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205-038
July 9, 2025 Bryan McLellan Senior Petroleum Engineer Alaska Oil & Gas Conservation Commission State of Alaska 333 W 7th AVE Anchorage, AK 99501 RE: Acceptance of Prior Plugging and Abandonment of the Moose Point No. 1 Well PTJ� 2o5-rn36 Dear Mr. McLellan: I am the landowner of KPB Parcel No. 02537009 where the plugged and abandoned Moose Point No. I Well is located. I understand that Alaskan Crude removed the marker pipe on the top of the well. I accept the existing condition of the well as -is and request that the top of the wellhead be left essentially flush with ground level. I also accept the site -clearance that's been done along with the existing drill pipe, ground fabric and other miscellaneous items that are still left on my property. Sincerely, C� CAL Lord E. Clark (Kenny) 103 Bitterweed Ct. Madison, Alabama 35758 Phone:703-717-2836 CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. From:Coldiron, Samantha J (OGC) To:AOGCC Records (CED sponsored) Subject:FW: Moose Point 1 (PTD 205-038) Date:Friday, May 30, 2025 2:03:27 PM Attachments:IMG_Polaris_Exact Location Of Moose Point Welldoxjzde_resized.png Samantha Coldiron AOGCC Special Assistant (907) 793-1223 From: Jim White, P.E. <jim@applecapital.net> Sent: Friday, May 30, 2025 11:31 AM To: McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Cc: 'Jim White' <jim@applecapital.net> Subject: RE: Moose Point 1 (PTD 205-038) Dear Bryan, In response to your email, I went out to the Moose Point #1 well yesterday and took some photos (attached). It is possible to drive to within 900 feet of the well. The last 900 feet is heavily overgrown and accessible only by foot. Due to covid restrictions that began in early 2020, none of the remaining work described in the attached sundry was completed. I will give you a call later today to discuss what I know about this site. Please feel free to reach out to me at any time with regard to this issue. Sincerely, James. A. White, P.E. President Alaskan Crude Corporation 514 Overland Ave., Apt. 25 Kenai, Alaska 99611 Personal Address 2214 Stephanie Brooke Wenatchee, WA 98801 509-741-7466 From: McLellan, Bryan J (OGC) <bryan.mclellan@alaska.gov> Sent: Wednesday, May 28, 2025 3:57 PM To: Jim White <jim@applecapital.net> Subject: Moose Point 1 (PTD 205-038) Jim, The AOGCC approved a sundry # 319-001 for abandonment and site clearance of Moose Point #1 well. We have not received a report (form 10-407) for this work. Was any of the work described in this attached sundry completed? Thank you Bryan McLellan Senior Petroleum Engineer Alaska Oil & Gas Conservation Commission Bryan.mclellan@alaska.gov +1 (907) 250-9193 THE STATE °fALASKA GOVERNOR MIKE DUNLEAVY James White Director Alaska Crude Corporation 10011 Villa Lea Lane Houston, TX 77071 Re: Moose Point Field, Moose Point Number 1 Well Permit to Drill Number: 205-038 Sundry Number: 319-001 Dear Mr. White: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 W Ww. oogcaalaska.gov Enclosed is the approved application for the sundry approval relating to the above referenced well. Please note the conditions of approval set out in the enclosed form. As provided in AS 31.05.080, within 20 days after written notice of this 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. A request for reconsideration is considered timely if it is received by 4:30 PM on the 23rd day following the date of this letter, or the next working day if the 23rd day falls on a holiday or weekend. Sincerely, Daniel T. Seamount, Jr. Commissioner DATED this 2—� day of April, 2019. 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JJDOV,(9 Paz»oyMV - adid JaX.enyp jO 1ne0way Z ain8,zj THE STATE 01ALASKA GOVERNOR BILL WALKER November 19, 2018 CERTIFIED MAIL — RETURN RECEIPT REQUESTED 7015 0640 0006 0779 5241 Mr. James White President Alaskan Crude Corporation 10011 Villa Lea Lane Houston, Texas 77071 Alaska (ail and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.claska.gov Re: Docket Number: OTH-18-051 Notice of Violation Failure to Plug and Abandon a Well Prior to Losing Rights to Drill in a Lease Moose Pt. Unit No. 1 (PTD 205-038) Dear Mr. White: Alaskan Crude Corporation (ACC) is the operator of record for the Moose Pt. Unit No. 1 well (PTD 205-038) on state oil and gas lease ADL 389922. The Department of Natural resources has informed the Alaska Oil and Gas Conservation Commission (AOGCC) that it has begun termination of ADL 389922. By letter dated November 20, 2009, ACC informed the AOGCC that it had reentered the Moose Pt. Unit No. 1 well (PTD 178-001) under PTD 205-038. An operator is required to properly plug and abandon all wells on property prior to expiration of the owner's rights in that properly. The Moose Pt. Unit No. 1 well is not properly plugged and abandoned. ACC will lose the right to operate on this lease in the very near future. Within 30 days of receipt of this letter, ACC shall submit an Application for Sundry Approvals (Form 10-403) for plugging and abandonment of Moose Pt. Unit No. 1. Once approved, the operations proposed in the Sundry shall be completed within 18 months from the date of this letter. The AOGCC reserves the right to pursue enforcement action in connection with the failure to properly plug and abandon the Moose Point No. 1 well. Sincerely, Hollis S. French Chair, Commissioner Docket Number: OTH-18-051 November 19, 2018 Page 2 of 2 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 reconsidemtion. 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 ru rr, C�FFWiAL USE D' ry Certified Mall Fee ry $ ED F Services& Fees (checkadd fee as eppowiW ❑ serum Receipt Oad.PY) $ ..D ORMurr Raad t(e!ectmmc) $ Postmark ❑CeRMeE McIlRmtrictetl peiNery $ Here C3 ❑"u$algnztu,e ReeulraJ $ O M.ft Slgeatum RashkfeE gaw"$_._ Mr. James White o President `n Alaskan Crude Corporation 0 10011 Villa Lea Lane ry Houston, Texas 77071 ■ Complete items 1, 2, and 3. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space Dermits. ❑ Agent Date Mr. James White erdenvelyaddr betow: No President lw Alaskan Crude Corporation w 10011 Villa Lea Lane�� Houston, Texas 77071 II I IIIIII IIII III I I I I I I I I II IIIIII II II III III I III 3. uNICe Type ❑ Priority Mail Express® ❑ Re Adult Signature ❑ Registered Mail' O Adult Signature Restricted Delivery ❑Registered Mail Restricted 9590 9403 0910 5223 5234 54 D Certified Mall® Delivery ❑ Certified Mail Restricted Delivery ❑ Return Receipt for ❑ Collect on Delivery Merchandise 2. Article Number (Transfer from service label) ❑ Collect an Delivery Restricted Delivery 0 Signature Confirmation*^' " Nail ❑ Signature Confirmation 7 015 0640 0006 0779 5241 fail Restricted Delivery Restricted Delivery 10) PS Form 3811, July 2015 PSN 7530-02-000-9053 Domestic Return Receipt ALASKAN CRUDE CORPORATION 4614 BOHILL ST. SAN ANTONIO, TX ,717 N 210-651-0777 .. v`a �.r , r ifyF• lu(JI�I 1 1�)I irAFe YG�_. November 20, 2009F } - Winton Aubert, Reservoir Engineer Emailed 11/20/09 to winton.aubert@alaska.gov Alaska Oil and Gas Conservation Commission Sent Regular mail 11/20/09 333 W. 7 h St. Ste. 100 Anchorage, Alaska 99501 Re: Request for Information Subject(s): Current Status and Future Plans for Moose Pt. #1 Well (PTD 205-038) Dear Mr. Aubert: Thank you for your request for information concerning the status of Alaskan Crude Corporation's Moose Pt. # I well. Moose Pt. #1 Well API No. 50133203129000 The 4" steel abandonment marker pipe has been milled out and removed from the 12' cement surface plug in the Moose Pt. #1 Well. ACC's plans for the Moose Pt. Well are attached as the "Proposed Rig Operations" for the Moose Pt. #1 Well. ACC plans to complete ACC's "Propose Rig Operations" for the Moose Pt. #1 Well upon a favorable outcome (for ACC) of current pending litigation. If you require further information, please do not hesitate to contact me. Kind Regards, %MNQD UT 81 2014 B• EeI ca L ager, Alaskan Crude Corporation 148na gmail.com Attachment: Moose Pt #1 "Proposed Rig Operations" for Moose Pt. #1 Well. To: AOGCC Die: April 22, 2009 From: a-rn mite Alaska Crude Corporation AYE ft5e-i,33- 1?At5 :IK 1-P! •'-.:. , r._v......� r:i4 1.'- ... Y::fl ..1:1 1 K.ty:>! f-1� .IIy li J.J nJ' 0. 'J.Y. r. Gt Ia' 1 ! ff: Ir.- r f-'YL. Irl." :.k.♦ r r r'. h:f.� iG. •1,...- .m- Lr • :41'd c. d' : ] ,- J 4 ,: lo.lu_1T1 d >-Y, b, irJ•. it,roose a oint #1 was &-Med as z s' bak to z iF' of E6,058' ma ice eaHy 1978. lntenals were tested, the well was suspended for apermd aftimo aid uIbmately fiats for abandonment in March 1982. Please refer to the attacl.ed wr3lb— soh —sal..- In sully, the well has 333' of 20" factor pipe, 2516' of 13-3/8" surface tatitag and 9032' of 7" Garet& Openhole from the 7" shoe to drilled TD of 10,058' is filled with czaicut Four plugs/retamers exist in the 7- and will be remioved from The surface -15'7, 55'-140', 4907'- 4985' and 8283'-8696' miL T be sum plug - 1577 is a enncrete plag (sand and gravel.)- The V pipe abandonment marker was set m the concrete surface to 15'? 0oncreUe plug. The metal portion of the 4" marker pipe concreted in the srnface plug to I5'? bas been milled and bored otrt. There are perforations at 5045'-5075' that have bean cement squeezed and open perfs at 8666'- 8696', below the lower reta®a_ The iovv set ofopmn pads will be the initial interval =getcd its * -'" We h w no record W.t >ndscates t1w ImgSh of the depth of tiro cpxs surface plug. The concrete surface plug m the casing could be mare or less dim 15' m the length of its depth. The well has about 55' of diesel above the upper ceniest plug in the 7" rasing. This diesel wilt be recovered and recycled as fuel for onsim heating Expected Presstmes_ Per DST #1 wbe n dns wcU was mmalIy dnlied, at mad p rf depth of 8631' NO, 8659' TVD (22' RKB), reservoir pressure was repodad to be 4065 psi or 0,47 psif8 gradient 9.Oppg EMW. Using a 0-1pstf8 gas grae6®t would resmt in a masimmm anticipated surface pressure(MASP) cf npP Y 32M p9- 18 C)� �1 M Nipple up, 7-U16" l '1' psi BUMsS:.l.9.i".1 :v Pipe -;a 'd �lll. .l! 1 :gill .1 preventer,- flow .. cum with 2- cqutpmcm and .1•U {:. ,'. ffr maAd (Exhibi instal :g plug- BOPBOPE tD 35W psL Tea . el a D 250 IV. Full test 1 0 5. PU work SLM9 drill Out SuTa= P — 15', R'; VD 25P o sib p➢®g at —55'. Circn.Eat O ox.>t and recover diesel freeze prvtec" foa reuse_ 6. Mill out the fast three opt PhgWIe s w" a 6" bk, circuladmg a mmunurn of 9.0 PPg idaCIMCl britre and gd sweeps_ CirvalaftArcem well d2D U93', vine tarp of the lower cemy t plug, p'-CWIM tss-' r g = 52S tom"- tau a� e3= z�-y ofV-Fae=z pew as 5045'-5075'utd- 7- 8- ias¢all two-way ChC6:. 1 lei 3W19 NU tie and PICS&alc ftsL RffiTWC- t :.11 11 n,-.11 J:i :.�, il$1,yULI .n •'LW '11 t Il Ta (•I 77-M- .'.7 la,t it A 1, i 1, 11 11. If the 8695'-8666' interval does nat prove up Sundry Applications will be submitted for approval to move the packer and test o31u;r intervals m the vmU bore fc'R gas producuon- 12. If r_yi114! ALASKA OIL AND GAS CONSERVATION COMMISSION October 8, 2009 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7005 1160 0001 5753 3545 Jim White Alaskan Crude Corporation 4614 Bohill San Antonio TX 78217 SEAN PARNELL, GOVERNOR 333 W. 7th AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907)276-7542 Re: Failure to Respond to Request for Information (20 AAC 25.300) Moose Pt. Unit # 1 PTD No. 205-038 Dear Mr. White, SCA,NNEV UCT 31 2014 Under 20 AAC 25.300 you are required to provide information requested by the Alaska Oil and Gas Conservation Commission (Commission). On January 28, 2009 the Commission requested verification of suspended, long-term shut-in and observation wells._ To_date you have provided no response to the Commission. __ This correspondence constitutes the Commission's final request for you to verify the wells as suspended, long-term shut-in or observation wells. If the requested information has not been received by the Commission by the close of business on December 1, 2009, you will be considered in violation of 20 AAC 25.300 and the Commission will take such action as it deems appropriate including, but not limited to, initiation of a public hearing, initiation of an enforcement action, and imposition of penalties as authorized under AS 31.05.150. If you have any questions regarding this request, please contact Winton Aubert at 907.793.1231 or winton.aubert(a�alaska.pov. Sincerely, Cathy P Foer er Comm ssioner Attachment cc: Tab Ballantine Department of Law ■ Complete Items 1, 2, and 3. Also complete item 4 if Restricted Delivery Is desired. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece,_ or on the front if space permits. 1. Article Addressed to: .1111Z CJrci��- A. X Name) I C. Is delivery address different from Item 1? U YM If YES, enter delivery address below: ❑ No 3. Se Type ttled Mail ❑ Express Mall Registered rn Receipt for Merchandise ❑ Insured Mali 0 C.O.D. 7 4. Restricted Delivery? (Extra Fee) ❑ Yes 2. Article Number (Transfer from service label) 7005 1160 0001 5753 3545 PS Form 3811, February 2004 Domestic Return Recelpt 102595-02-M-15/0 r F 1' SA RAH PALIN, GOVERNOR i .�.1t i ALASKA OIL A" GAS 333 W 7th AVENUE, SUITE 100 CONSERVATION COJWHSSION i ANCHORAGE, ALASKA 99501-3539 1 PHONE (907) 279-1433 / FAX (907) 276-7542 May 29, 2009 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7004 1160 0001 3621 2202 James W. White President Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas 78217 Re: Moose Pt. Unit #1 Well PTD No. 205-038 Dear Mr. White: This letter responds to the following: (1) the February 27, 2009 (February 27 Letter) of Alaskan Crude Corporation (ACC), claiming to respond to the letter dated January 27, 2009, of the Alaska Oil and Gas Conservation Commission (Commission); (2) ACC's letter dated April 22, 2009 (April 22 Letter), which ACC describes as an "Appeal of AOGCC's February 5, 2009 Website Decision to Retroactively Terminate Moose Pt. #1 Well's Drilling Permit 205-038 March 24, 2007"; and (3) ACC's application, received April 23, 2009 (Second Permit Application), and follow-up letter, received May 23, 2009, requesting a second permit to drill (PTD) the Moose Pt. Unit 41 well. i t aff" uIll-s c On March 24, 2005, the Commission issued to ACC PTD #205-038. The permit authorized ACC to reenter the plugged and abandoned Moose Pt. Unit #1 well, which was drilled under PTD #179-001. Pursuant to 20 AAC 25.055(g), in the absence of ongoing "drilling operations," as defined under AS 20 AAC 25.990(23), the permit expired on March 24, 2007. Moose Pt. Unit # I Well PTD No. 205-038 May 29, 2009 Page 2 of 5 On January 27, 2009 (January 27 Letter), pursuant to 20 AAC 25.070 and 20 AAC 25.300, the Commission asked ACC to provide the following for the Moose Pt. Unit #1 well. detailed report describing the history, present status, and plans for the well; 2. all records referenced in 20 AAC 25.070; 3. all geologic data and logs referenced in 20 AAC 25.071; and 4. an explanation detailing why any required submissions were not made. On February 18, 2009, the Commission posted (on its Web site) a list, dated February 5, 2009, of outstanding drilling permits. The list identified seven permits and, absent ongoing drilling operations, the expiration dates of those permits. The other operators with outstanding drilling permits were BP Exploration (Alaska), Inc. (3 wells), ConocoPhillips Alaska, Inc. (2 wells), and Storm Cat Energy (1 well). On February 27, 2009, ACC responded to the Commission's January 27 Letter. On April 22, 2009, the Commission received the April 22 Letter, which ACC describes as an "appeal" of Commission "actions declaring" PTD #205-038 "retroactively terminate[d]." This letter is based entirely on the list of outstanding PTDs posted on the Commission's Web site. On April 23, 2009, the Commission received ACC's Second Permit Application for another permit to reenter the Moose Pt. Unit #1 well. On May 23, 2009, ACC submitted a letter stating that the "replacement Moose Pt. #1 well drilling permit is a duplicate of the original (March 24, 2005) Moose Pt. #1 well drilling permit # 205-038." I. INFORMATION REQUEST The February 27 and April 22 Letters do not constitute an adequate response to the Commission's January 27, 2009, request for information. A. Requested Information 1. Detailed Report In response to the Commission's request for a detailed report describing the history of, present status of, and plans for the Moose Pt. Unit #1 well, the information provided to the Commission is limited to the following: Moose Pt. Unit #I Well PTD No. 205-038 May 29, 2009 Page 3 of 5 History 1. Summer 2006 — "[t]he above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed ... leaving still a portion of the 4" steel abandonment marker pipe sticking above ground." April 22 Letter 8. 2. June 13, 2007 —"actual boring in the well commenced when the upper portion of the well was drilled out to remove a 4 inch diameter metal pipe ...... Letter from James W. White to Tom Irwin, Commissioner, Alaska Department of Natural Resources (DNR) 2 (Jan. 20, 2009); see also Letter from White to Irwin 1 (Jan. 26, 2009); Memorandum from ACC 1 (Dec. 31, 2008)_ 3. Dec. 31, 2008 — a blowout preventer stack was attached to the wellhead. February 27 Letter 1. 4. Feb. 2009 — ACC began removing the drilling rig and related equipment. February 27 Letter 2. Status 1. The surface plug "remains sufficiently intact." February 27 Letter 2. 2. "ACC completely demobilizes the well this spring." February 27 Letter 2. Plans 1. If DNR "properly reinstates the ADL 389922 Lease," ACC will "continue" drilling operations in the 2009-2010 winter. (February 27 Letter 2) The Commission was able to identify this information only after spending a substantial amount of time reviewing ACC's February 27 and April 22 Letters and the attachments. This information is inadequate; the Commission needs the following: 1. for each day on which, or group of consecutive days during which, work was done at the well, a detailed description of the work that was commenced, ongoing, and completed; 2. an accurate and thorough description of the present condition of the well; and 3. a detailed timeline indicating the ongoing work at the well, work planned to be undertaken, and when ACC expects to complete each ongoing and planned activity. 2. 20 AAC 25.070 Records Moose Pt. Unit #1 Well PTD No. 205-038 May 29, 2009 Page 4 of 5 No "detailed accurate daily" records required pursuant to 20 AAC 25.070 have been provided. Nor has ACC stated that no such records exist. 3. 20 AAC 25.071 Geologic Data and Logs No logs and geologic data required pursuant to 20 AAC 25.071 (a) have been provided. Nor has ACC stated that no such data and logs exist. 4. Explanation for Not Providing Required Submissions ACC has not stated that all required submissions have been made. Nor has any explanation detailing why a required submission was not made been provided. B. Required Action Because ACC's response to the Commission's January 27, 2009, request for information was not adequate, the Commission is extending to June 30, 2009, the time for ACC to provide an accurate and thorough response. With its response, ACC needs to indicate whether any of the records required pursuant to 20 AAC 25.070, or any of the geologic data and logs required pursuant to 20 AAC 25.071, do not exist or otherwise are not available. If any such records or data and logs are not available, ACC needs to identify each one that is not available and provide an accurate and thorough explanation for why it is not available. If ACC again fails adequately to comply with the Commission's information request, the Commission will consider commencing an enforcement action pursuant to 20 AAC 25.535. However, as noted in the January 27, 2009, letter, responding to the Commission's request does not affect the Commission's right to take any action, including any enforcement action. Il. APRIL 22 LETTER ACC's April 22 Letter is described as an "appeal" of a Commission "decision" "retroactively terminat[ing]" PTD #205-038. No such decision was made. Specifically, even if the permit did expire under 20 AAC 25.005(g), the Commission did not terminate it simply by including it in a posted list of "outstanding" drilling permits, and by identifying on that list its expiration date based solely on the date it was issued. Accordingly, no Commission decision or other action regarding the Moose Pt. Unit #1 well exists to appeal. III. PERMIT APPLICATION At this time, the Commission is taking no action on ACC's application for a second Moose Pt. Unit #1 well PTD. If drilling operations commenced before March 24, 2007, and have been ongoing since then, PTD #205-038 remains valid; and granting a "duplicate" permit for the well would not be appropriate. Otherwise, PTD #205-038 expired. If that is the case, in Moose Pt. Unit #I Well PTD No. 205-038 May 29, 2009 Page 5 of 5 deciding whether to approve ACC's new PTD application for the well, the Commission will consider ACC's response to this letter, the other information ACC submitted, and any other relevant information available to the Commission. Under AS 31.05.090(d)(2), in deciding whether to approve a PTD application, the Commission considers whether the "applicant is in violation of a provision of this chapter, a regulation adopted under this chapter, or an order, stipulation, or term of a permit issued by the commission and the magnitude of such violation." Sincerely, )T��—� Daniel T. Seamount, Jr. Chair ALASKAN CRUDE CORPORATION 4614 BOHILL SAN ANTONIO, TEXAS San Antonio, Texas (210) 651-0777 Kenai, Alaska (907) 335-1829 Mobile (907) 394-1829 FAX TRANSMITTAL SHEET DATE: May 28, 2009 TO: Matt Rader Department of Natural Resources FAX NUMBER: 907-269-8938 NUMBER OF PAGES: 78 including cover page RE: Amerex ADL 389922 Moose Pt. # 1 Extension Appeal — Response to Matt Rader May 18, 2009 letter to ACC ALASKAN CRUDE CORPORATION 4614 BOHILL ST. I SAN ANTONIO, TX. 78217 1 Ph./Fax 210-651-0777 May 27, 2009 Matt Rader, Natural Resource Specialist Emailed: May 28, 2009 1:23 PM Department of Natural Resources Faxed: May 28, 2009 to 907-269-8938 550 West 7th Avenue, Suite 800 Sent Certified Mailed: May 28, 2009 Anchorage, Alaska 99501-3560 Re: Your May 18, 2009 letter titled, "Status of Operations at Moose Point #1 Well Plan of Operation LO/CI 03-019" Subject: In addressing Mr. Rader's May 18, 2009 letter concerning the "extension" of State lease ADL 389922: State of Alaska, Department of Natural Resource, unilaterally amended State lease contract, ADL 389922 firstly, by wrongfully terminating ADL 389922, December 31, 2008, the date ADL 389922 automatically extended pursuant to ADL 389922 para. 4(c)(1); and secondly the State unilaterally amended ADL 389922 para. 4(c)(1) by adding random provisions to the extension of ADL 389922 with DNR Commissioner's January 27, 2009 letter. Dear Mr. Rader: Thank you for this opportunity to clarify these issues addressed in your May 18, 2009 letter. Neither the Lessor, nor the Lessee Has Contractual Authority to Amend ADL 389922 Lease Contract Please see DNR's letter of June 26 1987 (attached) to George Trefry (Alaskan Crude Corporation) concerning a previous Appeal case involving ACC vs. DNR in which the DNR states, "The division of oil and gas (division) is fully aware that neither the division nor Alaskan Crude Corporation can unilaterally amend lease terms". Neither ACC, nor the State of Alaska has the power or authority to unilaterally amend any lease contract without the consent of all parties affected by the amendments. State of Alaska oil and gas lease contract terms remain the same for preventing unilateral amendments to this date for the State of Alaska's ADL 389922's lease contract. In response to your May 18, 2009 letter, ADL 389922 paragraph 4(c)(1) does not require the Lessee (White)or its operator, Alaskan Crude Corporation (ACC ) to submit a plan of operations to extend the lease as required by your May 18, 2009 letter. The State -drafted ADL 389922 lease agreement, agreed to by both the State of Alaska and Alaskan Crude Corporation (ACC) contains no provision requiring the working interest owner (Lessee, White) of ADL 389922 to file a monthly or annual work or drilling report 1 of 10 May 27, 2009 0f n (1 Re: DNR, Matt Rader's May 18, 2009 Letter for work performed on the lease during the primary term of the lease. However, I will attempt, as matter of common courtesy, to reply as best I can. Issues Concerning State Lease ADL 389922: It Should be Noted, the State Drafted ADL 389922 Lease Contract The State agreed in DNR's January 27, 2009 letter (attached), that ACC had performed drilling activities required to automatically extend ADL 389922, December 31, 2008, the last day of this lease's primary term (lease para. 4(c)(1)). Note: Please review ACC's video at this hyperlink documenting ACC's drilling activities on December 31, 2008 at Moose Pt. #1 well: 11ft1;I/W }_WAM1IUbe.com watch?v=ZSYAGPBveyM ADL 389922 lease paragraph 4(c)(1) simply requires, "if the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, the lease will continue in effect until 90 days after the cessation of that drilling..." The DNR, having no contractual authority to unilaterally amended ADL 389922 paragraph 4(c)(1), did attempt to unilaterally amend ADL 389922 paragraph 4(c)(1), by ordering, "the activities observed at the site on December 31, 2008, assembly of the blowout preventer (BOP), equipment staging for BOP placement, presence of a drill rig, and completion of the initial reentry of the existing well plug, can be deemed consistent with the portion of the definition that reads, '...other operations necessary and incidental the actual boring of the hole...'... However, the continued extension of the lease is contingent upon (1) continued drilling of the well; (2) completion of the well by April 27, 2009; (3) valid permits for all operation; (4) sustained production within 90 days following the cessation of drilling". ADL 389922 lease contract's paragraph 4(c)(1) does not require that the Moose Pt. # 1 well be "completed" by April 27, 2009. The ADL 389922 lease contract paragraph 4(c)(1) does not require that any well on ADL 389922 must be completed by a specific date after the lease has been automatically extended. The lease only requires that operations be conducted or continued with "reasonable diligence." ACC did not immediately invest more risk effort and risk capital in ADL 389922 lease after this ADL 389922 lease has been breached with DNR's January 2, 2009 letter terminating ADL 389922 on December 31, 2008. And furthermore, ACC did not immediately invest more risk effort and risk capital in ADL 389922 lease after this ADL 389922 lease has been breached with DNR's January 27, 2009 order proposing to unilaterally amending ADL 389922 without contractual authority requiring among other things that the Moose Pt. # 1 well be completed by April 27, 2009 and have sustained production from the well. 2 of 10 May 27, 2009 s Of 1P Re: DNR, Matt Rader's May 18, 2009 Letter The ADL389922 lease contract has no contract clause requiring that all permits must be in perfect place in order for this lease to automatically extend beyond its primary term pursuant to lease contract's paragraph 4 (c)(1). ADL 389922 lease contract's paragraph 4 (c)(1) automatically extends for 90 days after the cessation of diligent drilling operations. The DNR has no authority to place any date (i.e. April 27, 2009) for completion of ADL 389922's Moose Pt. # 1 well's work over. ACC's ADL 389922 lease contract is a generic commercial -type oil and gas lease contract between what is in essence two private parties even though, the State is one of the parties: The State of Alaska as Lessor, and James W. White, as Lessee. In matters concerning the ADL 389922 appeals of Lessor's (State of Alaska's DNR's AOGCC's or other state agency's) action, Lessee (White) or its operator (ACC) has the equal and same standing as the Lessor (State) has in the Alaska court system. If the DNR does not like its present state drafted ADL 389922 lease contract's paragraph 4(C) (1), the DNR is free to go back and redraft and amend lease paragraph 4( C)(1) and have the Lieutenant Governor approve a new amended oil gas lease contract for the next State of Alaska oil and gas lease sale. But, now, the DNR must abide by the terms of the present current State drafted ADL 389922 lease contract's paragraph 4(C)(1). The State of Alaska breeched the ADL 389922 contract paragraph 4(c)(1) when the DNR unilaterally, without contractual authority, tried to amend ADL 389922 lease contract to require, "completion of the well", "active drilling permits", and "sustained production" "by April 27, 2009" by the lessee (White). At no time has the DNR stated, prior to January 27, 2009, that ACC was in default because ACC was not diligently drilling Moose Pt. # 1 well. To the contrary, the past letter -record up to December 31, 2008 between the State (DNR and its sister agencies) and Lessee White/ operator ACC clearly evidences all the parties mentioned above believed (or stayed mute) that a valid Moose Point # 1 drilling permit was in place on December 31,2008. The DNR Commissioner's January 27, 2009 Order reinstating ADL 389922 to April 27, 2005 did not mention that ACC's Drilling Permit # 205-038-0 had been terminated by the AOGCC March 24, 2007. Furthermore, as of January 27, 2009, the date of the DNR Commissioner's Order reinstating ADL 389922, the AOGCC had not declared that ACC's Drilling Permit # 205-038-0 had been terminated March 24, 2007. No state agency had declared ACC's Drilling Permit # 205-038-0 was not a valid drilling eermit as of January 27, 2009, the date of the DNR Commissioner's Order reinstating ADL 389922 to April 27, 2009. 