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Home My WebLink AboutCO 510 AINDEX CONSERVATION ORDER NO. 510A Kenai Gas Field Kenai Unit Kenai Sterling Gas Pools 3, 4, 5.1, 5.2, and 6 Kenai Beluga/Upper Tyonek Gas Pool Kenai Tyonek Gas Pool 1 Kenai Deep Tyonek Gas Pool Kenai Peninsula Borough, Alaska 1. May 5, 2014 Hilcorp's request to amend CO 510 2. May 8, 2014 Notice of Public Hearing, Affidavit of Publication, email distribution, mailings 3. May 8, 2014 Emails re: public comment r • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp ) Docket Numbers: CO-14-009, CO-14-012, Alaska, LLC to amend ) CO-14-013, CO-14-014, CO-14-015, and Conservation Order No. 510 order ) CO-14-016 to define a new gas pool, to allow ) commingling of production, and ) Conservation Order No. 510A to establish an administrative ) action rule for the Kenai Gas ) Kenai Gas Field Field ) Kenai Unit Kenai Sterling Gas Pools 3, 4, 5.1, 5.2, and 6 Kenai Beluga/Upper Tyonek Gas Pool Kenai Tyonek Gas Pool 1 Kenai Deep Tyonek Gas Pool Kenai Peninsula Borough, Alaska July 11, 2014 IT APPEARING THAT: 1. By applications received April 11, 2014, May 1, 2014, and May 5, 2014, Hilcorp Alaska, LLC (Hilcorp) in its capacity as 100% working interest owner and operator of the Kenai Gas Field requested the Alaska Oil and Gas Conservation Commission (AOGCC) amend Conservation Order No. 510 (CO 510) to approve commingling of production downhole for three pools, to formally define an additional gas pool within the field, and to establish an administrative action clause. 2. Hilcorp's application received April 11, 2014 (Docket CO-14-009) requested authorization to commingle production downhole from the Kenai Beluga/Upper Tyonek Gas Pool (Beluga/Upper Tyonek Pool) and Kenai Tyonek Gas Pool 1 (Tyonek Pool 1) in the KBU 22-32 well. 3. Hilcorp's application received May 1, 2014 (Docket CO-14-012) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool and Tyonek Pool 1 in the KBU 23-05 well. 4. Hilcorp's application received May 1, 2014 (Docket CO-14-016) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and the proposed Kenai Deep Pool in the KDU 10 well. 5. Hilcorp's application received May 5, 2014 (Docket CO-14-013) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool and Tyonek Pool 1 in the KBU 11-08Z well. 6. Hilcorp's application received May 5, 2014 (Docket CO-14-014) requested AOGCC amend CO 510 to define a new gas pool named the Kenai Deep Gas Pool (Kenai Deep Pool), to approve downhole commingling on a field -wide basis for production Conservation Order 510AO • July 11, 20t4 Page 2 of 8 from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and the proposed Kenai Deep Pool, and to establish an administrative action rule. 7. Hilcorp's application received May 5, 2014 (Docket CO-14-015) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool and Tyonek Pool 1 in the KBU 43-07Y well. 8. For the application received April 11, 2014, and pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for May 27, 2014. On April 15, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list, and published the notice in the ANCHORAGE DAILY NEWS. 9. No protest to the April 11 application or request for hearing was received. 10. Because Hilcorp provided sufficient information upon which to make an informed decision, the April 11 request can be resolved without a hearing. 11. This tentatively scheduled hearing was vacated on May 23, 2014. 12. For the applications received May 1 and May 5, 2014, and pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for June 17, 2014. On May 8, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On May 9, 2014, the notice was published in the ANCHORAGE DAILY NEWS. 13. On May 8, 2014, the AOGCC received a comment that was a general concern about the possibility of downhole commingling involving oil pools and gas pools. 14. No protest to the May 1 and May 5 applications or request for hearing was received. 15. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 16. This tentatively scheduled hearing was vacated on June 10, 2014. Findings: 1. Hilcorp is the operator for the leases within the Affected Area described below. 2. CO 510 set forth Pool Rules to govern development of the Kenai Gas Field. 3. CO 510 defined, in descending stratigraphic order, five separate Kenai Sterling Gas Pools (Sterling Pools; numbered 3, 4, 5.1, 5.2, and 6), the Beluga/Upper Tyonek Gas Pool, and the Tyonek Pool 1. CO 510 identified two reference wells —Kenai Unit No. 21-6 (KU 21-6) and Kenai Deep Unit No. 1 (KDU 1)—to define these pools and specified a measured depth (MD) for the top and base of each pool within one of those wells. Conservation Order 510AO r July 11, 2014 Page 3 of 8 4. As defined by CO 510, the bottoms of Sterling Pools 3, 4, 5. 1, and 5.2 do not coincide with the tops of the underlying gas pools, leaving vertical gaps between these pools.' 5. Hilcorp's May 5, 2014 application requests AOGCC define a new gas pool —named the Kenai Deep Pool —as the interval from 9,890' to 13,615' measured depth (MD) in a third well, Kenai Unit No. 41-8 (KU 41-18, formerly named KUH No. 1). 6. The lower portion of the Beluga/Upper Tyonek Pool, the Tyonek Pool 1, and the proposed Kenai Deep Pool lie within the fluvial Tyonek Formation (Tyonek). Sandstone reservoirs within these pools were deposited in lower energy river and stream channels that flowed through mud -rich marshes or swamps. 7. Within the Kenai Gas Field, the name of each previously defined pool includes the name of the affected geologic formation.2 8. Hilcorp has not yet drilled and completed proposed development gas wells KBU 22- 32, KBU 23-05, KBU 11-08Z, or KDU 10, the wells for which downhole commingling approval is sought. Development gas well KBU 43-07Y began production from the Beluga/Upper Tyonek Pool in May 2014. 9. Based on experience gained from nearby wells, it is anticipated that gas reserves encountered in the Beluga/Upper Tyonek Pool by KBU 22-32, KBU 23-05, KBU 11- 08Z, KDU 10, and KBU 43-07Y will be greater than in those found in Tyonek Pool 1 or the proposed Kenai Deep Pool. These five wells may encounter reserves in Tyonek Pool 1 and/or the proposed Kenai Deep Pool that are not sufficient to justify completing a well in only one of those pools. 10. Production logs will be run on a regular basis to allocate production between the commingled pools. 11. AOGCC's Conservation Orders commonly include an Administrative Action rule. CO 510 does not contain such a rule. Conclusions: 1. To prevent confusion, it is appropriate to restate the definitions for Sterling Pools 3, 4, 5.1, 5.2, and 6 in reference well KU 21-06. A second, deeper reference well—KU 41-8—is needed to define the underlying gas pools. 2. Following past practices, Kenai Deep Tyonek Gas Pool is the appropriate name for the proposed new Tyonek gas pool.3 3. Reservoir performance for the proposed Kenai Deep Tyonek Pool is expected to be similar to that of the Beluga/Upper Tyonek Pool and Tyonek Pool 1 because the sediments that comprise these three pools accumulated under similar depositional 1 For example, Kenai Sterling Gas Pool 3 is defined as the interval from 4,175' to 4,374' MD in reference well KU 21- 6. Underlying Kenai Sterling Gas Pool 4 is defined as the interval from 4,412' to 4,558' MD in that same well. 2 Examples are Kenai Sterling Pool 5. 