use about a quarter of the produced gas, re -use it, but after we put in these four -40- turbine pumps for the waterf,00d, we expect we'll be immediately reusing about half of the reusable produced pas. And then, as time roes on, we'll be propor- tionately using more and more until we hit that convergence point and we'll be using 100 per cent of the available and reusable produced gas. The volume of surplus produced gas over -and -above our fuel gas consumption needs until con- vergence is now predicted to be ?2 billion cubic feet. Now, this is significantly less than the surplus gas that we had forecast earlier. A final figure I'd like to show on this graph is that the ultimate produced gas from the Chakachatna lease holdings now is forecast to be 44 billion cubic feet. That's about all I can get out of that graph. MR. SWAN: Well, in summing up, Mr. Giles, a 'ittle bit here, the area under the bottom preen curve, which is your new forecast, in effect represents the gas that you have to reserve or dedicate for operations, does it not? MR. GILES: It does. MR. SWAN: This is gas that....you can't sell it because you have to replace it with something else, is than right? MR. GILES: That is correct. MR. SWAN: And, then the area between that bottom green curve and the top green curve, your new forecast, represents gas for which if you had a market you could sell? MR. GILES: Yes. MR. SWAN: What's the status of the possibility of marketing that quantity of gas even though it's somewhat less than you thought it would be? MR. GILES: Well, we have received and considered two proposals for the available surplus gas. First proposal was from an Anchorage -based firm. They talked to us in January of 1969 on the availability of casinghead gas from the Pan American operated platforms in Granite Point and Middle Ground for use by a plant for the extraction of ;propane gas. Now, that company was looking for up to 5 million cubic feet a day to serve Anchorage with propane. One very is 0 practical consideration brought up b� us apparently made it incumbent upon that company to look elsewhere, feeling that our source of supply would not be satis- factory and that consideration was this, that to avoid interference with our oil producing operations we'd have to have a contract which would permit us to interupt and cease deliveries at unpredicatble intervals on short notice and for uncertain and perhaps extended periods of time. There was an additional thought that came to our mind too, we had concern about such a contract because if we were to supply 5 million a day, this would not include all of the gas which we would have available when we were able to make deliveries. So entering into a contract for only a portion of the available gas would, and could, seriously impair our availability to find a market for the balance. The second proposal that we considered was also made made in January of 169 by a Vancouver -based firm in connection with a project to serve Fairbanks with natural gay. Now, the success of their project depended on obtaining a sufficient supply of gas on the order of 300 to 400 BCF in the vicinity of a pipeline terminal near Anchorage. Now, we have no such gas that close by. Our gas at Kaloa and the West Foreland areas on the west side of Cook Inlet was mentioned, although our reserves there are not now sufficient to support such a project. The outfit we were talking with kind of became disenchanted with these west side reserves when they realized the cost of getting this gas into their proposed system. Well, the up -shot of it all is that even though we could see that we couldn't help them in their project, we left the door wide open to whatever future encouragement we could offer them in the project because this Fairbanks prospect represents one of the very few marketing prospects and oppor- tunities for Pan American's Alaskan gas. Now in a letter of May 9 of this year, the president of this Vancouver firm wrote us, and he told us that they have retained a consulting firm to complete a feasibility and economic study of the proposed supply of Gas to Fairbanks and that perhaps depending on assessing their position in even greater depth, they would be Getting back in touch with us at a future date, but we haven't received any word yet, but we're still hoping. I'd -42- 0 • like to sum up this though' on a market prospect this way; the inner -acting forces, and they are inner-actinq, between supply and demand should continue to be allowed to work uninhibited toward a proper answer. In the case of the Fairbanks market and in our opinion, this is the most promising prospect to appear yet. No one party, no one pool seams able to supply its requirements. So, even though our supply of gas is diminishing somewhat with time, we know it is, we can see this on Exhibit 7, the marketer will carefully appraise and reappraise several sources of gas supply in the area and sce if he can put them ali together in a package to satisfy the demand for his project. Now, a delay in the marketer accomplishing this objective while it may seem to work to our disadvantaqe and it may not seem to be solving our desire and the Committee's desire to see the flare cut down in the Inlet, this delay in reality could be a blessing in disguise as this marketer continues to search to satisfy his demand. So, I guess what I'm saying is, let's not be too impatient in trying to cut down the flare. Oil, by far, is the most valuable product of our Inlet operations and as for the associated produced gas, supply and demand has to become a reasonably close match for a contract for gas to evolve. Marketers are kind of stUbborn and tenatious people, they don't give up after their initial frustrations, so this Fairbanks market could yet become the solution for our Cook Inlet gas flare problems. MR. SWAN: Mr. Giles, although the quantity of gas in excess of what we have to reserve for platform operation is somewhat less,then actually that gas will° be available for a long period of time,so actually it is a more marketable gas supply isn't it, or a better gas supply if you're looking for a market, than we first thought it would be? MR. GILES: Yes, I'm sure that they're considering that. It's not much longer, two -plus years, but I think a little bit more beneficial. MR. SWAN: Really, on our previous forecast it looks like we'd be all through by 173 or 174 for all practical purposes. MR. GILES: Yes, that's true. 0 .46 -43- MR. SWAN: Now, it goes quite a bit beyond that? MR. GILES: Yes. MR. SWAN: You mentioned the Kaloa well, where is that? MR. GILES: On Exhibit 1,, it's located in Section 26, II North, 12 West, on shore. MR. SWAN: That is.... I've been meaning to ask you this .... is that well a part of this field? It is not? MR. GILES: No, it is not. MR. SWAN: Are there other gas reserves, or do you know in the area that might be used in combination of this reserve at Granite Point in addition to the reserve at Kaloa? MR. GILES: Well, Nicolai Creek is fairly close and there are some other gas fields but the details of these I do not know. questions? MR. SWAN: I believe that covers the testimony. CHAIRMAN BURRELL: Thank you. Do the Committee advisors have any MR. GILBRETH: Mr. Giles, you mentioned that the lowering of your estimates there had actually extended the producing life and the period of time which you would have surface gas available. If the producing rates were reduced in this field, would this not also have the same effect of extending the available life -out of life which gas might be available? MR. GILES: Yes. MR. GILBRETH: 'We have noticed and have reported to your company, the Committee has or its representatives, on more than one occassion, that the flares from your platforms are quite black, indicating improper burning or high content of fluids in the gas. Can you tell me if anything has been done to minimize this to better extract fluid from the gas? MR. GILES: I would say, Mr. Giibreth, that they're working on and possibly trying to improve the removal of liquids from the gas and that perhaps -44 f i there is The associated black smoke 'v,iti, this flare, but this is what it is, possibly a carry-ov.r of soma liquids and this has the conttation of some air poiiution that the companies and c-;erators are constantly tryinn to minimize in effect. MR. GILBRETH: Your r_omnany, it's not directly associated with this hearing, but you operate with Shell in Middle Ground Shoat where the gathering facility is very close to the Granite Point gathering facility. Additional separation facilities have been installed there to accumulate condensable hydrocarbons from the Middle Ground Shoals Field. Your company has told us they would look into the feasibility of this for the Granite Point facility. Can you give us any report on if anything is being done to recover these hydrocar- bons on shore? MR. GILES: (unintelligible comments) MR. GILBRETH: You have gas -lift compression equipment on your plat- forms do you not to lift the production? MR. GILES: Yes, and no. I have to answer it this way, that we have to add some compression stages if we are actually going to these compressors for gas lift. They're basically for putting the gas ashore. MR. GILBRETH: You have had no facility at this time that would go to a high enough pressure to reinject into the reservoir, correct? MR. GILES: That's right. MR. GILBRETH: You're using hydraulic lifting on both platforms? MR. GILES: Both platforms, yes. MR. GILBRETH: You mentioned that there had been a contact made with a local Anchorage group, I believe, about the gas. Has the door been completely closed on this possibility? Or is it still open? MR. GILES: The door is never closed on a market possibility, Mr. Gilbreth. I would say the door is wider open to the prospect of the Fairbanks market. -45- t'•",R. GILBRETH: Would your company be agreeable to committing its excess gas to a sales contract if the operator were agreeable to the interruptionsnecessary to your oil production and if he paid a sufficient price to get the gas to shore, and give you some profit? MR. GILES: Yes, is there somebody like that? MR. GILBRETH: I don't know, I,m asking. MR. GILES: Yes, we certainly would. MR. GILBRETH: Alright. That's all I have. MR. SWAN: i have one witness who's here primarily to testify on one point that neither of these witnesses have covered and that is the field limit. I don't think it will take more than two minutes to....it might run a little past twelve. .................Call Mr. Kirkpatrick. CHAIRMAN BURRELL: I don't believe Mr. Kirkpatrick has qualified.