3 of 10 May 27, 2009 3 _p (1 q Re: DNR, Matt Rader's May 18, 2009 Letter The Eight Mile Long North Kenai Road Quagmire - Hazardous and Seasonal Access to Drilling Operations The ability to haul ordinary oil field equipment to and from Moose Pt. # 1 well ended in early March, 2009. The ability to safely continue drilling operations at Moose Pt. # 1 well is based on the ability to bring drilling rig parts to and from the drill site before the March break up. The ability to service the drilling operation ceased after early March, 2009. The time remaining from early March to April 27, 2009 is a meaningless time frame for normal drilling operations on the Moose Pt. #1 well because there is no normal way to bring in, or out, heavy trucks needed to service a normal drilling operation. Kenai borough road maps show that North Kenai Road runs from the Captain Cook Park, 8 miles to the Moose Pt. # 1 well site and on beyond to the Kenai Peninsula's Point Possession. The platted North Kenai Road is shown to run a long side the 20" Philip's Pipeline to the Phillip's LNG Plant, however, this platted North Kenai Road does not exist. After spring break up, the path for this North Kenai Road to Otter Creek is an 8 mile long quagmire with many peat -bogs, small streams, and marsh -like terrain to cross to get to the Moose Pt. # 1 well located on ADL 389922. After spring break up, and until fall freeze up roughly March thru December (each year), to travel through this 8 mile long quagmire, light four -wheeler or amphibian Argo -type vehicles with tracts are required. Obviously, these types of vehicles have extremely limited weight carrying capabilities. These light weight types of vehicles will not haul ordinary oil field drilling parts and equipment from the Captain Cook Park to ADL 389922's Moose Pt. # 1 well. It should be noted: this path through the 8 mile long quagmire did not freeze up last winter enough to support a light pickup truck until December 20, 2008. The year of 2008 was one of the rainiest and wettest years on record for the Kenai Peninsula, making travel along this path almost impossible after spring break-up. The so-called North Kenai Road was not frozen deep enough to support an eighteen -wheel truck December 31, 2008. It was not until mid -January 2009 that the so-called North Kenai Road could support a light -loaded eighteen -wheel truck and trailer to travel to ADL 389922's Moose Pt. # 1 well. However, the DNR wrongfully terminated ADL 389922 on December 31, 2008 in a letter addressed to Lessee, James W. White dated January 2, 2009 (attached); but the DNR did not reinstate ADL 389922 until the Commissioner issued his order on January 27, 2009 reinstating the lease while remaining mute about the fact that the lease was terminated by the DNR from January 1, 2009 until January 27, 2009 causing ACC to lose 28 days of prime potential winter -time drilling operations, which is almost 50% of the available winter time drilling season (January and February). 4 of 10 May 27, 2009 4q OFI { Re: DNR, Matt Rader's May 18, 2009 Letter Timeline Affecting ADL 389922 Lease Automatic Extension Pursuant to ADL 389922 Paragraph 4(c)(1) Mr. Rader, the information you requested concerning ADL 389922 has already been sent to the DNR by ACC by the below correspondences: 1. December 31, 2008 ACC filed a Memorandum, subject: Discussing the later than normal winter freeze up of the North Kenai Borough Road (attached). 2. January 15, 2009 ACC filed with the DNR a letter: "Re: Wrongful Termination of ADL 389922 (attached). 3. January 20, 2009 ACC formally appealed DNR's decision to terminated ADL 389922 with a letter (attached). 4. January 26, 2009 ACC filed a letter with the DNR titled, "Re: Potential Damages Caused by Improper Termination of ADL 389922 (attached). 5. January 27, 2009 DNR reinstated ADL 389922 in a manner not prescribed pursuant to ADL 389922 lease contract 4(c)(1) (attached). 6. January 27, 2009, AOGCC sent ACC a letter concerning Moose Pt. # 1 well (attached). 7. February 11, 2009, ACC filed a letter with the DNR titled, "RE: Request for Reconsideration -ADL 389922 Notice of Expiration of Lease Term (Corrected Document) (attached). 8. February 18, 2009, DNR denied ACC's request for reconsideration in a letter received by ACC, February 25, 2009 (attached). 9. February 27, 2009, ACC sent a file with pictures to AOGCC titled, "January 27, 2009 Letter from AOGCC's Daniel T. Seamount, Jr. Chair addressing work done at Moose Pt. # 1 well (attached). 10. March 22, 2009 ACC receives a letter from McKenzie Transportation describing a March 11, 2009 incident of a McKenzie transport truck falling through the ice while removing drilling equipment from ADL 389922's Moose Pt. # 1 well on the North Kenai Road (attached). 11. March 30, 2009, ACC files a detailed letter to DNR addressing DNB's unilateral amendments to ADL 389922 in DNR's January 27, 2009 letter (attached). 12.April 22, 2009, ACC files an official request with the Alaska Oil and Gas Conservation Commission (AOGCC), for approval to re-enter the Moose Pt. #1 well to test for gas production potential (attached). 13.April 22, 2009, files a letter with AOGCC, copied to DNR, appealing AOGCC's retroactive termination of ACC's Drilling Permit # 205-038-0 (attached). 14. May 18, 2009, ACC receives a letter from DNR titled, "Re: Status of Operations at Moose Pt. # 1 well Plan of Operation LO/Cl 03-019 (attached). 15. May 23, ACC files a letter with the AOGCC (attached) requesting the status of ACC's replacement application for ACC Drilling Permit #205-038-0 which the AOGCC retroactively terminated two years earlier, March 24, 2007 through a February 5, 2009 AOGCC website posting (http://www state ak us/admiii/ogc/drillinglOutPermits/2009/OPermits090 228.pdf). 5 of 10 May 27, 2009 5 C� r�(+ Re: DNR, Matt Rader's May 18, 2009 Letter Drilling operations have been continued with reasonable diligence. Wrongful Retroactive Termination of ACC's Drilling Permit #205-038-0 ACC discovered in April 2009, that on February 5, 2009 through the AOGCC State Website "Outstanding Drilling Permits: Expiration Dates 1/1/2007 thru 2/28/2009" (IaUi� (1��tti��slatc.alcH�i,IdIII in/W't d1111ni�1/UuU'cr:ni 2Uli0�O�'crmi_t40'nl_� t;. it) that ACC's Drilling Permit # 205-038-0 had retroactively terminated two years earlier, March 24, 2007. Please see ACC's April 22, 2009 letter (attached). The DNR, no doubt, will take the position that ACC's ADL 389922 could not automatically extend December 31, 2008, because the AOGCC took the position that Drilling Permit # 205-038-0 retroactively terminated, March 24, 2007 two years earlier. ACC takes exception to AOGCC's position that Drilling Permit # 205-038-0 retroactively terminated and believes that this retroactive termination of ACC's Drilling Permit # 205- 038-0 is erroneous and wrong. 20 AAC 05.005(g) states, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Moose Pt. # 1 well drilling operations did commence within 24 months after the AOGCC approved Drilling Permit # 205-038-0; therefore, pursuant to 20 AAC 05.005(g), Drilling Permit # 205-038-0 automatically extended. Even if the AOGCC should prevail in its assertion that the drilling permit did expire, it is not necessary to have a drilling permit in place for the lease to be automatically extended under paragraph 4. Before Moose Pt. # 1 well "normal" drilling rework operations could commence pursuant to 20 AAC 05.005, Moose Pt. # 1 well had to be restored to a condition that would allow normal rework drilling operations to take place. These restoration procedures required ACC to access and prepare the site, acquire any necessary permits, and acquire specially designed milling tools (not ordinary shelf items), to mill out 4" pipe that had been wrongfully concreted into the top of the 7" casing. Upon receipt of those tools, commencement of milling the 4" steel pipe that had been wrongfully concreted into the 7" casing began. It should be noted, while the manufacturing of the milling tools was ongoing, ACC performed hand drilling on the interior of the 4" pipe to attempt to determine the length of the depth of the concreted steel that had been wrongfully concreted into the top of the wellbore. This hand drilling was necessary to determine the texture of the concrete so that ACC could be sure their mill designs were capable of milling out the concrete and steel. Please see the pages 10-11 of ACC's April 22, 2009 letter to the DNR, and to you, Matt Rader, describing the work performed. 6 of 10 May 27, 2009 % _ 0� Re: DNR, Matt Rader's May 18, 2009 Letter This is not drilling of a new well operation. This is the rework/reentry operation of an old well that was completed in the late 1970s.p The AOGCC's regulations for drilling permits do not address rework/reentry operations for old wells that have been improperly plugged and abandoned with 4" steel pipe improperly concreted into the 7" casing and possible filled with other iron/steel and cable debris. Prior to March 24, 2009 ACC performed drilling operations preparing Moose Pt. # 1 well. These drilling operations consisted of: 1. Prior to March 24, 2007, ACC cut the surface portion of the 4" steel abandonment marker pipe above the Moose Pt. #1 well's 7" casing. 2. Prior to March 24, 2007, ACC began the process of designing milling tools to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 7" casing of ADL 389922's Moose Pt. # 1 well. 3. Prior to March 24, 2007, ACC began the process of accepting bids from, and hiring machine shops to fabricate and deliver the specially designed milling tools to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 7" casing of ADL 389922's Moose Pt. # 1 well. 4. On or about June 2007, ACC, upon the receipt of the unique milling tools, began the process of milling out the 4" steel abandonment marker pipe wrongfully concreted into the 7" casing of ADL 389922's Moose Pt. # 1 well. Drilling operations have been continued with reasonable diligence. An AOGCC drilling permit is issued for two years. If drilling operations occurs before the two year time -limit and is continuing over the two year time date, the drilling permit automatically extends until all drilling operations cease. There is no explanation in State Regulation 20 AAC 05.005 Drilling Permits that describe the length of time a drilling extends beyond its two year time frame. Pursuant to 20 AAC 25.535,"If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Because AOGCC did not send ACC written notification "by personal service or by certified mail, return receipt requested," or any other form of correspondence, informing ACC that ACC had "violated of failed to comply with a provision of AS 31.05," it is obvious that ACC was in full compliance of Drilling Permit #205-038-0 therefore Drilling Permit #205-038 never terminated. Had, at any time, ACC "violated or failed to comply with a provision of AS 31.05", particularly AS 31.05.090 Permits to Drill Wells, the AOGCC was mandated to send ACC written notification "by personal service or by certified mail, return receipt requested," pursuant to Alaska State Regulation 20 AAC 25.535. 7 of 10 May 27, 2009 q01� Tl Re: DNR, Matt Rader's May 18, 2009 Letter On April 22, 2009 ACC sent certified mail requested and submitted a drilling permit application to replace Drilling Permit #205-038-0 that had been retroactively terminated by the AOGCC's website, "Outstanding Drilling Permits' (I;t_ll i /UutPcnnits�2009�OPermits090228.pdf) February 5, 2009 back to March 24, 2007, two year earlier. Note: Regulation 20 AAC 25 provides that there is no cost for drilling permit. A new drilling permit is free. Note: If the AOGCC did not inform the DNR about ACC's March 24, 2007 retroactive termination of ACC's Drilling Permit #205-038-0, that would not be considered "as an act in good faith" on the part of the AOGCC. Note: The AOGCC did not inform ACC in any shape, form, or fashion that ACC's Drilling Permit #205-038-0 retroactively terminated March 24, 2007, and this likely cannot be considered "as an act in good faith" on the part of the AOGCC. Note: Prior to December 31, 2008, if the DNR was fully aware that the AOGCC terminated ACC's Drilling Permit # 205-038-0 March 24, 2007 while allowing ACC to spend enormous out-of-pocket capital developing ADL 389922's Moose Pt. #1 well without an active drilling permit in effect, that would not be considered "as an act in good faith" on the part of the DNR. ADL 389922 Is Still Active As of May 26, 2009 "As of: 05/11/2009" the Department of Natural Resources (DNR) "Lease Status" website (httl2://www.dog.dnrstate.al_.is/oil/1)roducts/12ublications/leaseactivity/pdf/lease activit y auadrant.pdf) shows that ADL 389922 is still "Active". However, this DNR "Lease Status" website shows an expiration date of April 27, 2009 for ADL 389922 yet being maintained in "Active" status as shown circled below in Image 1. Thirty-six (36) days to this date (May 28, 2009), the AOGCC has neither approved nor disapproved ACC's submitted (April 22, 2009) drilling permit replacement for of Drilling Permit #205-038-0 even though ADL 389922 is still in "Active" status. It should be noted that Drilling Permit 205-038-0 took only 20 days to be approved when first issued in 2005. In regards to your statement in "item 11" of your May 18, 2009 letter, ACC has no information as to what Moose Pt. # 1 well "condition" is acceptable to the AOGCC. When the AOGCC makes this information available to ACC, ACC will immediately forward this AOGCC information to you, Matt Rader or anyone else you designate. 8 of 10 May 27, 2009 g QC V Re: DNR, Matt Rader's May 18, 2009 Letter Image 1. DNR Lease Status Website Showing ADL 389922 Shown In Active Status Circled in Red Lease Slalrrs .�slrf.� a112009 dn9NgeA61'.lf7RS ,�L IIIR tact lleres Bitll Sale E0'ec4ve Upire n StaLn Unit lndefiwW Associated Nofificatmn MA. No. Acre Da new DA. Term File Lessee mdicam. SaN Tr Acres BiW Sak Effective Expiration sums Urrit Indefirafe Assabled Na0ficadon ADL MTR No. No Acre Date Date Drte Term File Lessee Mdicator 50355 SOOQNCO9'4 M 2551 2.07 12/111197 03MI11273 3__BI1983 CLOSED DERNIFE SALE 20 TERM 50356 SWBNOD9YY 26 1286 9.87 12/11/197 0MV1973 =&1978 CLOSED DEFINITE SALE26 TERM 59357 SCO9N00PW M 683 12.6600 12111N97 03MI11273 02/MI1978 CLOSED DEFINITE SALE 20 TERM 50358 SOtrdNODOW 20 900 126E 12NU197 03A1111973 0220/1978 CLOSED DEFINITE SALE IRM 50359 SOD9N00M M 1280 2.07 12JI11197 0=11I973 0212&'1978 CLOSED DEFINITE SALE TERM 50360 SDWN009W M 1276 1.22 IVIIII07 OWOVIDT3 OI/M11078 CLOSED DEFINITE SALE26 TERM 50301 SOO9N009W M 1280 10.82 17/111197 DVOU1973 02/28f1Q78 CLOSED DEFINITE SALE20 TERM 59302 S009NDO9W M 1280 4.M 121111197 0310111QT3 021M1l978 CLOSED DEFINITE SPLEM TERM 59M $W91,1000'N M Oe t.= 1VII11W M111073 0 M1970 CLOSED DEFINITE SALEM TERM 05823 SSOOPN009'W 29 We 3.92 10r231197 0110111975 12/3111984 CLOSED DEFINITE SALE 20 TERM 320101 MNDOOW 33 2880 10 0131198 0710111991 WN11088 CLOSED DEFINITE BP AMERICA TERM PROOUCTION COMPANY 305a44 S NOD9W 46A 3M0 67 0226119e 0&0111985 04130'19P2 CLOSED DEFINITE UNION TEXAS TERM PETROLEUM ALASFAC 374018 SMNMW 67A 2880 42 OUM90 pM0 AN1 033111998 TERMINATED DEFINITE UNION TEXAS TERM PETROLEUM ALASIWC 37019 SD9NMRW 67A 4459 15 0112&190 041D1f1991 0M3111998 TERMINATED DEFINITE UNION S TERM PETROLEUM ALASNAC 374020 SMNOODW 07A 4722 27 Dl2&1QD 0410111Q01 M31119GS TERMINATED DEPNRE UNION TEXAS TERM PETROLEUM ALASPAC 384335 3000 UNION TEXAS TERM _ ALAS C SDDBNCC9W C2MJ <B00 501 059&200 0 27P(109 04'27"gW ACTIVE DEFINf7- WNRE TERM 390369 SD09N009W C120E13 IT92 5 DEFINITE TERM BARR 2%83 S N010E 13 2533 1.53 1241&IM DYDU198r 02/2811975 TERMINATED DEFINITE SALE 13 TERM 18724 SDDQNOIOW Q 5090 50.9404 OV111196 0WD111902 O&131r1907 CLOSED DEFINITE SALE9 TERM 18707 SWPN010W 9 510E 1.15 07/111190 101001902 OD130f100T RELMOUISNED DEFINITE SALE TERM Lease Aed+ilt5 o"anged 611fIR5 P., 20i ofs- 9 of 10 May 27, 2009 9 0-� r n T Re: DNR, Matt Rader's May 18, 2009 Letter Please consider the fact that: 1. ACC has been damaged by State actions for the wrongful termination of ADL 389922 by the DNR, December 31, 2008; and 2. ACC has been damaged by the DNR Commissioner's Order reinstating ADL 389922 from January 27, 2009 to April 27, 2009. In conclusion, drilling operations have been continued with reasonable diligence. Kindest Regards, Alaskan Crude Corporation, Operator of Moose Pt. # 1 drilling operation y: es W. White, P s' en Alaskan Crude Corporation A ames W. White, Lessee Office: 4614 Bohill St. San Antonio, TX 78217 Phone: 210-651-0777 (office) 907-394-1829 (cell) CC: DNR Director, Kevin Banks (kevin banks@alaska.gov); DNR Commissioner, Thomas Irwin (tom irwin(@alaska.gov); James. A. White (iimwhite(o)acsalaska.net); AOGCC Commissioner, Daniel Seamount, Jr. (dan seamount@alaska.gov); Thomas Maunder (tom maunder@alaska.gov). 10 of 10 May 27, 2009 V oC Re: DNR, Matt Rader's May 18, 2009 Letter MAXIM UM wMMI l 10H UM f. I fill LVkvM, n 78N7 Date: May 23, 2009 Alaska Oil and Gas Conservation Commission �n'a° �g"� Mekq OOq 333 W. 7th Ave., Ste.100 vl` Anchorage, Alaska 99501 Re: Based on the fact that the State of Alaska DNR records still reflect that Alaskan Crude Corporation's (ACC) State ADL 389922 Lease is still in Active status as of May 23, 2009, ACC is requesting a response to ACC's drilling application submitted to the AOGCC April 22, 2009 to replace the Drilling Permit #205-038-0 to rework ADL 389922 Moose PL # 1 well retroactively announced terminated on the AOGCCs'Outstanding Drilling Permits" website (httu //wwwstateakus/admin�gc/drilling/OutPermits/2009/OPennits09 022 S. )do by the AOGCC February 5, 2009. Subject: The AOGCC posted a public Webpage (htto //vnvwstate.ak auc/drilling/OutPermits/2009/oPermits09 022Rpdo notice titled "Outstanding Drilling Permits:1/1/2007 thru 2/28/2009" on February 05, 2009 retroactively terminating Alaskan Crude Corporation's Drilling Permit # 205-038-0 two years earlier, March 24, 2007. The new replacement ADL 389922's Moose PL # 1 well drilling application was properly and duly submitted to the AOGCC for approval, April 22, 2009; but has not yet been approved or disapproved by the AOGCC. The new replacement Moose Pt. # 1 well drilling application has not been approved or disapproved to this date, May 23, 2009. The original Moose PL # 1 well Drilling Permit #205-038-0 was submitted on or about March 04, 2005 and subsequently approved about 20 days after the Moose Pt. # 1 well drilling application's submittal, March 24, 2005. The (April 22, 2009) replacement Moose Pt. # 1 well drilling permit is a duplicate of the original (March 24, 2005) Moose Pt. # 1 well drilling permit # 205-038-0. Dear Commissioners: Alaskan Crude Corporation's (ACC) new replacement Moose PL # 1 well drilling application to rework ADL 389922's Moose PL # 1 well has been pending before the Alaskan Oil and Gas Conservation Commission (AOGCC) for approval for more than 31 days since it was first submitted to the AOGCC, April 22, 2009, for approval. The new replacement drilling application to rework ADL 389922's Moose PL # 1 well is almost a mirror image of the 1 Of33 0` (] f i MASH t tA)eN1R M 1014 UM ff. I UN l>iWn, i. 707 original drilling application for Drilling Permit #205-038-0 which was approved March 24, 2005,20 days after drilling permit # 205-038-0s original submittal date. As of 05/11/2009 (May 11, 2009) the Department of Natural Resources (DNR) "Lease Status"Website (litti2://www.do-.dnr.,state.ak.us/oil/`12roducts/publications/leaseactivity/pdf/lease activit uadrant, �dt) shows that ADL 389922 is still an Active lease in Active status. However, the DNR "Lease Status"Website shows an expiration date of April 27, 2009 for ADL 389922 yet being maintained in Active status thru May 11, 2009 as shown circled below in Image 1. ADL 389922 lease is a current lease as attested on the DNWs "Lease Status" Webpage, May 11, 2009. On April 22, 2009, ACC petitioned the AOGCC to approve or disapprove the replacement ADL 389922 Moose Pt # 1 well drilling application submitted, April 22, 2009. On April 22, 2009 Alaskan Crude Corporation submitted, by certified mail, a replacement drilling permit for AOGCC's approval to rework ADL 389922s Moose Pt. # 1 well. On April 22, 2009, Alaskan Crude Corporation submitted a letter appealing the March 24, 2007 retroactive termination of ACC's Drilling Permit # 205-038-0 posted on the AOGCC's "Outstanding Drilling Permits" Website (http i //www.state.ak.us /admin/agc /drilling/ Qutftrmi ts /2009 JQPermits09022 Undf). hwV L DNR Lease Status Website ('tZtt (/www.do dnrstate ak.us/oi]/}roducWl)ublicatlons Zicaseactivityfpdf/lease activity duadraI L.p l Showing ADL 389922 Shown In Active Status Circled in Red Lease Sfahis th.MM 8► TM llenv �C' Sak 5Frb" Erytr�bon S�ID6 VM Inphih Ai,RI,bE NW@,Yen 1tt YIR M,. M,. Mn Offi Offi Wu Tmn v. le.w YMCM VM 97C®6M 78 33 1227 WIN RU10 17 1201 rER A^ -�`i, •ii:ur n,ip ��n i�ic �i , ,w nrn: NW SWKW.Y 'm 2`..873 SWIM 8 16724 5xWO 9 19787 St)L'�4, Ck 9 Lew.40* waagedbt.= 2of3 ,aoF1�q 20 15311171196 C391IM VITI975 TE78884AT-O 5% @.W oa11996 stuiK C8e3u,i87 COED 51oe 175 9111119E 10TIM d'i S99!TV Ii LNWSe TEN PEML-'1NA4WC XRATE TERM 7EPN7fE TEN 7ER47E TM XRM TEW �m TM )OM TM IF4MTET6t4 PEraolEutA4AskAc suw 84E13 SALE 9 W9 ?Wt0'e "1. UMW a tWMIW 1044 >W Z i i111i NRVW IL 707 To this date, thirty-one (31) days later (May 23, 2009), the AOGCC has not acted to Move or i rove ACCs replacement Moose Pt # 1 well Drilling Permit #205-038-0 even though ADL 389922 is still in active status as attested to DNR's Zeast Status' Website (httu ilwww dog.dnrsia __ Tiitdactivit y nuadrant. df). It should be carefully noted that the original Moose Pt # 1 well Drilling Permit 205-038-0 took only 20 days after its original submittal to be approved, March 24, 2005. Please advise ACC about AOGCCs decision regarding the status of ACCs replacement Moose Pt. #1 well drilling permit submitted April 22, 2009. Kind Regards, * O ^ A N ' Li.a+vim m - anager Alaskan C de Corporation 4614 Bohill St. San Antonio, TX 78217 CC. Alaska Oil and Gas Conservation Commission, Daniel T. Seamount, Jr. Alaska Oil and Gas Conservation Commission, Tom Maunder Department of Natural Resources, Commissioner, Thomas Irwin Department of Natural Resources, Director, Kevin Banks Department of Natural Resources, Specialist, Matt Rader 3of3 13 ()e IFT V VE OFU M DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL &GAS May 18, 2009 Alaskan Crude Corporation Attn: James W. White 4614 Bohill Street San Antonio, Texas 78217 Re: Status of Operations at Moose Point # 1 Well Plan of Operations LO/C103-019 Dear Mr. White: SARAH PAUN, GOVERNOR 550 WEST 7'" AVENUE, SURE 800 ANCHORAGE, ALASM 99501-3560 PHONE: (907) 269-8900 FAX' (907) 269-8938 This letter sets forth my bestjudgment as to the facts regarding your physical progress at Moose Point #1 Well. Information that would assist administration of the lease was requested in a letter from Junne Slemons on February 18, 2009, and in my letter of April 7, 2009 that requested a written response. The purpose of these letters was to establish the facts of physical activity on the lease so that the lease and plan of operations can be administered with respect to the extension. Since you didn't respond, these are the facts of physical activity as they appear to me. Please take this opportunity to correct any errors 1 may make. 1. Between December 2005 and February 2006 a drill rig and equipment was mobilized to the site 2. Between April and September 2006 the site was cleared and graded. 3. On June 13, 2007 boring commenced to reach the bottom hole by removing the concrete and steel pipe surface marker to 6 feet below grade. 4. On December 23, 2008 you informed mein a telephone call that you were resuming drilling and would continue drilling through the December 31, 2008 lease expiration date and that this would extend the lease. S. On December 31, 1 was present at the drill site and observed beat begin applied to a BOP in a box adjacent to the well head; snow had been recently plowed from the drill site; the drill rig was not running, the mast was not raised, the drill bit was not turning in the hole, and the drill rig and systems did not appear to have been operated for some time. 6. During the night of December 31, 2009 the BOP stack was being assembled on the wellhead using a truck mounted boom. T In our telephone conversation on or about January ITh, I understood that Aurora was testing the BOP equipment, and that you had other BOP equipment that could be manually operated, and that you would be working with Tom Maunder of the AGOCC to get it approved. 8. On January 21, 2009 Brian Havelock and Shaun Peterson of the DO&G visited the site and observed activity that could be associated with drilling, but did not observe the drill bit actually boring in the well or actual operation of the drill rig and systems in the act of drilling, "Develop, Conserve, and Enhance Natural Resources jor Present and Future Alaskans. " I c� 1 1 Division of Oil & Gas 5/1RAW Page 2 of 2 nor did they appear to have been recently operated for drilling. The BGP was attached to the wellhead. The required accumulator was not operationally configured. 9. In telephone conversations you conveyed that during the approximate period from January 13, 2009 to January 21, 2009 the access road could not be used due to warn weather. 10.On or about February 12, 2009 in a call from Houston, you informed me that equipment needed for the well was loaded and shipped out of Houston on an 18 wheeler and would be delivered in Alaska in about 10 days, that the drill rig was capable of running, and that an accumulator for the BOP was being shipped to the site. 11. In a telephone conversation on or about April 13, 2009, you informed me that the drill rig was no longer on the Moose Point #1 drill site and was in Kenai. You also stated that the well marker was not on the well, but that the well was being left in a condition acceptable to AOGCC. 12. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well occurred between the end of the drilling commenced in June 13, 2007, and the time the lease was set to expire on December 31, 2009. 13. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the hole occurred after December 31, 2009, or that AOGCC has approved your BOP equipment for nse. 14. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well was occurring on December 31, 2008, or on January 21, 2009, or has commenced or continued since the tease extension decision of January 27. 7-009. 