1, Kenai Beluga/Upper Tyonek Pool, and Kenai Tyonek Pool 1. 3 CO 510 Finding 6 states: "The bottom of the proposed Beluga/Upper Tyonek Gas Pool is coincident with the top of the Kenai Deep Tyonek gas pool." CO 510 does not define nor further discuss the Kenai Deep Tyonek gas pool. Per CO 510 Rule 1, the base of Kenai Beluga/Upper Tyonek Gas Pool coincides with the top of Kenai Tyonek Gas Pool 1. Conservation Order 510AO July 11, 2014 Page 4 of 8 conditions. Performance of individual reservoir sands within the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and the proposed Kenai Deep Tyonek Gas Pool may vary due to differing grain sizes and varying degrees of sorting caused by local environmental conditions. 4. Allowing downhole commingling of production from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and/or the proposed Kenai Deep Tyonek Gas Pool will improve resource recovery and prevent waste. 5. Production allocation based on periodic production logging is appropriate. 6. Approving downhole commingling of production on a field -wide basis renders moot Hilcorp's applications for downhole commingling within development gas wells KBU 22-32, KBU 23-05, KBU 11-08Z, KDU 10, and KBU 43-07Y. 7. An Administrative Action rule will enable more efficient management and administration of the Kenai Gas Field by allowing minor modifications to rules that will not cause unsafe operations, affect correlative rights, cause waste, or allow movement of hydrocarbons into sources of freshwater. NOW, THEREFORE, IT IS ORDERED that: Conservation Order 510 is superseded by this order. Development and operation of the Kenai Gas Field is subject to the following rules and the statewide requirements under 20 AAC 25 to the extent not superseded by these rules. Conservation Order 510A• July 11, 2014 Page 5 of 8 Affected Area: Seward Meridian Township, Range Description T4N, RI 1W Section 3: Lot 4, SW 1/4 NW 1/4, W 1/2 SW 1/4 Sections 4, 5, 6, 7, and 8: All Section 9: N 1/2, SW 1/4, W 1/2 SE 1/4 j Section 16: N 1/2 NW 1/4, SW 1/4 NW 1/4, NW 1/4 SW 1/4 Sections 17 and 18: All ............... Section 19: Lot 1, NE 1/4 NW 1/4, NE 1/4 1 Section 20 N 1/2 NW 1/4, SW 1/4 NW 1/4 .... T4N, R12W Section 1: All .......... .......... ....... .... ... Section 2: E 1/2 E 1/2 ...--..- _ -- 1 Section 11: E 1/2 NE 1/4 Section 12: All ....- ._. ....--- . ....... ... - Section 13: Lots 5 through 12, easterly 2.50 acres of Lots 13 through 16, E 1/2 NW 1/4 NE 1/4, E 1/2 E 1/2, E 1/2 W 1/2 SE 1/4 NE 1/41 E 1/2 W 1/2 NW 1/4 SE 1/4, E 1/2 SW 1/4 NE 1/4, E 1/2 NW 1/4 SE 1/4, All of W 1/2 NE 1/4, E 1/2 NW1/4 lying westerly of coastline ........ ........ ........ Section 17: Lots 8 and 9, NW 1/4 SW 1/4, S 1/2 SW 1/4, All of Kenai TSN, R11W River ...... ......... ......... . ......... Section 18: SE 1/4 SE 1/4 .......... _... Section 19: Lots 2, 6 through 13, SE 1/4, E 1/2 E 1/2 SE 1/4 SW 1/4, NE 1/4, All SE 1/4 NW 1/4, NE 1/4 SW 1/4, S 1/2 SW 1/4 lying westerly of coastline Section 20: S 1/2 NW 1/4, SW 1/4 NE 1/4, NW 1/4 NE 1/4 ......... .......... .........._ . Section 28: NW 1/4 NW1/4, S 1/2 NW 1/4, SW 1/4, W 1/2 SE 1/4, SE 1/4 SE 1/4 ....... _ Sections 29 and 30 All ....... Section 31: Lots 3 through 10, E 1/2, All that portion lying westerly of coastline j ............ ......... ........._.. . .. Sections 32 and 33: All ............. ............ ......... __ ............... ._. .. - .... ................ Section 34: NW 1/4 NW 1/4, S 1/2 NW 1/4, SW 1/4, W 1/2 SE 1/4 T5N, R12W .... Section 25 SE 1/4 NE 1/4, E 1/2 SE 1/4 ... Section 36 E 1/2 Rule 1 Definition of Pools (Revised from CO 510 and new this order) a. Kenai Sterling Gas Pool 3 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,175' to 4,412' MD in reference well KU 21-6. (Source: CO 510, revised this order) b. Kenai Sterling Gas Pool 4 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,412' to 4,576' MD in reference well KU 21-6. (Source: CO 510, revised this order) Conservation Order 510A* July 11, 2014 Page 6 of 8 c. Kenai Sterling Gas Pool 5.1 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,576' to 4,880' MD in reference well KU 21-6. (Source: CO 510, revised this order) d. Kenai Sterling Gas Pool 5.2 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,880' to 5,250' MD in reference well KU 21-6. (Source: CO 510, revised this order) e. Kenai Sterling Gas Pool 6 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 5,250' to 5,520' MD in reference well KU 21-6. (Source: CO 510) f. Kenai Beluga/Upper Tyonek Gas Pool is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,780' to 8,993' MD in reference well KU 41-18. (Source: CO 510, restated this order 4) g. Kenai Tyonek Gas Pool 1 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 8,993' to 9,890' MD in reference well KU 41-18. (Source: CO 510, restated this orders) h. Kenai Deep Tyonek Gas Pool is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 9,890' to 13,615' MD in reference well KU 41-18. (New this order) Rule 2. Well Spacing (Revised this order) There shall be no restrictions as to well spacing except that no gas pay shall be opened in a well within 1,500' of an external property line where the owners and landowners are not the same on both sides of the line. Rule 3 Casing and Cementing Requirements (Restated from CO 510) Surface casing shall be landed at not less than 1,200' or more than 2,000' and cement shall be circulated to the surface. Production casing shall be landed through the completion zone and cement shall cover and extend to at least 500' above each potentially productive sand interval. The use of multi -stage cementing procedures shall be permitted. Alternatively a casing string shall be adequately cemented at an intermediate point and a liner landed through the completion zone. If a liner is run, the annular space behind the liner shall be filled with cement to at least 100' above the casing shoe or the top of the liner shall be squeezed with sufficient cement to provide at least 100' of cement between the liner and casing annulus. Cement must cover all potentially productive intervals behind the liner. Casing and well head equipment shall be hydrostatically tested to not less than 2,000 pounds per square inch pressure. 4 CO 510 defined Kenai Beluga/Upper Tyonek Gas Pool as the accumulation of gas common to and which correlates with the accumulation found in the interval 4,587' to 9,155' MD in reference well KDU 1. Well log correlations indicate the top of the Kenai Beluga/Upper Tyonek Gas Pool occurs at 5,520' MD in reference well KU 21-6. 