` MR. SWAN: No, sir, this is the first time he has testified before this commission, committee, or any other.............Would you state your name please? MR. KIRKPATRICK: Terry Kirkpatrick. MR. SWAN: By whom are you employed, Mr. Kirkpatrick? A Pan American Petroleum Corporation 0 And, what position do you hold? A Geologist in the exploration department, primarily concerned presently with field studies in the Cook Inlet Basin. 0 What has been your education in geology? A I have a Masters Degree from the University of Iowa which was received in 1967. Q What experience have you had as a geologist? A I worked as a summer employee with Union Oil Company of California in 1965 in New Orleans. A summer employee in 1966 with the Chevron Oil Company, also in New Orleans; and upon receiving my degree in 167 came to work for Pan American, came here to Alaska to our Anchorage office where I remained until April of this year, and presently with the Denver office. Q Then, during your work for Pan American, have you had occassion to be familiar with the geological problems in the Cook Inlet and specifically with this field here? A Yes, sir, my primary job up here was to aid the development department and exploration department in Cook Inlet field development. Q One question which the previous witnesses have not covered...... you have been here during the testimony? A Yes. MR. SWAN: At this time, may his qualifications as a geologist be admitted? CHAIRMAN BURRELL: Unless there are objections, his qualifications are accepted. MR. SWAN: One question which previous witnesses have not covered, Mr. Kirkpatrick, because it deals primarily to a geological question, is whether the limits of the field have been sufficient to decline by the drilling of wells so that it would be proper to initiate a secondary recovery operation in the field. May I ask you as a geologist, do you feel that the productive limits of this field have been sufficient to define and has the productive area been developed by the means in question? MR. KIRKPATRICK: Yes, sir. 0 In other words, essentially development drilling is concluded in this field? A Yes, sir. 0 And wells have been drilled which completed development? A Yes, sir. 0 How are those productive limits determined geologically. I mean, explain a little bit the basis for your answer. -47- • • A The western limits of production in the Granite Point Field, we feel, are defined by a discontinuity which is shown on Exhibit 1, running along the west flank of the field. We have bore hole evidence and seismic evidence that there is some structural discontinuity here which will efficiently, unfortunately, end our production at approxi= mately this point. 0 The wells have actually crossed that area, haven't they, or have they? Or is that a good question? A Yes, well, it is a difficult question to say definitely. We do have indirect evidence at least that we have extremely steep dip on the west flank, have cores in the 18742 No. 6 that we talked about before, encountered almost vertical dips. We have a very definite decrease in wells on that side in permeability, porosity, and increase in water saturation. These various factors we feel do point to a breakover in this area. There are some wells which we feel may have actually penetrated a fault. Q Perhaps I should have asked it this way, have some wells been drilled on the west side of that discontinuity which have tested these same formations or would you have some idea as to whether production might go beyond? A Yes, sir, they have. Q And, what has been the result of those? A The result to date has been that we have no commercial production from the zone. Q Well, its your opinion then that the productive limits of this field do not extend west? A That's right. 0 How about the limits in other directions? A The °imit in the northern end of the field, commercial limit at any rate, we feel lies somewhere in the area of 17587 of the two wells, • • essentially wildcat wells, did test this zone, in particular, and I point to Exhibit 6-8 which we have here, cross section, running from 18742, No. 2, located near the crest of the structure in a northerly direction to the 17587 No. 2, and -;finally to the Tyonek I -A well which we drilled before development of the field. As 1 be!ieve Mr. Giles pointed out, or Mr. Darsow, the most productive formation that we have is one that we designated C-7 in that formation zone. This has an oil - water contact which we have calculated at sub -sea level or 10,250 feet. We tested that zone in the 17587 No. 2 and did not get commercial pro- duction from it. That is the only zone we tested in that well. Q Do you have any ideas for the reasons or an opinion of a reason why that zone is unproductive;? A We feel that is is probably due, number one, the closeness of the well due to calculated oil -water contact, and I'm sure due to some permea- bility and porosity diminishment to the north end of the field. We have the one well where the porosities and permeabilities are lower than we normally experience in adjacent wells. This is normal for non-commercial wells. 0 In other words, then, you would be of the opinion that any well drilled north of that well, what did you call it..... A 17587 No. 2. Q 17587 No. 2 would not be productive oil from the Granite Point reservoir? A Not commercially. Q And, if any well drilled anywhere to the north of that did find commercial productivity, it would be in another direction, would it not? A Yes, sir. 0 How are the limits determined to the east? A To the east mainly by this oil -water contact within this 10,250 sub -sea which would fall well down in the flank of Exhibit I. We unfortunately 0 O have no-,- -Nested it; however, it is our feeling that we aIso are goinq to be limited by certain perm,;ability and porosity problems which may occur higher on the structure. Q Back to the previous witnesses°testimony which is offered for the limited purpose simply to show you that the field has been developed,before we start........ CHAIRMAN BURRELL: Any questions from the Committee? Mr. Marshall? MR. MARSHALL: Yes, Mr. Kirkpatrick, would you relate your cross section 6-6, please, to Exhibit No. I. Yoj indicate on it, No. I, where your line cross section lies? MR. KIRKPATRICK: Yes, sir, it's this orange line that we've placed on Exhibit I with the wells showing as orange circles that we've used.... MR. MARSHALL: I see. Then your northern -most well, Exhibit I, lies on the north side of the fault indicated on it? MR. KIRKPATRICK: Yes, sir. MR. MARSHALL: Would you indicate the bore hole please on the .... on your Section 6-B, Exhibit 6-B, lining the bore hole to make the fault shown. i can't.... MR. KIRKPATRICK: We've used an electric log here and this would be the approximate position of the bore hole in line with the fault line to the south. MR. MARSHALL: Would you review the geological evidence for the fault indicated on the map here which roughly runs...... MR. KIRKPATRICK: Yes, Mr. Marshall, we drilled from a shore position into our acreage offshore Tyonek No. I well, encountered formation difficulties, were forced to abandon the hole, plug back, and drill No. I -A; which on Exhibit I -A, No. I lies due east of I -A bore hole trace. Upon completion of the well and correlation of the elctric log we found that there is a nominal section located below the unit that we are discussing now, even underlying these of which there is a 400 foot nominal section there between two wells that are no more than a few hundred feet apart, the bore hole traces are 200 feet apart. This can only lead us to conclude that we have some structural disconformity in this area. We also have seismic evidence which states that we do have this discontinuity in this approximate position that we have indicated on Exhibit i. MR. MARSHALL: Thank you, Mr. Kirkpatrick. That concludes my questions. MR. GILBRETH: Mr. Kirkpatrick, the exhibit tends to show the oil -water Is the interface essentially level between the north end of the Granite Point Field and the south end of the field? MR. KIRKPATRICK: With a doubt we have, I would