15. According to the AOGCC, your permit to drill (#205-038-0) expired on March 24, 2007. On or about April 22, 2009 you appealed that determination to the AOGCC. If I am wrong about these details at the Moose Point #1 Well, please provide some documentation about actual boring, testing, the status of the permits and approvals, and progress in the well. If boring did occur, this is information in your possession that you should be willing to provide since it is in our mutual interest that we reach the correct conclusions. If you do not provide additional written information by June 1, 2009 that is contrary to my understanding of the facts as presented above, then my understanding as presented above may be considered in future decisions affecting administration of the lease and plan of operations. If you have any questions please give me a call in Anchorage at 907-269-8776 or email matLradcr@alaska.gov. Sincerely, '� J IC. Y Matt Rader Natural Resource Specialist Ec. Jonne Slemons i imwhitefalacsalaska.net iimwhite asatx.rr.com j imwh ite�aopl�aoital.com 15 c� '�q 4614 Bohdl Street San Arrtorrio, 7X 78217 Phone/Faoc: (210)651-0777 jirrwrhite@sabc.rr.00m Date: April 22, 2009 To: AOGCC 333 W 7" Ave., Anchorage, Alaska 9950; From: Jim White, Alaskan Crude Corp. To: AOGCC Attention AOGCC, Thank you. Regards Jim White President, Alaskan Crude Corp. (Q C- '-- To: AOGCC Date: April 22, 2009 From: aim White Alaska Crude Corporation Subject: Moose Point #1 Retry API #50433-20312.00 A r\..rn.,al is r lee tM to rerntel the Morse Point #1 well to test for eas production potential. We anticipate being preparation work pending lieezmg weather conditions. Below please find a summary of the existing well and pW mW operations: Moose Point # I is located 2512 feet frorn the north line (FNL) and 2124 fed from the east line (FEL) of Section 14, T9N, R9W, Seward Meridian_ The well site is located on private property. The well's ground elevation is 163 feet. It is outside of any Corps of E*hw redesignated wetland area Moose Point # 1 was drilled as a straight hole to a TD of 10,058' rod in early 1978. Intervals were tested, the well was suspended for apetiod of tone and ultura teiy 51as for abandonmet m %larch 1982. Please refer to the attached wellbore schexua's:_ In summary, the well has 333' of 20" conductor pipe, 2516' of 13-3/8" surface casing and 9032' of 7" casing. Openhole from the 7" shoe to drilled TD of 10,058' is filled with cent. Four plugs/retainers exist in the 7" and will be nod from the surface - 15.71 55'-140', 4907% 4985' and 8283'-8696' end. "Ile sz~rface ping -IF? is a cooserPPlug (sand and gravel)_ Theit" pipe abandonment marker was set m the concrft surface to 15'7 concrete plug. The metal portion of the 4" marker pipe concreted in the surface plug to 151 has been milled and bored out. There are perforations at 5045'-5075' dot have been cement squeezed, and open perfs at 8666'- 8696', below the lower ruiner. 114ese lower set of open perfota0ions will be the initial interval .bct_ for t--du& wa havc no r000rdd that md;calos Ow latgth of #fro depth of the concrete surface plug. The concrete surface plug in the casing could be more or less than 15' in the length of its depth. The well has about 55' of diesel above the upper cement plug in the i casing. This diesel will be recovered and recycled as fuel for on-sde heating equipment. Expected Pressures: Per DST #1 when this well was unnaRy dolled, at mid perf depth of 868)' MD, 8659' TVD (22' RKB), reservoir pressure was reported to be 4065 psi or 0.47 psifft gradient 9.Oppg EMW. Using a O.IpsiH1 gas graft would result in a nmxbnum anticipated surface pressure(MASP) of approoumaaety 3200 ps- -. \ >\ \ 1 . bI, , 11.' -IIIIJI r :.;.' ,Jf n\ 4J11\ .l flr- �fl 1: \ 11 � i�.l ./.:11._i \\ •YI .1 � \ 1 � . 1'I l 1 I Install a 13-518" 3000 psi x 7-1116" 5000 psi tubing !read with seals has been insMUed and pressure tested. 4. Nipple nr 7-1(16" 5000 psi WP BME COnMStM9 of pips ;son, bbW Mass all armular preventer, a flow cross with 2" eTjq ma t and a 2" 5000 psi choke manifold (Exhibit A-1) install test plug. Test BOPE to 3500 psi_ Test annu to 2500 psi_ Pan test phig- 5. PU work string drill out surface phag — 15', R1H to top of second plug at —55'. Circulate out and recover diesel f ecze protect for reuse. 6. Min out the fast three cxaonnt phrgs/retamers with a 6" bit, circulating a minimum of 9.0 ppg NaCl/KCI brine and gel sweeps. Circulatrheam well down to 8283', the top of the lower cement plug. Pressure test 7" casing to 500 psi to determine competency of squeeze per & at 5045'-5075' and 7. mill out fi , . Cave,CORefft Phlewtanwru witt r..e 0 . of the cement plugL 8. Run 2-7/8" 6.4# L-80 tubing and packer with the intent of testing the open perforations at 8666'-8696'. Install tubing hanger and ttst Pump diesel down timer annulus for freeze protect. Set retrievable production packer. 9. Install two-way check. ND BOPS, NU tree and pressure test Pull TWC. 10. RU testing equipment and test interval at 8666'48696- by swabbing hqm& from tubing. 1I. If the 8695'-8666' interval does not prove up Sundry Appheations will be submitted for approval to move the packer and test athur mterval:s in the well bore for gas production. 12. If commercial production of hydrocarbons is established at this well site, additional plans for development and surface hauAing of production will be submitted. Should the well be plugged and abate, p1uggM and abandanmeet of the wen bore will be m accordance with regulation established by the State of Alaska. Ground Level 18r KB Elevation IW I I � rr.yv 3R��V 133-r CaMM Cemeftd to u Mp Surface I H TC%2Wa3MN-W " gw-p Total Depth H 10.05S, 19 0� q - del S' I ft r� of ti rn ete Mug CeRart Mug 55 —Iw 333'_H 20' HAD Conductor CanaiRedto swface Cened Mug 490T-49W aytti —� Cement Retainer 50451-5075' Perforatiom (SW —g5 sr) PeriwRvo.e Cement Pkig vim--gsw 9569, CemaKRetd— Wildcat WELL: Moose Point#1 Permit No. APT No. 50-133-20312-00 Sec 14. T9N.Ft9W 2124 FEL 2511.5 FNL ALASKAN CRUDE CORPORA nON 4614 BOWN Sheet San Antonio, TX 78217 Phone/Fax: (210)651-0777 pmwhite@sabr-rr.com Date: April 22, 2009 To: AOGCC 333 W 7 h Ave., Anchorage, Alaska 99501 From: Jim White, Alaskan Crude Corp. To: AOGCC Attention AOGCG Alaskan Crude request a variance to use a 2' Sk choke manilbld with the 7", 5k BOP stack instead of a 3' Sk choke rthahtihokl for the re-entry of the Moose Pant *1 well. Thank you. Regards . /By: Jim White i President, Alaskan Crude Corp. p-V op 1 T i N W W GJ.VnlJ 1 m Typed W06C ib_ Ciere it Wes C� E J � 14 Spac7y fiileL is plvposed for Gas Ho-tes ❑ Dt0 ❑ Rae" ❑ Vrd§W phis Test ❑ c''emice estop newt GM caaad t" ❑ Oi��7�..�n Q ❑ Re-entry © WhMp%Zo.e Buntr Blartet J � v" 11. We0 Name and Nm bw Z. - BaNm S� We MODD %loose pcut#i (LM tom)) rdp- Alaskan Cnde t.a P"*OMW p 12 FwWfilool(s): � 3. AddneSGZ 4614 BotIB, San AnWdO. TX 78217-1413 1D: 10,059 TVD, 10 051r Un1aiown 48. Location d We! (Gmernrrlerdat Setlial} - Propdty Desonalliam- Surface_ 2511-6 FNL, 212 r FEt, SEC 14. TQK R9W. Sit- ADL 389922 Top of Productive HOr¢arc Lard Use Pam 13- Appru0rmle Spud Dd&' MA tiftld105 Sam Acm in Pmveft 14 Deim m to Nearest Total Death: - 470Dacams Pmpw apprOX 135 4b. Location of Well (State Base PWM c� - HAD 27): 10MB Ebafm abase MSL- feet /S_ Distance to Nearest Well Open Surface: a 2124' FEL y- 25MT FIML Zo t® Ebwaso . above GL- 163 feet to Same Pool: WA feel 17_fiAmi aAreteipddd PY m Vsne(we 20 AAC 25A35) 16-Denafedw�: malnRdepIk Wf1 Madmen Foie AnlgW WA 4W5 paw sataoe< 3M - m Top - � Obit - BoNam Cerrlart y cl- or saolm 18. Casing Program Hole t%' Weigh Grade ts@Bt MD TVD %® TVD i IB �) - -19� -- _ p 0 Sit 333 Sekvasi RmD 781 = Coss G. �„ 94i F7-40 0 25tfT 1710 sl[ Class G. 171? 13 3B 72.86 L-80 O aD37 am OV Taol T B 1? T 32a?3i Kam,"90 Ra-6iyE)peraeun� PRESEwr WELL Cold (Toheoo fediLbep1h 19. Total Dam MD QW Totat Dope. TVD W P%1ga idreafraet £Hest %1®( t�fed- TW (ux .bade (rne�aloed): MD -. Sme cemeRtf MD TVD g casinTat mr orlrml 0-33370-50' 0-2516 0-t5'2 t7t0mr 0-251f3' Slpfam IrgenneEliate 04903Z 3r'tb; T-6Br taros: 0-M37 Pin, 8203 M PerforAm Deem TVD j 81i80a (OPEN) WPkWed Perforation Deptlh tvlD W- Z6. Aaatla[ genery F-� BOP Skdc r f Drieg j�.�'qj Program Taaav- Daplh Plot Stoftm Hurd Armbim LJ 2GAAC 25.0501 *"ffa ft ® pf Plat Q S1a43dr SmbW Report D11Ham FW P� Dow 21. VmtW ApwmaL Canrvrn ssion Oam ni 2Z Ihmwcwwmmthemtargdf®is V.0arld cum_— Pfww Name immw.vwhiq Twe President Sgrl ire j Pismo 2UMM-GM Dds -M Cameos 1iseOrt' Aonur l off far ar NIM Nnmmer CondtlonsofapproM: Irbo ischedact, !Umynotbelmdfp�oe lfO,ta#.or PFG& OuBRmdmAm+e, gash .or oao amstmles:Q SmtgAesrel(=t Yes[] No[] Mad log read: Yes ❑ NO❑ Odw- lip meaaues YesQ No[] Drectimad my Feld Yes ❑ No ❑ APPROVED BY THE COMMISSION ��- , COMMISSIONER in ()il�Ia Fern, c 4j L F ' To40MI RM oat WA UMM^::,"Tid f," p%G III d,3 oP ` �- April 22, 2009 Tn- Alaska Oil and Gas Conservation Commission 333 W. 7m Avenue Suite 100 Anchorage, Alaska 99501-3539 Attn: Thomas E. Irwin, Kevin Banks, Mr. Daniel T. Seamount, Jr. Faxed April 22, 2009 to Daniel T. Seamount, Jr at (907) 276-7542 Faxed April 22, 2009 to Commissioner, Thomas E. Irwin at (907) 269-8918 Faxed April 22, 2009 to DNR-DOG Director, Kevin Banks at (907) 269-8938 This letter is appealing the Alaska Oil and Gas Conservation Commission's (AOGCC) actions declaring on February 5, 2009 that Moose Pt #1 Well's Drilling Permit # 205-038-0 had terminated two years earlier on March 24, 2007. The AOGCC declared Moose Pt #1 Well's Drilling Permit # 205-038-0 had ceased to exist after March 24, 2007. The AOGCC only published an AOGCC website (h /w mL-iMte.akus/admin/oec/homeoec shtml) February 5, 2009 for the very first and only time declaring that Moose Pt #1 Well's Drilling Permit # 205-038-0 had expired March 24, 2007. The drilling operations milling out required to mill the 4" steel pipe concreted into Moose Pt #1 Well's 7" casing automatically extended the Drilling Permit # 205-038-0. Therefore, 3! ?or,- 11R11 nntnmatirally PYtnnrlM hPvnnd March 24, 70()7; va uuug a u uu� n w••� `- ""J "••" • •`-- Please note: To rework Moose Pt # Well with a 4" steel pipe concreted into the 7" casing may not seem like much of a "drilling operation" to the inexurrienced however, to the @xpg^.g^.C• � da, :Iler ; taP jnb anrf reworking MnncP Pt i!1 WPII'c racing with a rnnrretrcl in 4" steel pipe sticking out the 7" casing is in fact a maior `drilling operation." Oftentimes the original operator who originally drilled, then plugged and abandoned the well deliberately leaves iron pipe and other metal debris (chain, etc.) in the casing to prevent the well from ever being reentered or reworked. That original operator generally is not interested in leaving his well in a condition where a new operator can come in and easily have a cheap well. 20 AAC 05 states the regulations required to obtain and maintain a drilling permit 20 AAC 05.005(g) states a drilling permit will expire if "drilling operations" are not commenced 24 1ot20 months after the approval of the drilling permit 20 AAC 25.990(23) defines "drilling operations' as having commenced when drilling below the conductor pipe. In reworking an existing well that has been drilled, cased from the surface down the TD depth and plugged and abandoned a conductor pipe does not exist inside the casing. The definition 20 AAC 25.990(23) of 'drilling operations' has no specific mechanism to trip "drilling operations" when reworking the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned. However, drilling was underway at the Moose Pt #1 Well prior to expiration of the drilling permit The definition "drilling operations' as defined in AACj25.990(23) needs to be revised and re -promulgated to clearly trip 20 AAC 25.990(23) `drilling operations" into affect when reentering and reworking a well that has already been drilled, properly cased, plugged and abandoned and has no conductor pipe existing inside the casing. In the mean time, the AOGCC needs to exercise its agency discretion and acknowledge that drilling by ACC did commence prior to expiration of the drilling permit AOGCC DID NOT NOTIFY JAMES W. WHITE IN WRITING ON OR BEFORE FEBRARY 5, 2009 PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205-038-0 MARCH 24, 2007 SOME TWO YEARS EARLIER 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05... the commission will send the person g written notification by personal service or by certified mail, return receipt requested." AOGCC did not send "a written notification by personal service or by certified mail, return receipt requested telling ACC Drilling Permit # 205-038-0 was in non-compliance of 20 AAC 25. ;05(g). AOGCC chose notta tell ACC that Grilling Permit # 205-038-0 may have terminated after the AOGCC had declared February 5, 2009 that the drilling permit retroactively expired two years earlier. ACC could find no evidence that this information had been posted elsewhere previous to 2009. It clearly was not sent "certified mail" to ACC. In addition, there is no evidence that AOGCC considered the operations at Moose Pt #1 Well not to be drilling operations. In fact the record favors the premise that the AOGCC did consider the operations to be drilling operations. ACC has been diligently conducting operations at Mosse PL # 1 well for the past two years and has kept the AOGCC informed of these operations. ACC kept the AOGCC informed of ACC's progress and lack of markets for Moose Pt. #1 Well's gas. Had AOGCC informed ACC that AOGCC is terminating Drilling Permit # 205-038-0, March 24, 2007 while ADL 389922 still had two years remaining in its primary term, ACC would 2 of 20 a5� have had ample time to file and get a new drilling permit in view of the fact that it only took less than twenty (20) days to get the original drilling permit filed and approved in 2005. Image 1: AOGCC Website showing the "NEW link.' Outstanding Drilling Permits" circled in red. Home I Databases I Orders I Staff I Calendar 1 Contact Js I : tt•i l'.�•4 1 )i: �l.il i[{I�I 0 ��.\4 iiiHl{Illt 41(1714 t 1 3333�911 - ..�.,,tvaiioll Col,1ilil1-i-sioll find Headlines Highlights Quick Links _,,,y,/ Frc,csea fteY G$any?s .alti cn9se ',.-.eAna Of hltelGSt i iJlssier. 9ia^ & F:iettr, r_:antaUa'ar In3i :Goat :'.... Gas Fac!s ImCF—ation.L: aiia_!e Regulations State Calendars ' Jain Our Mailing Lief Ca•'-'entsF a!iun Cats :as-- 'ssn:l Lists Yrv_ducttan &*tistics C 41!i^, Sts` stiCs -nrnisi €td_ct4s Release Dates & E:Sensicas Fun..i.Cna GYP: C?'e5c3 Fer-•3s to rnl. Lldestr. 3umn ze Eu1!etirs Gas Fos i^n Ya:ers & 3tudiea Qrde:s & Cecisicns CZB%6:res_:. a:3P_: . ZC--e->'z-. t-il d Gas Lints EF�a i:1- F-" ` trGera?ate 0ii -eat Gm-u ... '.ater F�otac£ian ..au„cif taInEE31a Llg "i .) ef, t _a Bureau of Land ail Fie!: Ter —a COE Fas<_il Energ The AOGCC Website (http://www.state.akus/admin/ogc/drilling/OutPermits/2009/OPermitsO9O228.pdf ) (Image2), "Outstanding Drilling Permits," is shown dated February 05, 2009 and circled in red at the bottom of the page. This publication advertises that ACCs Drilling Permit # 205- 038-0 had arbitrarily been terminated two years earlier, March 24, 2007 by the AOGCC. AOGCC made no attempt to send ACC, pursuant to 20 AAC 25.535, "a written notification by personal service or by certified mail, return receipt requested" declaring February 05, 2009 the AOGCC retroactively terminated ACCs Drilling Permit # 205-03". This Website, "Outstanding Drilling Permits," did not provide or detail White of his rights to appeal the Website notice that Drilling Permit # 205-038-0 had been retroactively terminated two years earlier with this Website image (Image 2). 3 of 20 a to 0 F qT This action by the AOGCC occurred while ACC had operations actively underway at the wellsite. Image 2: Screen -print of "Outstanding Permits: Expiration Dates 11112007 Thru 2/28/2008"PDF Website showing date Thursday, February 2, 2009 circled in red. �4 sttandi g Driyin_gyee n Expiration Dates 1/1/2007 tMu 2/28/2009 Baee N�l Openeer \Tel3a APIN�Wber N..& Ap Io d E-0a ALASYLAN CRUDE CO NOOSE PT L--\Ti I Rc< -0-133.20312.90-00 20S 038-0 3 24. 2005 3 24 200 —E\ERGS STORM COAT �O?Cl2TeRVIIiL`cf£IL---'ifl.—I—_.---:d�3i9�cff±>--OO7J0—TO6'A07�S— ] _5 �006 1 25 2008 BP EXPLORATION (A PRLDHOE MY UNIT S-IOC i0-029-21 i6_'-03-00 206-01" 1312006 131200S CONOCOPHII.LIPS AL 6UPARMM UNIT 2D05LI 50-029-21157-60-00 206.1740 12-20�2006 1220200S CONOCOPHILLIPSAL 1.-UPARM RIV UNIT 2D-051-1-01 50-029-21157-61- _'06-1-5-0 110.2007 1'102009 BP EXPLORATION (A PRUDHOE BAY UNIT 01-09B 50-029-2029"Z-00 207-019-0 2 714007 2 14 2000 BP EXPLORATION (A PRUDHOE BAY UN ORDI V201A 50-029-230V-01-00 207-024-0 2.2I 2007 221:2009 T4ndm. Fe. 05.?009 _J Page l ofI ILLgPev._.OJ.� Q..�D.mn. Seta lTnmd]saI]r,. MAIN ISSUES Below are the main issues concerning Drilling Permit # 205-038-0: 1. 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05... the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Clearly, the AOGCC declared that ACC had not complied with the "drilling operation" regulations pursuant to 20 AAC 25.005(g) required to automatically extend the drilling permit beyond two years. Clearly, it is very important that ACC needs know if ACC may be in non-compliance. Cieariy, it is very important that ACC know if ACC's drilling permit may have been terminated. The AOGCC's failure to inform ACC of any possible non-compliance or the possible termination of ACC's Drilling Permit # 205-038-0 was an arbitrary and capricious decision and a violation of 20 AAC 25.535 and their own mandated discretion of the law: a. 20 AAC 25.535 reads: (a) If the commission, as the result of an investigation or otherwise, considers that a person may have violated or failed to 4of20 Ck I UT" 1 comply with a provision ofAS 31.05, this chapter, or a commission order, permit, or other approval, the commission will, in its discretion, take enforcement action under this section against the person. (b)If the commission proposes to take enforcement action under this section against a person, the commission will send the person a written noaketion ¢personal service or by certified mail return receip=uested The commission's written notification to the person will (I) state the nature of the apparent violation or noncompliance, (2) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (3) state the action that the commission proposes to take under (e) of this section; and (4) inform the person of the person's rights and liabilities under (c) - (e) of this section. 2. The AOGCC made no effort in phone conversations or written correspondence between 2007 and 2009 to inform ACC that Drilling Permit # 205-038-0 may have terminated on March 24, 2007. Correspondence between ACC and AOGCC includes volumes of emails, certified letters, and faxes concerning ADL 389922 and Moose Pt. #1 Well (see Exhibit 1). The AOGCC sat on this arbitrary and capricious decision for two years, not advising ACC in any way, shape or form that Dillirig Permit # 205- 038-0 may have terminated in 2007. 3. James W. White spent his own risk capitol, not investor money, to develop the Moose Pt #1 Well. Believing Drilling Permit # 205-038-0 was actively in place, ACC continued to spend $1,000,000 (1 million dollars) developing Moose Pt #1 Well and the lease property over the 2007-2009 time period. Believing Drilling Permit # 205- 038-0 was actively in place, ACC kept ACC's drilling rig at the Moose Pt. #1 Well through 2009 paying $52,000 in ADL Lease 389922 rental fees alone. Believing Drilling Permit If 205-038-0 was in place ACC spent hundreds -of -thousands of dollars at Moose Pt #1 Well in the reentering process of reworking Moose Pt #1 Well. 4. Moose Pt #1 Well was not properly Plugged and abandoned when ACC acquired ADL 389922 and Drilling Permit # 205-038-0 was approved. Reworking operations were continuing when ACC began the process of safely milling out the 4" steel abandonment marker pipe concreted into the 13-3/8 3K wellhead. No agency regulation exists addressing the procedures for reentering an improperly plueeed and abandoned well Therefore, actual 'drilling operations' had commenced when ACC cut the top of the 4' concreted abandonment marker pipe from the 13-3/8 3K 5 of 20 a. ' 0f T1 wellhead and began the process designing special milling tools for milling the remainder 4" concreted abandonment marker pipe out of the 13-3/8 3K wellhead, and hiring machine shops to fabricate the milling tools. 5. Existing AOGCC records did not indicate that a 4" steel abandonment marker pipe was concreted into the 13-3/8 wellhead. Image 3: photo showing Moose Pt #1 Well with 4" steel abandonment marker pipe concreted into the 13-31W 3K wellhead, taken summer of 2006. 5F .S yn dbaM"nment nwrrk¢r Image 3. pipe- cenc'ei'adlnto t3-3/1r' 3R yen Y.ead - 6 of 20 ai 4 image 4: Photo showing Moose PG #1 Wellhead with portion of 4" concreted abandonment marker pipe still sticking out of the 13-3/8" 3K wellhead, taken March 19, 2007. DRIi LING OPERATIONS COMMENCED The regulation 20 AAC 25.005(g) refers to the actual drilling of a new grass -roots well. Reentering and reworking Moose Pt #1 Well as permitted by Drilling Permit # 205-038-0 is in no way the same as drilling a new well from scratch. Reworking and reentering Moose Pt #1 Well required first step was to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 13-3/8 3K wellhead. This is a reworldng operation of a well already drilled. it should be further noted, concrete (having a gravel mixture) is much more difficult to mill out than neat cement (pure cement) normally used in plugging and abandonment operations. 20 AAC 25.005(g), reads, `if drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Drilling operations as defined by 20 AAC 25.990(23) reads, 'drilling operations" means the penetration of ground below the setting agob of structural or phi& using a drilling rig capable of performing the permitted well work and for purposes other than setting structural or conductor casing" "drilling operations" includes the running of casing, cementing, and other downhole work performed ancillary to formation evaluation, and operations necessary to complete and equip the well so that formation fluids can be safely brought to the surface." 20 AAC 25.990(23) does not apply to Moose Pt. #1 Well because the 333' twenty inch "structural conductor casing" does not exist inside the 7' casing. The 20' conductor pipe that is set 333' below the surface is set outside of the 7' casing extends from the surface to the 9,032TD (total depth of the 7" casing). The well has already been drilled and properly cased with 7" casing from the ground surface to its total depth 9032' (9,032 feet). 7 of 20 ;30opr�q 20 AAC 25.990(23) defines no mechanism to trip the Moose Pt #1 Well into an automatic extension because there is no conductor nine inside the 7" casing to drill out from. The 7" casing simply exists from the surface to the TD depth 9032'. Agency discretion should be exercised and a ruling issued that drilling did commence prior to expiration of the drilling permit The oil and gas regulations do not have a drilling permit specially promulgated for reworking existing plugged and abandoned wells. The definition 20 AAC 25.990(23) of "drilling operations" does not fit the generic reworking operations to rework the Moose Pt #1 Well that has already been drilled, properly cased, plugged and abandoned having no conductor pipe inside the 7" casing. All of the "drilling operations" described in 20 AAC 25.990(23) does not define the reworking and reentering operations of the Moose Pt # 1 Well. The tripping mechanism of 20 AAC 25.990(23) requires that "drilling operations" commence below the conductor pipe to trip Moose Pt #1 Well's Drilling Permit # 205-038- 0 into place to automatically extend the permit The Moose Pt # Well has no conductor pipe inside of it to drill out below needed to trip 20 AAC 25.990(23) definition of "drilling operations" into place to automatically extend Moose Pt #1 Well's Drilling Permit # 205- 038-0. ACC should not he held hostage or damaged because of a gap in the regulations. The necessity to mill out up to 25' or 3 ;' (25 or 30 feet), or more of 4" steel abandonment marker pipe concreted in the 7" casing is an extraordinary situation and is NEVER encountered when a well is properly plugged and abandoned (please note the 2" 3K valve shown in Image 3, still attached to the bottom half of the original 13-3/8" 3K wellhead containing the slips supporting the 7" casing at the surface). 1. Existing AOGCC records DID NOT MENTION the depth of that surface plug, nor the length of the 4" steel abandonment marker pipe concreted in to Moose Pt #1 Well in the original plugging and abandonment records filed with AOGCC. 2. The above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed the summer of 2006 leaving still a portion of the 4" steel abandonment marker pipe sticking above ground. (cut off portion of 4" pipe is shown in Image 4) 8 of 20 31 o� Y 3. That portion of the 4" steel abandonment marker pipe concreted in to the 7" casing forced ACC to specially design milling tools and hire machine shops to fabricate the milling tools to safely attempt to mill out that portion of the 4" steel_ abandonment marker pipe concreted down into the 7 casing. 4. ACC did not know if that portion of the 4" concreted abandonment marker pipe went 5' or 30' down into the 7' casing. ACC had to plan for the worst and plan the milling operation for 30'. S. These specially designed milling tools were not delivered to ACC until early summer of 2007. These unique milling tools that were required were not shelf items and had to be specially designed by ACC to remove the 4" concreted abandonment marker pipe. It took several months for the machine shops to fabricate and deliver the milling tools to ACC. Machine shops during that period of time were extremely busy. 6. Upon delivery of the milling tools, early summer 2007, ACC commenced the milling operation to mill out the then -unknown length of 4" steel abandonment marker pipe that had been concreted into the 7" casing at the surface (see Image 4). Any experienced driller will acknowledge that milling steel pipe concreted in a 7" casing is a very difficult and sensitive operation. It is much more difficult to drill a pipe at the surface than it is to mill out 4" pipe cemented thousands of feet deeper in a 7" casing, because at a deeper level you have the 7" drilling casing's ID (inside diameter) to stabilize mill rotation and drill pipe weight providing measured weight on the milling tool. At the surface your milling tool wants to jiggle and bounce around threatening to damage the sux flace of the wellhead and the 7" easing, thus ruining all hope of a successful reentry. Milling tools ware very rapidly and have to be replaced or rebuilt often when milling out iron cemented in a 7" casing. 7. Great drilling experience and skill is required to protect the wellhead and 7" casing When milling steel out of a 7' casing at its ground surface. You must not damage the gasket and ceiling surfaces of the 13'-3/8 3K wellhead when trying to mill out the 4" steel abandonment marker pipe concreted into the 7' casing. Firstly, the Moose Pt #1 Well had not been properly P&Xd in accord to state standards by the previous operator when ACC obtained Drilling Permit # 205-038-0. Normally, the well casing is cut off 4' (4 feet) below the ground surface. A metal plate should be welded to the top of the casing thereby sealing the casing. A 4" steel abandonment marker pipe is then welded atop of the metal plate that is welded to the top of the cut off 7" casing. This 4" well marker pipe is then welded to the plate that is welded to the 7' casing 44 below the ground surface that should be long enough to stick above the surface level to a height of 6 feet Dirt is then filled in around the marker pipe welded to the metal plate welded to the cut-off 7' casing 4-5 feet below the ground to the surface level. 9 of 20 '1�E Ce � �i _. J Y_✓, i �t.. 1.��: ' ✓• 1_i_' .G_ i Y_ � is _ i Jib _ i. i _ The 4" (4 inch) steel abandonment marker pipe was improperly concreted into the 13-3/8" 3K 7" casing wellhead. The 4" steel abandonment marker pipe was set and concreted into the 7" (7 inch) casing at the surface in the 7" casing; therefore. "drilling operations." as defined by ACC 25.990 does not apply to the Moose Pt #1 Well because Moose Pt #1 Well had already been drilled in 1978. `Drilling operations" speak only to drilling a new grass- roots well. ACC did commence drilling operations in the required time frame. REWORKING MOOSE FL #1 WELL SPECIFIC OPERATIONS Reworking Moose Pt #1 Well required an extraordinary milling operations: 1. cutting of the top of the 4' steel abandonment marker pipe to assess the specific needs of a specially designed milling tool 2. designing the milling tools 3. having machine shops fabricate the milling tools 4. receiving delivery of the milling toot from the machine shops 5. removing, milling, and boring out the 4' concreted steel abandonment marker pipe These operations constitute the reworking, reentering, and "drilling operations" for Moose Pt #1 Well Drilling Permit # 205-038-0. The first step necessary to reenter Moose Pt #1 Well was to first cut off the top of the 4" steel abandonment marker pipe to examine and determine the proper design for milling tools to milling out the unknown length of the pipe concreted into the 7" casing. Please note: 4" drill pipe generally comes in 30 foot lengths. Existing AOGCC records did not record the length of the marker pipe wrongfully concreted in the top of the 7" casing. The length of the 4" steel abandonment marker pipe was unknown whether it was 5' long, or 30' long. ACC believes that the unique operation of first being required to design and get delivery of the milling tools to commence milling and drilling that portion of the 4" steel abandonment marker nine that had been concreted into the surface plug constituted the actual first steps ._.