5 CO 510 defined Kenai Tyonek Gas Pool 1 as the accumulation of gas that is common to and correlates with the accumulation found in the interval 9,155' to 9,890' in reference well KDU 1. Conservation Order 510A* July 11, 2014 Page 7 of 8 Rule 4. Computed Bottomhole Pressure Surveys (Restated from CO 510) A key well bottomhole pressure survey shall be taken in each pool upon AOGCC request; however, such surveys shall not be required more often than twice in any calendar year. Bottomhole pressure may be computed from surface measurements taken with a dead weight tester provided, however, than an approved bottomhole measuring device shall be used when the accuracy of the computed bottomhole pressure is questionable. The time, length and kind of survey, number and location of the wells to be tested, datum and other details may be determined by the operator subject to AOGCC approval. Rule 5. Downhole Commingling (Restated from CO 510 and new this order) a. Commingling of production from Kenai Sterling Pool 4 and Kenai Sterling Pool 5.1 in well KU 33-32 is allowed. (Source CO 510) b. Commingling of production downhole from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and Kenai Deep Tyonek Pool is allowed with the following conditions (New this order): 1. Within 30 days of commencement of commingled production, and after production from the well has stabilized, the operator shall run a production log to determine the allocation of production between the Gas Pools. 2. Thereafter, the operator shall conduct production logging operations within each well at least once each calendar year, with no more than 13 months between operations, and adjust the allocation of production between the gas pools as appropriate. 3. Within 30 days of completion of production logging operations, printed and electronic copies of all logs used for determining allocation of production shall be submitted to the AOGCC. Rule 6. Administrative Action (New this order) Unless notice and the opportunity for a public hearing are otherwise required, upon proper application the AOGCC may administratively waive the requirements of any rule stated herein or administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. Conservation Order 510AO July 11, 2014 Page 8 of 8 DONE at Anchorage, Alaska and dated July 11, a /� 4---- Cathy . Foerster Chair, Commissioner - Daniel T. Seamount, Jr. 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: Carlisle, Samantha J (DOA) Sent: Monday, July 14, 2014 8:26 AM To: (michael j.nelson@conocophillips.com); AKDCWellIntegrityCoordinator, Alexander Bridge; Andrew VanderJack; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Cliff Posey; Colleen Miller, Corey Cruse; Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy; David Goade; David House; David McCaleb; David Scott; David Steingreaber, David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallegos; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt, Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Schultz (gary.schultz@alaska.gov); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff; Jacki Rose; Jdarlington oarlington@gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz, Jones, Jeffrey L (GOV); Juanita Lovett; Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty; Keith Wiles; Kelly Sperback; Klippmann; 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 P. Worcester, Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz, Mindy Lewis; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Steve Kiorpes; Moothart, Steve R (DNR); Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger, trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net, Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff 1 (DNR); Casey Sullivan; David Lenig; Diane Richmond; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jilt.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; Bettis, Patricia K (DOA); Peter Contreras; Richard Garrard; Richard Nehring; Robert Province, Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Wendy Wollf, William Hutto; William Van Dyke; Ballantine, Tab A (LAW); Bender, Makana K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Jackson, Jasper C (DOA); Kair, Michael N (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K To: (DO; Wallace, Chris D (DOA) Subject: Conservation Order 510A (Kenai Unit) Attachments: co510a.pdf Samantha Carlisle Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) 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 Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. • • Penny Vadla George Vaught, Jr. Jerry Hodgden 399 W. Riverview Ave. Post Office Box 13557 Hodgden Oil Company 408 Soldotna, AK 99669-7714 Denver, CO 80201-3557 Golden, S Golden, COO 80401-2433 Bernie Karl CIRI North Slope Borough K&K Recycling Inc. Land Department Planning Department Post Office Box 58055 Post Office Box 93330 Post Office Box 69 Fairbanks, AK 99711 Anchorage, AK 99503 Barrow, AK 99723 Richard Wagner Gordon Severson Jack Hakkila Post Office Box 60868 3201 Westmar Cir. Post Office Box 190083 Fairbanks, AK 99706 Anchorage, AK 99508-4336 Anchorage, AK 99519 David Duffy Darwin Waldsmith James Gibbs Landman Post Office Box 39309 Post Office Box 1597 Hilcorp Alaska, LLC Ninilchik, AK 99639 Soldotna, AK 99669 3800 Centerpoint Dr., Ste. 1400 Anchorage, AK 99503 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 W. 71h Avenue, Suite 100 Anchorage Alaska 99501-3192 Re: THE APPLICATION OF Hilcorp Alaska, LLC to amend Conservation Order No. 510 order to define a new gas pool, to allow commingling of production, and to establish an administrative action rule for the Kenai Gas Field Conservation Order No. 510A Kenai Gas Field Kenai Unit Kenai Sterling Gas Pools 3, 4, 5.1, 5.2, and 6 Kenai Beluga/Upper Tyonek Gas Pool Kenai Tyonek Gas Pool 1 Kenai Deep Tyonek Gas Pool Kenai Peninsula Borough, Alaska July 21, 2014 CLARIFICATION NOTICE The Alaska Oil and Gas Conservation Commission (AOGCC) notes that due to confusion regarding the interpretation of the revision made to Rule 2 in Conservation Order No. 510A, which did not change the effect of this rule, that a clarification in the rule is necessary. This correction will be reflected in a corrected Conservation Order No. 510A to be issued by the AOGCC. DONE at Anchorage, Alaska and dated July 21, 2014. `Q Ottq�yo thy . Fo ster Daniel T. mount, Jr. Chair, Commissioner Commissioner RECONSIDERATION 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 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: Carlisle, Samantha J (DOA) Sent: Monday, July 21, 2014 3:42 PM To: (michael j.nelson@conocophillips.com); AKDCWeIIIntegrityCoordinator, Alexander Bridge; Andrew Vandedack; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Cliff Posey; Colleen Miller, Corey Cruse; Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy; David Goade; David House; David McCaleb; David Scott; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallegos; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Schultz (gary.schultz@alaska.gov); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff, Jacki Rose; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett; Judy Stanek, Houle, Julie (DNR); Julie Little; Kari Moriarty, Keith Wiles; Kelly Sperback; Klippmann; 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 P. Worcester, Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200, Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Kiemmer, Steve Kiorpes; Moothart, Steve R (DNR); Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger, trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net, Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Diane Richmond; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; 