say it is, yes. We have seen no evidence of a tilted oil -water content. MR. GILBRETH: Are there separate water tables in these stringers? MR. KIRKPATRICK: Yes, there....the exhibit as we have shown it here, it happens to show the oil -water content in general in the zones. Now, with any zone, there are a number of sands,many of these continuous, some which have their own oil -water contact. MR. KUGLER: Terry, I had one question. Which well did you find the vertical beds? MR. KIRKPATRICK: In the 18742 No. 6. MR. KUGLER: And, would you point that out on the map please? MR. KIRKPATRICK: MR. KUGLER: What depth were those? MR. KIRKPATRICK: Those were....l don't know the exact depth, Mr. Kugler, but they were deeper than the zone we're talking about. I believe they were in the Hemlock zone. I'm not real sure of that. MR. KUGLER: Cuite a bit deeper than what we had depicted on the cross section. And you feel like there's overlap of these producing sands above these vertical beds to the west? You didn't find this vertical dip in the producing sand west of this well? 0 MR. KIRKPATR",CK: No, we didnl-. MR. KUGLER: I see. CHAIRMAN BURRELL: Anything else Mr. Kugler? MR. KUGLER: No, that's all. CHAIRMAN BURRELL: Mr. Larson? MR. LARSON: You say on this 17587 No. 2. Did you recover any water on the tests that were made in that well or were they just perfectly lacking of all liquid production? MR. KIRKPATRICK: In the data that I have, Mr. Larson, we recovered 56 barrels of oil per day and no gas, and I don't have any figures as to whether we had water or not. It was tight and did not..... MR. LARSON: For all apparent purposes then, you had not penetrated the water table in that particular zone in that well? MR. KIRKPATRICK: No. MR. LARSON: Thank you. CHAIRMAN BURRELL: Do you have any further questions? ....... Thank you very much sir. MR. SWAN: Excuse me, may I offer this exhibit in? CHAIRMAN BURRELL: Yes, and would you also offer Exhibit 7 along with MR. SWAN: First, Mr. Kirkpatrick, you have been testifying from an exhibit which has been designated Exhibit 6-B. Was that prepared by you or.... MR. KIRKPATRICK: Yes, it was. MR. SWAN: May I offer that at this time? CHAIRMAN BURRELL: That is acceptable. MR. SWAN: And, may I co back and offer Mr. Giles' Exhibit 7, was it not, representing the comparison between the previous forecast and the present forecast of gas use and production? CHAIRMAN BURRELL: The exhibit is accepted. MR. SbJAN: I certainly hit twelve o°clock on the nose, didn't I? CHAIRMAN BURRELL: Excellent timing. We have a slight problem here, at least I do. I'm not certain whether we have this this afternoon. Do you know Mr. Marshall? MR. MARSHALL: Yes, we do. CHAIRMAN BURRELL: We do have.....Would 1:15 be agreeable to everybody? We'll stand adjourned then and reconvene at 1:15. Thank you. (Hearing adjourned until 1:15) CHAIRMAN BURRELL: I'll call the hearing back to order. If anybody, again, didn't sign this morning will you do so some time today. Mr. Holland! MR. HOLLAND: Thank you, sir. Mr. Burrell, and the Committee, if I may present first Mr. Joe Tremble, who is co -counsel with me for Mobil. On my left Jack Meyer who will be our first witness and Art Burnett who will be our second witness. Mr. Meyer has, I believe, already qualified before the Committee and I would ask that his qualifications be accepted. CHAIRMAN BURRELL: They are accepted. MR. HOLLAND: I believe %hat all the witnesses have been sworn in. CHAIRMAN BURRELL: Correct. MR. MEYER: Pan American, as operator for the Chakachatna Group, has presented basic data in their application and testimony for conducting secondary operations in the Granite Point Field, Middle Kenai Pool. We are in agreement with all presented data in so far as Mobil and Union are directly affected. Our testi- mony at this time is for the purpose of supporting the Chakachatna Group in this joint application. Although the field is not unitized, we believe that the Middle Kenai Pool can be effectively produced and flooded by the joint effort reported by the line well agreement between Mobil -Union and the Chakachatna Group with equitable results and the protection of correlative rights of all parties affected. As can be seen from Exhibit I which has previously been submitted by Pan American, the injection pattern involving the Mobil -Union acreage utilizes four Mobil -Union wells. These are 33-14, 42-23X, i2-24, and 24-13, which is our test injection well. Two line injection wells, MUC 1-I and MUC I-2, which were previously desig- nated also, MUC I well and the MUC 2 well which was presently drilling, are operat- ed by Mobil from the Mobil -Union platform and are covered by the Granite Point line well agreement. Data gathered during the secondary recovery period will be constantly analyzed. Future data may indicate that a shift in the injection points are necessary; however, our analysis to date favors the pattern we have proposed, and we feel that it will afford an effective sweep for the reservoir. Some degree of flexibility would be desirable during the course of the flood to enable the operators to shift injection points and drill wells for additional recovery in the event such changes appear advisable as the flood progresses. It is therefore requested that approval of changes in operation of the flood be by administrative order of the state when applied for by either or both of the Granite Point operators, as per Section 6 of the secondary recovery hearing application. The water injection equipment that is to be installed on Mobil -Union platform and under full-scale injection by February 1970 is capable of injection rates from 30,000 barrels a day, approximately 30,000 barrels a day, at 4,500 psi and 14,000 barrels a day at 7,500 psi. Filtered and treated Inlet water will be used as the injection medium during the life of the secondary recovery operations. Exhibit A, which shows the Mobil -Union Granite Point State 24-13 water injection test history, or does show that history. This exhibit simply goes through the total test rate of our well which was July 168 to the end of May or just short of May 1969. During that period we see the pressures, surface tubing pressures, which are 4,000 foot iine - 5,000 foot line. Our operations were between those two pressures essentially. The daily injection rate which is 1,000 barrels a day is 1,000-2,000 barrels of water per day. We had packers in this well and we attempted to sustain rates in each of these sands with +hese pack �s that were ---- did have quite a ranee in in ection rates and also with fluctuation c~ pressures. In the latter part of the flood we're looking at 1,200 barrels a day injection, we did not have -54- our C-7 or one of the three main sands we're going to be injecting in and our operating pressures there were 4,250 pounds. I would like to show you Exhibit B which will show some rate tests. The analyses of this in„ection '-,"story in conjunction with the break down rate tests on Exhibit B ind;cates that water injection operations are feasible. These, the C-2 of the "A" sands that are designated by Mobil, the C-5, C-6 Mobil and Union, refer to as "B" Zone and the -7 is our "C" Zone. These are essentially the three main intervals we are involved with on the Mobil -Union lease. The breakdown rate tests were made with bridge plugs and packers between these 'zones„ so that they are isolated tests. As can be seen in the C-2 interval, prior to going up to pressure to breakdown, we are looking at operating injection rates of 641 barrels a day at 4,250. We went ,p to 6,000 pounds which was at breakdown pressure. Injection rates of 4,360 barrels a day. After the breakdown period, we drop back to 4,250 psi with injection rates of 2,308 barrels per day. In the C-5, C-6 interval, which is a more mssive sand than any so far, we have initially over 1,500 barrels a day injection at 4,250. At the 6,000 psi breakdown we were injecting 4,100 barrels a day. After the breakdown we drop back to 4,250 and we're putting in over 1,100 barrels a day. This drop here was in the short term test. We feel like the injection rates are very satisfactory for this in- terval. The sand here was not performing quite as well as we had zero injection at 40250 and zero after breakdown. At 6,000 pounds you're putting away 2,300 barrels a day. These sands are.... do vary in not only productivity but injection rates for some of them. We feel that the ones that aren't producing very well are also difficult to inject into. The C-7, the next main interval, 513 barrels a day at 4,250 putting away 4,100 barrels a day at 5,100 psi zero breakdown, and after the breakdown over 3,000 barrels a day at 4,250. We can see that this coupled with our injection history that we definitely feel that we can put water into these zones. The injection rates under full-scale operations are indeterminate at this time; however, it is our contention that rates as high as 5,000 barrels a day per well may be obtained and sustained rates as low as 1,500 barrels a day average per well would be satisfactory fo,- fficient, economic sweep of the reser- voirs. Our waterflood equipment is desigr°: to operate at high pressure if necessary; however, we believe that normal operations and satisfactory injection rates will be obtained below 4,500 pounds with only short periods of high pressure injection