�..._. IV in complying with Drilling Permit # 205-038-0. As stated above, these milling tools were not the type of milling tools that you can buy off the shelf from others 10of20 33 v� q% This 4" concrete abandonment marker pipe event was a total surprise. ACC did not anticipate this concreted in 4" steel abandonment marker pipe removal program when ACC bought ADL 389922 and filed ACC's Drilling Permit # 205-038-0 to reenter the Moose Pt #1 Well. This 4" steel abandonment marker pipe's existence was not shown in existing AOGCC records at that time. Existing AOGCC records did not mention a 4" steel abandonment marker pipe concreted into the 13-3/8 wellhead. Existing AOGCC records only indicated that the well surface plug was set at 58' (feet) below the surface of the ground. Existing AOGCC records indicated that the casing was filled with diesel fluid from the top of the 58' surface plug to the surface for freeze protection (see Drilling Permit # 205-038-0 illustrations). Existing AOGCC records did not reflect the depth of the 4" steel abandonment marker pipe concreted from the surface that had been placed in the 7" casing. In the beginning, ACC was not sure if ACC could safely mill out the 4" concreted steel abandonment marker pipe without damaging the Moose Pt #1 Well's 7" casing to a point where the 7" casing as then currently permitted, could not be safely reentered in the process. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY James W. White had to spend hundreds -of -thousands of dollars during that period of time, 2005-the end of the 2007, to perform site work, drill a water well, design and have machine shops fabricate and build expensive and uniquely special milling tools according to ACC's own and unique specifications that are not "shelf -items' in order to safely and accurately mill out the 4" concreted abandonment marker pipe from the 7" casing without damaging the 7" casing beyond any hope of reentry. ACC performed these drilling operations and incurred these expenses because ACC believed that Drilling Permit # 205-038-0 was still active and valid beyond December 31, 2008. Having met the requirements, Drilling Permit # 205-038 .^. should stay in effect. Nobody ever indicated that Drilling Permit # 205-038-0 was not automatically extended beyond December 31, 2008, until February 2, 2009. Then the drilling permit should stay in effect Please note: It makes no sense to plan the reentering of a well if no drilling permit is in place. Not being notified otherwise, ACC believed that Drilling Permit # 205-038-0 was still active and in effect while performing the drill site work described in detail above. 11 of 20 31 ©f qq Had AOGCC informed ACC that Drilling Permit # 205-038-0 may have been in violation or failed to comply with any AOGCC or DNR regulation and mandates, ACC would have taken the proper action to correct and address any such pressing issues. Because of Alaska's unique/short winter drilling seasons, one can only mobilize a drilling rig in or out of the property between the months of January, February -mid March. ACC left their drilling rig at Moose Pt #1 Well in anticipation that Drilling Permit # 205-038-0 was still in effect, and that ACC might be able to secure a suitable term Gas Sale Contract with Agrium Fertilizer Plant In 2007 there was considerable publicity concerning the Phillips -Marathon efforts to get the State of Alaska to agree to allow the export and sale of Alaska's gas to Japan Governor tw,4o rinro it WmIld ronniro th2t Phillins- CdlVl y.- .- y-- Marathon purchase gas from an independent oil and gas producer such as Alaskan Crude Corporation (ACC). F.vervhodv in the Alaska's oil industry, including ttie Department of Natural Resources, Division of Oil and Gas believed that ACC had a drilling permit in place for Moose Pt # 1 Well from early 2005 forward through December 31, 2008. The AOGCC clearly did not advise the DNR's Division of Oil and Gas that Drilling Permit # 205-038-0 was not in place prior to January 27, 2009.On January 27, 2009 the DNR Commissioner advised White that he had reinstated ADL 389922 because the Commissioner had found that drilling activities were ongoing automatically requiring the primary term of ADL 389922 to automatically extend beyond its primary term Nobody with whom ACC conferred such as the DNR or AOGCC ever advised ACC that they believed that the drilling permit was in violation and may have terminated on March 24, 2007. If AOGCC and DNR believed that the ACC Drilling Permit # 205-038-0 was terminated but failed to notify ACC in writing that Drilling Permit # 205-038-0 was in ^olation or ACC failed to comply with any regulations then the permit cannot be expired. ACC Drilling Permit # 205-038-0 was approved on March Z4, 2005 and unhel+rownnst to ACC "terminated" on March 24, 2007. ACC was not aware that Drilling Permit # 205-038-0 had terminated according to the AOGCC because the AOGCC failed to notify ACC pursuant to 20 AAC 25.535. Until April 14, 2009, two whole years later after the termination of Drilling Permit # 205- 038-0, when ACC witnessed the Website ('Outstanding Drilling Permits"), ACC believed that ACC .. s in Pull compliance with all AOGCC regulations pursuant to 20 A_AC 25,005, 12 of 20 35 of Permit to Drill, for maintaining and keeping current Drilling Permit # 205-038-0 in effective and operating status. TWO YEARS OF COMMUNICATION YET NO MENTION OF TERMINATED DRILLING FPFP 1041T Neither ACC lames W White nor any pajU associated with Alaskan Crude Corporation (ACC)EVER RECEIVED WRITTEN NOTICE pursuant to 20 AAC 25.535 that Drilling Permit # 205-038-0 was in violation, failed to comply with any provision, or terminated. Examples or correspondence between ACC and AOGCC about Moose Pt #1 Well: 1. April 3, 2008 ACC faxed a letter to AOGCC titled, "Amerex well reentry April 3, 2008 Progress Report," detailing the work being done at Moose Pt #1 Well. (see Exhibit 11) 2. April 4, 2008 ACC and AOGCC corresponded numerous times about Moose Pt #1 Well (see Exhibit 111) - Note Drilling Permit 20"38-0 is references in the subject line all of these correspondences 3. On January 27, 2009, AOGCC sent a Certified Letter to ACC stating, "In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt Unit #1 well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or complete." 4. On February 27, 2009 ACC responded to AOGCC in full with supporting pictures and evidence stating, "ACC drilled, milled and bored out the 4in. pip that been wrongfully concreted in the Moose Pt #1 Well's Tin. casing the summer of 2007....". AOGCC's emails AOGCC order transcriptions to the oil industry. From before 2007 to 2009, AOGCC has emailed countless AOGCC orders. The AOGCC's declaration that Drilling Permit # 205-038-0 terminated in 2007 would have been an AOGCC order. ACC never received, "a written notification by pcmnal Service or by certified mall returu receipt Mauested " from AOGCC mentioning any order terminating Drilling Permit # 205-038-0 in 2007. CONCLUSIONSJCONSIDERATIONS In conclusion ACC feels that: (1) AOGCC was mandated by 20 AAC 25.535 to notify ACC in writing that Drilling Permit # 205-038-0 may have been in violation, failed to comply with any regulations, or may be terminated; (2) AOGCC failed to notify ACC in writing that Drilling Permit # 205-038-0 may have been in violation, or failed to comply with any regulations; 13 of 20 3 1p 0-F (3) in 2007, had AOGCC informed ACC that Drilling Permit # 205-038-0 was to be terminated, ACC would have had ample time get a new drilling permit for Moose Pt. #1 Well because the primary term of ADL 389922 still had 21 months to its primary term. The original Drilling Permit # 205-038-0 took 20 days to be approved. A new drilling permit is free: (4) this action by the AOGCC could likely be determined to be an abuse of discretion in implementing the mandates of 20 AAC 25.535 from AOGCC as result of AOGCC's failure to notify ACC of any issues concerning Drilling Permit # 205-038-0. ACC asks the AOGCC to please reconsider their actions and reverse the decision terminating Drilling Permit # 205-038-0 because: (1) AOGCC, pursuant to 20 AAC 25.535 did not inform ACC in writing to: (a) state the nature of the apparent violation or noncompliance, (b) summarize the reasons why the commission considers a violation or noncompliance to have occurred, (c) state the action that the commission proposes to take under ( of this section, and (d) inform the person of the person's rights and liabilities under (c) - (e) of this secrion; (2) The drilling operations conducted at Moose Pt #1 Well automatically extended the term of the Drilling Permit # 205-038-0. Therefore, Drilling Permit # 205-038-0 automatically extended; (31 AOGCC did not mention the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13-3/8 wellhead at Moose Pt #1 Well in their original file records; (4) James W. White and ACC met the requirement of Drilling Permit # 20 AAC 25.535 when they first removed the 4' abandonment marker pipe, designed and commissioned the unique milling tools from several machine shops, and milled, bored, out and drilled out the 4' steel abandonment marker pipe wrongfully concreted into the 13-3/8' wellhead; (5) AOGCC did not consider the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13-3/8 wellhead at Moose Pt #1 Well and that actual drilling operations were required and undertaken to remove this pipe. (6) Drilling operations at Moose PL #1 Well were under way when ACC transported all of the equipment to rework the well and commence reworking operations of the existing Moose Pt #1 Well the winter drilling seasons 2005 and 2006 forward. Thank you for your consideration. If AOGCC can not settle this manner, James W. White will take further actions to protect his interests. 14 of 20 DTCry�} Please advice ACC of the how the Commission will address the issues in this letter within 5 days. If ACC does not receive a response within 5 days, ACC will pursue further actions to protect our interests. Please advise if the Commission needs more time. Regards, James W. White, Alaskan Crude Corporation, President James W. White, Individual 4614 Bohill St San Antonio, TX 78217 office Ph. 210-651-0777 Cell Ph. 907-394-1829 Email iimwhite(&satx.rr.com CC. Emailed to: Thomas E. Irwin; Kevin Banks, Daniel T. Seamount, Jr.; Matt Rader; Camille Recknagel; Bruce Webb; James A. White; Brian Stibitz; Rick Wagner; Office of Governor Sarah Palin IS of 20 3 (0 OPl'IL CONTENTS 1. AOGCC DID NOT NOTIFY WHITE IN WRITING PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205- 038-0 MARCH 24, 2007 SOME TWO YEARS AGO ... Pg. 2 2. MAIN ISSUES ... Pg. 4 3. DRILLING OPERATIONS COMMENCED...Pg. 7 4. REWORKING MOOSE PT #1 WELL SPECIFIC OPERATIONS ... Pg. 10 5. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY ... Pg. it 6. TWO YEARS OF ONGOING COMMUNICATIONS, YET NO MENTION BY AOGCC OF TERMINATED DRILLING PERMIT ... Pg. 13 7. CONCLUSIONS/CONSIDERATIONS ... Pg. 13 16 of 20 Exhibit I Example of Correspondences between ACC, DNR and ACC (non-exahstive) 1. March 31, 2009 - an entire 42 page document was faxed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 2. March 30, 2009 - an entire 42 page document (the same was faxed on March 31, 2009) was faxed emailed, and mailed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 3. March 30, 2009 to Thomas E. Irwin, AOGCC: Re: Your Letter Dated "January 27, 2009", Decision to Reinstate ADL Lease 389922 4. March 11, 2009 from McKenzie Transpiration - letter describing transport truck breaking through ice on ADL 389922 5. February 27, 2009 to AOGCC: Re: January 27, 2009 Letter from Daniel T. Seamount Jr, Chair" detailing work being done on ADL Lease 389922. 6. February 18, 2009 from Commissioner Thomas E. Irwin, AOGCC (received by regular mail February 25, 2009): Re Request for Reconsideration - ADL 389922 Notice of Expiration of Lease - this letters states the Commissioners decision to order a reconsideration of ADL Lease 389922 7. February 11, 2009 From ACC- Formal request for reconsidering of the terms and conditions of ADL 389922 emailed to AOGCC (faxed February 10, 2009 to 907-269- 8918). 0. January 27, 2009 from AOGCC, Daniel T. Seamount Ir, Chair. Re: Moose Pt Unit 1 PTD No. 205-038 - letter states that AOGCC is not aware of any work being done at Moose Pt Unit 1 PTO No. 205-038. 9. January 27, 2009 from AOGCC, Commissioner Thomas E. Irwin: Re: ADL 389922 Notice of Expiration of Lease date January 2, 2009 - Letter details decision to "reinstate ADL 389922" (this letter was appealed on ... 10. January 26, 2009 to AOGCC Commissioner Irwin: Re: Potential Damaged Caused by Improper Termination of ADL 389922 11. January 22, 2008 to Mr. John Havelock, Division of Oil and Gas: Re: DNR's representatives' visit to the private property where Moose Point #1 Well is located on ground by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the State of Alaska 12. January 20, 2009 to AOGCC (faxed to 907-269-0060): Re: Administrative Appeal— ADL 389922 Notice of Expiration of Lease Term 13. January 15, 2009 to Kevin Banks, Department of Natural Resources (DNR): Re: Wrongful Termination of ADL 389922 14. January 2, 2009 from Jennifer Haines, AOGCC: Lease Expired - ADL 389922. 17 of 20 � �� y0Q 15. December 31, 2008 from ACC - Discussing the later than normal winter freeze up of the North Kenai Borough Road. 16. Thursday, December 06, 20071:05 PM, Colombie, Jody J (DOA) jodv colombieftlaska. aio2b-023 CPA Kuparuk. 17. Friday, December 07, 200712:34 PM (email), Colombie, Jody J (DOA) jodv colombie la ka gov. Public Hearing Notice North Alexander #1 18. Wednesday, December 05, 2007 2:32 PM (email), Colombie, Jody J (DOA) jodv colombie(&alaska gov. A104C-015 corrected cancellation 19. Tuesday, December 04, 2007 3:17 PM (email), Colombie, Jody J (DOA) jody.colombie(&alaskagov. Other 52 Regulatory Cost Charge 2008. 20. Monday, December 03, 2007 7:09 PM (email), Colombie, Jody J (DOA) iodv colombiePalaska.gov Public Meeting Notice. 21. Friday, November 30, 2007 8:20 PM (email), Colombie, Jody J (DOA) iodv colombieftlaska.gov. A104C-015 corrected cancellation 22. Wednesday, November 28, 2007 5:42 PM (email), Colombie, Jody J (DOA) jolly colombie(talaska.gov o 457B.003 and co341e.005 PBU 23. Wednesday, November 28; 2007 8:19 PM (email), Colombie, Jody I (DOA) jodv colombieftlaskagov. Public Notice, Additional Information and Proposed Regulation 24. Friday, November 30, 2007 2:25 PM (email) Colombie, Jody J (DOA) Jody colombie alas m a¢ov Corrected Admin Approvals and ERIO 2-005 25. Friday, November 30, 200712:47 PM (email), Colombie, Jody J (DOA) iodv colombieftlaska.gov A104C-015 cancellation and A1014A-002 PBU Admin Approvals 26. Wednesday, November 28, 2007 8:43 PM (email), Colombie, Jody J (DOA) jod3 colombie@aiaska gov Various PBU Admin Approvals and A104E.015 PBU 18of20 1 o-f Exhibit 11 April 2, 2008, Letter to AOGCC, Subject: Amerex well reenty April 3, 2008 Progress Report ALASKAN CRUDE CORPORATION 4614 Bohill, San Antonio, Texas, 78217 Ph210-651-0777 Date: April 3, 2008 To: AOOCC Attention: Mr. Tom Maunder Subiect: Amerex well reentry April 3, 2008 Progress Report Re: AMEREX well reentry operations This letter is to advise the Commission that a new 7' Sin double BOP and new 7" 5111 Annular were delivered to Amerex drill pad about Marcb 10, 2008. One air pump is being replaced on the accuumlator. Accumulator nitrogen bottles are also being replaced - The V pipe has been milted out of the 7" casing and well head has been installed and ready to except the installation ofthe new r 5m BOP stack. ACC will recommence drilling reentry operations when the well pad dries out after break up. (mid May hopefully) Regards Jim white 1im",bite: uaa;x% 11- 19 of 20 -� a 0� ` + EXHIBff M AprH 4,200BACC email correspondence with AOGCC showing Drilling Permit# 205- b F*,.AORM4§4.l 20 of 2C SARAH PALIN, GOVERNOR DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL & GAS May 18, 2009 Alaskan Crude Corporation Attn: James W. White 4614 Bohill Street San Antonio, Texas 78217 Re: Status of Operations at Moose Point # 1 Well Plan of Operations LO/CI 03-019 Dear Mr. White: 550 WEST 7'" AVENUE, SUITE 600 ANCHORAGE, ALASKA 99501-3560 PHONE: (907) 269-8800 FAX (907) 269-8938 This letter sets forth my best judgment as to the facts regarding your physical progress at Moose Point #1 Well. Information that would assist administration of the lease was requested in a letter from Jonne Slemons on February 18, 2009, and in my letter of April 7, 2009 that requested a written response. The purpose of these letters was to establish the facts of physical activity on the lease su that the lease and plan of operations can be administered with respect to the extension. Since you didn't respond, these are the facts of physical activity as they appear to me. Please take this opportunity to correct any errors I may make. 1. Between December 2005 and February 2006 a drill rig and equipment was mobilized to the site 2. Between April and September 2006 the site was cleared and graded. 3. On June 13. 2007 boring commenced to reach the bottom hole by removing the concrete and steel pipe surface marker to 6 feet below grade. 4. On December 23, 2008 you informed me in a telephone call that you were resuming drilling and would continue drilling through the December 31, 2008 lease expiration date and that this would extend the lease. 5. On December 31, I was present at the drill site and observed heat begin applied to a BOP in a box adjacent to the well head; snow had been recently plowed from the drill site; the drill rig was not running, the mast was not raised, the drill bit was not turning in the hole, and the drill rig and systems did not appear to have been operated for some time. 6. During the night of December 31, 2008 the BOP stack was being assembled on the wellhead using a truck mounted boom. 7. In our telephone conversation on or about January 13a', I understood that Aurora was testing the BOP equipment, and that you had other BOP equipment that could be manually operated, and that you would be working with Tom Maunder of the AGOCC to get it approved. 8. On January 21, 2009 Brian Havelock and Shaun Peterson of the DO&G visited the site and observed activity that could be associated with drilling, but did not observe the drill bit L L actually boring in the well or actual operation of the drill rig and systems in the act of drilling, ® "`D elop, Conserve, and Enhance Natural Resources for Present and Future Alaskans. " Division of Oil & Gas 5/18/09 Page 2 of 2 nor did they appear to have been recently operated for drilling. The BOP was attached to the wellhead. The required accumulator was not operationally configured. 9. In telephone conversations you conveyed that during the approximate period from January 13, 2009 to January 21, 2009 the access road could not be used due to warm weather. 10. On or about February 12, 2009 in a call from Houston, you informed me that equipment needed for the well was loaded and shipped out of Houston on an 18 wheeler and would be delivered in Alaska in about 10 days, that the drill rig was capable of running, and that an accumulator for the BOP was being shipped to the site. 11. In a telephone conversation on or about April 13, 2009, you informed me that the drill rig was no longer on the Moose Point #1 drill site and was in Kenai. You also stated that the well marker was not on the well, but that the well was being left in a condition acceptable to AOGCC. 12. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well occurred between the end of the drilling commenced in June 13, 2007, and the time the lease was set to expire on December 31, 2009. 13. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the hole occurred after December 31, 2009, or that AOGCC has approved your BOP equipment for use. 14. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well was occurring on December 31, 2008, or on January 21, 2009, or has commenced or continued since the lease extension decision of January 27. 2009. 15. According to the AOGCC, your permit to drill (#205-038-0) expired on March 24, 2007. On or about April 22, 2009 you appealed that determination to the AOGCC. If I am wrong about these details at the Moose Point #1 Well, please provide some documentation about actual boring, testing, the status of the permits and approvals, and progress in the well. If boring did occur, this is information in your possession that you should be willing to provide since it is in our mutual interest that we reach the correct conclusions. If you do not provide additional written information by June 1, 2009 that is contrary to my understanding of the facts as presented above, then my understanding as presented above may be considered in future decisions aiiecting adruir"tration of ` lease pan ` per d'ic icasc aiiu plan of i�—ciativriS. If you have any questions please give me a call in Anchorage at 907-269-8776 or email matt.rader@alaska.gov. Sincerely, Matt Rader Natural Resource Specialist Ec. Jonne Slemons I . ['fr iimwhitenaacsalaska.net S'nmwhite(c� atx.n.com iimwhite a.applecapital.com March 30, 2009 Thomas E. Irwin, Commissioner Department of Natural Resources 550 West 7th Avenue, Suite 1400 Anchorage, AK 99501-3650 Re: Your Letter Dated "January 27, 2009", Decision to Reinstate ADL Lease 389922 Dear Commissioner Irwin: This letter is in response to your letter agreeing to reconsider the conditional reinstatement of ADL Lease 389922 that you issued/granted. While I am pleased that you agree that ADL Lease 389922 was wrongfully terminated on January 2, 2008, 1 do not believe you can unilaterally "conditionally reinstate" a lease contract without bilateral agreement of the parties. The lease was automatically extended by drilling, so I must reject the unilateral changes you propose to my lease contract for reasons illustrated below: 1. The Department of Natural Resources (DNR) wrongfully terminated my lease contract on January 2, 2009 and destroyed my ability to continue drilling with reasonable diligence during this past winter drilling season. The winter drilling season is now over. 2. Instead of reinstating my lease in full and compensating me for any time caused by the improper termination of my drilling operations, your letter dated January 27, 2009 attempted to modify my lease contract by adding terms that are unacceptable to me. Specifically, you stated that: a. "ADL 389922 is hereby reinstated and extended in accordance with AS 38.05.180(m)..." The ADL389922 lease contract paragraph 4(C)(1) requires the primary term of the lease to automatically extend because drilling operations clearly defined by paragraph 4(C)(1) had been met by the lessee. THE GENERIC CONDITIONS CONTAINED IN THE ORIGINAL LEASE CONTRACT SIMPLY CONTINUE PURSUANT TO PARAGRAPH 4(C)(1), NO MORE, NO LESS. The ADL 389922 lease contract DOES NOT require the lease to automatically extend pursuant to AS.38.05.180. Our STATE DRAFTED ADL 389922 lease contract does not provide unilateral authority TO THE LESSOR OR THE LESSEE to add conditions OR AMEND THE LEASE IN ANY FASHION. b. "...the well must be completed within 90 days of this decision." This authority is not in the lease contract. Drilling will be completed when it is completed; not within a particular time frame. There is no provision in the lease contract specifying a time period to complete drilling operations. c. "...failure to complete the well will result in the automatic termination of this lease." This authority is not in the lease contract. Drilling is underway. d. "After 90 days from the date of the letter, April 27, 2009, we will review your progress to determine whether continued lease extension is warranted, including proof that all permits required are current" eD� �{(s chip 9f March 29, 2009 Page 2 of 3 I am required to pursue operations with reasonable diligence. I am doing just that. e. "...the continued extension of the lease is contingent upon: 1. "continued drilling of the well 2. "completion of the well by April 27, 20G9 3. "valid permits for all operation 4. "sustained production within 90 days following the cessation of drilling" THE GENERIC CONDITIONS CONTAINED IN THE ORIGINAL LEASE CONTRACT SIMPLY CONTINUE PURSUANT TO PARAGRAPH 4(C)(1), NO MORE, NO LESS. f. "Failure to comply with any of these conditions will result in the automatic termination of this lease." If these terms are retained in your approval letter, I will have to appeal your decision to court. In addition, if you try to terminate my lease as a result of any of these conditions I will be forced to appeal that action also. I received the DNR letter dated January 2, 2008 wrongfully stating, "In accordance with the lease agreement, ADL 389922 expired on December 31, 2008. The case file has been closed..:.. anc 31, January 20, 2009 and January 26, 2009 this letter was appealed (see attached letters). On January 27, 2007 Commissioner Irwin's letter stated that the Commissioner "reinstated and extended" ADL 389922 lease "under the provisions of AS 38.05.180(m) and ADL Lease 389922: 4(c)(1)". This lease is automatically extended Pursuant for paragraph 4(c)1, "if the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, this lease will continue in effect until 90 days diter cessation of that drilling and for so long as oii or gas is produced in paying quantities from the lease area." AOGCC procedures require that production permits cannot be acquired until the north half of Section 14 where the Moose Pt. 1 well is located and south half of Section 14 are involuntarily unitized, or the two owners reach an interest agreement. As of this date, the owners of the south half of Section 14 have not agreed to participate in the development of this Moose Pt. 1 well, nor have they participated in the msts and affnrts to reenter this Moose Pt. 1 well to date. Before the Moose Pt. 1 well can be produced, AOGCC requires that there be an agreement between the owners of the both halves of the Section 14 to produce the well pursuant to 20 AAC 25.055. Drilling units and well spacing (a)(2). There is no unitized interest between the party that owns the south half of Section 14, and myself who owns the top half of Section 14. Pursuant to AS 31.05.300(c) and reiterated by AS 31.05.110, the AOGCC states that a well cannot be produced until there is an agreement between both parties, or until the AOGCC has involuntarily integrated an agreement between all of the parties. Without a unitization of the north and south half of Section 14, no permits to produce can be obtained. 20 AAC 25.055. Drilling units and well spacing 4(b) clearly requires that production of the well cannot occur until all interest holders of a governmental section are unitized. Implementing these procedures and regulations will take longer than 90 days_ March 29, 2009 Page 3 of 3 As 31.Os.100 (c) states, "When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the drilling rights in it and the right to share in the production from it may agree to pool their interests and develop their lands as a dr hill% unit. If the persons do not agree to pool their interests, the commission may enter an order pooling and integrating their interests for the development of their lands as a drilling unit for the prevention of waste, for the protection of correlative rights, or to avoid the drilling of unnecessary wells." AOGCC procedures allowed the Moose Pt. 1 Well to be reentered and tested (ADL 389922). These AOGCC procedures did not allow Moose Pt. 1 to be produced until both the north half and south half of Section 14 (where the Moose Pt. 1 well is located), are integrated either voluntarily or involuntarily. Procedures to voluntarily or involuntarily integrate the interests in Section 14 normally take more time than 90 days. The Commissioner's January 27, 2009 letter should have acknowledged that the primary term of the lease automatically extended beyond its original primary term on December 31, 2008 pursuant to paragraph 4(c)1, not only until the arbitrary and capricious date of April 27, 2009 allotted. Commissioner Irwin's letter did not mention the 27 days of lost prime winter working days in this abnormally short Z008-ZO09 winter drilling season due to the wrongful termination of ADL Lease 389922. The drill site was only accessible with the proper drilling equipment during January, February, and the first ten days of March of 2009. Access to the Moose Pt. 1 well site is very limited and subject to weather conditions. The Moose Pt. 1 well is completely inaccessible during a majority of the year due to the lack of a road, swamps, creeks, soft tundra, and the presence of a high pressure gas pipeline below soft soils that must be crossed. The drill site was not accessible this winter season by an eighteen-wheeler truck until AFTER December 31, 2008. On March 11. 