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; Bettis, Patricia K (DOA); Peter Contreras; Richard Garrard; Richard Nehring; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Wendy Wollf, William Hutto; William Van Dyke; Ballantine, Tab A (LAW); Bender, Makana K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Jackson, Jasper C (DOA); Kair, Michael N (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K To: w (DOA); Wallace, Chris D (DOA) Subject: Conservation Order 510 A Clarification Notice and Corrected (Kenai Unit) Attachments: co510a corrected.pdf, co510a clarification notice.pdf Please see attached. Samantha Carlisle Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) 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 Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. Penny Vadla George Vaught, Jr. Jerry Hodgden 399 W. Riverview Ave. Post Office Box 13557 408181 n Oil Company t. Soldotna, AK 99669-7714 Denver, CO 80201-3557 Golden, S Golden, CO 80401-2433 Bernie Karl CIRI North Slope Borough K&K Recycling Inc. Land Department Planning Department Post Office Box 58055 Post Office Box 93330 Post Office Box 69 Fairbanks, AK 99711 Anchorage, AK 99503 Barrow, AK 99723 Richard Wagner Gordon Severson Jack Hakkila Post Office Box 60868 3201 Westmar Cir. Post Office Box 190083 Fairbanks, AK 99706 Anchorage, AK 99508-4336 Anchorage, AK 99519 David Duffy Darwin Waldsmith James Gibbs Landman Post Office Box 39309 Post Office Box 1597 Hilcorp Alaska, LLC Ninilchik, AK 99639 Soldotna, AK 99669 380G Centerpoint Dr., Ste. 1400 Anchorage, AK 99503 li* � 'Z°k -k Angela K. Singh STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC to amend Conservation Order No. 510 order to define a new gas pool, to allow commingling of production, and to establish an administrative action rule for the Kenai Gas Field IT APPEARING THAT: Docket Numbers: CO-14-009, CO-14-012, CO-14-013, CO-14-014, CO-14-015, and CO-14-016 Conservation Order No. 510A Corrected Kenai Gas Field Kenai Unit Kenai Sterling Gas Pools 3, 4, 5.1, 5.2, and 6 Kenai Beluga/Upper Tyonek Gas Pool Kenai Tyonek Gas Pool 1 Kenai Deep Tyonek Gas Pool Kenai Peninsula Borough, Alaska July 21, 2014 By applications received April 11, 2014, May 1, 2014, and May 5, 2014, Hilcorp Alaska, LLC (Hilcorp) in its capacity as 100% working interest owner and operator of the Kenai Gas Field requested the Alaska Oil and Gas Conservation Commission (AOGCC) amend Conservation Order No. 510 (CO 510) to approve commingling of production downhole for three pools, to formally define an additional gas pool within the field, and to establish an administrative action clause. 2. Hilcorp's application received April 11, 2014 (Docket CO-14-009) requested authorization to commingle production downhole from the Kenai Beluga/Upper Tyonek Gas Pool (Beluga/Upper Tyonek Pool) and Kenai Tyonek Gas Pool 1 (Tyonek Pool 1) in the KBU 22- 32 well. 3. Hilcorp's application received May 1, 2014 (Docket CO-14-012) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool and Tyonek Pool 1 in the KBU 23-05 well. 4. Hilcorp's application received May 1, 2014 (Docket CO-14-016) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and the proposed Kenai Deep Pool in the KDU 10 well. 5. Hilcorp's application received May 5, 2014 (Docket CO-14-013) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool and Tyonek Pool 1 in the KBU 11-08Z well. Conservation Order 510A Corrected July 21, 2014 Page 2 of 8 6. Hilcorp's application received May 5, 2014 (Docket CO-14-014) requested AOGCC amend CO 510 to define a new gas pool named the Kenai Deep Gas Pool (Kenai Deep Pool), to approve downhole commingling on a field -wide basis for production from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and the proposed Kenai Deep Pool, and to establish an administrative action rule. 7. Hilcorp's application received May 5, 2014 (Docket CO-14-015) requested authorization to commingle production downhole from the Beluga/Upper Tyonek Pool and Tyonek Pool 1 in the KBU 43-07Y well. 8. For the application received April 11, 2014, and pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for May 27, 2014. On April 15, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list, and published the notice in the ANCHORAGE DAILY NEWS. 9. No protest to the April 11 application or request for hearing was received. 10. Because Hilcorp provided sufficient information upon which to make an informed decision, the April 11 request can be resolved without a hearing. 11. This tentatively scheduled hearing was vacated on May 23, 2014. 12. For the applications received May 1 and May 5, 2014, and pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for June 17, 2014. On May 8, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On May 9, 2014, the notice was published in the ANCHORAGE DAILY NEWS. 13. On May 8, 2014, the AOGCC received a comment that was a general concern about the possibility of downhole commingling involving oil pools and gas pools. 14. No protest to the May 1 and May 5 applications or request for hearing was received. 15. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 16. This tentatively scheduled hearing was vacated on June 10, 2014. Findings: 1. Hilcorp is the operator for the leases within the Affected Area described below. 2. CO 510 set forth Pool Rules to govern development of the Kenai Gas Field. 3. CO 510 defined, in descending stratigraphic order, five separate Kenai Sterling Gas Pools (Sterling Pools; numbered 3, 4, 5.1, 5.2, and 6), the Beluga/Upper Tyonek Gas Pool, and the Tyonek Pool 1. CO 510 identified two reference wells —Kenai Unit No. 21-6 (KU 21-6) and Kenai Deep Unit No. 1 (KDU 1)—to define these pools and specified a measured depth (MD) for the top and base of each pool within one of those wells. Conservation Order 510A Corrected July 21, 2014 Page 3 of 8 4. As defined by CO 510, the bases of Sterling Pools 3, 4, 5.1, and 5.2 do not coincide with the tops of the underlying gas pools, leaving vertical gaps between these pools.l 5. Hilcorp's May 5, 2014 application requests AOGCC define a new gas pool —named the Kenai Deep Pool —as the interval from 9,890' to 13,615' measured depth (MD) in a third well, Kenai Unit No. 41-8 (KU 41-18, formerly named KUH No. 1). 6. The lower portion of the Beluga/Upper Tyonek Pool, the Tyonek Pool 1, and the proposed Kenai Deep Pool lie within the fluvial Tyonek Formation (Tyonek). Sandstone reservoirs within these pools were deposited in lower energy river and stream channels that flowed through mud -rich marshes or swamps. 7. Within the Kenai Gas Field, the name of each previously defined pool includes the name of the affected geologic formation.2 8. Hilcorp has not yet drilled and completed proposed development gas wells KBU 22-32, KBU 23-05, KBU 11-08Z, or KDU 10, the wells for which downhole commingling approval is sought. Development gas well KBU 43-07Y began production from the Beluga/Upper Tyonek Pool in May 2014. 