when and if necessary. Exhibit "C" is a srhematic drawing of the well bore of our injection well 24-13 showing the casing and cementing depths and the type of tubing packer configuration we plan to utilize in our injection wells. This is our 24-13 where we essentially have a surface casing, 13 3/8 has been set to at least 4,000 feet with a plus -minus and the cement circulated to surface. The setting depths of subsequent strings of casing 9 5/8 or liner, 7 inch and 5 1/2, which we have in some wells, were controlled mainly by drilling problems encountered while drilling wells. These liners are circulated with cement. The cement jobs were verified by temperature surveys, cement bond logs or water shut-off tests, or a combination of these methods, and where necessary or questionable perforating and squeezing cementing operations were conducted to assure isolation of the productive interval. Cementing procedures utilized in our completions will prevent communication not only between the Middle Kenai Zone and upper water sands but also between indivi- dual sands within the Middle Kenai Zone. Our injection well completions will utilize packers, at least our plans at this time, our injection well completion will utilize packers and one string of tubing as can be seen on this exhibit. We have our three main intervals K or C-2, C-5, C-o and C-7 interval with packers between these and one string of 'tubing with positive chokes set in these intervals. This will enable us to monitor and regulate the in,'Iection into the three main intervals. These chokes can be gone through with radioactive surveys or spinner surveys. We intend to control them . Although a satisfactory injection profile in a!l sands may be possible by thr use of only one packer at the top of the zone, we feel that this configuration as shown on the exhibit will give us maximum -56- • 1 • flexibility in conductinq the fluid injection operations. At this time, I would like to submit Exhibit "^" lot: o- 7'-13 and individual well production tests which is so. ,. �. HOLLAND:: F�.rer ., E. - ., A E. Have all of these documents e? the,r _.a try pre :-; �-ed by yea or - !our d i rect supervision? M✓R. MEYER: Yes, they have. "fR. H0_LAND: And they do r,ctua :y reflect the information which you have testified to? MR. MEYER: Yes, they do. MR. HOLLAND: I wouid o,far these as exhibits in connection with our presentation. CHAIRMAN BURRELL: Exhibits A --nrour,n E are accepted. MR. HOLLAND: I believe the is the completion of Mr. Meyer's direct presentation. If there are questions which you have..... MR. GILBRETH: Is your other witness going to testify about the pattern or recoveries, or anything in the project or....... MR. HOLLAND: No. MR. GILBRETH: Could you tell us then Mr. Meyer why you have chosen what appears to be a poripherai-type pattern on the south end as compared to the pattern that Pan American has chosen on the north end? MR. MEYER: Yes, we have ..... Our studies initially have resulted with this type of pattern which will give us a completely effective sweep of the reser- voir and that although we have seen permeability, lower permeability, on the flank we feel that the sweep towards the center will give us this flood. Now, as we requested, we will leave this open later on to changing the pattern if we feel it is necessary later on. We do feel though that this will give us a sweep of the reservoir and if internal wells are arbitrarily injected into they cannot be used effectively as producers if we feel 'ike there is a break"nrough or is not efficient sweep by this kind of injection. Also, we have the highest productive wells on the crest and the higher hereavi:i`y on -he crest of the structure so we feel that this is definitely a rrore optimum pattern at this time. MR. GILBRETH: Have you rae model studies of these.... MR. MEYER: Yes, we have. to . on your exhibit "A" you mentioned analT you could put in ahout I,?00 barrels of water a day at 4,250'pounds. Did I understand you to say that that excluded the three main sands? MR. MEYER: We have three strings of tubing and we did have mechanical problems towards the end of this and the only ones that were open were in the last part of this were the C-2 which is the ....C-2, and the C-5, C-6, or the other main interval the C-6 was not included in that injection test period. We feel that sufficient amount would be added by the C-7 to get highly successful - injection rates. MR. GILBRETH: Doesn't your exhibit there on Exhibit "C", your well diagram, the one where you use pollychoke, are these setable and replaceable with wire line and yet..... MR. MEYER: These are wire lines. And they are essentially like a gas - lift valve. They have an internal opening that can be changed. MR. GILBRETH: Do your studies indicate substantially that some benefit can be achieved from secondary recovery as Pan American's do in terms of ultimate recovery and increasing..... MR. MEYER: We certainly do; we're looking at the same range of recov- eries as Pan American has, since we have 15 to 20 per cent recovery on primary, we will have 12 to 15 per cent on primary and with secondary recoveries with 25 and 35 per cent. MR. GILBRETH: I believe in prior hearings the operators have testified tnat they felt water injection, would be the chnaaest method of recovery and would offer the greatest recovery. Do your studies still bear this out? MR. MEYER: Definitely, we feel that water is the..... • • MR. GILBRETH: If the - cr doesn'w prove successful then, will you consider the feasibility of gas icr? MR. MEYER: I think pro:-.w h This type of reservoir a serious look would have to be made again -for gas injection. I really doubt that it would be a satisfactory injection. MR. GILBRETH: Do your studies indicate that there is an essentially level oil -water contact throughout the reservoir? Mil. MEYER: I believe we've seen some differences on the Pan American wells up here. We have seen some of the main sands go weft which are correalated with ours. We feel like there is a definite difference in zones between these two areas. MR. GILBRETH: Do you have anything that indicates in any way that there may be any separation between or any faulting or barriers within the area colored in pink and yellow there? MR. MEYER: No, I have none that i can pin down at all. MR. GILBRETH: That's all I have. MR. MEYER: We do have ..... I might mention some seismic data initially on this that gave some question as to whether there were faulting across here and I think that data is still present of course that do indicate some barriers but we have not seen any as yet. MR. GILBRETH: Nothing that would lead you to believe that you do not have good communications for injection. That's all I wanted. CHAIRMAN BURRELL: Mr. Meyer, is Mobil's position at MUC I-1 and 2 wells, injection wells, substantially improve migration of wells on the lease line there? MR. MEYER: We feel that these two wells will protect the rights of both operators and the state. CHAIRMAN BURRELL: Any questions, Mr. Marshall? MR. MARSHALL: No. MR. LARSON: Are you going to attempt to vary the choke size in the -59- 0 tub i nq str i nc;s to �c� ^ u : c or e c d : } er; nq vo I umes i nto the sands accord - inn to the thickness and their rOCer,7iveness to water? MR. MEYER: We may ultimately do that. I think,essentiaily the same as Pan American, we feel that we may be able to inject in all these sands with one packer and will probably take satisfactory injection rates without controlling it. The nature of this reservoir is su^h that one sand may take higher rates for one period and then slow down to let another sand shift and takes higher rates at different times. We feel like this will be happening so that there will be a continual change of injection rates in the sands throughout the life of the flood, If we don't feel like this is happening we are prepared to set chokes and restrict for increased rates in the various sand...... MR. LARSON: Now, I presume that your going to....what are your plans on the injection wells. Are you going to put them on injection just as soon as you get them worked over and your equipment installed to start injection or will you have to wait until, say, the injection pumps are installed and everything? MR. MEYER: No, we are prepared to have them recompleted by the time we have water injection facilities ready to inject. MR. LARSON: So, then, when you go on -stream with your injection, you will be injecting into six wells then? MR. MEYER: That is correct. MR. MARSHALL: Mr. Meyer, were you able to determine what your frac pressure was? MR. MEYER: These pressures were essentially at breakdown. The break- down interval since is a little higher, then it drops back and these were the pressures of 6,000 pounds that were at frac pressure, were at breakdown pressure. MR. GILBRETH: Mr. Meyer, at an earlier hearing on the flaring of gas in this reservoir, I believe the Mobil representative indicated that he felt the optimum point at which the pressure should not fall below, at least, was some- thing in the order of 10 per cent free gas saturation. At that time he did in- dicate that Mobil had studies under way. Do you know if this still holds from v your company standpoint? MR. MEYER: Yes, we have had onoueh studies that as far as the gas saturation we are continuing to agree with ali testimony