2009, while transporting a load of pipe from the Moose Pt 1 well site, a McKenzie Transport trailer broke through the ice (see attached letter dated March 11, 2009). At this point the road could not be relied upon to safely support heavy trucks. Attached is documentation from www.weatherchannel.com (3/25/2009) which shows the March 11 temperatures for the Cook Inlet at a high of 34 degrees. The drill site is inaccessible until the next drilling season's winter freeze. Please reconsider your letter reinstating this lease with added conditions. The lease should be reinstated without ANY added conditions or terms. I do not believe that an additional briefing or hearing is necessary in order for you decide this issue. Thank you for your consideratio52q please forward any correspondence to: James W ,OWbhill Street n Antonio, TX 78217 Office:210-651-0777 Cell: 907-394-1829 Email: jimwhite@acsalasks.net; and jimwhite@satx.rr.com `l 4 83/ZZ/Z999 1b:37 ]tTJbbro�� wcn�a.rcc TO' VWOBB9394 • P.IC) Banc 4376 &Adob^ AK 99669 ("7) Xa-I328 M7) M&7149 fi /vQ aW-V77jr ,; w 7-t£ P.z'O p R o D u GT�mo.j D1J 3 f I//P9 w o=,r z- -rejwx PFiK? rN r,. R 4�. ots-0 OF P:;r-PjE F-OCWn O ur€2 C9EEK -r'a g€N�Ee i-coP 0, ovE.R T14C CrRtRY G X=ems Ro/gD pu -rjeA=XodZ S£'DhtE ' 'N.Cio"C q =rhC On? ONE $. D.E. y"rYcXe c✓19-C .v0 D t9 rhc`- WX77J WHC g:r v eegnn- .Z /W 074C 4. AIM90S Q t/ 94C rFR Vli., P:1.1 C�.� rJ�9': E GNA•••6E %HAT t�,r li��T TlP��S �ofc'7 7.'V4r T.ZGC c'--ZrW 7-M4 c.vr10.F : �vnr r QERLoN'l;ly ,'EcQ��➢�F.�r y�O ,A r.. •,;Vcs jcrc ►J,i .nr �14'G� PTro� Arc y� ,r�s�Hr TiYa9,v,K c7v�.. S�Uu TRAP-T Pb,e7-- )4q Q� r+r s ' �Y►a,°i�ba���/mac`^Y F. led: February y-29Q2 Ilardeopy will be sent via mail 6 State of Alaska AOGCC 333 W. 7`s Avenue Suite 1000 Anchorage, Alaska 99501-5339 Re: January 27, 2009 Letter from Daniel T. Seamount, Jr. Chair Dear Commissioners: In response to your letter, please see the following: ACC drilled, nulled and bored out the 4in_ pipe that had beech wrongfully concreted in the Moose Pt. #1 well's Tin_ casing the summer of 2007 (please see photo titled, "Moose Point 91 Well shown as abandoned, 1982" attached). Agrium Fertilizer Facility made tentative o&rs to purchase gas from Alaskan Crude Corporation (ACC), but the offered prices that they were willing to pay were too low to make it economically feasible to produce the gas profitably from the Moose Pt- 91 well- Governor Sarah Palm negotiated with Phillips -Marathon early 2008 when Phillips -Marathon agreed to purchase around 30K (30,000) MCF/day from an independent such as White/ACC- This is the first time in the seven year history of this ADL 389922 Lease that there was a tentative osier to purchase gas making it economical to reenter the Manse Pt. 0l well.; hence, ACC's efforts to re enter the wc11 during the 2008-2009 winter drilling season. ACC was able only to access this site via pickup trick this winter December 20, 2008_ Work_ commenced, and drilling activities (see: picnim attachments) to attach the Tin. 50001b. BOP stack on the well -head on December 31, 2008. Thus, work was ongoing pursuant to 4(c)(1) of the ADL 389922 Lease contract automatically extending ADL 389922 Lease beyond its primary rhp r)r3wrhnent of Natural Resources (DNR) wrongly terminated this ADL r 389922 Lease on January 2, 209 and all drilling work immediately stopped. On January 27, 2009 Commissioner Irvin issued an Order (enclosed) acknowledging that "the lease had been reinstated and extended in accordance with AS38.05180(m) and paragraph 4(c)(1) of the ADL 389922 Lease " However, the C mmliceioner's terms reinstating the ADL 389922 Lease were not in accord to the clear language of the ADL 389922 Lease contract. Therefore, James W. White, as lessee, drily appeals the Commissioner's January 27, 2009 decision and terms of reinstatement of ADL 389922 Lease. Commissioner Irwin has since stated that he will reconsider his January 27, 2009 decision with his February 18, 2009 letter (attached), and the outcome of this reconsideration is yet unknown. ACC is in the process of mobilizing and removing the carrier -mounted drilling rig and related equipment from the Moose Pt. #1 well site before this March breakup commences as spring breakup Domes early on the Kenai Peninsula Currently, when the BOP stack is removed from the Tin. casing the well will still remain settee as the surface plug remains sufficiently intact. Your engineering department may require further procedures to be implemented atop of the well- head when ACC completely demobilizes the well this spring_ Again, White remains unsure as to what Commissioner hwin's decision will be pursuant to his February 18, 2009 letter relating the status of ADL 389922 Lease_ If he properly reinstates the ADL 389922 Lease, ACC will continue Moose Pt. #1 drilling operations this next winter season of 2009-2010. if Commissioner Irwin does not rcinatatc the ADL 389922 1.oase, White will continue to pursue the matter in court - Please check this link (hupfrnv%+vv-voutube.conuxiatch?v=ZS YAGPBvevt 1) to watch a video of drilling activities that were ongoing December 31, 2009. Other photos are also attached documenting activity performed : t the Mom Pt. #1 well site for yeur files. Included is al -so a complete documentation of correspondence. I would appreciate an opportunity to discuss this matter and other issues that ACC has pending with the commission concerning the Burgtin 33-1 well at your earliest convenience. Crude Corporation 510�gq DEPARTMENT OF NATURAL OFFICE OF THE SARAN PAUN, GOVERNOR P.O. BOX 111000 JUNEAU. ALASKA 99811-1000 PHONE.(907) 465-2400 FAX- (907) 465-3886 3URCFS/ 0 Su WEST 7TM AVENUE, SUITE 1400 ANCHORAGE, ALASKA 99501-3650 ISS/O1MER PHONE' 1907) 269-&31 FAX (907) 269-019. a YrltAl February 18,�2-y009� bu James W. White \iw('.P'(" b� Alaskan Crude, Inc. t �/n 4614 Bohill e(• San Antonio, TX 78217 Re: Request for Reconsideration - ADL 389922 Notice of Expiration of Lease Dear Mr_ White: By a letter dated and received on February 11, 2009, you requested that I reconsider my decision on the expiration of your oil and gas lease (ADL 389922). You assert that 1 unreasonably coniib the extension of your lease, and presented 17 material facts that you believe are in dispute. Your request was received within the time allowed by law (I I AAC 02.040). I have decided to order reconsideration You have until February 26, to submit additional written material or request a hearing with supporting factual issues to be considered. If you request a hearing, please identify the format and methodology you request, whether you will want to present the testimony of witnesses and their names and contact information, and any other preferences. If you do not request a hearing, I will make a decision on reconsideration based on the information provided in your February 11, 2009 letter and the fads available to me_ My January 27, 2009, decision remains in effect for you to pursue continued drilling operations. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas 5 -crp r�T "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans. " February 11, 2009 Commissioner Tom Irwin Faxed: 2/10/2009 to (907) 269-8918 Department of Natural Resources 550 West 7ie Avenue, Suite 1400 Anchorage, AK 99501-3650 . ,I RE: Request for Reconsideration—ADL 399922 Notice of Expiration of Lease Term(Corrected Document) Dear Commissioner Irwin_ First, I want to thank you for your decision dated January 27, 2009. I agree with you that the lease is automatically extended by drilling. However, I cannot agree with the conditions that you attached to the "automatic" extension of my lease. Thin icttcr constitutes my rcquast for reconsideration of your decision dated January 27, 2009 concerning my oil and gas lease ADL 389922. Your decision reinstated my lease with conditions. I am the owner of the oil and gas lease and eligible to ask for reconsideration of your decision The remedy I am seeking is simple reinstatement of the lease withotrt conditions as provided for in the lease contract between die state and myself The lease contract does not provide for automatic extensions of the primary term with conditions. The lease was automatically extended. Please -remove any and all ext o --bdm= mcludw m y,--z decision dared January 27, 2009_ Please address all written correspondence concerning this nupiest to James W_ White 4614 Bohill San Antonio, TX 78217 San Antonio, Texas, Phone Work: 210-651-0777 Cell 907-394-1929 and jimw;-hite[ =&daska_net The affected propertyRand_is oil and gas lease ADL 399922. It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10, 11, 12, 14, mod 15— containing 4800 acres more or less_ Under paragraph 4 of the lease contract I am entitled to a simple automatic extension of the lease if drilling is underway on the expiration date of the lease. There is no provision in the lease contract to allow the state to attach additional conditions to that automatic extension if drilling was underway. Under paragraph 4 of the lease I have the right to continue drilling operations with reasonable diligence to keep the lease in effect. Your decision imposed a limit of 90 days for me to complete the drilling operation. While I o hP nhip to meet that deadline_ the lease does not eive you the authority to impose it. If drilling takes longer than 90 days, then I have the right to take longer than 90 days to complete the drilling operations. Contrary to your January 27, 2009 decision, as long as drilling remains underway with reasonable diligence, the lease is automatically extended. 1 estimate that the drilling will take 30 days to complete, but I have no way to know at this time if it may take longer. I cannot risk farther capital and resources if the lease will expire if I do not finish the drilling operations before the arbitrary deadline you set The initial January 2, 2009 notice from the division clouded the title to my lease and I temporarily ceased operations until the cloud is lifted. The wells operator now has to prepare equipment and resources to resume drilling operations- In addition, the drill site has only seasonal winter access for heavy equ ipmenL Your decision again clouds the title to my lease in that it imposes an arbitrary time limit to complete drilling operations. I am besitant to resume full dulling operations with this arbitrary deadline in place. What happens if I am not completed with drilling operations by the deadline you set, even if I am continuing drilling operations with reasonable diligence?. I have no guarantee that you will not try to arbitrarily terminate the lease at that point in time. I am asking for a simple straightforward decision that complies with the lease contract. I realize t'nat you want me to continue drilling operations with reasonable diligence, but I will do just that only under the terns of the lease contract- But I cannot guarantee when drilling will be completed, and you do riot have the authority under the lease to impose a deadline. Drilling serves to automatically extend the lease term There is no provision in the lease to attach conditions to that automatic extension. _. l f - -1 " = Wet The material nouns m dispute and rote wins for the rcqucsr rrtr �-=�e•�='•�••� a• an as wuows: 1. The lease contract paragraph 30- SEVERABILTY plainly states: "If it is finally dete inured in any judicial proceeding that any provision of this lease is invalid, the state and lessee may jointly agree by a written amendment to the lease that, in consideration of the provision in that written amendment, the invalid portion will be treated as several from the lease and that the remains of this lease as amended will remain in effect" 2. There has been no judicial proceeding invalidating any portion of ADL399922- 1� O-- 3 541 a�p q �4 3. White has rawer agreed to amend any provision of the lease- 4. The ADL39M lease remains in full force in same form as originally agreed to. 5. The lease automatically mended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and contimxd on December 31, 2008. the date on which the lease otherwise would have expired. There is no provision in the lease to altwh conditions to that automatic extension. 6. On June 13, 2007, actual boring in the well commenced when the well was drilled out to remove the 4 inch diameter metal pipe that had been war concreted inside the well's 7 inch using when it was originally plugged and abandoned back in 1978_ At his point the drilling rig was positioned over the wellbore. it has since been temporarily moved aside to install the blow-out prevention equipment on the welL Drilling as dcfincdin the leax includes many eativities in edditiaa to vmU milling or boring a hole, including activities incidental to the actual drilling of a hole. 7. Alaskan Crude Corporation is the optemwr on the lease. Alaskan Crude's dtiUmg operations meet the definition described in Paragraph 34 of the lease contract On December 31. 2008, the expiration date of lease ADL 389922, Mr. Mart Rader, ftom the department witnessed the continuation of drilling activities and also left with photos and written memorandum doctunenfinq the prior drilling activities conducted on ADL 389922, including building the pad, drilling a water well with the rig and conducting drilling operations with the rig. S. The DNR sold us a state -drafted lease wlth the clear contract right to automatically extend the lease by driUmg on the day that the lease would otherwise expire. Drdit activities had commenced prior to that date and were unequivocally contouring on the dole that the lease would otlreawrise have expired. The rmual r__ntrd payment was timely paid thereby a wornatically cam$ the lea-sc beyond its primary term. 9. Significant risk capital has already been invested to drib and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator; to sell ADL 389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent PalinliNG agreement allowing export license gas deliveries -to Japanwwtth millions of dollars over the next two years. This opportunity must be timely met or this two year opp "ar!ty to sell this gas to the LNG plant will be lost_ Please note, this is the first time during this seven year primary term of the lease that this lease has finally had opportunity to market its gas at an acceptable price. Alaska gas market opportunities for small independent oil and gas operators are almost non-existent. This lease is adjacent to the ConoccPhiMps natural gas transmission pipeline that rums farm the North Cools hilet gas field to Nrikiski and the LNG plant- 10. ConocoPhiUips has committed to buy 30k MCF of gas from third panties to fulfill a portion of its LNG export volumes beginning in April 2009. This is a potential 50 miflion dollar plus per year gas market available for Alaska's and is that have gas delivetability readily available. i 1. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 12. Access to this lease area by heavy equipment is limited except for winter months when the ground is solidly frozen. t H o4 3-7 55 o� � r' 13. The DNWs notice dated January 2, 2009 stating that the lease had expired immediately caused the title to this lease to be clorxied Your decision of January 27, 2009 also clouded the title to the lease in that it stated that the tease would automatically terminate on April 27. 2009 if drilling was not complete by that date. If the DNR continues to assert that this lease may expire on an arbitrary date, I will be forced to take whatever legal actions are necessary to protect my interests. 14. I paid the annual delay rental in full prior to the due date. 15. I was drilling on the expiration date of the lease as drilling is defined in Paragraph 34 of the lease. 16. The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lei. Drilling was undmway both prior to and on that dare• The lease should have been automatically extenAeA wiMout condl[ioos. 17. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling opera&n. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. This is not a matter of agency expertise or discretion- The lease was automatically extended by drilling. The conditions included in your decision are a direct breach of my lease contact As lessee of ADL 389922, I relied terms that I bought contained in the 4 cornets of the state drafted AFL389922 Lease contract the state widely publicly advertized and then sold at a public aeon, and I have been and continue to be damaged by your decision. If you have any questions concerning this request for recoosAmatinu Please contact me. Sincerely, 'Names W. White Cc: Kevin Banks, Department of Natural Resources, Oil & Gas Division 15 b- T3 5'1p OF 'fq VeiNn(�AAMA Ma DEPARTMENT OF NATURAL. '70.71TV-T0713 IfTTIal A:iDRM-1 January 27, 2009 SARAN PAUN, GOVERNOR 6^.1..«�Tli w�,owc c „c iiw ANiK)RAGF- ALASKA 9950136M MOW (907) 2604431 FAX (90n 269-MlB Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: ADL 389922 Notice of Expiration of Lease dated January 2, 2009 Dear Mr. White: I received your January 20, 2009 appeal of the subject expiration, which requests retraction of the lease expiration in accordance with paragraph 4(c)(1) of the lease. I carefully reviewed the facts, your Plan of Operations for the Moose Pt. #1 well, and queried the first-hand observers of the activities at the well site. I also reviewed the definition of "drilling" in paragraph 34.(4) of the lease. I have concluded that the activities observed at the site on December 31, 2008, assembly of the bknvaut paeveaw (BOP), equipment staging for BOP placement, presence of a drill rig, and completion of the initial reentry of the existing well plug, can be deemed consistent with the portion of the definition that reads, "... other operations necessary and incidental to the actual boring of the hole... Therefore, I hereby grant your appeal and retract the subject Notice of Expiration of Lease dated January 2, 2009. ADL 399922 is hereby reinstated and extended in accordance with AS 38.05.180(m) and paragraph 4(cxl) of your lease for so long as drilling is continued with reasonable diligence and sustained production begins within 90 days after cessation of that drilling. In your Plan of Operations you estimated a 30-day work effort to complete drilling. Nonetheless, to ensure you have sufficient time to complete this well, the well must be completed within 90 days of this decision. The failure to complete the well will result in the automatic termination of this lease. After 90 days from the date of this letkr, April 27, 2009, we will review your progress to determine whether continued lease extension is wanaeted, including proof that all permits required are current. In summary, I am remst Ling your lease because you were engaged in drilling on the lease expiration date. However, the continued extension of the lease is contingent upon (1) continued drilling of the well; (2) completion of the well by April 27, 2009; (3) valid permits for all operations; and (4) sustained production within 90 days following the cessation of drilling. The failure to comply with any of these conditions will result in the automatic termination of this lease. I & o -F 3 -7 "Develop, Conserve, and Enhance Natural Resources jar Present and Future Alaskans" ADL 399922 Notice of Exp6atiL. JLeese dated JarEy 2, 2009 Jammy 27, 2009 V Per 2 of 2 This is a final administrative order and dectston of the department for purposes of an appeal to Superior Court An appellant a$ected by this final order and decision may appeal to Superior Court within 30 days in accordance with the rules of the court, and to the extort permitted by applicable law. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas 17b43-7 5t tR ALASSA OIL AND GAS CONSI RMMON CODIDIISSION January 27.2009 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7005 1160 000124" 6095 Jim White Alaskan Crude Corporation 4614 Bohill San Antonio TX 78217 Re: Moose Pt. Unit # 1 PTD No. 205-038 Dear Mr. White: SARAN PAUN, GOVERNOR 333 IN nI AVENUE, SUITE 1DD ANCHORAGE, ALASKA 995013539 PHONE (W) 279-1433 FAX (907) 270-7542 On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) issued Permit to Drill No. (PTD #) 205-038 to Alaskan Crude Corporation for re-entry into the plugged and abandoned Moose Pt Unit # 1 well (which was first drilled under PTD # 179-001). In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit # i well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or completed. Nor does the Commission know the status of any other work at the well. Accordingly, by February 28, 2009, please provide the following for the Moose Pt. Unit # 1 well: (1) a detailed report describing the history, present status, and plans for the well; (2) all records and reports referenced in 20 AAC 25.070; (3) all geologic data and logs referenced in 20 AAC 25.071; and (4) an explanation detailing why any required submissions were not previously made. Requesting and receiving this information in no way affects the Commission's right to take any action, including any enforcement action. Snccrely, i Daniel T. Seamount, Jr. Chair January 26, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 71h Avenue, Suite 1400 Anchorage, AK 99501-3650 Faxed to 907-269,0060' Entailed to Director Mr. Keven Banks, Mr Matt Rader Ij RE: Potential Damages Caused by I nproper Termination of ADL 389922 Dear Commissioner Irwin: The opportunity to drill the Moose Point #1 well this winter season is ending quickly. The risk is spring -break up on the Kenai can begin in early March, 2009. That is about 35 days from today. It has now been twenty six days since the Division of Oil and Gas on January 1, 2009 wrongfully terminated ADL 389922 oil and gas lease. I have received absolutely no indication that the DNR intends to timely reinstate my ADL 389922 lease. My n-nl,r_.tatnr rannnt continue, the drilling of the Moose Point #I well this winter drilling season without immediate notice from you that the lease has been reinstated The Division's wrongful ADL 389922 lease termination has likely prevented this lease from being drilled this winter The.—, l 1 t: left this d n' ♦ e Kenai la tO drill 3eaSCiia. a ueiv i$ nG'vi iTitue ante a�.0 uuS ��� SwSin on t. ��IIar Peninsula w the Moose Point # 1 well's remote site. Please note, it will take additional time to recommence Moose Point # 1 drilling operations to make up for time and efforts that has already been lost this season as a result of the Division's Notice to me. Routine drilling has been delayed for nearly one month during this abnormally short 60+ day winter drilling season. I am being damaged I cannot market gas from the wrongfully terminated ADL 389922 lease. Nobody will consider buying gas from the ADL 389922 lease until this lease has been properly reinstated. Your representatives, Mr. Havelock and Mr. Peterson, January 22, 2009, inspection visit to Moose Point well site clearly demonstrated to your agency that preparations were underway to mobilize the drilling equipment and transport this rig to another drilling location in the event this lease is not soon timely reinstated this winter drilling season I cannot afford to strand the drilling rig on the remote pad over the summer season There is no reason to delay reinstating this lease because the contract is quite clear on this issue. Unequivocal drilling had timely and duly commenced when our drilling rig, which is capable of reaching the bottom of the well, bored out the wrongfully placed concrete and iron in the top portion of the well. Furthermore, your office has received ample documentation of prior well 1� ! UO tl boring activities, along with video, eye witness testimony and photos of our setting the blowout preventer on December 31, 2008 which is necessary and incidental to boring deeper into the Moose Point # 1 well. Other activities incidental to drilling are discussed in our appeal submitted to you. I again ask you to reinstate this lease as quickly as possible or my entire investment in this lease to date will be lost. My costs are escalating. Drilling without owning the oil and gas lease would result in either a free gas well for the State of Alaska or a huge liability for me to the State of Alaska for destroying the speculative value of this lease if the well came up dry. My contact information is provided below Sincere,, s W. e C:::::Address: 4614 Fohill San Antonio, TX 78217 Phone: Kenai 907-335-1829 San Antonio 210-651-0777 Cell 907-394-1829 Email address: jimwhite@acsalaska.net ; jimwhite@satx.rr.com d J 04� 3-7 b, C,F Ijq January 26, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 71° Avenue, Suite 1400 Anchorage, AK 99501-3650 Faxed to 907-269-8918 Faxed and emailed to Director Mr. Keven Banks, Mr Matt Rader RE: Potential Damages Caused by Improper Termination of ADL 389922 Dear Commissioner Irwin: The opportunity to drill the Moose Point #1 well this winter season is ending quickly. The risk is spring -break up on the Kenai can begin in early March, 2009. That is about 35 days from today. It has now been twenty six days since the Division of Oil and Gas on January 1, 2009 wrongfully terminated ADL 389922 oil and gas lease. I have received absolutely no indication that the DNR intends to timely reinstate my ADL 389922 lease. My operator cannot continue the drilling of the Moose Point #1 well this winter drilling season without immediate notice from you that the lease has been reinstated The Division's wrongful ADL 389922 lease termination has likely prevented this lease from being drilled this winter season. There is nncu !:title time le-R this winter drilling ewacnn nn the Kenai Peninsula to dr1L the Moose Point # 1 well's remote site. Please note, it will take additional time to recommence Moose Point #1 drilling operations to make up for time and efforts that has already been lost this season as a result of the Division's Notice to me_ Routine drilling has been delayed for nearly one month during this abnormally short 60+ day winter drilling season. I am being damaged. I cannot market gas from the wrongfully terminated ADL 389922 lease. Nobody will consider buying gas from the ADL 389922 lease until this lease has been properly reinstated. Your representatives, Mr. Havelock and Mr. Peterson, January 22, 2009, inspection visit to Moose Point well site clearly demonstrated to your agency that preparations were underway to mobilize the drilling equipment and transport this rig to another drilling location in the event this lease is not soon timely reinstated this winter drilling season. I cannot afford to strand the drilling rig on the remote pad over the summer season. There is no reason to delay reinstating this lease because the contract is quite clear on this issue. Unequivocal drilling had timely and duly commenced when our drilling rig, winch is capable of reaching the bottom of the well, bored out the wrongfully placed concrete and iron in the top portion of the well. Furthermore, your office has received ample documentation of prior well 1 O 04 `3% LOa C+ qr� boring activities, along with video, eye witness testimony and photos of our setting the blowout preventer on December 31, 2008 which is necessary and incidental to boring deeper into the Moose Point #1 well_ Other activities incidental to drilling are discussed in our appeal submitted to you I again ask you to reinstate this lease as quickly as possible or my entire investment in this lease to date will be lost. My costs are escalating. Drilling without owning the oil and gas lease would result in either a free gas well for the State of Alaska or a huge liability for me to the State of Alaska for destroying the speculative value of this lease if the well came up dry. My contact information is provided below Sincerely., r�uuress: i 4614 Bohili San Antonio, TX 78217 Phone: Kenai 907-335-1829 San Antonio 210-651-0777 Cell 907-394-1829 Email address: jimwhite@acsalaska.net ; jimwhite@satx.rr.com I Ot n-� 3 7 (V3 cep r�q January 20, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7' Avenue, Suite 1400 Anchorage, AK 99501-3650 RE: Administrative Appeal—ADL 389922 Notice of Expiration of Lease Term Der Commissioner Irwin: This letter constitutes my appeal of the Division of Oil and Gas Notice dated January 2, 2009 and signed by Jennifer Haines. That decision purports to close my oil and gas lease numbered ADL 389922. I am the owner of the oil and gas lease and eligible to appeal the Division's decision. The remedy I am seeking is reinstatement of the lease term or alternatively acknowledgment from the division that the lease term did not expire as stated in the Notice. I am seeking corrective action from the Division to place my lease in active status in the division's records systems and case files. Under the terms of the lease the lease was automatically extended beyond the primary term, yet the Division incorrectly terminated the lease term. Please address all correspondence concerning this appeal to James W. White 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907-335-1829 San Antonio 210-651-0777 Cell 907-394-1829 Email address:jimwhite@acsalaska.net jimwhite(a) satx sr.com �L(V 0�- IY� T,� i0 The property/land under appeal is oil and gas lease ADL 389922. It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10, 11, 12, 14, and 15— containing 4800 acres more or less. Under 11 AAC 02.030 I request reconsideration of the Division's decision to terminate ADL 389922. I specifically request that ADL 389922 be reinstated completely and extended as provided for in paragraph 4 (c) (1) of the lease contract. If the commissioner does not reverse the termination of the lease and grant the extension, under 1 I AAC 02.050 I request a hearing. The factual issues to be discussed are the grants to the lessee contained in paragraphs 4 and 34 in my lease and the specific nature of my past and current drilling operations on the lease that serve to automatically extend the lease term. Under I I AAC 02.060 I request an immediate stay of the decision. The public interest requires a stay in this case. Without a stay, my title to the lease is clouded and I cannot negotiate gas sales contracts or market gas produced from the lease. Even with a stay in place, the Division's Notice (and subsequent inaction since issuing the Notice) acts to cloud the title of the lease, causes me undue financial harm, and absolutely prevents sale of any gas from ADL389922. The issues in dispute include the division's incoriect termination of the lease, the specific nanlre or my past anti current drilling operations on the tease, me meaning or paragraphs 4 and 34 to my lease and the division's remedy/action that is appropriate to re -instate the lease in the state's lease data base and records system. I request that the division withdraw its Notice and immediately declare the lease never expired as of 12:01 am January 1, 2009. The material fartS in Aiennta an�1 tha hg.i. fr the .....e. I �.n .