9. Based on experience gained from nearby wells, it is anticipated that gas reserves encountered in the Beluga/Upper Tyonek Pool by KBU 22-32, KBU 23-05, KBU 11-08Z, KDU 10, and KBU 43-07Y will be greater than in those found in Tyonek Pool 1 or the proposed Kenai Deep Pool. These five wells may encounter reserves in Tyonek Pool 1 and/or the proposed Kenai Deep Pool that are not sufficient to justify completing a well in only one of those pools. 10. Production logs will be run on a regular basis to allocate production between the commingled pools. 11. AOGCC's Conservation Orders commonly include an Administrative Action rule. CO 510 does not contain such a rule. Conclusions: 1. To prevent confusion, it is appropriate to restate the definitions for Sterling Pools 3, 4, 5. 1, 5.2, and 6 in reference well KU 21-06. A second, deeper reference well—KU 41-8—is needed to define the underlying gas pools. 2. Following past practices, Kenai Deep Tyonek Gas Pool is the appropriate name for the proposed new Tyonek gas pool.3 1 For example, Kenai Sterling Gas Pool 3 is defined as the interval from 4,175' to 4,374' MD in reference well KU 21-6. Underlying Kenai Sterling Gas Pool 4 is defined as the interval from 4,412' to 4,558' MD in that same well. 2 Examples are Kenai Sterling Pool 5. 1, Kenai Beluga/Upper Tyonek Pool, and Kenai Tyonek Pool 1. 3 CO 510 Finding 6 states: "The bottom of the proposed Beluga/Upper Tyonek Gas Pool is coincident with the top of the Kenai Deep Tyonek gas pool." CO 510 does not define nor further discuss the Kenai Deep Tyonek gas pool. Per CO 510 Rule 1, the base of Kenai Beluga/Upper Tyonek Gas Pool coincides with the top of Kenai Tyonek Gas Pool 1. Conservation Order 510A Corrected July 21, 2014 Page 4 of 8 3. Reservoir performance for the proposed Kenai Deep Tyonek Pool is expected to be similar to that of the Beluga/Upper Tyonek Pool and Tyonek Pool 1 because the sediments that comprise these three pools accumulated under similar depositional conditions. Performance of individual reservoir sands within the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and the proposed Kenai Deep Tyonek Gas Pool may vary due to differing grain sizes and varying degrees of sorting caused by local environmental conditions. 4. Allowing downhole commingling of production from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and/or the proposed Kenai Deep Tyonek Gas Pool will improve resource recovery and prevent waste. 5. Production allocation based on periodic production logging is appropriate. 6. Approving downhole commingling of production on a field -wide basis renders moot Hilcorp's applications for downhole commingling within development gas wells KBU 22-32, KBU 23-05, KBU 11-08Z, KDU 10, and KBU 43-07Y. 7. An Administrative Action rule will enable more efficient management and administration of the Kenai Gas Field by allowing minor modifications to rules that will not cause unsafe operations, affect correlative rights, cause waste, or allow movement of hydrocarbons into sources of freshwater. NOW, THEREFORE, IT IS ORDERED that: Conservation Order 510 is superseded by this order. Development and operation of the Kenai Gas Field is subject to the following rules and the statewide requirements under 20 AAC 25 to the extent not superseded by these rules. Conservation Order 510A Corrected July 21, 2014 Page 5 of 8 Affected Area: Seward Meridian Township, Range IDescription T4N, RI 1 W Section 3: Lot 4, SW 1/4 NW 1/4, W 1/2 SW 1/4 j Sections 4, 5, 6, 7, and 8: All Section 9: N 1/2, SW 1/4, W 1/2 SE 1/4 Section 16: N 1/2 NW 1/4, SW 1/4 NW 1/4, NW 1/4 SW 1/4 Sections 17 and 18: All _. ......... _..... Section 19: Lot 1, NE 1/4 NW 1/4, NE 1/4 ......... .. ........ ........... .. ........ ._................................. ....... Section 20: N 1/2 NW 1/4, SW 1/4 NW 1/4 ......... T4N, R12W .. Section 1: All .... _ ............. Section 2: E 1/2 E 1/2 _._ .. Section 11: E 1/2 NE 1/4 .._.._.. _. ._......... ..... ..... ............ ------- _._ _.. Section 12: All ...._....... ......... Section 13: Lots 5 through 12, easterly 2.50 acres of Lots 13 through 16, E 1/2 NW 1/4 NE 1/4, E 1/2 E 1/2, E 1/2 W 1/2 SE 1/4 NE 1/4, E 1/2 W 1/2 NW 1/4 SE 1/4, E 1/2 SW 1/4 NE 1/4, E 1/2 NW 1/4 SE 1/4, All of W 1/2 NE 1/4, E 1/2 NW 1/4 lying westerly of coastline TSN, R11W Section 17: Lots 8 and 9, NW 1/4 SW 1/4, S 1/2 SW 1/4, All of Kenai River ... _.._ Section 18: SE 1/4 SE 1/4 ..... ....... ......... ..__ .... ... ....... Section 19: Lots 2, 6 through 13, SE 1/4, E 1/2 E 1/2 SE 1/4 SW 1/4, NE 1/4, All SE 1/4 NW 1/4, NE 1/4 SW 1/4, S 1/2 SW 1/41 in westerly of coastline Section 20: S 1/2, NW 1/4, SW 1/4 NE 1/4, NW 1/4 NE 1/4 ......... ...... Section 28: NW 1/4 NW1/4, S 1/2 NW 1/4, SW 1/4, W 1/2 SE 1/4, SE 1/4 SE 1/4 ......... ..... .. .............................................. Sections 29 and 30: All ........ ... . . ........ .............. Section 31: Lots 3 through 10, E 1/2, All that portion lying westerly of coastline Sections 32 and 33: All ......... ...___.-_ . Section 34: NW 1/4 NW 1/4, S 1/2 NW 1/4, SW 1/4, W 1/2 SE 1/4 ......... ......... ........ T5N, R12W _ ....... ............ ..... ......... Section 25: SE 1/4 NE 1/4, E 1/2 SE 1/4 ........ ..... ......... Section 36: E 1/2 Rule 1. Definition of Pools (Revised from CO 510 and new this order) a. Kenai Sterling Gas Pool 3 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,175' to 4,412' MD in reference well KU 21-6. (Source: CO 510, revised this order) b. Kenai Sterling Gas Pool 4 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,412' to 4,576' MD in reference well KU 21-6. (Source: CO 510, revised this order) Conservation Order 510A Corrected July 21, 2014 Page 6 of 8 c. Kenai Sterling Gas Pool 5.1 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,576' to 4,880' MD in reference well KU 21-6. (Source: CO 510, revised this order) d. Kenai Sterling Gas Pool 5.2 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,880' to 5,250' MD in reference well KU 21-6. (Source: CO 510, revised this order) e. Kenai Sterling Gas Pool 6 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 5,250' to 5,520' MD in reference well KU 21-6. (Source: CO 510) f. Kenai Beluga/Upper Tyonek Gas Pool is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 4,780' to 8,993' MD in reference well KU 41-18. (Source: CO 510, restated this order 4) g. Kenai Tyonek Gas Pool 1 is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 8,993' to 9,890' MD in reference well KU 41-18. (Source: CO 510, restated this orders) h. Kenai Deep Tyonek Gas Pool is the accumulation of gas that is common to and correlates with the accumulation found in the interval from 9,890' to 13,615' MD in reference well KU 41-18. (New this order) Rule 2. Well Spacing (Revised this order) There shall be no restrictions as to well spacing except that no gas pay shall be opened in a well within 1,500' of an external property line of the Affected Area described above where the owners and landowners are not the same on both sides of the line. Rule 3. Casing and Cementing Requirements (Restated from CO 510) Surface casing shall be landed at not less than 1,200' or more than 2,000' and cement shall be circulated to the surface. Production casing shall be landed through the completion zone and cement shall cover and extend to at least 500' above each potentially productive sand interval. The use of multi -stage cementing procedures shall be permitted. Alternatively a casing string shall be adequately cemented at an intermediate point and a liner landed through the completion zone. If a liner is run, the annular space behind the liner shall be filled with cement to at least 100' above the casing shoe or the top of the liner shall be squeezed with sufficient cement to provide at least 100' of cement between the liner and casing annulus. Cement must cover all potentially productive intervals behind the liner. Casing and well head equipment shall be hydrostatically tested to not less than 2,000 pounds per square inch pressure. 