Pan Am presented and their exhibits. MR. GILBRETH Well, now, Pan American's testimony was contrary to this. I'm talking about Mobil's testimony. At the earlier hearing, I'm talking about. MR. MEYER: b;e'll ask you to rephrase that. MR. GILBRETH: At an earlier hearing, a Mobil representative testified that he felt optimum recovery would be achieved in this reservoir with a free gas saturation of -about 10 per cent and my question is, is this still your opinion? MR. MEYER: Yes. MR. GILBRETH: Do you have any information from your properties that indicates that it takes any long period of time for a well to build up in this reservoir? MR. MEYER: No; we feel that, as I said before, there will be no big response from this flood, but within a year's period there will be ..... show some response. MR. GILBRETH: Your tentative plans are based to maintain pressure as indicated by the Pan American exhibit or the pressure survey presented? MR. MEYER: This pressure -curve was total fieldwide and we are in agree- ment with that total..... MR. GILBRETH: Do you plan to inject with a pressure balance system or volume balance, or just turn the water loose and let it go where it will, or what? How are you going to control the water between the zones? MR. MEYER: Between well;? MR. GILBRETH: No, between the zone within a well to insure that you get a good profile. Will this be pressure balanced, volume balanced, or what? MR. MEYER: Probably volume balance. I can't answer that for sure but of course the C-2 being this far down we would not put in twice as much as between 0 0 6 intervals. These sands are simply continuous throughout our field so we would balance it by simply the amount sand there....... MR. GILBRETH: That's ail. CHAIRMAN BURRELL: Any further questions? MR. LARSON: Are you going to present data on reservoir pressure? MR. MEYER: What was that? MR. LARSON: Are you going to present data on reservoir pressures at this time? MR. MEYER: We have the fieldwide curves as presented by Pan Am, of course, included the averages which included our property. MR. LARSON That was a joint effort then, I presume? MR. MEYER: Yes. CHAIRMAN BURRELL: Thank you very much, Mr. Meyer. MR. HOLLAND: We would like to present next the testimony of Mr. A. V. Barnett in connection with the manner of gas used. Mr. Barnett's qualifications... I might state them briefly beforehand; they are: He graduated from the University of California in Los Angelas in January 1955 with a Bachelor of Science degree in Engineering. Prior to graduation he spent eight years working for General Petroleum Corporation, Mobil Oil Corporation, California oil fields in various capacities ranging from roustabout, well puller and lease gauger. His entire career since graduation has been devoted to design installation and operation of surface production and process equipment. His initial assignment for Mobil was a member of the engineering group in Taft,California. Three years design, estimated cost and supervised the installation tank farms liquid and gas gathering system, hearing and treating facilities, and other surface facilities associated with production of oil and gas. During +he period of 1960 through 1962 he was assigned to Mobil's San Ardo field. During this period his efforts were devoted to the consolidation of the field oil treating facilities and the installation of LACT for the shipment of oil to the pipeline company. In 1962 he was promoted to senior V -62- engineer, was transfcrrer to 7a, t, Ca l i orn i a to head -up the mechanical engineering group for ,fobil's San Juaquin Vall{v operations. For six years he supervised and acted as consultant in the design and installation and operations of all surface equipment in this area, now known as the Bakersfield producing area. During this period he spent approximately two years as project engineer responsible for the design and in<stallation of a 8,000 horsepower compressor plant built near one of Mobil's in situ secondary recovery operations near Taft. He was promoted to associate production engineer in 1967, since then he has worked on special projects, the latest of which was the process design and specifications of oil treating equipment installed on the shore sites for the Mobil California offshore operations. He is a member of the RIME and the API and was a member of the Committee of the Production Practices Technology Section of the 1966 annual API drilling and pro- duction practices publication. In 1968 Mr. Barnett was transferred to Anchorage and is currently the associate operations engineer for the Northwest producing area. One of his major responsibilities to date is the supervision of the design and installation of equipment and facilities required by the waterflood which is under discussion today. Mr. Barnett, you have previously been placed under oath.. I would ask you if this presentation accurately reflects your background and qualifications? MR. BARNETT: Yes, it does. MR. HOLLAND: I would offer Mr. Barnett's testimony. MR. BURRELL: We will accept Mr. Barnett's qualifications. MR. BARNETT: Thank you very much. With regard to gas usage, during testimony before this Committee in February of 1966, Mobil and others detailed the many complications involved in providing for the 100 per cent utilization of the natural gas produced with the oil. This is a matter of record and we will not belabor..... CHAIRMAN BURRELL: Excuse me for interrupting, could you get the micro- phone a little closer here? i nc -, ., s - of record, we wcr,' r belabor you by ^oiw through it and rrl grata all the details at this time. We will, however, bring you up to &=ate wcth our latest thoughts and endeavors on the subject. I would like to r;fr now to Exhibit "F" if I may. This is a graph of the gas production and usa:ae with respect to time. This exhibit was put be`ore this Committee in 1968. We have now updated it and we will see that prior testimony of previous estimates are indicated by the large dash lines on the exhibit, whereas our current estimates are indicated by the solid line. Initially, after only 9 months of production history, Mobil anticipates, anticipated producing 71 million MCF, that's 71 billion cubic feet through the year 1987. Now, 18 months later, and with the limits of the reservoir more clearly defined, we find that the total gas produced during this same period will amount to 36 million MCF, or 36 billion cubic feet, through 1987. Also, during 1968 testimony, we anticipated that the daily oil usage required would exceed the daily produced gas volume during the year of 1979. As indicated on the exhibit we now feel that the produced gas volume will be sufficient to supply our needs through this 20-year period. In other words, we're saying that our gas usage now will not exceed the produced gas volume over this period. This is subject to the addition of the needed equipment as required by the waterflood naturally. We now can see that approximately 1,900 MCF per day are required as compared to the 6,000 MCF a day we had anticipated using at that time. This difference is the result of analyzing our needs based on reduced oil rates and the information gained from production history of some eight wells drilled since that last meeting. It was originally anticipated that we use one and three-quarter million MCF per year, by the dash line. We now anticipate that we will use about six -tenths of a million MCF per year. With regard to the recovery of natural gas liquids from the produced gas, statements made again by Mobil in February of 1968 hearing are essentially the same today. We have recently made a feasibility study which indicates that the equipment required to recovery natural gas liquids in excess of that which we are -64- 0 10 not now recovering on the platforms through our gas -lift compression cycleiare definitely uneconomic. On the subject of surplus gas disposal, at present there are no known markets available for surplus gas production from the Mobil-Union's Granite Point platforms. During the past year the following markets have been investigated. 