�� F 11..... t...... ................. "Ft.........., m ..,a.a,..s: 1. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. Drilling commenced the winter of February, 2006, when eight miles of North Kenai road was repaired and ice bridges were constructed by ADL 38992Ts Operator, Alaskan Crude Corporation (ACC) across Leaf Creek and Cum Creek. Then the Ideco UD35 BIR drilling rig was mobilized along with its related drilling equipment and transported out the North Kenai Road (ice road) and placed at the ADL 389922 lease's Moose Point # 1 well site. After breakup in 2006 early summer extensive access road repair and landscaping wont was performed 011. _he'rl::.: Point# I well pad to get in shape to accommodate the reentry and testing of the Moose Point #1 well. The site's water well was redrMW and a new water pump was installed August, 2006. White's negotiations to sell ADL38992Ts gas to the Agnum Fertilizer were continued Agrium with reasonable diligence. 2. On June 13, 2007, actual boring in the well commenced when the upper portion of the well was drilled out to remove a 4 inch diameter metal pipe that had been wron fully concreted inside the well's 7 inch casing when it was originally plugged and abandoned back in 1978. At this point the drilling rig was positioned over the wellbore. It has since been temporarily moved aside to install the blow-0ut prevention equipment on the well. Drilling as defined in the lease includes many activities in addition to well milling or e.--? 04 3i b-5CF� r�q boring a hole. The fall of 2007 Agium announced that that the Agrium Fertilizer plant would be shut down the winter of 2007-2008 because dependable gas feed stock was not available to Agrium for a price that Agrium was willing to pay. The following spring of 2008 Agrium announced that their fertilizer was being permanently shut down due to no cheap gas feed stock. At that time White had no other potential market for and ADL 389922's gas until the Patin/LNG two year export license agreement was announced providing for the LNG plant to purchase up to 30 mmcf of gas per day from Independents such as White and Alaskan Crude Corporation. Late freeze-up caused ACC to postpone its re -commencement of its 2008 winter Moose Point#1 drilling operations until T..,,-� M zWo hen e._.._......�..val LL.�L ll,.....,. T..:� Leciem 1 W, LWO WLell We .•.VYRI a{;1�"JJ 1\VlW 11enai Road to we Moose runit drill site had frozen hard enough to support travel by light pick-up trucks. The North Kenai Road had not frozen hard enough to support needed travel by heavy trucks December 31.2008. 3. ACC is the operator on the lease. Alaskan Crude's drilling operations met the definition of drilling described in Paragraph 34 of the lease contract_ On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from your office witnessed the continuation of drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including site preparation, building the pad, drilling a water well with the rig and conducting drilling operations with the rig. Such drilling operations have been conducted with reasonable diligence_ 4. The DNR advertised and sold a state -drafted lease with the clear contract right to automatically extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otherwise have expired The annual delay rental payment was timely paid, thereby autornaticallv extending the lease beyond its primary term. 5. Significant risk capital has already been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL 389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent Pahn/LNG agreement allowing export license gas deliveries to Japan worth millions of dollars over the next two years. This gas-m1e opportunity must be timely mct or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is ft:o first time du ' -'---- ' .. during the seven year tft T j iaiu in we lca.�c wur UHN tease has 1`lnally had the opportunity to market its gas at an acceptable price. We stiff suffer hub losses if we are not able to deliver gas from this lease commencing this spring. Alaska gas marketing opportunities for small independent oil and gas operators are almost non- existent. Future gas marketing operations are at risk as long as the division's decision is not reversed or withdrawn. 6. This lease is adjacent to the ConocoPhillips natural gas transmission pipeline that runs from the North Cook Inlet gas field to Nrkiski and the LNG plant 7. ConocoPhillips has committed to buy 30kmcf of gas from third parties to fulfill a portion Of its LNG export volumes beginning in April 2009 and mnnmg for 24 months. This is a �� d 7q potential 50 million dollar plus per year gas market available for Alaska's independents that have gas deliverability readily available. 8. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 9. Access to this lease area by heavy equipment is limited except for winter months when the ground is solidly frozen, which for this winter season did not occur by December 31, 2008. However, the access road became suitably frozen to safely support a light duty pickup on December 20, 2008. 10. The DNB's notice dated January 2, 2009 stating that the lease had expired immediately caused the title to this lease to be clouded. If the DNR continues to assert that this lease is expired, then title to the lease continues to be clouded. I will be forced to take whatever legal actions are necessary to protect my interests. Selling gas from a lease with a clouded title is unheard of. It never happens. 11. I paid the annual delay rental in full prior to the due date. 12. I was drilling on the expiration date of the lease as drilling is defined in Paragraph 14 nr the lease. 13. The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. Drilling was underway both prior to and on the expiration date. The lease is automatically extended —it is not a discretionary decision. 14. Mr. Matt Rader is aware of the wrongful termination of my lease and the mistake made by your office, yet no action has been forthcoming from your office. 15. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling operation. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. 16. Director Banks was informed of this wrongful lease termination by fax copy on January 15, 2009. This is not a matter of agency expertise or discretion. The lease was automatically extended by drilling. This is a direct breach of my lease contract As lessee and purchaser of ADL 389922, I relied on the patently clear contract provisions in the lease that was sold to me to extend the lease. I have been and continue to be damaged by the division's actions and misinterpretation of the lease provisions. Under 11AAC 02.030 this letter is also my notice of intent to file additional materials in support of this appeal within the allotted 20 day period. r�01 o-� Z--) (D,+ 0 � V If you have any questions concerning this appeal please contact me. Sincerely, W. White of Record Enclosures —sent by US mail service Email addressed to Kevin Banks Pictures of drilling operations Memo/Notes addressed to Matt Rader You Tube Video of Drilling Operations: http://www.youtube.com/watch?v=HOKcwuu5aXw January 15, 2009 Mr. Kevin Banks Department of Natural Resources State of Alaska 550 West r Avenue, Suite 800 ((_ Anchorage, Alaska 99501-3500 Re: Wrongful Termination of ADL 389922 Dear Kevin, I received the attached termination letter from the DNR dated January 2, 2009 stating that ADL 389922 has expired and the case closed. If the termination letter was a clerical error, please correct it and advise me by email before 2.00 PM Friday, January 161b that the lease is still in effect Otherwise I plan to timely appeal the DNR letter. This is not a matter of agency expertise or discretion. This is a direct breach of our lease contract. I, as lessee of ADL389922, am being damaged by this action. 1. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. Drilling has continued with reasonable diligence since. On June 13, 2007, actual well boring commenced when the well was drilled out to remove the 4 inch metal pipe that had been wronzftdlv concreted inside the well's 7 inch casing when it was originally plugged and abandoned back in 1978. 2. Alaskan Crude's drilling operations met tr,.., d.�.on. described in Paragraph 34 of the lease contract On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from your office witnessed the drilling activities and also left with pbotos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including building the pad, drilling a water well with the rig and conducting drilling operations with the rig.. 3. The DNR sold us a state drafted lease with the clear contract right to extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally occurring on the date that the lease would otherwise have expired The atonal delay rental payment was timely paid thereby extending the lease beyond its primary term. 4. Significant risk capital has already been invested to drill and develop ADL389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell AD1389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent Patm/LNG agreement allowing': export license gas deliveries to Japan worth millions of dollars the next two years. This opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost Please note, this is the la time during this seven year primary term of the lease that this lease has finally had opportunity to market its c7 I 0 t (,gq bf y� gas at an acceptable price. We will suffer huge losses if we are not able to deliver gas from this lease this spring. Alaska gas market opportunities for small independent oil and gas operators are almost non-existent 5. This lease is adjacent to the ConocwPhillips natural gas transmission pipeline that runs from the North Cook Inlet gas field to Nikiski and the LNG plant. 6. ConocoPhillips has committed to buy 30kmcf of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009. This is a potential 50 million dollar plus per year gas market available for Alaska's independents that have gas deliverability readily available. 7. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 8. Access to this lease by heavy equipment is limited except for winter months when the ground is solidly frozen which did not occur by December 31, 2008. However, the access road became suitably frozen to safely support a light duty pickup December 20, 2008. 9. The DNR's letter dated January 2'", stating that the lease had expired immediately caused the title to this lease to be clouded If the DNR continues to assert that this lease is expired, then title to the lease continues to be clouded I will be forced to take whatever legal actions are necessary to protect my interests. Raising capital to use on development of a property with a clouded title is difficult or impossible to do. 10. I paid the annual delay rental in full prior to the due date. 11. I was drilling on the expiration date of the lease as defined in Paragraph 34 of the lease. 12. 12 The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. 13. Mr. Matt Rader is aware if the situation on my lease and the mistake made by your office, yet no action has been forthcoming from your office. 0 rn Again, I plan to appeal the Division's January 2, 2009 decision letter stating that my lease has expired unless I hear otherwise that the lease is still in effect. Mr. Matt Rader from your office was on location on my lease on the expiration date. He can attest as to my drilling operation_ Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. Regards, James W. White, Lessee ofADL 389922 4614 Bohill Street San Antonio, TX 78217 210.651.0777 San Antonio Office iimwhiteCa)satx. rr.com 907.335.1829 Kenai I imwhite(Wacsa laska.com X9 33 a-C 3-) F-I C'C n V V(1 �'nA M �S� RAHPALIN, GO{'ERNOR L(,j'}U'' U� DEPARTMENT OF NATURAL RESOURCES 550 WEST 7" AVENUE, SUITE 800 ANCHORAGE, ALASKA 99501-356o DIVISION OF OIL AND GAS PHONE: (907) 269-BB00 FAX: (907) 269-8938 January 2, 2009 James W. White 4614 Bohill San Antonio, TX 78217 NOTICE LEASE EXPIRED t l Oil and Gas Lease ADL 389922 Effective January 1, 2002, the State of Alaska issued oil and gas lease ADL 389922 in the Cook Inlet area for a primary term of 7 years. You are hereby notified that in accordance with the lease agreement, ADL 389922 expired on December 31, 2008_ The case file has been closed in this office. Sincerely, Pe4 a ifer Haines raI Resource Specialist ToL Deyelop, Cottsetvg and Enhance Natural Re501lreLs for Present and Frrttwe Alaskans. " Alaska Crude Corporafion, 4614 Bohi'llf, San Antonio, Texas 7M7 MEMORANDUM SUBJECT: Discussing the later than normal winter freeze up of the North Kenai Borough Road. FROM: Alaska Crude Corporation DATE: December 31, 2008 June 13, 2007, actual well boring commenced to reach the bottom hole location of the Moose Point #1 well. The well was reentered to remove the 16 foot long 4 inch metal pipe and concrete that was cemented in 6 feat below the final grade when the well was plugged and abarxioned in 1978. Drilling operations are being performed pursuant to Lease contract: ArtirlF 34 Definitions, Paragraph (4) Article 34 DEFINITIONS (4) "Drilling' means the act of boring a hole to reach a proposed bottom hole location through which oil or aas may be Droduced if encountered in Davin quantities, and indudes redrilling, sidetracking, deepening, or other means necessary to reach the proposed bottom hole location, testing, logging, plugging, and other operations necessary and incidental to the actual boring of the hole;" Other operations necessary and incidental to the actual boring of the hole to reach the bottom hole location occurred when Alaska Crude Corporation (ACC) redriiled and completed the lease's 120 foot water well with a pump to provide water required to drill the Moose Point #1 well. Additionally, the workover rig, blow out preventer, mud tanks, drill pipe and other major equipment necessary and incidental to reach the proposed bottom hole location of this well are currently located at the lease well site. Drilling operations are now continuing on ADL389922 lease's Moose Point # 1 well whose bottom hole is located on this lease_ The Moose Point # 1 well AOGCC API drilling permit number is 50-133-20312-9000. -3S- o-F 'Y% � -3 0� qr+ Drilling has duty commenced on ADL 389922 and will continue with reasonable diligence on the day that this lease would otherwise expire, December 31,2008,and continue thereby automatically extending this lease pursuant to lease paragraph 4(cx1) until 90 days after cessation of reasonable diligence. Article 4 (c)(1) of the lease provides: "If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, this lease will continue in effect until 90 days after cessation of that drilling and for so long as oil or gas is produced in paying quantities from the leased area." Development of ADL 389922 is dependent upon having a road that is capable of carrying heavy equipment to remote well site and finding a market for gas that might possibly come from this well - The 8 mile North Kenai road beyond Captain Cook Park is a Kenai Borough unimproved road. It will only support truck travel in the winter when the ground is frozen deep enough to support a heavy truck. It was not until December 2&, 2008 that the road became frozen enough to support limited light duty pick-up travel to and from ADL 389922 lease's Moose Point #1 well site. The road will not be frozen sufficiently to safely support large vehicle travel to the Moose Point #1 well until after December 31, 2008- If the weather remains cold, road conditions should improve so heavier equipment may be able to travel after December 31, 2008 to and from the well site as needed. Finding a market for the gas is important. Available markets justify the investment of wildcat risk capital in exploration and drilling oil and gas wells. The Birch Hill well, kx:aked only 2 miles from the Moose Point #1 well, has been capable of selling gas since 1967, but has not sold one cubic foot of gas the last 40 years - ACC had ongoing gas sale negotiations with Agrium until they shut their plant down in 2007. This meant there were no other possible markets to market gas from ADL 389922 until Governor Palin bargained to approve Phillip/Marathon's gas export license to ship Kenai gas to Japan. Governor Palin forced PhilliplMaraihon to agree to purchase up to 3( o4? 3--? T� c! -` 30,000,000 cubic feet of gas per day from new independents like ACC and include that purchased gas in the Japanese gas delivery. Because of her actions, ACC now believes that it may be profitable to take the risk to invest more risk capital to continue exploring the ADL389922 lease. ACC believes that ACC has a reasonable dance to market gas to the LNG plant partners if gas can be found timely during this very short two year new Phillips/Marathon export license to Japan. ACC now intends to invest more risk capital to explore the ADL 389922 for gas on the risky premises gas could be sold to the LNG plant. Phillips has a 20" pipeline to their liquefied natural gas plant that runs over ADL 389922 and is within 800 feet of the Moose Point #1 well. If gas is found in the Moose Point #1 well, the physical act of connectino an 800 foot Gathering line could be accomplished within a few days. ACC currently knows of no other market to sell gas in Alaska. ACC now believes it can get a reasonable rate of return if it can get the Moose Point #1 proved up and flowing before too much time goes by when Phillips/Marathon commences its new gas exports to Japan. Then royalties from this state lease can begin flowing to the state's coffers. �S -�C)-(:�-S7 JA� 11 3/At1`1��� "ll s1EYFCcriITIR, GowRNt)R DUPAICTIRIENT OF NATURAL RESOURCES P.O. BOX 7034 DIVISION OF OIL ANO GAS ANCHORAGE. ALASKA 99510-7034 June 26, 1987 31��,/a George Trefry, Esq. Trefry and Kasmar 3003 Minnesota Drive, Suite 301 Anchorage, Alaska 99503 Re: ADL 318612 and ADL 318613 Dear Mr. Trefry: This letter responds to your June 22, 1987 letter. It is sent in order to avoid any implication that the state agrees with all of the assertions made in your June 22, 1987 letter. The division of oil and gas (division) is fully aware th t neither the division nor Alaskan Crude Corporation can un'laterally amend lease terms. This fact does not, however, re der it inappropriate for the division to state its understanding ofIthe rights and obligations under the leases. The division specifically disagrees with your contention that pendency of litigation (instituted, incidentally, by your client) automatically removes any obligation from your client to do an}thing other than to pay rentals. The simple fact is that there is no judicial stay preventing your clients from drilling on the lenses. You assert that your clients have been "effectively pr cluded" from developing the leases on account of the litigation. Ho ever, Alaskan Crude Corporation's subjective assessment of the pr deuce of expending time and money in drilling is irrelevant. In ev ry lease contract there are constraints and risks. All lessees mu t weigh the geologic risk concerning whether or not oil and gas wi be found in paying quantities against the cost of acquisition, exil loration and development of the leases. All that is added by th pendency of the litigation is the legal risk that the Supreme Cogrt may agree with the state. There is no injunction against op rations by Alaskan Crude Corporation. Accordingly, if Alaskan Cr de Corporation is confident of its legal position, it should ha a no fear of proceeding with exploration. The legal risk is only cumulative with the other risks and costs mentioned above, and does not amount to a bar against drilling activities. This is not to say that Alaskan Crude Corporation is precluded from asking the courts to rule that the period of the appeal should not be 0,� 9-1�- C0059G %'/-i2Oi George Trefry, Esq. June 26, 1987 Trefry and Kasmar Page 2 "chargeable against the primary lease term." However, the division is equally entitled to contend otherwise. J Finally, I take issue with your assertion that the division is not acting in good faith. The division has every bit as much a right as Alaskan Crude Corporation to seek judicial relief. Alaskan Crude Corporation exercised its right by filing an administrative appeal to the Superior Court:. It has no cause to complain when the state exercises its reciprocal right. Nor do we see how the division has acted in bad faith'by asserting its understanding of the impact of the pending 'Supreme Court appeal on ongoing lease obligations. Surely it is better for the division to put Alaskan Crude Corporation on notice as to the division's understanding in advance. The fact that you may disagree with the division's understanding of the interrelationship between the appeal and ongoing lease obligations provides a possible need for judicial resolution of a dispute, but provides no basis for a charge that the division is acting in bad faith. Sincerely, mes Eason erector JE:MPW:amh cc: Alaskan Crude Corporation Mark Worcester, Assistant Attorney General ADL 318612 and ADL 318613 lease files �i C J Significantly, the trial court, even in ruling generally favorably to Alaska Crude Corporation on ADL 318612 and ADL 318613 did not rule in favor of Alaskan Crude Corporation on the extension 41 of the primary term issue. Y q,� cf q-q Oki Apr, 22 09 04:55p Intrepid Production 2106510777 p.1 �r ALASKAN CRUDE CORPORATION 4614 BOHILL SAN ANTONIO, TEXAS San Antonio, Texas (210) 651-0777 Kenai, Alaska (907) 335-1829 Mobile (907) 394-1829 FAX TRANSMITTAL SHEET TO: AOGCC ATTENTION: Daniel T. Seamount, Jr. FAX NUMBER: (907) 276-7542 CE=l ITED 21.16 APR 2/ 2009 Alaska Coil & Gas Cons, Commission, Anchorage Subject: Moose Pt. # 1 Well Drilling Permit 205-038-0 Wrongful Termination Apr, 22 09 04:56p Intrepid Production i 2106510777 p.2 i April 22, 2009 APR 2 2 2009 To: Alaska Oil and Gas Conservation Commission klasita Oil & Gas Cons. Coinraissior. 333 W. 71h Avenue Suite 100 Anci oia2e Anchorage, Alaska 99501-3539 Attn: Thomas E. Irwin, Kevin Banks, Mr. Daniel T. Seamount, Jr. Faxed April 22, 2009 to Daniel T. Seamount, Jr at (907) 276-7542 Faxed April 22, 2009 to Commissioner, Thomas E. Irwin at (907) 269-8918 Faxed April 22, 2009 to DNR-DOG Director, Kevin Banks at (907) 269-8938 This letter is appealing the Alaska Oil and Gas Conservation Commission's (AOGCC) actions declaring on February 5, 2009 that Moose Pt. #1 Well's Drilling Permit # 205-038-0 had terminated two years earlier on March 24, 2007. The AOGCC declared Moose Pt. #1 Well's Drilling Permit # 205-038-0 had ceased to exist after March 24, 2007. The AOGCC only published an AOGCC website (htW://www s_ tate gk.usfadmin/ogcfhomeogc shtml) February 5, 2009 for the very first and only time declaring that Moose Pt. #1 Well's Drilling Permit # 205-038-0 had expired March 24, 2007. The drilling operations milling out required to mill the 4" steel pipe concreted into Moose Pt. #1 Well's 7" casing automatically extended the Drilling Permit # 205-038-0. Therefore, Drilling Permit # 205-038-0 automatically extended beyond March 24, 2007. Please note: To rework Moose Pt. # Well with a 4" steel pipe concreted into the 7" casing may not seem like much of a "drilling operation" to the inexperienced; however, to the experienced driller, reentering and reworking Moose Pt. #1 Well's casing with a concreted in 4" steel pipe sticking out the 7" casing is in fact a maior "drilling operation." Oftentimes the original operator who originally drilled, then plugged and abandoned the well deliberately leaves iron pipe and other metal debris (chain, etc.) in the casing to prevent the well from ever being reentered or reworked. That original operator generally is not interested in leaving his well in a condition where a new operator can come in and easily have a cheap well. 20 AAC 05 states the regulations required to obtain and maintain a drilling permit. 20 AAC 05.005(g) states a drilling permit will expire if "drilling operations" are not commenced 24 1 of 20 Apr,22 09 04:56p Intrepid Production 2106510777 p.3 months after the approval of the drilling permit 20 AAC 25.990(23) defines "drilling operations" as having commenced when drilling below the conductor pipe. In reworking an existing well that has been drilled, cased from the surface down the TD depth and plugged and abandoned a conductor pipe does not exist inside the casing. The definition 20 AAC 25.990(23) of "drilling operations" has no specific mechanism to trip "drilling operations" when reworking the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned. However, drilling was underway at the Moose Pt. #1 Well prior to expiration of the drilling permit. The definition "drilling operations" as defined in AAC 25.990(23) needs to be revised and re -promulgated to clearly trip 20 AAC 25.990(23) "drilling operations" into affect when reentering and reworking a well that has already been drilled, properly cased, plugged and abandoned and has no conductor pipe existing inside the casing. In the mean time, the AOGCC needs to exercise its agency discretion and acknowledge that drilling by ACC did commence prior to expiration of the drilling permit. AOGCC DID NOT NOTIFY JAMES W. WHITE IN WRITING ON OR BEFORE FEBRARY 5, 2009 PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205-038-0 MARCH 24, 2007 SOME TWO YEARS EARLIER 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05... the commission will send the person a written notification by personal service or by certified mail, return receipt requested." AOGCC did not send "a written notification by personal service or by certified mail, return receipt requested telling ACC Drilling Permit # 205-038-0 was in non-compliance of 20 AAC 25.00S(g). AOGCC chose not to tell ACC that Drilling Permit # 205-038-0 may have terminated after the AOGCC had declared February 5, 2009 that the drilling permit retroactively expired two years earlier. ACC could find no evidence that this information had been posted elsewhere previous to 2009. It clearly was not sent "certified mail" to ACC. In addition, there is no evidence that AOGCC considered the operations at Moose Pt #1 Well nQt to be drilling operations. In fact the record favors the premise that the AOGCC did consider the operations to be drilling operations. ACC has been diligently conducting operations at Moose PL # 1 well for the past two years and has kept the AOGCC informed of these operations. ACC kept the AOGCC informed of ACC's progress and lack of markets for Moose PL #1 Well's gas. Had AOGCC informed ACC that AOGCC is terminating Drilling Permit # 205-038-0, March 24, 2007 while ADL 389922 still had two years remaining in its primary term, ACC would 2 of 20 Apr,22 09 04:56p Intrepid Production 2106610777 p.4 L�! have had ample time to file and get a new drilling permit in view of the fact that it only took less than twenty (20) days to get the original drilling permit filed and approved in 2005. Image 1: AOGCC Website showing the "NEW" link, "Outstanding Drilling Permits" circled in red. Csriera t, 5fa€t- I I Contact Lis I AOGCC find FrE� kt,�5.,p is}'y e[r.f1'p4ki� v <q�arri8€r�,eB 9itoo Headlines- '; Highlights F r•.. _.d Reg Chant?,, Stems l_,.,,, ,_t. A.) CC nlIth �nnPRfsar, -17daE1'ip sta :st^s Of Interest r -.... .._.._... Gala, is c- In;iFa ra „il c6 Rcidauons Jl2 ..Lwal"o JCIn ll -i... The AOGCC Website 3 EX!enstuns .I 'I cr:rts &. Studies ,.. i.... '. Cecls!UI-s Quick Links EPk, UC. Prcgrer- IN, entale eiss cr i m role laln. a 'E.r,ic+ Eu;"u CI Land Uomf COL r,s.