4 CO 510 defined Kenai Beluga/Upper Tyonek Gas Pool as the accumulation of gas common to and which correlates with the accumulation found in the interval 4,587' to 9,155' MD in reference well KDU 1. Well log correlations indicate the top of the Kenai Beluga/Upper Tyonek Gas Pool occurs at 5,520' MD in reference well KU 21-6. 5 CO 510 defined Kenai Tyonek Gas Pool 1 as the accumulation of gas that is common to and correlates with the accumulation found in the interval 9,155' to 9,890' in reference well KDU 1. Conservation Order 510A Corrected July 21, 2014 Page 7 of 8 Rule 4. Computed Bottomhole Pressure Surveys (Restated from CO 510) A key well bottomhole pressure survey shall be taken in each pool upon AOGCC request; however, such surveys shall not be required more often than twice in any calendar year. Bottomhole pressure may be computed from surface measurements taken with a dead weight tester provided, however, than an approved bottomhole measuring device shall be used when the accuracy of the computed bottomhole pressure is questionable. The time, length and kind of survey, number and location of the wells to be tested, datum and other details may be determined by the operator subject to AOGCC approval. Rule 5. Downhole Commingling (Restated from CO 510 and new this order) a. Commingling of production from Kenai Sterling Pool 4 and Kenai Sterling Pool 5.1 in well KU 33-32 is allowed. (Source CO 510) b. Commingling of production downhole from the Beluga/Upper Tyonek Pool, Tyonek Pool 1, and Kenai Deep Tyonek Pool is allowed with the following conditions (New this order): 1. Within 30 days of commencement of commingled production, and after production from the well has stabilized, the operator shall run a production log to determine the allocation of production between the Gas Pools. 2. Thereafter, the operator shall conduct production logging operations within each well at least once each calendar year, with no more than 13 months between operations, and adjust the allocation of production between the gas pools as appropriate. 3. Within 30 days of completion of production logging operations, printed and electronic copies of all logs used for determining allocation of production shall be submitted to the AOGCC. Rule 6. Administrative Action (New this order) Unless notice and the opportunity for a public hearing are otherwise required, upon proper application the AOGCC may administratively waive the requirements of any rule stated herein or administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. Conservation Order 510A Corrected July 21, 2014 Page 8 of 8 DONE at Anchorage, Alaska and dated July 2 Cathy Y. Foerster Chair, 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: Carlisle, Samantha J (DOA) Sent: Monday, July 21, 2014 3.42 PM To: (michae{ j.ne{son@conocophillips.com); AKDCWellIntegrityCoordinator, Alexander Bridge; Andrew Vanderlack; Anna Raff; Barbara F Fullmer; bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Cliff Posey; Colleen Miller, Corey Cruse; Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy; David Goade; David House; David McCaleb; David Scott, David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallegos; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Schultz (gary.schultz@alaska.gov); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff; Jacki Rose; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett; Judy Stanek, Houle, Julie (DNR); Julie Little; Kari Moriarty; Keith Wiles; Kelly Sperback; Klippmann; 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 P. Worcester, Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Steve Kiorpes; Moothart, Steve R (DNR); Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Diane Richmond; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr; Smith, Graham O (PCO); Greg Mattson; Hans Schlegel; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jilt.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; Bettis, Patricia K (DOA); Peter Contreras; Richard Garrard; Richard Nehring; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Wendy Wollf, William Hutto; William Van Dyke; Ballantine, Tab A (LAW); Bender, Makana K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Jackson, Jasper C (DOA); Kair, Michael N (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K To: (DOA); Wallace, Chris D (DOA) Subject: Conservation Order 510 A Clarification Notice and Corrected (Kenai Unit) Attachments: co510a corrected.pdf, co510a clarification notice.pdf Please see attached. Samantha Carti'Ae Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 7ch Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) 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 Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. Penny Vadla George Vaught, Jr. Jerry HodgdenHodgden Oil Company 399 W. Riverview Ave. Post Office Box 13557 408 cn t. Soldotna, AK 99669-7714 Denver, CO 80201-3557 Golden, S Golden, CO 80401-2433 Bernie Karl CIRI North Slope Borough K&K Recycling Inc. Land Department Planning Department Post Office Box 58055 Post Office Box 93330 Post Office Box 69 Fairbanks, AK 99711 Anchorage, AK 99503 Barrow, AK 99723 Richard Wagner Gordon Severson Jack Hakkila Post Office Box 60868 3201 Westmar Cir. Post Office Box 190083 Fairbanks, AK 99706 Anchorage, AK 99508-4336 Anchorage, AK 99519 David Duffy Darwin Waldsmith James Gibbs Landman Post Office Box 39309 Post Office Box 1597 Hilcorp Alaska, LLC Ninilchik, AK 99639 Soldotna, AK 99669 3800 Centerpoint Dr., Ste.1400 Anchorage, AK 99503 Angela K. Singh #3 • • Carlisle, Samantha J (DOA) From: Roby, David S (DOA) Sent: Thursday, May 08, 2014 4:41 PM To: Carlisle, Samantha J (DOA) Subject: FW: Public Hearing Notices (Hilcorp - Kenai Gas Field) Sam, Please put this in record for each of the Hilcorp applications. Thanks, Dave Roby (907) 793-1232 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 Dave Roby at (907)793-1232 or dave.roby@alaska.gov. From: Brian Havelock[mailto:brianhavelock@yahoo.com] Sent: Thursday, May 08, 2014 4:37 PM To: Roby, David S (DOA) Subject: Re: Public Hearing Notices (Hilcorp - Kenai Gas Field) Dave, thank you for the reply. I am concerned about blowdown of PBU and can see as well as you can see the rupture of the H Pad number eight well flow line, a 1978 vintage well that should not have been called upon so hard. I'm concerned about them pulling too hard on PBU oil rim, pushing too much water into Kuparuk sandstones, not so much pulling too hard on small oil fields in cook inlet. However, the gas scene as far as the integrity of the reservoirs is somewhat alarming