14o looked into the possibility of sales to Phillips at East Foreland and consideration was given to transport the gas via a subsea line to Pan Am's Platform Anna and from there trans:,orted to their subsea line to Phillip's East Foreland natural gas liquid plant. The cost of the 7,800 feet of subsea line to Pan Am together with the additional pressure requirements made the project unecon- omical. We also considered the possibility of selling gas to Marathon at West Foreland. At this point we considered compression of the gas at the Mobil shore site for transport to Marathon's gas liquid extraction plant located on West Foreland. Here again the cost of compression and a 25-mile line would have exceeded the gas liquid income for the entire gas reserve. One more opportunity was available and we did look into the possibility of sales to Texaco and Atlantic Richfield for their platform use. Here, however, the cost of facilities for short-term sales again precluded the economics of it. We would like to state that we have and we will continue in our efforts to derive the most beneficial use of all of the natural resources placed in Mobil's charge. MR. HOLLAND: Mr. Barnett, was Exhibit "F" prepared by you personally? MR. BARNETT: Yes, sir. MR. HOLLAND: And does it accurately reflect the testimony which you had? MR. BARNETT: Nearest the data we have available. MR. HOLLAND: I would offer this as our Exhibit "F". CHAIRMAN'BURRELL: Exhibit "F" is accepted. Are there any questions? Mr. Marshall? Mr. Kugler? Mr. Larson? MR. LARSON: Have you completed converting of all of your internal combustion engines on the platform to natural gas? MR. BARNETT: No, sir, we have not. We have two AC diesel.generators -65- which are not con r , ri._ 0710 Tf)., ;;:d ons of the field ',usage.... the fact that we are ; o .... g ,t_, I ly youid use less. CHAIRMAN BURRELL. ,; .irethl> gas lift? MR. GILBRETH: Are you q lif;ring your production on the platform? MR. BARNETT: Yes, sir. MR. GILBRETH: Are you t.sing 100 per cent of your compressed gas for MR. BARNETT: No, sir. MR. GILBRETH: Would it be feasible to inject the surplus? MR. BARNETT: It would be feasible but there is nothinq to gain from it. It would just come ri.n,,ht baC k at you and the gas would not serve to recover any more liquids. There is a limit to the amount of nas put in any well bore with respect to depth and draw down ............... MR. GILBRETH: Have you made a study of this? MR. BARNETT: We made a review of it. As a matter of fact, one of our other engineers went out a couple of months ago and analyzed the system and our operating people are doing so right now. CHAIRMAN BURRELL: That concludes our questions. MR. HOLLAND: That concludes our presentation. MR. BARNETT: We do have for you gentlemen............ CHAIRMAN BURRELL: Before we get away here, I think I'd like to ask if there is anybody in the audience, an affected or interested party, who has any question of either the Pan American spokesmen or the Mobil spokesmen. If so, we would like them to come forward, identify themselves and address their question. MR. SWAN: Mr. Chairman, Oscar Swan of Pan American. I have a question for myself, but Mr. Gilbreth asked a question which indicates to me that he feels that we're in apparent conflict in our testimony at a previous hearing by Mr. >sch and by Mr. Darsow. I think this needs to be clarified and 1 would like to offer Mr. Darsow back for some supplementary testimony. -66- CHAIRMAN BURRELL: '41e wi!I have Mir. Darsow back. MR. GILBRETH: Mr. Darsow, on the previous hearing, and I'm sorry'I do not have a transcript in front of me, but is is my recollection that the Pan American representative at that time testified that he felt the optimum point to maintain pressure in this reservoir was at or near the saturation pressure. Your testimony today has indicated that you now feel that these probably were some- where in the neighborhood of 10 per cent free gas saturation below the saturation pressure when 10 per cent free gas saturation is set up. Does this represent a change in thinking in your company about this particular reservoir? MR. DARSOW: Mr. Gilbreth, no, I don't believe it does, I don't believe there's really any conflict at all in those two statements for this reason, that the previous testimony at the time of the spacing hearing and the statements made there of attempting to arrest pressure at or near the bubble point are a valid statement based on the economic raturn for operation of this field. Now, I testified this morning and from my exhibits depicting the fact that we will go below bubble point pressure, we will establish some free gas, but this indeed is not detrimental, but a small amount is beneficial, the fact as long as we are still maintaining ourselves near the bubble point by being only this 250 pounds below the saturation pressure. If on the other hand, as I testified, and this compliments the previous testimony in past hearings, we proceed too far below bubble point then you start to loose any benefit that you could gain from the trapped gas effect. Now, I don't mean to over -impress you with the fact of trapped gas, in other words, the fact that you establish free gas doesn't quarantee that you will trap any. You could conduct a flood where you have a free gas saturation in which such a small amount would become trapped, you would not effect even your theoretical recovery factor. But here we're looking at a combination not only of the theoretical recovery factor but also this combines with the economical end of it and I'm sure in reviewing the transcript of the earlier hearings we've had that our witnesses for Pan American were implying that what we have to strive for -67- here was e< -I y water -,: ls_ .�, _. ::. i ^ fr _ ti1 r.,,, , , , any today where ress— ed the fact that we wi11 be a^,err-;t ..I cr: 1. ._caIe within three years his gives early waterflood. MR. GILBRETH: Do you know about what weighted reservoir pressure is used as shown on the curve, this would cL"ve...... 1, moan your optimum point? factor? MR. DARSOW: What optimum point, you mean, for a theoretical recovery MR. GILBRETH: Right. The reason I'm asking this, I believe the Mobil representative in the same hearing testified this to be 700 pounds below satura- tion pressure. MR. DARSOW: I would....this is a theoretical calculation that we tried to obtain with performance, the actual lead times and averages and unknowns in- volved, such as your actual injection rates, I would say that previous testimony by Mobil would not conflict with our own thinking. I would estimate now in answer to your question that in my own opinion that probably a 2,000 pound weighted average pressure a 1,900 would be optimum. Now, this is 400-500 pounds below. Certainly, as you break out this gas it not only is a function of the lowest pressure but the length of time that your reservoir sits at that pressure. Now, this is a weighted average where your reservoir has stabilized at that pressure; yes, we'll break out that much free gas and I'd actually have to calculate just exactly what pressure this would be. Since we anticipate with the fact that our equipment is ordered and is anticipated to arrive in the early part of the second quarter of next year and that we would, with your approval, have start-up in July, I didn't project it to any lower pressure and simply made this calculation the basis of 2,150 pounds. MR. GILBRETH: Your extrapolation then....or calculation, would indicate certainly that you are not going below any dangerous levels at this point? MR. DARSOW: That is correct. NIR. GILBRETH: That clarifies, Mr. Swan, my point. MR. SWAN: May I ask you myself....Mr. Darsow, to get it maybe in a lawyer's instead of ar. c _, :::-., ,��t the difference between, if there is any, betwear, and v!`.at '"r. Rousch says, more of an economic factor; in other words, he wa-- interested in keepinc producing rates high and in conducting the flood as cheaply as possible. And,actually, while it may have been a little more expensive to waist for this pressure equipment, the recovery of oil would essentially be the same. MR. DARSOW: Yes. MR. SWAN: O.K. Another question. If you could get this equipment that we have on order off the shelf today would you install it today? MR. DARSOW: We sure would. MR. SWAN: And, on the other hand, if you had to initiate a waterflood with the equipment that you can get off the shelf do you think you could get a successful waterflood that will be as successful as the one we propose? MR. DARSOW: No, not without economic waste. MR. BURRELL: Let me follow Mr. Swan's line of questioning if I may. In view of the fact that production is less than half of what it was, fieldwide, at its optimum, if the production that's now not available on the shelf were available a year and a half ago would you have installed it then? MR. DARSOW If we had....now if I understand your question right.... if a year and a half ago we had available equipment...... CHAIRMAN BURRELL: The equipment you now have on order, if it was available off the shelf then. MR. DARSOW: I doubt very much it would have been put in a year and a half ago for the simple reason that at that time we had not in our own minds as operators or as owners in this field accurately defined it to where we could project what anticipated total performance would be. CHAIRMAN BURRELL: Nell, you hadn't run your water infectivity test.... Assume you had run those at that time. C -69- MR. DARSOW: If we had prorrc, ..,s far alonq, yes, if the decisions had been reached for the companies irvo� yes....if we had those factors it would have been o -.