+d E eiq% (http://www.state.ak.usladmin/ogc/drilling/OutPermits/2009lOPermitsO9O228.pdf ) (Image2), "Outstanding Drilling Permits," is shown dated February 05, 2009 and circled in red at the bottom of the page. This publication advertises that ACC's Drilling Permit # 205- 038-0 had arbitrarily been terminated two years earlier, March 24, 2007 by the AOGCC. AOGCC made no attempt to send ACC, pursuant to 20 AAC 25.535, "a written notification by personal service or by certified mail, return receipt requested" declaring February 05, 2009 the AOGCC retroactively terminated ACC's Drilling Permit # 205-038-0. This Website, "Outstanding Drilling Permits;" did not provide or detail White of his rights to appeal the Website notice that Drilling Permit # 205-038-0 had been retroactively terminated two years earlier with this Website image (Image 2). 3 of 20 Apr.22 09 04:57p Intrepid Production 2106510777 p.5 i �- This action by the AOGCC occurred while ACC had operations actively underway at the wellsite. Image 2: Screen -print of "Outstanding Permits: Expiration Dates 11112007 Thru 212812008" PDF Website showing date Thursday, February 2, 2009 circled in red. , -outstanding Drillin Permit4 > Expiration Dates 111/2007 thru 212012009 OPrmmr \l'eLLSarle - AP1 Swnl»r .,_.,_Pa>b: A!gnmxd Fatly CRUDE CO MOOSE PT I1 T ! Re- , SrH133_10312.9!'1100 :05.136.0 3 24 _'005 i _42007 STOR\I C.y7 i,ERG]•_-COA773fP.:Qu4"tf'Eil'-.... :" . (i+Orfi::[N'i1Arn?!J�'ti;F.P' : --_.— .`Tt— •c BP EXPL0P.47I0N IA PRLDHOE BAY LWIT X-10C tii-U24J37E2di?-00 206.015-0 1 51 :0.36 1 ii _00s C'ONOCOPHIUIPS.-LL KUPARLIS PS': L_XTT _D-05L1 50.0]u-_115'-d0-nf: _Oe-t'. J-0 1220 i006 31:0.]03s CONOCOPHILLIPS _AL KL3ARLIK Rn'UN7T :13-05LI-07 Rk:¢J 15'-61-0!' 206-1^. -0 110:01,7 110_009 BP EXPLORATION (A PRLDBOE BAY UNIT 0--056 50-G:4-:u:96-C_ O(! ]0'-ri19.0 _.1a _W'! : 14 ]09 BP EXPLORATION (,A PRLDHOE BA1' LV ORIN V-201d 207-0:4-0 : 1! ]0)? _ _: 2009 '7deudiy, Tebn N. .00o Page I or I a>� Prn'ms...OAri Ouu:.rdm: Pmvn. 6:ktt \1v,ril Hx Ihtes MAIN ISSUES Below are the main issues concerning Drilling Permit # 205-038-0: 1. 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Clearly, the AOGCC declared that ACC had not complied with the "drilling operation" regulations pursuant to 20 AAC 25.005(g) required to automatically extend the drilling permit beyond two years. Clearly, it is very important that ACC needs know if ACC may be in non-compliance. Clearly, it is very important that ACC know if ACC's drilling permit may have been terminated. The AOGCC's failure to inform ACC of any possible non-compliance or the possible termination of ACC's Drilling Permit # 205-038-0 was an arbitrary and capricious decision and a violation of 20 AAC 25.535 and their own mandated discretion of the law: a. 20 AAC 25.535 reads: (a) if the commission, as the result of an investigation or otherwise, considers that a person may have violated or failed to 4 of 20 Apr 22 09 04:57p Intrepid Production 2106510777 p.6 comply with a provision of AS 31.05, this chapter, or a commission order, permit, or other approval, the commission will, in its discretion, take enforcement action under this section against the person. (h)lf the commission proposes to take enforcement action under this section against a person, the commission will send the person a written notification by personal service or by cued mail return receipt requested. The commission's written notification to the person will (I) state the nature of the apparent violation or noncompliance; (2) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (3) state the action that the commission proposes to take under (e) of this section; and (4) inform the person of the person's rights and liabilities under (c) - (e) of this section. 2. The AOGCC made no effort in phone conversations or written correspondence between 2007 and 2009 to inform ACC that Drilling Permit # 205-038-0 may have terminated on March 24, 2007. Correspondence between ACC and AOGCC includes volumes of emails, certified letters, and faxes concerning ADL 389922 and Moose Pt. #1 Well (see Exhibit 1). The AOGCC sat on this arbitrary and capricious decision for two years, not advising ACC in any way, shape or form that Drilling Permit # 205- 038-0 may have terminated in 2007. 3. James W. White spent his own risk capitol, not investor money, to develop the Moose PL 41 Well. Believing Drilling Permit # 205-038-0 was actively in place, ACC continued to spend $1,000,000 (1 million dollars) developing Moose Pt. #1 Well and the lease property over the 2007-2009 time period. Believing Drilling Permit # 205- 038-0 was actively in place, ACC kept ACC's drilling rig at the Moose Pt. #1 Well through 2009 paying $52,000 in ADL Lease 389922 rental fees alone. Believing Drilling Permit # 205-038-0 was in place ACC spent hundreds -of -thousands of dollars at Moose Pt. #1 Well in the reentering process of reworking Moose Pt. #1 Well. 4. Moose Pt. #1 Well was not properly Plugged and abandoned when ACC acquired ADL 389922 and Drilling Permit # 205-038-0 was approved. Reworking operations were continuing when ACC began the process of safely milling out the 4" steel abandonment marker pipe concreted into the 13-3/8 3K wellhead. No agency regulation exists addressing the procedures for reentering an improperly plugged and abandoned well. Therefore, actual "drilling operations" had commenced when ACC Cut the top of the 4" concreted abandonment marker pipe from the 13-3/8 3K 5 of 20 Apr 22 09 04:58p Intrepid Production 2106510777 p.7 wellhead and began the process designing special milling tools for milling the remainder 4" concreted abandonment marker pipe out of the 13-3/8 3K wellhead, and hiring machine shops to fabricate the milling tools. S. Existing AOGCC records did not indicate that a 4" steel abandonment marker pipe was concreted into the 13-3/8 wellhead. Image 3: Photo showing Moose Pt. #1 We➢l with 4" steel abandonment marker pipe concreted into the 13-3/8" 3K wellhead, taken summer of 2006. 7ko'1"o strews y., aSwndcnmen+�„��� Image Ql?C cancretnJ,lnTo 6 of 20 Apr 22 09 04:59p Intrepid Production 2106510777 p.8 Image 4: Photo showing Moose Pt. #1 Wellhead with portion of 4" concreted abandonment marker pipe still sticking out of the 13-3/8" 3K wellhead, taken March 19, 2007, Image 4. \il ,I✓ {� it . 1 .l -1 19, 2007 DRILLING OPERATIONS COMMENCED The regulation 20 AAC 25.005(g) refers to the actual drilling of a new grass -roots well. Reentering and reworking Moose Pt. #1 Well as permitted by Drilling Permit # 205-038-0 is in no way the same as drilling a new well from scratch. Reworking and reentering Moose Pt. #1 Well required first step was to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 13-3/8 3K wellhead. This is a reworking operation of a well already drilled. It should be further noted, concrete (having a gravel mixture) is much more difficult to mill out than neat cement (pure cement) normally used in plugging and abandonment operations. 20 AAC 25.005(g), reads, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Drilling operations as defined by 20 AAC 25.990(23) reads, "drilling operations" means the penetration of ground below the setting depth of structural or conductor casing, using a drilling rig capable of performing the permitted well work, and for purposes other than setting structural or conductor casing; "drilling operations" includes the running of casing, cementing, and other downhole work performed ancillary to formation evaluation, and operations necessary to complete and equip the well so that formation fluids can be safely brought to the surface." 20 AAC 25.990(23) does not apply to Moose Pt. #1 Well because the 333' twenty inch "structural conductor casing" does not exist inside the 7" casing. The 20" conductor pipe that is set 333' below the surface is set outside of the 7" casing extends from the surface to the 9,032TD (total depth of the 7" casing). The well has already been drilled and properly cased with 7" casing from the ground surface to its total depth 9032' (9,032 feet). 7of20 Apr.22 09 05:00p Intrepid Production 2106510777 p.9 I 20 AAC 25.990(23) defines no mechanism to trip the Moose Pt. #1 Well into an automatic extension because there is no conductor pipe inside the 7" casing to drill out from. The 7" casing simply exists from the surface to the TD depth 9032'. Agency discretion should be exercised and a ruling issued that drilling did commence prior to expiration of the drilling permit. The ail and gas regulations do not have a drilling permit 5 eP cially romulgated for reworking existing plugged and abandoned wells. The definition 20 AAC 25.990(23) of "drilling operations" does not fit the generic reworking operations to rework the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned having no conductor pipe inside the 7" casing. All of the "drilling operations" described in 20 AAC 25.990(23) does not define the reworking and reentering operations of the Moose Pt. # 1 Well. The tripping mechanism of 20 AAC 25.990(23) requires that "drilling operations" commence below the conductor pipe to trip Moose Pt #1 Well's Drilling Permit # 205-038- 0 into place to automatically extend the permit. The Moose Pt. # Well has no conductor pipe inside of it to drill out below needed to trip 20 AAC 25.990(23) definition of "drilling operations" into place to automatically extend Moose Pt #1 Well's Drilling Permit # 205- 038-0. ACC should not be held hostage or damaged because of a gap in the regulations. The necessity to mill out up to 25' or 30' (25 or 30 feet), or more of 4" steel abandonment marker pipe concreted in the 7" casing is an extraordinary situation and is NEVER encountered when a well is properly plugged and abandoned (please note the 2" 3K valve shown in Image 3, still attached to the bottom half of the original 13-3/8" 3K wellhead containing the slips supporting the 7" casing at the surface). 1. Existing AOGCC records DID NOT MENTION the depth of that surface plug, nor the length of the 4" steel abandonment marker pipe concreted in to Moose Pt #1 Well in the original plugging and abandonment records filed with AOGCC. 2. The above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed the summer of 2006 leaving still a portion of the 4" steel abandonment marker pipe sticking above ground. (cut off portion of 4" pipe is shown in Image 4) 8 of 20 Apr.22 09 05:00p Intrepid Production 2106510777 p.10 r 3. That portion of the 4" steel abandonment marker pipe concreted into the 7" casing forced ACC to specially design milling tools and hire machine shops to fabricate the milling tools to safely attempt to mill out that portion of the 4" steel abandonment marker pipe concreted down into the 7" casing. 4. ACC did not know if that portion of the 4" concreted abandonment marker pipe went 5' or 30' down into the 7" casing. ACC had to plan for the worst and plan the milling operation for 30'. S. These specially designed milling tools were not delivered to ACC until early summer of 2007. These unique milling tools that were required were not shelf items and had to be specially designed by ACC to remove the 4" concreted abandonment marker pipe. It took several months for the machine shops to fabricate and deliver the milling tools to ACC. Machine shops during that period of time were extremely busy. 6. Upon delivery of the milling tools, early summer 2007, ACC commenced the milling operation to mill out the then -unknown length of 4" steel abandonment marker pipe that had been concreted into the 7" casing at the surface (see Image 4). Any experienced driller will acknowledge that milling steel pipe concreted in a 7" casing is a very difficult and sensitive operation. It is much more difficult to drill a pipe at the surface than it is to mill out 4" pipe cemented thousands of feet deeper in a 7" casing, because at a deeper level you have the 7" drilling casing's ID (inside diameter) to stabilize mill rotation and drill pipe weight providing measured weight on the milling tool. At the surface your milling tool wants to jiggle and bounce around threatening to damage the surface of the wellhead and the 7" casing, thus ruining all hope of a successful reentry. Milling tools ware very rapidly and have to be replaced or rebuilt often when milling out iron cemented in a 7" casing. 7. Great drilling experience and skill is required to protect the wellhead and 7' casing when milling steel out of a 7" casing at its ground surface. You must not damage the gasket and ceiling surfaces of the 13'-3/8 3K wellhead when trying to mill out the 4" steel abandonment marker pipe concreted into the 7" casing. Firstly, the Moose Pt. #1 Well had not been properly P&A'd in accord to state standards by the previous operator when ACC obtained Drilling Permit # 205-038-0. Normally, the well casing is cut off 4' (4 feet) below the ground surface. A metal plate should be welded to the top of the casing thereby sealing the casing. A 4" steel abandonment marker pipe is then welded atop of the metal plate that is welded to the top of the cut off 7" casing. This 4" well marker pipe is then welded to the plate that is welded to the 7" casing 4'+ below the ground surface that should be long enough to stick above the surface level to a height of 6 feet. Dirt is then filled in around the marker pipe welded to the metal plate welded to the cut-off 7" casing 4-5 feet below the ground to the surface level. 9 of 20 Apr•22 09 05:01p Intrepid Production 2106510777 p.11 In this instance the Moose Pt. #1 Well's casing was never cut off i elow ground eves as required. The 4" (4 inch) steel abandonment marker pipe was improperly concreted into the 13-3/8" 3K 7" casing wellhead. The 4" steel abandonment marker pipe was set and concreted into the 7" (7 inch) casing at the surface in the 7" casing, therefore. " rilli g operations," as defined by ACC 25.990 does not apply to the Moose Pt. #1 Well because Moose Pt #1 Well had already been drilled in 1978. "Drilling operations" speak only to drilling a new grass- roots well. ACC did commence drilling operations in the required time frame. REWORKING MOOSE PT #1 WELL SPECIFIC OPERATIONS Reworking Moose Pt. #1 Well required an extraordinary milling operations: 1. cutting of the top of the 4" steel abandonment marker pipe to assess the specific needs of a specially designed milling tool 2. designing the milling tools 3. having machine shops fabricate the milling tools 4. receiving delivery of the milling tool from the machine shops S. removing, milling, and boring out the 4" concreted steel abandonment marker pipe These operations constitute the reworking, reentering, and "drilling operations" for Moose Pt #1 Well Drilling Permit # 205-038-0. The first step necessary to reenter Moose Pt #1 Well was to first cut off the top of the 4" steel abandonment marker pipe to examine and determine the proper design for milling tools to milling out the unknown length of the pipe concreted into the 7" casing. Please note: 4" drill pipe generally comes in 30 foot lengths. Existing AOGCC records did not record the length of the marker pipe wrongfully concreted in the top of the 7" casing. The length of the 4" steel abandonment marker pipe was unknown whether it was 5' long, or 30' long. ACC believes that the unique operation of first being required to design and get delivery of the milling tools to commence milling and drilling that portion of the 4" steel abandonment marker pipe that had been concreted into the surface plug constituted the actual first steps in complying with Drilling Permit # 205-038-0. As stated above, these milling tools were not the type of milling tools that you can buy off the shelf from others. 10 of 20 Apr 22 09 05:01p Intrepid Production 2106510777 p.12 I This 4" concrete abandonment marker pipe event was a total surprise. ACC did not anticipate this concreted in 4" steel abandonment marker pipe removal program when ACC bought ADL 389922 and filed ACC's Drilling Permit # 205-038-0 to reenter the Moose Pt #1 Well. This 4" steel abandonment marker pipe's existence was not shown in existing AOGCC records at that time. Existing AOGCC records did not mention a 4" steel abandonment marker pipe concreted into the 13-3/8 wellhead. Existing AOGCC records only indicated that the well surface plug was set at 58' (feet) below the surface of the ground. Existing AOGCC records indicated that the casing was filled with diesel fluid from the top of the 58' surface plug to the surface for freeze protection (see Drilling Permit # 205-038-0 illustrations). Existing AOGCC records did not reflect the depth of the 4" steel abandonment marker pipe concreted from the surface that had been placed in the 7" casing. In the beginning, ACC was not sure if ACC could safely mill out the 4" concreted steel abandonment marker pipe without damaging the Moose Pt #1 Well's 7" casing to a point where the 7" casing, as then currently permitted, could not be safely reentered in the process. EXTRODINARY OUT OF POCKET EXPENSES — NOT INVESTOR MONEY James W. White had to spend hundreds -of -thousands of dollars during that period of time, 2005-the end of the 2007, to perform site work, drill a water well, design and have machine shops fabricate and build expensive and uniquely special milling tools according to ACC's own and unique specifications that are not "shelf -items" in order to safely and accurately mill out the 4" concreted abandonment marker pipe from the 7" casing without damaging the 7" casing beyond any hope of reentry. ACC performed these drilling operations and incurred these expenses because ACC believed that Drilling Permit # 205-038-0 was still active and valid beyond December 31, 2008. Having met the requirements, Drilling Permit # 205-038-0 should stay in effect. Nobody ever indicated that Drilling Permit # 205-038-0 was not automatically extended beyond December 31, 2008, until February 2, 2009. Then the drilling permit should stay in effect Please note: It makes no sense to plan the reentering of a well if no drilling permit is in place. Not being notified otherwise, ACC believed that Drilling Permit # 205-038-0 was still active and in effect while performing the drill site work described in detail above. 11of20 Apr 22 09 05:02p Intrepid Production 2106510777 p.13 Had AOGCC informed ACC that Drilling Permit # 205-038-0 may have been in violation or failed to comply with any AOGCC or DNR regulation and mandates, ACC would have taken the proper action to correct and address any such pressing issues. Because of Alaska's unique/short winter drilling seasons, one can only mobilize a drilling rig in or out of the property between the months of January, February -mid March. ACC left their drilling rig at Moose Pt. #1 Well in anticipation that Drilling Permit # 205-038-0 was still in effect, and that ACC might be able to secure a suitable term Gas Sale Contract with Agrium Fertilizer Plant. In 2007 there was considerable publicity concerning the Phillips -Marathon efforts to get the State of Alaska to agree to allow the export and sale of Alaska's gas to Japan. Governor Palin well publicized that if this event were to take place, it would require that Phillips - Marathon purchase gas from an independent oil and gas producer such as Alaskan Crude Corporation (ACC). Everybody in the Alaska's oil industry, including the Department of Natural Resources Division of Oil and Gas believed that ACC had a drilling permit in place for Moose Pt. #1 Well from early 2005 forward through December 31, 2008. The AOGCC clearly did not advise the DNR's Division of Oil and Gas that Drilling Permit # 205-038-0 was not in place prior to January 27, 2009.On January 27, 2009 the DNR Commissioner advised White that he had reinstated ADL 389922 because the Commissioner had found that drilling activities were ongoing automatically requiring the primary term of ADL 389922 to automatically extend beyond its primary term. Nobody with whom ACC conferred such as the DNR or AOGCC ever advised ACC that they believed that the drilling permit was in violation and may have terminated on March 24, 2007. If AOGCC and DNR believed that the ACC Drilling Permit # 205-038-0 was terminated but failed to notify ACC in writing that Drilling Permit # 205-038-0 was in violation or ACC failed to comply with any regulations then the permit cannot be expired. ACC Drilling Permit # 205-038-0 was approved on March 24, 2005 and unbeknownst to ACC "terminated" on March 24, 2007. ACC was not aware that Drilling Permit # 205-038-0 had terminated according to the AOGCC because the AOGCC failed to notify ACC pursuant to 20 AAC 25.535. Until April 14, 2009, two whole years later after the termination of Drilling Permit # 205- 038-0, when ACC witnessed the Website ("Outstanding Drilling Permits"), ACC believed that ACC was in full compliance with all AOGCC regulations pursuant to 20 AAC 25.005, 12 of 20 Apr 22 09 05:02p Intrepid Production 2106510777 p.14 P.� Permit to Drill, for maintaining and keeping current Drilling Permit # 205-038-0 in effective and operating status. TWO YEARS OF COMMUNICATION -YET NO MENTION OF TERMINATED DRILLING PERMIT Neither ACC James W. White nor any party associated with Alaskan Crude Corporation (ACCI EVER RECEIVED WRITTEN NOTICE pursuant to 20 AAC 25.535 that Drilling Permit # 205-038-0 was in violation, failed to comply with any provision, or terminated Examples or correspondence between ACC and AOGCC about Moose Pt. #1 Well: 1. April 3, 2008 ACC faxed a letter to AOGCC titled, "Amerex well reentry April 3, 2008 Progress Report," detailing the work being done at Moose Pt #1 Well. (see Exhibit 11) 2. April 4, 2008 ACC and AOGCC corresponded numerous times about Moose Pt. #1 Well (see Exhibit 111) - Note Drilling Permit 205-038-0 is references in the subject line all of these correspondences 3. On January 27, 2009, AOGCC sent a Certified Letter to ACC stating, "In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit #1 well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or complete." 4. On February 27, 2009 ACC responded to AOGCC in full with supporting pictures and evidence stating, "ACC drilled, milled and bored out the 4in. pip that been wrongfully concreted in the Moose Pt #1 Well's 7in. casing the summer of 2007...". AOGCC's emails AOGCC order transcriptions to the oil industry. From before 2007 to 2009, AOGCC has emailed countless AOGCC orders. The AOGCC's declaration that Drilling Permit # 205-038-0 terminated in 2007 would have been an AOGCC order. ACC never received, "a written notification-hv-nersoatal service or by certified mail. return receipt requested " from AOGCC mentioning any order terminating Drilling Permit # 205-038-0 in 2007. CONCLUSIONSICONSIDERATIONS In conclusion ACC feels that: (1) AOGCC was mandated by 20 AAC 25.535 to notify ACC in writing that Drilling Permit # 205-038-0 may have been in violation, failed to comply with any regulations, or may be terminated; (2) AOGCC failed to notify ACC in writing that Drilling Permit # 205-038-0 may have been in violation, or failed to comply with any regulations; 13 of 20 Apr 22 09 05:03p Intrepid Production 2106510777 p.15 (3) in 2007, had AOGCC informed ACC that Drilling Permit # 205-038-0 was to be terminated, ACC would have had ample time get a new drilling permit for Moose Pt. #1 Well because the primary term of ADL 389922 still had 21 months to its primary term. The original Drilling Permit # 205-038-0 took 20 days to be approved. A new drilling permit is free: (4) this action by the AOGCC could Iikely be determined to be an abuse of discretion in implementing the mandates of 20 AAC 25.535 from AOGCC as result of AOGCC's failure to notify ACC of any issues concerning Drilling Permit # 205-038-0. ACC asks the AOGCC to please reconsider their actions and reverse the decision terminating Drilling Permit # 205-038-0 because: (1) AOGCC, pursuant to 20 AAC 25.535 did not inform ACC in writing to: (a) state the nature of the apparent violation or noncompliance; (b) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (c) state the action that the commission proposes to take under (e) of this section; and (d) inform the person of the person's rights and liabilities under (c) - (e) of this section, (2) The drilling operations conducted at Moose Pt #1 Well automatically extended the term of the Drilling Permit # 205-038-0. Therefore, Drilling Permit # 205-038-0 automatically extended; (3) AOGCC did not mention the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13-3/8 wellhead at Moose Pt. #1 Well in their original file records; (4) James W. White and ACC met the requirement of Drilling Permit # 20 AAC 25.535 when they first removed the 4" abandonment marker pipe, designed and commissioned the unique milling tools from several machine shops, and milled, bored, out and drilled out the 4" steel abandonment marker pipe wrongfully concreted into the 13-3/8" wellhead; (5) AOGCC did not consider the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13-3/8 wellhead at Moose Pt #1 Well and that actual drilling operations were required and undertaken to remove this pipe. (6) Drilling operations at Moose Pt #1 Well were under way when ACC transported all of the equipment to rework the well and commence reworking operations of the existing Moose Pt #1 Well the winter drilling seasons 2005 and 2006 forward. Thank you for your consideration. If AOGCC can not settle this manner, James W. White will take further actions to protect his interests. 14 of 20 Apr 22 09 05:04p Intrepid Production i, 2106510777 p.16 z- Please advice ACC of the how the Commission will address the issues in this letter within 5 days, If ACC does not receive a response within 5 days, ACC will pursue further actions to protect our interests. Please advise if the Commission needs more time. r' Regards, jartes W, White, Alaskan Crude Corporation, President James W. White, Individual 4614 Bohill St San Antonio, TX 78217 Office Ph. 210-651-0777 Cell Ph. 907-394-1829 Email Jimwhite0satmr.com CC. Emailed to: Thomas E. Irwin; Kevin Banks; Daniel T. Seamount, Jr.; Matt Rader; Camile Recknagel; Bruce Webb; James A. White; Brian Stibitz; Rick Wagner; Office of Governor Sarah Palin 15 of 20 Apr 22 09 05:04p Intrepid Production 2106510777 p.17 CONTENTS I. AOGCC DID NOT NOTIFY WHITE IN WRITING PURE ANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205 038-0 MARCH 24 2007 SOME TWO YEARS AGO ... P2. 2 2. NiA(:N !SSUFS... Pg. 4 3. DRy1;`.,) IIVGyC`tP? r_)`_'i !(�)i�:Z £_{)plM`; ;i_c _)...Pg. 7 4. xq—A'._VY MU€. `3:'i..—F % \9'Ph L6 hl �t(�yi...Pg. 10 S Zll.'T'- i,°A^)31�Vpt{+:t(cY J3`U 'i) as3i:iCR li Z ii iro ;S— l5t=sNly`gq;_ �2 P.x n? Y. P/g. ll( 6. TWO YEA—RS PLO i _3 Y�a ERM,', vATP:0 P iLLI Jd PE!t%,;�,. f ...Pg. 13 7. £_iafII.FS1f3 J , eletr :.< 1^''iNS—Pg. 13 16of20 Apr 22 09 05:04p Intrepid Production 2106510777 p.18 Exbibit 1 Example of Correspondences between ACC, DNR and ACC (non-exabstive) I. March 31, 2009 - an entire 42 page document was faxed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 2. March 30, 2009 - an entire 42 page document (the same was faxed on March 31, 2009) was faxed emailed, and mailed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 3. March 30, 2009 to Thomas E. Irwin, AOGCC: Re: Your Letter Dated "January 27, 2009", Decision to Reinstate ADL Lease 389922 4. March 11, 2009 from McKenzie Transpiration -letter describing transport truck breaking through ice on ADL 389922 S. February 27, 2009 to AOGCC: Re: January 27, 2009 Letter from Daniel T. Seamount Jr, Chair" detailing work being done on ADL Lease 389922. 6. February 18, 2009 from Commissioner Thomas E. Irwin, AOGCC (received by regular mail February 25, 2009): Re Request for Reconsideration - ADL 389922 Notice of Expiration of Lease - this letters states the Commissioners decision to order a reconsideration of ADL Lease 389922 7. February 11, 2009 From ACC- Formal request for reconsidering of the terms and conditions of ADL 389922 emailed to AOGCC (faxed February 10, 2009 to 907-269- 8918). 