what Hilcorp is proposing. I am concerned Hillcourt is not acting as a prudent operator. They are under incredible pressure to make Senate Bill 21 a winner for the governor; unfortunately that is the political reality. If oil is demanded to produce more than 575,000 barrels, I would expect 30 more ruptures. Thank you for listening to my concerns. I am sure your staff could identify the ones that are most vulnerable to failure. Let me know if you would like me to help investigate. Brian Brian Havelock Text anytime and call during hours of 08:00-18:00 AKT (AKT = UTZ -9 hrs.) On May 8, 2014, at 4:25 PM, "Roby, David S (DOA)" <dave.robv@alaska.gov> wrote: Brian, Hilcorp is asking for authorization to commingle three gas pools (there's currently seven gas pools defined in the Kenai Gas Field). Two of these gas pools, The Kenai Beluga/Upper Tyonek gas pool and Kenai Tyonek Gas Pool 1, have already been defined as gas pools by the AOGCC. The third pool was applied for by Hilcorp in one of the applications that was just noticed. Since the definition of the third pool and the commingling applications are all matters pending before the AOGCC I cannot say what action(s) the AOGCC will take. I can say though that if we decide to define a new pool we will classify it in accordance with our regulations and the data available and that we will not authorize commingling if we believe it will cause waste. Off the9of my head I cannot think of any instancowhich we've authorized commingling between an oil pool and a gas pool (at least not an active oil pool, it's possible we've authorized commingling of a depleted oil pool with a gas pool in order to blow down the gas that remained in the oil pool). Dave Roby (907) 793-1.232 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 Dave Roby at (907)793-1232 or dave.roby@alaska.gov. From: Carlisle, Samantha J (DOA) Sent: Thursday, May 08, 2014 3:48 PM To: Roby, David S (DOA) Subject: FW: Public Hearing Notices (Hilcorp - Kenai Gas Field) Can you answer this question? From: Brian Havelock[ma iIto: brianhavelock@yahoo.com] Sent: Thursday, May 08, 2014 3:46 PM To: Carlisle, Samantha J (DOA) Subject: Re: Public Hearing Notices (Hilcorp - Kenai Gas Field) Sounds like Tyonek deep oil down there. This I am a little concerned about being a gasfield. How do you know that they will isolate the oil zones from the gas zones with all this co -mingling? This looks like it blowdown of the gas. Brian Havelock Text anytime and call during hours of 08:00-18:00 AKT (AKT = UTZ -9 hrs.) On May 8, 2014, at 11:06 AM, "Carlisle, Samantha J (DOA)" <samantha.carlisle@alaska.gov> wrote: Please see attached. Samantha Cardsle Executive Secretary II Alaska Coil and Gas Conservation Commission 333 West 77'' Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) 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 Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. <Notice of Public Hearing, CO-14-012.pdf> <Notice of Public Hearing, CO-14-013.pdf> <Notice of Public Hearing, CO-14-014.pdf> <Notice of Public Hearing, CO-14-015.pdf> <Notice of Public Hearing, CO-1�16.pdf> #2 • 0 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-14-014 The application of Hilcorp Alaska, LLC (Hilcorp) for an amendment to Conservation Order 510 (CO 510) to define a new gas pool, authorize downhole commingling for three gas pools, and add an administrative action rule to the order.. Hilcorp, by letter dated May 5, 2014, requests the Alaska Oil and Gas Conservation Commission (AOGCC) to amend CO 510 to define a new Kenai Deep Gas Pool, authorize the downhole commingling of production from the Kenai Beluga/Upper Tyonek Gas Pool 1, the Kenai Tyonek Gas Pool 1, and the proposed Kenai Deep Gas Pool, and add an administrative action rule to the order that is consistent with the administrative action rules contained in other orders. The AOGCC has tentatively scheduled a public hearing on this application for June 17, 2014, at 9:00 a.m. at 333 West 71h Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on May 29, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after June 2, 2014. In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7' Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on June 12, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the June 17, 2014, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than June 10, 2014. Daniel T. Seamount, Jr. Commissioner a STATE OF ALASKA ADVERTISING ORDER ' NOTICE TO PUBLISHER INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE ADVERTISING ORDER NO. / A 1 O_14033 SEE BOTTOM FOR INVOICE ADDRESS F R D M AOGCC 333 W 7th Ave, Ste 100 Anchorage, AK 99501 AGENCY CONTACT Jody Colombie DATE OF A.O. May 8, 2014 PHONE 9 —1221 PCN DATES ADVERTISEMENT REQUIRED: ASAP THE MATERIAL BETWEEN THE ENTIRETY ON THE DATES SHOWNUBLE LINES MUST BE PRINTED IN ITS o Anchorage Daily News PO Box 149001 Anchorage, AK 99514 SPECIAL INSTRUCTIONS: Type of Advertisement Legal® ❑ Display Classified ❑Other (Specify) SEE ATTACHED SEND INVOICE IN TRIPLICATE TO - AOGCC, 333 W. 7th Ave., Suite 100 Anchorage, AK 99501 PAGE 1 OF 12PAGES TOTAL OF ALL PAGES $ REF TYPE I NUMBER AMOUNT DATE COMMENTS 1 VEN 2 ARC 02910 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST LID 1 14 02140100 73451 2 REQUISITIONED Y: ]DIVISION 4 APPROVAL: 02-902 (Rev. 3/94) V "- �Publisber/Original Copies: Department Fiscal, Department, Receiving AOTRM 270227 0001038454 RECEIVED $ 219.12 MAY 16 2014 AFFIDAVIT OF PUBLICATIONAOGCC STATE OF ALASKA THIRD JUDICIAL DISTRICT Joleesa Stepetin being first duly sworn on oath deposes and says that he is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on May 09, 2014 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed Subscribed and sworn to before me (his 9th day of May, 2014 Notary Public in and for The State of Alaska. Third Division Anchorage, Alaska MY COMMISSION EXPIRES ly)l Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-14-014 The application of Hilcorp Alaska, LLC (Hilcorp) for an amendment to Conservation Order 510 (CO 510) to define a new gas pool, authorize downhole commingling for three gas pools, and add an administrative action rule to the order.. Hilcorp, by letter dated May 5, 2014, requests the Alaska Oil and Gas Conservation Commission (AOGCC) to amend CO 510 to define a new Kenai Deep Gas Pool, authorize the downhole commingling of production from the Kenai Beluga/Upper Tyonek Gas Pool 1, the Kenai Tyonek Gas Pool 1, and the proposed Kenai Deep Gas Pool, and add an administrative action rule to the order that is consistent with the administrative action rules contained in other orders. The AOGCC has tentatively scheduled a public hearing on this application for June 17, 2014, at 9:00 a.m. at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on May 29, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after June 2, 2014. In addition, written comments regarding this application may be submitted to the Alaska oil and Gas Conservation Commission, at 333 west 7th Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on June 12, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the June 17, 2014, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than June 10, 2014. AO-14-033 Published: May 9, 2014 Daniel T. Seamount, Jr. Commissioner 0 9 STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED /� O_14-033 ORDER AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF A ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE F I AOGCC R 333 West 71" Avenue. Suite 100 o Anchorage_ AK 99501 M o Anchorage Daily News PO Box 149001 Anchorage, AK 99514 AGENCY CONTACT I DATE OF PHONE IPCN 17V / 1 -.2 �1LL1 DATES ADVERTISEMENT REQUIRED: ASAP THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Account 4 STOF0330 AFFIDAVIT OF PUBLICATION United states of America REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. division. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared ATTACH PROOF OF PUBLICATION HER who, being first duly sworn, according to law, says that he/she is the of Published at state of in said division and and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2012, and thereafter for consecutive days, the last publication appearing on the day of , 2014, and that the rate charged thereon is not in excess of the rate charged private individuals. Subscribed and sworn to before me This _ day of 2014, Notary public for state of My commission expires - Singh, Angela K (DOA) From: Carlisle, Samantha J (DOA) Sent: Thursday, May 08, 201411:07 AM To: (michael j.nelson@conocophillips.com); AKDCWellIntegrityCoordinator, Alexander Bridge; Andrew VanderJack; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Cliff Posey, Colleen Miller, Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy; David Goade; David House; David McCaleb; David Scott; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Schultz (gary.schultz@alaska.gov); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff, Jacki Rose; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett; Judy Stanek, Houle, Julie (DNR); Julie Little; Kari Moriarty; Keith Wiles; Kelly Sperback; Klippmann; 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 P. Worcester, Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike@kbbi.org; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Steve Kiorpes; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler; Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; 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; Bettis, Patricia K (DOA); Peter Contreras; Richard Garrard; Richard Nehring; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Woolf, Wendy C (DNR); William Hutto; William Van Dyke; Ballantine, Tab A (LAW); Bender, Makana K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Johnson, Elaine M (DOA) (elainejohnson@alaska.gov); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Trade L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, To: Angela K (DOA); Turkington, Jeff A (DOA); Wallace, Chris D (DOA) Subject: Public Hearing Notices (Hilcorp - Kenai Gas Field) Attachments: Notice of Public Hearing, CO-14-012.pdf, Notice of Public Hearing, CO-14-013.pdf, Notice of Public Hearing, CO-14-014.pdf; Notice of Public Hearing, CO-14-015.pdf; Notice of Public Hearing, CO-14-016.pdf Please see attached. Samantha Carlisle Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907') 276-7542 (fax) 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 Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. David Duffy Landman Hilcorp Alaska, LLC 3800 Centerpoint Dr., Ste. 1400 Anchorage, AK 99503 Penny Vadla George Vaught, Jr. 399 W. Riverview Ave. Post Office Box 13557 Soldotna, AK 99669-7714 Denver, CO 80201-3557 Bernie Karl CIRI K&K Recycling Inc. Land Department Post Office Box 58055 Post Office Box 93330 Fairbanks, AK 99711 Anchorage, AK 99503 Richard Wagner Gordon Severson Post Office Box 60868 3201 Westmar Cir. Fairbanks, AK 99706 Anchorage, AK 99508-4336 Darwin Waldsmith James Gibbs Post Office Box 39309 Post Office Box 1597 Ninilchik, AK 99639 Soldotna, AK 99669 Jerry Hodgden Hodgden Oil Company 40818' St. Golden, CO 80401-2433 North Slope Borough Planning Department Post Office Box 69 Barrow, AK 99723 Jack Hakkila Post Office Box 190083 Anchorage, AK 99519 #1 � RECIO1/ED ,a MAY 0 5 2014 AOGCC Hilcorp Alaska, LLC May 5, 2014 Cathy Foerster, Chair Alaska Oil and Gas Conservation Commission 333 West 7t' Avenue, Suite 100 Anchorage, Alaska 99501 RE: Proposal to amend Conservation Order 510 Dear Commissioner Foerster, Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone: 907/777-8414 Fax: 907/777-8301 Email: dduffv@hilcorp.com Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Kenai Gas Field/Kenai Unit, respectfully requests the Alaska Oil and Gas Conservation Commission ("AOGCC") take action to amend Conservation Order 510 to: (a) establish anew Rule 2(f) to define a new pool ("Kenai Deep Gas Pool") below the Kenai Tyonek Gas Pool 1; (b) to establish a new rule ("Rule 5") to allow commingling of production from the Kenai Beluga/Upper Tyonek, Kenai Tyonek Gas Pool 1, and (proposed) Kenai Deep Gas Pool; and (c) to establish a new rule ("Rule 6") to provide for administrative action. The specific language proposed by Hilcorp states: Rule 2 Definition of Pools (a)-(g) [no change] (f) The Kenai Deep Gas Pool is defined as the accumulation of gas common to and which correlates with the accumulation found in the interval 9890' to 13,615' (MD) in the KUH No. 1 (subsequently renamed KU 41-18). Rule 5. Commingling In any well, commingling of production is allowed from the Kenai Beluga/Upper Tyonek, the Kenai Tyonek Gas Pool 1 and the Kenai Deep Gas Pools. Rule 4. Administrative Action Unless notice and public hearings are otherwise required, the Commission may administratively wave or amend any rule stated above as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in fluid movement to fresh waters. Hilcorp Alaska, LLC h� /• Proposal to Amend Conservation Order 553 May 5, 2014 Page 2 of 2 DISCUSSION Hilcorp has recently submitted five (5) separate proposals for commingling within the wellbore of the following wells within the Kenai Gas Field: KBU 22-32 (submitted 4/11/14); KDU 10 and KBU 23-05 (submitted May 1); and KBU 43-07Y and KBU 11- 8Z (submitted May 5, 2014). The attachments provided with each individual commingling application provide the technical basis and support required for the AOGCC to take action on the proposed amendment to Conservation Order 510. For administrative efficiency, Hilcorp requests the AOGCC to bundle the latest four individual commingling applications (dated May 1 and May 5, respectively) with this application to amend Conservation Order 510 into a single docket. As the sole working interest owner and operator, Hilcorp's proposed modifications to Conservation Order 510 do not promote waste or jeopardize correlative rights, are based upon sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into fresh water. They are also designed to reduce the administrative burdens on both Hilcorp and AOGCC staff. Hilcorp would be pleased to provide additional information or host a technical meeting with AOGCC staff to discuss the merits of the individual commingling application and the proposed pool rule amendments. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at 777-8341. Sincerely David W. Duffy, Landman Hilcorp Alaska, LLC Enclosures: none