__, : I e. CHAIG'"AN BUIRRELL: Thank you.... ain I'll ask if there are any questions from members of the audience or anybody thaT F oday......Yes, sir. Could you please come up to the microphone and identify yourself please, sir. MR. IDEN: My name is Bob Iden with Shelf Oil Company, and I have a question for Mr. Darsow regarding performance of the No. 6 well which they tested, and that is, I was interested to know if you have any information that would suggest that in raising the surface pressure above the fracture level that the water would remain in the confines of the reservoir and would not fracture to other sands. MR. DARSOW: Bob, l would refer you to the exhibit where I presented the injection profile and on the basis of the radioactive tracer survey that we actually ran above frac pressure. The survey indicates to us that the water is leaving the well bore and entering the floodable zones in a good relationship to their pay thicknesses. Now, as far as further proof beyond that, I have none until we really get into the full-scale scheme, and as I testified, we will attempt, and as Mobil has commented too, to propagate this flood at, or below, the bubble point pressure, and we will only go above this pressure as we need to to obtain the desired rates. We've made extensive and exhaustive fracture propagation studies and analysis in this type of rock and we feel that the way we're approach- ing it, the dollars involved for this special equipment, that this is a possible and suitable way to pursue secondary recovery here. MR. SWAN: Mr. Darsow, as you know.....you said you were going to inject at, or below, bubble point pressure, did you mean that? MR. DARSOW: Excuse me, I meant fracture pressure. Thank you. CHAIRMAN BURRELL: Are there any further questions from anybody in the audience? Any further questions from the Committee? Any further statements? -70- 0 0 MR. S',AN- No, s i r; the cn 1 y stt try iieri < l nave is a question and we answered t! a Guest i on. 4i `: , but, Mean, i s t^ure anything in the ca I l for 'this hearing which the Committee feels we haven't touched upon? We certainly would like to know about it. CHA I RMIA\ ? R?;:..�, 1 t;, i nk evervth i n7 ca I i ed }or the heari nq has been touched upon. �T. G i L BRrTH: You e, i I i 4 «r;-, i sh the basis for the pressure plot? adjourned. MR. DARSOW: Yes, we will. CHAIRMAN BURRELL: If there is nothing further then, the meeting stands END OF HEARING---- 0 Mobil Oil Corporation 700 "G" STREET ANCHORAGE, ALASKA 99501 HLB Northwest Producing TRM Area OKG P. 0. Box 1734 KLV — - Anchorage, Alaska 99501 HVJK ' REL July 19, 1969 Mr. Thomas R. Marshall FILE _-- Executive Secretary Alaska Oil & Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 JOINT APPLICATION FOR GRANITE POINT WATERFLOOD HEARING Dear Mr. Marshall, Attached hereto are four copies of the subject application, submitted by Mobil Oil Corporation as Operator, on behalf of itself and Union Oil Company of California, and Pan American Petroleum Corporation as Operator on behalf of Phillips Petroleum Company, Skelly Oil Company and Atlantic Richfield Company, Successor by Merger to the interest of Sinclair Oil Corporation. As per previous discussion, it is requested that this application be set for hearing on August 15, 1969. Very t y you/rA) W. G. Christensen CCWoodruff cc: Mr. F. L. Franz Mr. H. W. Patterson Skelly Oil Company Phillips Petroleum Company 1088 Lincoln Tower Building 1300 Security Life Building Denver, Colorado 80202 Denver, Colorado 80202 Mr. H. C. Jamison Mr. J. L. White Atlantic Richfield Company Mobil Oil Corporation P. 0. Box 360 612 South Flower Street Anchorage, Alaska 99501 Los Angeles, California 90054 Mr. W. M. Jones Mr. E. F. Griffin Pan American Petroleum Corp. Union Oil Company of California Security Life Building 507 W. Northern Lights Blvd. Denver, Colorado 80202 Anchorage, Alaska 99503 LIVISION0 ^. ANCUO,cPGE- STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS ALASKA OIL AND GAS CONSERVATION COMMITTEE 3001 Porcupine Drive Anchorage, Alaska 99504 RE: APPLICATION OF MOBIL OIL CORPORATION AND PAN AMERICAN PETROLEUM CORPORATION FOR AN ORDER AUTHORIZING WATER INJECTION FOR PRESSURE MAINTENANCE OR SECONDARY RECOVERY PURPOSES IN THE GRANITE POINT FIELD, COOK INLET, ALASKA AND FOR THE CONSOLIDATION AND REVISION OF CONSERVATION ORDERS NO. 59 AND NO. 60. Come now Mobil Oil Corporation as Operator, on behalf of itself and Union Oil Company of California (said two companies hereinafter sometimes being referred to for convenience as Mobil -Union) and Pan American Petroleum Corporation as Operator, on behalf of itself and Phillips Petroleum Company, Skelly Oil Company, and Atlantic Richfield Company, Successor by Merger to the interest of Sinclair Oil Corporation, (said four companies hereinafter being sometimes referred to for convenience as "Chakachatna") and respectfully petition the Oil and Gas Conservation Committee for an Order authorizing the conducting of field -wide water injection for pressure maintenance or secondary recovery purposes in the Granite Point Field; amending and consolidating Conservation Order No. 59 and Conservation Order No. 60 heretofore issued; and adopting appropriate field rules governing the development and operation of the Middle Kenai Oil Pool of the Granite Point Field, Cook Inlet, Alaska. In support of their application the applicants state: I The applicants and the other parties on behalf of whom this application is filed are the only persons who will be affected by any action which the Commission may take pursuant to this application. The applicant Mobil Oil Corporation as Operator for itself and Union Oil Company of California operates a platform in the Granite Point Field located upon Lease ADL 18761 issued by the State of Alaska as lessor. Pan American Petroleum Corporation as Operator for itself and the other three companies comprising the Chakachatna group of companies operates two platforms in the Granite Point Field, both located on Lease ADL 18742. The producing wells which have been 2 L F� AI�{rri INYYit,l.�ti drilled from these three platforms include all of the wells which have been drilled to, completed in and are now producing oil from the Middle Kenai Oil Pool as said pool has been heretofore defined in Conservation Order No. 59. II Development in the Granite Point Field from the three platforms located in that field has been carried out by the drilling of wells to and the completion of wells in the Middle Kenai Pool and development has now proceeded to a stage at which the productive limits of the Middle Kenai Pool in the Granite Point Field, can be determined with reasonable accuracy. III The wells which have been drilled to and completed in the Middle Kenai Pool in the Granite Point Field to date and which may hereafter be drilled to and completed in said pool in accordance with the field rules established in Conservation Order No. 59 will produce all of the oil which can efficiently and economically be recovered from said pool by primary production methods. WA Pursuant to the authority granted to them by Conservation Order No. 60 the applicants have each conducted fluid injection tests for the purpose of obtaining data necessary to determine the feasibility of a field -wide fluid injection program for pressure maintenance or secondary recovery. Pursuant to Conservation Order No. 70 the applicants and the other companies on whose behalf this application is filed have joined in the drilling of a well known as well MUC #I-1 Granite Point Field to be used as a lease line injection well in afield -wide injection program conducted by cooperative agreement between all interested parties. V A request for an exception permitting the drilling of a second lease line injection well, the MUC #I-2,has been filed and the drilling of said well will be commenced promptly upon the granting of authority therefor. The feasibility tests which have been conducted by the applicants indicate: that field -wide water injection for pressure maintenance and secondary recovery purposes is feasible in the Middle Kenai Pool in the Granite Point Field; that such field -wide water injection will result - 2 - in the recovery of oil from said pool which cannot be recovered by primary production methods; and that the value of the additional oil which will be recovered will be sufficient to repay the cost of conducting the field -wide water injection program, plus a reasonable profit, VI In.order to achieve the most efficient operation of the water injection program it will be necessary that some of the wells which have heretofore been drilled to and completed in the Middle Kenai Pool be converted to injection purposes. It may also be necessary: to drill additional wells for injection purposes or for production purposes; to convert wells from producing status to injection status or from injection status to producing status from time to time. It is impossible at this time to determine the locations at which additional producing or injection wells should be drilled or to determine when and at what locations wells should be converted from producing status to injection status or from injection status to producing status, therefore provision should be made for immediate administrative approval of any such operation more than one half mile from a lease line where ownership changes upon a proper showing to the Alaska Oil and Gas Conservation Committee by Mobil Oil Corporation as Operator for itself and Union Oil Company of California or by Pan American Petroleum -Corporation as Operator for itself and the Chakachatna group of companies; provided further that provision should be made for immediate administrative approval of any such operation.on lands within one half mile of a lease line where ownership changes if written consent is provided the Committee by the owners of the adjoining lands, or, absent consent or objection, administrative approval may be granted after waiting the customary fifteen (15) days following proper notice by applicant of any such operations. WHEREFORE, applicants request that this matter be set for hearing on August 15, 1969•; that notice of hearing thereon be given as provided in Section 31.05.050(b) since the matter is concerned only with operations within a single field; that a hearing be held thereon at which all interested parties be afforded an opportunity to be heard; and that based upon the evidence received by it at such hearing the Oil and Gas Conservation Committee enter a new Conservation -Order amending, consolidating and replacing Conservation Orders No. 59 and 60 to read as follows: -3- ;.. • NOW, THEREFORE, IT IS ORDERED that the area described as follows is affected by this Order: T 11_ N - R 11 W, S.M. Section 29: All Section 30: All Section 31: All Section 32: All T 10 N - R 12 W, S.M. T ll N- R 12 W, S.M. Section 25: E/2NE/4, SEA Section 35: E/2 Section 36: All Section 1: All Section 15: E/2SE/4 Section 2: All Section 22: NE/4NE/4, S/2NE/4, Section 11: All SE/4, SE/4SW/4 Section 12: All Section 23: All Section 13: All Section 24: All Section 14: All T 10 N - R 11 W, S.M. Section 5: All Section 6: All Section 7: All Section 8: All Section 18: All Section 19: All The following special rules apply to the aforementioned area: Rule 1. Pool Designation The Middle Kenai Pool shall be designated as the interval which correlates with the interval 7725 feet to 10,800 feet in the Mobil -Union Granite Point # 1 well. Rule 2. Spacing No more than two completed oil wells shall be allowed in the Middle Kenai Pool on any governmental quarter section or governmental lot corresponding thereto. No oil well may be completed closer than 1000 feet to any well drilled to or capable of producing from the Middle Kenai Pool. No well may be completed at a distance of less than 500 feet from a lease line where ownership changes unless agreed to by both lease owners and the Committee. Rule 3. Casing and Cementing Requirements Surface casing must be set and cemented to a depth of at least 1600 feet. Sufficient cement must be used to circulate to the surface. The production string must be cemented with a sufficient volume of cement to extend at least 500 feet above the shoe or a volume sufficient to cover 100 feet above the top of the uppermost producing zone encountered in the well, whichever is greater. _ Rule 4. Bottom Hole Pressure Surveys A key well bottom hole pressure survey shall be made in the Middle Kenai Pool in the Granite Point Field upon committee request; provided, however such survey shall not be required more often than twice in any calendar year. The time and -4- length of survey, number and location of wells, datum and other details will be determined by the committee upon consultation with the operators. Rule 5. Gas -Oil Ratio Tests. A gas -oil ratio test of 24 hours duration shall be made annually on each producing well in the affected area. The test will be made during the months of June and July and the results will be reported on Form P-9 by the end of August of each year. The requirements of this rule will be waived if monthly reported oil and gas production is based on a gas -oil ratio test made at least every six months by the operator. Rule 6. Pressure Maintenance Project. The injection of water for the purpose. of pressure maintenance, secondary recovery or of conducting injectivity tests is hereby permitted in the Middle Kenai Pool in the Granite Point Field. A semi-annual progress report detailing project operations and results shall be submitted to the committee in January and July of each year. Rule 7. Administrative Approval. Upon request of the applicants and a showing that the affected parties have been notified of such request, the Committee may .authorize the conversion or drilling of any well at any location, the termination or suspension of the project, or any operation reasonably designed to further the purposes of the project. Applicants further request that the order entered herein include such different or additional provisions consistent with the request made by this application as may be shown to be necessary or desirable by evidence presented at the hearing. Respectfully submitted, MOBIL OIL CO ORATION By PAN AMERICAN PETROLEUM CORPORATION By 22n'c.� ie_ - 5 - Jfv 0 qb 5�T oN FK L � 0C,5 � �� � / Crr'• ""4 J 13 CV", -fir / r l7- r -13 Cl- 0 r� Ex k, 6 it S-A GRANITE POINT CHAKACHATNA GROUP LATEST WELL TESTS Test Well Date BOPD BWPD MCFD GOR 17586-3 6/11/69 1182 0 1478 1250 17586-4 7/10/69 645 6 482 747 17586-5 6/30/69 381 0 210 551 17587-3 7/14/69 566 14 321 567 17587-5 6/2/69 116 56 68 586 18742-3 7/9/69 968 3 516 533 18742-4 7/1/69 539 40 270 501 18742-5 6/8/69 1995 10 3266 1637 18742-6 Shut-in 18742-7 7/13/69 261 26 230 881 18742-8 7/14/69 535 40 362 677 18742-9 7/15/69 700 168 418 597 18742-10 6/7/69 858 62 710 828 18742-11 6/15/69 1212 20 858 708 18742-12 Shut-in 18742-13 7/18/69 251 0 175 697 18742-15 7/16/69 998 0 674 675 18742-16 7/13/69 1178 0 1804 1531 13742-18 7/12/69 1020 26 574 563 18742-19 6/14/69 260 118 158 608 18742-20 6/5/69 404 17 286 708 18742-23 6/6/69 193 7 19 11021 18742-25 7/17/69 480 0 354 738 18742-27 6/9/69 101 74 46 455 MOBIL -UNION INDIVIDUAL WELL PRODUCTION TESTS _ EXHIBIT F E `l�,6t 'f` WELL Average Daily Production BO BW GOR ft3 /bbl. Date Granite Point State #11-13 1528 Trace 1298 7-21-69 13-13 1579 Trace 926 8-5-69 22-13 1300 Trace 844 8-6-69 24-13 Injection Test Well - Idle 31-13 298 Trace 986 7-2-69 33-13 1073 Trace 866 8-4-69 31-14 290 Trace 1277 7-7.-69 33-14 669 Trace 1057 7-18-69 44-14 1364 Trace 963 7-29-69 31-23 1.025 Trace 812 7-29-69 32-23 1107 Trace 754 8-3-69 42-23X 416 Trace 945 8-7-69 11-24 977 3 865 7-26-69 12-24 329 36 435 8-8-69 MUC 1-1 766 11 885 7-216-69 MUC I-2 Drilling 8-9-69 . k- ft� A- e,yl iv NOTICE OF PUBLIC NEARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee Conservation File No. 76 Re: The motion of the Oil and Gas Conservation Committee to hold a public hearing to hear testimony by the operators of the Granite Point Field to determine if waste is occurring as a result of producing the Middle Kenai Pool and to hear testimony on the initiation of a pressure maintenance project for the fiddle Kenai Pool, the beneficial use of gas produced as the result of crude oil production and any other matters relevant to the proper development and operation of this pool. Notice is hereby given that the Alaska Oil and Gas Conservation Com- mittee will hold a hearing pursuant to Section 2004 of the Oil and Gas Con- servation Regulations to determine if waste is occurring as the result of producing the Middle Kenai Pool in the Granite Point Field. The Committee will seek testimony on the following matters: 1. Commencement of a pressure maintenance project pursuant to Section 2226 of the Oil and Gas Conservation Regulations including provisions for administrative approval of expansion or contraction of the project, conversion of wells, the drilling of additional wells and any other matter reasonably necessary to carry out the purposes of the project. 2. Beneficial use of gas produced as the result of crude oil pro- duction operations including, but not limited to, negotiation with prospective purchasers. NOTICE OF PUBLIC HEARING Conservation File No. 76 Page 2 3. Reservoir performance and possibility of waste occurring as the result of crude oil producing operations. A hearing on these matters will be held in the City Council Chambers of the Z. J. Loussac Library, Fifth Avenue and "F" Street, Anchorage, Alaska, at 9:30 a.m., August 15, 1969, at which time affected and interested parties will be heard. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99504 Publish July 17, 1969 • ANCHORAGE DAILY NEWS Legal Notice NOTICE OF PUBLIC HEARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee Conservation File No.z 76 Re -,The motion Df the Oil and Gas Conservation Committee to hold a public hearing to Bear testi- mony by the operators of the Granite Point Field to determine if waste is occurring as a result of producing the Middle Kenai Pool and to hear, testimony on the initiation of a pressure main- tenance project .for the Middle Kenai Pool, the beneficial use of gas produced as the result of crude oil production and any other matters relevant to the proper development and opera- tion of this pool. Notice is hereby given that the Alaska Oil and Gas Conservation Committee will hold a hearing pur- suant to Section 2004 of the Oil and Gas Conservation Regulations to de- termine if waste is occurring as the result of producing the Middle Kenai Pool in the Granite Point Field. The Committee will seek testimony on the following matters: 1. Commencement of a- pressure maintenance project pursuant to See tion 2226 of the Oil and Gas Con -I servation Regulations including pro- visions for administrative approval of expansion or contraetion of the project, conversion of; 'wells, the drilling of additional wells and any other matter reasonably necessary to carry out the purposes of the project. r 2. Beneficial use of gas produced) as the result of crude oil production! operations including, but not limited! to, negotiation with prospective pur-I chasers. - 3. Reservoir performance and pos- sibility of waste occurring as the result of crude oil producing opera- tions. - - Ahearing - on - these matters will be'heW in° the=City Council Cham- hers of the Z: J. Loussac Library, :Fifth Avenue and "F" Street, An- chorage, Alaska, at 9:30 a.m.; August 15, 1969, at which time affected and interested parties will be heard.! Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, . Alaska 99504 ;Publish: July 1.7, 1969 Legal Notice No. 1984 July 17, 1969