8. January 27, 2009 from AOGCC, Daniel T. Seamount Jr, Chair: Re: Moose Pt. Unit 1 PTD No. 205-038 - letter states that AOGCC is not aware of any work being done at Moose Pt. Unit 1 PTD No. 205-038. 9. January 27, 2009 from AOGCC, Commissioner Thomas E. Irwin: Re: ADL 389922 Notice of Expiration of Lease date January 2, 2009 - Letter details decision to "reinstate ADL 389922" (this letter was appealed on ... 10. January 26, 2009 to AOGCC Commissioner Irwin: Re: Potential Damaged Caused by Improper Termination of ADL 389922 11. January 22, 2008 to Mr. John Havelock, Division of Oil and Gas: Re: DNR's representatives' visit to the private property where Moose Point #1 Well is located on ground by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the State of Alaska 12. January 20, 2009 to AOGCC (faxed to 907-269-0060): Re: Administrative Appeal— ADL 389922 Notice of Expiration of Lease Term 13. January 15, 2009 to Kevin Banks, Department of Natural Resources (DNR): Re: Wrongful Termination of ADL 389922 14. January 2, 2009 from Jennifer Haines, AOGCC: Lease Expired - ADL 389922. 17 of 20 Apr 22 09 05:05p Intrepid Production 2106510777 p.19 15. December 31, 2008 from ACC - Discussing the later than normal winter freeze up of the North Kenai Borough Road. 16. Thursday, December 06, 2007 1:05 PM, Colombie, Jody J (DOA) jody.colombie(a)alaska.gov. aio2b-023 CPA Kuparuk. 17. Friday, December 07, 200712:34 PM (email), Colombie, Jody J (DOA) iody.colombie0alaska gov. Public Hearing Notice North Alexander #1 18. Wednesday, December 05, 2007 2:32 PM (email), Colombie, Jody J (DOA) iody-.colombieaalaska.gov. AI04C-015 corrected cancellation 19. Tuesday, December 04, 2007 3:17 PM (email), Colombie, Jody J (DOA) jody.colombie0alaska.gov. Other 52 Regulatory Cost Charge 2008. 20. Monday, December 03, 2007 7:09 PM (email), Colombie, Jody J (DOA) iody.colombie2alaska.gov. Public Meeting Notice. 21. Friday, November 30, 2007 8:20 PM (email), Colombie, Jody J (DOA) jody.colombigaalaska.gov AI04C-015 corrected cancellation 22. Wednesday, November 28, 2007 5:42 PM (email), Colombie, Jody J (DOA) iody.colombie0alaska.gov. o 457B.003 and co341e.005 PBU 23. Wednesday, November 28, 2007 8:19 PM (email), Colombie, Jody J (DOA) iodv.colombie(&alaska.gov. Public Notice, Additional Information and Proposed Regulation 24. Friday, November 30, 2007 2:25 PM (email) Colombie, Jody J (DOA) jody.colombie@alaska.gov. Corrected Admin Approvals and ERIO 2-005 25. Friday, November 30, 200712:47 PM (email), Colombie, Jody J (DOA) iody.colombie(@alaska.gov. AI04C-015 cancellation and A1014A-002 PBU Admin Approvals 26. Wednesday, November 28, 2007 8:43 PM (email), Colombie, Jody J (DOA) iody.colombie@alaska.ggv, Various PBU Admin Approvals and A104E,015 PBU 18of20 Apr 22 09 05:05p Intrepid Production 2106510777 p,20 i Exhibit 11 April 2, 2008, Letter to AOGCC, Subject: Atrterex well reenty April 3, 2008 Progress Report ALASKAN' CRUDE CORPORATION 4614 Bohill, San Antonio, Texas, 78217 Ph.210-651-0777 Date: April 3, 2008 To: AOGCC Attention: Mr. Tom Maunder Subject: Amerex well reentry April 3, 2008 Progress Report Re: AMEREX well reentry operations This letter is to advise the Commission that a new 7' Sm double BOP and new 7" 5m Annular were delivered to Amemx drill pad about March 10, 2008. One air pump is being replaced on the accumulator. Accumulator nitrogen bottles are also being replaced. The 4" pipe has been milled out of the 7" casing and well head has been installed and ready to except the installation of the new 7" 5m BOP stack.. ACC will recommence drilling reentry operations when the well pad dries out alter break up. (mid May hopefully) Regards Jim White 19 of 20 Apr 22 09 05:05p Intrepid Production 2106510777 p.21 EXHIBIT III April 4,2008 ACC email correspondence with AOGCC showing Drilling Permit # 205- 038 in subiect headinLy N W am Too 4bq Iko Oft Far,.IrANYMWW to rc'�M141•rrGKd�illrtlt:fm6Me.end3edsAucm': Imb SM To: 4,4kr. 1�m E k,.%tit M*t i,-is RFtl TV f,,alf Y 1k iZ,i ;kS. Vi a v. z 7. 20 of 20 State of Alaska AOGCC 333 W. 7e Avenue Suite 1000 Anchorage, Alaska 99501-5339 Emailed: February 27, 2009 Hardcopy will be sent via mail RECEIVED MAR 0 2 2009 Re: January 27, 2009 Letter from Daniel T. Seamount, Jr. Chair Alaska Oil & Gas Cons. Commission Anchorage Dear Commissioners: In response to your letter, please see the following: ACC drilled, milled and bored out the 4in. pipe that had been wrongfully concreted in the Moose Pt. #1 well's Tin. casing the summer of 2007 (please see photo titled, "Moose Point #1 Well shown as abandoned,1982" attached). Agrium Fertilizer Facility made tentative offers to purchase gas from Alaskan Crude Corporation (ACC), but the offered prices that they were willing to pay were too low to make it economically feasible to produce the gas profitably from the Moose Pt. #1 well. Governor Sarah Palin negotiated with Phillips -Marathon early 2008 when Phillips -Marathon agreed to purchase around 30K (30,000) MCF/day from an independent such as White/ACC. This is the first time in the seven year history of this ADL 389922 Lease that there was a tentative offer to purchase gas making it economical to reenter the Moose Pt. #1 well.; hence, ACC's efforts to re-enter the well during the 2008-2009 winter drilling season. ACC was able only to access this site via pickup truck this winter December 20, 2008. Work commenced, and drilling activities (see: picture attachments) to attach the Tin. 50001b. BOP stack on the well -head on December 31, 2008. Thus, work was ongoing pursuant to 4(c)(1) of the ADL 389922 Lease contract automatically extending ADL 389922 Lease beyond its primary term. However, the Department of Natural Resources (DNR) wrongly terminated this ADL 389922 Lease on January 2, 209 and all drilling work immediately stopped. On January 27, 2009 Commissioner Irwin issued an Order (enclosed) acknowledging that "the lease had been reinstated and extended in accordance with AS38.05.180(m) and paragraph 4(c)(1) of the ADL 389922 Lease." However, the Commissioner's terms reinstating the ADL 389922 Lease were not in accord to the clear language of the ADL 389922 Lease contract. Therefore, James W. White, as lessee, duly appeals the Commissioner's January 27, 2009 decision and terms of reinstatement of ADL 389922 Lease. Commissioner Irwin has since stated that he will reconsider his January 27, 2009 decision with his February 18, 2009 letter (attached), and the outcome of this reconsideration is yet unknown. ACC is in the process of mobilizing and removing the carrier -mounted drilling rig and related equipment from the Moose Pt. #1 well site before this March breakup commences as spring breakup comes early on the Kenai Peninsula. Currently, when the BOP stack is removed from the Tin. casing the well will still remain secure as the surface plug remains sufficiently intact. Your engineering department may require further procedures to be implemented atop of the well- head when ACC completely demobilizes the well this spring. Again, White remains unsure as to what Commissioner Irwin's decision will be pursuant to his February 18, 2009 letter relating the status of ADL 389922 Lease. If he properly reinstates the ADL 389922 Lease, ACC will continue Moose Pt. #1 drilling operations this next winter season of 2009-2010. If Commissioner Irwin does not reinstate the ADL 389922 Lease, White will continue to pursue the matter in court. Please check this link (htti)://www.youtuhr ') to watch a video of drilling activities that were ongoing December 31, 2008. Other photos are also attached documenting activity performed at the Moose Pt. #1 well site for your files. Included is also a complete documentation of correspondence. I would appreciate an opportunity to discuss this matter and other issues that ACC has pending with the commission concerning the Burglin 33-1 well at your earliest convenience. Crude Corporation r James W. White 4614 Bohill Street San Antonio, TX 78217-1413 Phone Number: 210-651-0777 Cell Number: 907-394-1829 Email: jimwhite@satx.rr.com Comments: To: Brian Stibitz, Reeves Amodio LLC Fax number: 907-222-7199 From: James W. White, Alaskan Crude Corp Fax number: 210-651-0777 Date: 2/20/2009 Regarding: Request fOr Reconsider to T Omn Irwin Phone number for follow-up: ?yn-651-n777 # of pages including cover page: 15 Brian, Please find attached the request for reconsideration which was e-maiied to Commissioner Tom Irwin on 2/11/2009. Sincerely, James W. White, President Alaskan Crude Corporation t �6 r ! HP Officejet 6310 Personal Printer/Fax/Copier/Scanner Last Transaction Date Time Type Station ID Feb 23 3:37PM Fax Sent 9072227199 Log for Intrepid Production 2106510777 Feb 23 2009 3:39PM Duration Pages Result 2:21 4 OK Jim White From: Jim White Dimwhite@satx.rr.comj Sent: Wednesday, February 11, 2009 12:41 PM To: lom.irv4n@ataska.gov' Cc: 'kevin.banks@alaska_gov'; 'matt.rader@alaska.gov' Subject: Request for Reconsideration of Conditions of ADL 389922 Lease Extension Attachments: Request for Reconsideration ADL389922 Tom Irwin Dear Mr. Irwin, Please find my formal request for reconsideration of the terms and conditions of my lease ADL389922 attached. Sincerely, James W. White Alaskan Crude Corporation Cell: 907-394-1829 Office: 210-651-0777 J- 41--�; February 11, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7' Avenue, Suite 1400 Anchorage, AK 99501-3650 Faxed: 2/10/2009 to (907) 269-8918 RE: Request for Reconsideration—ADL 389922 Notice of Expiration of Lease Term(Corrected Document) Dear Commissioner Irwin: First, I want to thank you for your decision dated January 27, 2009. 1 agree with you that the lease is automatically extended by drilling_ However, I cannot agree with the conditions that you attached to the "automatic" extension of my lease. This letter constitutes my rcqucA for reconsideration of your decision dated January 27, 2009 concerning my oil and gas lease ADL 389922. Your decision reinstated my lease with conditions. I am the owner of the oil and gas lease and eligible to ask for reconsideration of your decision_ The remedy I am seeking is simple reinstatement of the lease without conditions as provided for in the lease contract between the state and myself. The lease contract does not provide for automatic extensions of the primary term with conditions. The lease was automatically extended. Please remove any and all extra conditions included in your decision dated January 27, 2009. Please address all written correspondence concerning this request to James W. White 4614 Bohill San Antonio, TX 78217 San Antonio, Texas, Phone Work: 210-651-0777 Cell 907-394-1829 Email address: and jimwhite@acsalaskanet The affected property/land is oil and gas lease ADL 389922. It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10, 11, 12, 14, and 15-- containing 4800 acres more or less. Under paragraph 4 of the lease contract I am entitled to a simple automatic extension of the lease if drilling is underway on the expiration date of the lease. There is no provision in the lease contract to allow the state to attach additional conditions to that automatic extension if drilling was underway. Under paragraph 4 of the lease I have the right to continue drilling operations with reasonable diligence to keep the lease in effect Your decision imposed a limit of 90 days for me to complete the drilling operation. While I may be able to meet that deadline, the lease does not give you the authority to impose it. If drilling takes longer than 90 days, then I have the right to take longer than 90 days to complete the drilling operations. Contrary to your January 27, 2009 decision, as long as drilling remains underway with reasonable diligence, the lease is automatically extended. I estimate that the drilling will take 30 days to complete, but I have no way to know at this time if it may take longer. I cannot risk further capital and resources if die I-cbc--- -W In—ZII expire ii I ::, nvt (Fl+ +S the drilling (yrarafinpc before the arbitrary deadline you set The initial January 2, 2009 notice from the division clouded the title to my lease and I temporarily ceased operations until the cloud is lifted. The wells operator now has to prepare equipment and resources to resume drilling operations. In addition, the drill site has only seasonal winter access for heavy equipment Your decision again clouds the title to my lease in that it imposes an arbitrary time limit to complete drilling operations. I am hesitant to resume full drilling operations with this arbitrary deadline in place. What happens if I am not completed with drilling operations by tnc tiratuu� you scr cve„ „ . am : a........=e u=••••• s operations with reasonable diligence? I have no guarantee that you will not try to arbitrarily terminate the lease at that point in time. I am asking for a simple straightforward decision that complies with the lease contract. I realize that you want me to continue drilling operations with reasonable diligence, but I will do just that only under the terms of the lease contract. But I cannot guarantee when drilling will be completed, and you do not have the authority under the lease to impose a deadline. Drilling serves to automatically extend the lease term There is no provision in the lease to attach conditions to that automatic extension. The material facts in dispute and the basis for the request for reconsideration are as follows: The lease contract paragraph 30_ SEVERABILTY plainly skates: "If it is finally determined in any judicial proceeding that any provision of this lease is invalid, the state and lessee may jointly agree by a written amendment to the lease that, m consideration of the provision in that written amendment, the invalid portion will be treated as severed from the lease and that the remainder of this lease as amended will remain in effect' 2. There has been no judicial proceeding invalidating any portion of ADL389922. ri 'A ic" 3. White has never agreed to amend any provision of the tease. 4. The ADL389922 lease remains in full force in same form as originally agreed to. 5. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. There is no provision in the lease to attach conditions to that automatic extension. 6_ On June 13, 2007, actual boring in the well commenced when the well was drilled out to remove the 4 inch diameter metal pipe that had been wrongfully concreted inside the well's 7 inch casing when it was _._ _ _ J_�_A L__1 IAY Q ^a U.— �, a U— A�:11:-- � cili.,--A originally plugged and aoatluoneu uacx in i710. nL .ua PUIUL u.c uw..u..g ..K wan yvoau w vrv. ua wellbore. It has since been temporarily moved aside to install the blow-out prevention equipment on the well. Drilling as defined in the lease includes many activities in addition to well milling or boring a hole, including activities incidental to the actual drilling of a hole. 7. Alaskan Crude Corporation is the operator on the lease_ Alaskan Crude's drilling operations meet the definition described in Paragraph 34 of the lease contract. On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from the department witnessed the continuation of drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including building the pad, drilling a water well with the rig and conducting drilling operations with the rig. 8. The DNR sold us a state -drafted lease with the clear contract right to automatically extend the lease by drilling on the day that the lease would otherwise expire_ Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otherwise have expired. The annual delay rental payment was timely paid thereby automatically extending the lease beyond its primary tern. 9. Significant risk capital has already been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL 389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent PaiinlLNG agreement allowing export license gas deliveries to Japan worth millions of dollars over the next two years. This opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is the first time during this seven year primary term of the lease that this lease has finally had opportunity to market its gas at an acceptable price. Alaska gas market opportunities for small independent oil and gas operators are almost non-existent. This lease is adjacent to the ConocoPhillips natural gas transmission pipeline that runs from the North Cook Inlet gas field to Nikiski and the LNG plant. 10. ConocoPhillips has committed to buy 30k MCF of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009. This is a potential 50 million dollar plus per year gas market available for Alaska's independents that have gas delivetability readily available. 11. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 12. Access to this lease area by heavy equipment is limited except for winter months when the ground is solidly from_ 13. The DNB's notice dated January 2, 2009 stating that the lease had expired immediately caused the title to this lease to be clouded_ Your decision of January 27, 2009 also clouded the title to the lease in that it stated that the lease would automatically terminate on April 27, 2009 if drilling was not complete by that date. If the DNR continues to assert that this lease may expire on an arbitrary date, I will be forced to take whatever legal actions are necessary to protect my interests. 14_ I paid the annual delay rental in full prior to the due date. 15.1 was drilling on the expiration date of the lease as drilling is defined in Paragraph 34 of the lease. 16. The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. Drilling was underway both prior to and on that date. The lease should have been automatically extended without conditions. 17. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling operation. Mr- Rader has voiced no opinion to me as to whether the lease would be extended then or now. This is not a matter of agency expertise or discretion. The lease was automatically extended by drilling. The conditions included in your decision are a direct breach of my lease contract. As lessee of ADL 389922, I relied terms that I bought contained in the 4 comers of the state dratted AFL389922 Lease contract the state widely publicly advertized and then sold at a public auction, and I have been and continue to be damaged by your decision. If you have any questions concerning this request for reconsideration please contact me. Sincerely, i James W. White Cc: Kevin Banks, Department of Natural Resources, Oil & Gas Division C0 r�) r �; SARAH PAUN, GOVERNOR 5W WEST 7TM AVENUE, SURE 1400 ANCHORAGE, ALASKA 99501-36W PHONE (9079 269F431 DEPARTMENT OF NATURAL. OFFICE OF THE January 27, 2009 James W. White Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: ADL 389922 Notice of Expiration of Lease dated January 2, 2009 Dear Mr. White: I received your January 20, 2009 appeal of the subject expiration, which requests retraction of the lease expiration in accordance with paragraph 4(c)(1) of the lease. I carefully reviewed the facts, your Plan of Operations for the Moose Pt. #1 well, and queried the first-hand observers of the activities at the well site. I also reviewed the definition of "drilling" in paragraph 34.(4) of the lease. I have concluded that the activities observed at the site on December 31, 2008, assembly of the blowout preventer (BOP), equipment staging for BOP placement, presence of a drill rig, and completion of the initial reentry of the existing well plug, can be deemed consistent with the portion of the definition that reads. "_.. other operations necessary_ and incidental to the actual boring of the hole...". Therefore, I hereby grant your appeal and retract the subject Notice of Expiration of Lease dated January 2, 2009. ADL 389922 is hereby reinstated and extended in accordance with AS 38.05.180(m) and paragraph 4(c)(1) of your lease for so long as drilling is continued with reasonable diligence and sustained production begins within 90 days after cessation of that drilling. In your Plan of Operations you estimated a 30-day work effort to complete drilling. Nonetheless, to ensure you have sufficient time to complete this well, the well must be completed within 90 days of this decision. The failure to complete the well will result in the automatic termination of this lease. After 90 days from the date of this letter, April 27, 2009, we will review your progress to determine whether continued lease extension is warranted, including proof that all permits required are current. hi summary, I am reinstating your lease because you were engaged in drilling on the lease expiration date. However, the continued extension of the lease is contingent upon (1) continued drilling of the well; (2) completion of the well by April 27, 2009; (3) valid permits for all operations; and (4) sustained production within 90 days following the cessation of drilling. The failure to comply with !'U d' 'n 1. L L ! , any ur mese t;6iiiuiiiut5s w7u result rti lire a'u'ruYBaiie iel'Hfiiiau3n ofthis rraSc. "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans" ADL 389922 Notice of Expiration of Lease dated January 2, 2009 January 27, 2009 Page 2 of 2 This is a final administrative order and decision of the department for purposes of an appeal to Superior Court. An appellant affected by this final order and decision may appeal to Superior Court within 30 days in accordance with the rules of the court, and to the extent permitted by applicable law. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas January 26, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7m Avenue, Suite 1400 Anchorage, AK 99501-3650 Faxed to 907-269-8918 Faxed and entailed to Director Mr. Kevin Banks, Mr. Matt Rader RE: Potential Damages Caused by Improper Termination of ADL 389922 Dear Commissioner Irwin: The opportunity to drill the Moose Point #1 well this winter season is ending quickly. The risk is spring -break up on the Kenai can begin in early March, 2009. That is about 35 days from today. It has now been twenty six days since the Division of Oil and Gas on January 1, 2009 wrongfully terminated ADL 389922 oil and gas lease. I have received absolutely no indication that the DNR intends to timely reinstate my ADL 389922 lease. iviy operator cannot coutinue the drilling of the Moose Point #1 well this winter drilling season without immediate notice from ygu that the lease has been reinstated. The Division's wrongful ADL 389922 lease termination has likely prevented this lease from being drilled this winter season. There is now little time left this winter drilling season on the Kenai Peninsula to drill the Moose Point # 1 well's remote site. Please note, it will take additional time to recommence Moose Point #1 drilling operations to make up for time and efforts that has already been lost this season as a result of the Division's Notice to me. Routine drilling has been delayed for nearly one month during this abnormally short 60+ day winter drilling season. I am being damaged I cannot market gas from the wrongfully terminated ADL 389922 lease. Nobody will consider buying gas from the ADL 389922 lease until this lease has been properly reinstated. Your representatives, Mr. Havelock and Mr. Peterson, January 22, 2009, inspection visit to Moose Point well site clearly demonstrated to your agency that preparations were underway to mobilize the drilling equipment and transport this rig to another drilling location in the event this lease is not soon timely reinstated this winter drilling season. I cannot afford to strand the drilling rig on the remote pad over the summer season. There is no reason to delay reinstating this lease because the contract is quite clear on this issue. Unequivocal drilling had timely and duly commenced when our drilling rig, which is capable of reaching the bottom of the well, bored out the wrongfully placed concrete and iron m the top portion of the well. Furthermore, your office has received ample documentation of prior well boring activities, along with video, eye witness testimony and photos of our setting the blowout q CA 1 r-; preventer on December 31, 2008 which is necessary and incidental to boring deeper into the Moose Point #1 well. Other activities incidental to drilling are discussed in our appeal submitted to you. I again ask you to reinstate this lease as quickly as possible or my entire investment in this lease to date will be lost. My costs are escalating. Drilling without owning the oil and gas lease would result in either a free gas well for the State of Alaska or a huge liability for me to the State of Alaska for destroying the speculative value of this lease if the well came up dry. My contact information is provided below Sincerely, James W. White Address: 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907-335-1829 San Antonio 210-651-0777 Cell 907-394-1829 Email address: jimwhite@acsalaska.net ; jimwhite@satx.rr.com January 20, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7's Avenue, Suite 1400 Anchorage, AK 99501-3650 faxed to 907-269-0060 RE: Administrative Appeal—ADL 389922 Notice of Expiration of Lease Term Dear Commissioner Irwin: This letter constitutes my appeal of the Division of Oil and Gas Notice dated January 2, 2009 and signed by Jennifer Haines. That decision purports to close my oil and gas lcasc numbered ADL 389922. I am the owner of the oil and gas lease and eligible to appeal the Division's decision. The remedy I am seeking is reinstatement of the lease term or alternatively acknowledgment from the division that the lease term did not expire as stated in the Notice. I am seeking corrective action from the Division to place my lease in active status in the division's records systems and case files. Under the terms of the lease the lease was automatically extended beyond the primary terns, yet the Division incorrectly terminated the lease term. Please address all written correspondence concerning this appeal to James W. White 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907-335-1829 San Antonio 210-651-0777 Cell 907-394-1829 Email address:jimwhite@acsalaskamet jimwhite@satx.tr.com The property/land under appeal is oil and gas lease ADL 389922. It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10, 11, 12, 14, and 15— containing 4800 acres more or less. Under 11 AAC 02.030 I request reconsideration of the Division's decision to terminate ADL 389922. I specifically request that ADL 389922 be reinstated completely and extended as provided for in paragraph 4 (c) (1) of the lease contract. If the commissioner does not reverse the termination of the lease and grant the extension, under 11 AAC 02.050 I request a hearing. The factual issues to be discussed are the grants to the lessee contained in paragraphs 4 and 34 in my lease and the specific nature of my past and current drilling operations on the lease that serve to automatically extend the lease term. Under 11 AAC 02.060 I request an immediate stay of the decision. The public interest requires a stay in this case. Without a stay, my title to the lease is clouded and I cannot negotiate gas sales contracts or market gas produced from the lease. Even with a stay in place, the Division's Notice (and subsequent inaction since issuing the Notice) acts to cloud the tide of the lease, causes me undue financial harm, and absolutely prevents sale of any gas from ADL389922. The issues in dispute include the division's incorrect termination of the lease, the specific nature of my past and current drilling operations on the lease, the meaning of paragraphs 4 and 34 in my lease and the division's remedy%action that is appropriate to re -instate the lease in the state's lease data base and records system. I request that the division withdraw its Notice and immediately declare the lease never expired as of 12:01 am January 1, 2009. The material facts in dispute and the basis for the appeal are as follows: 1. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. Drilling commenced the winter of n_t_..._. �4 ...1.— ,..�I..... 1— ,.F KT.. r. Ye.,.,; m. A . v ;r.A and ;rP hr;r]OPC WPrP rculuaiy, LVIR), WHQH Gigm � M VI AVx,u AlZxl 1, W. I.I. ,.w -- vaxubvu V. -1- constructed by ADL 38992Ts Operator, Alaskan Crude Corporation (ACC) across Leaf Creek and Cum Creek. Then the Ideco HD35 BIR drilling rig was mobilized along with its related drilling equipment and transported out the North Kenai Road (ice road) and placed at the ADL 389922 lease's Moose Point # 1 well site. After breakup in 2006 early summer extensive access road repair and landscaping work was performed on the Moose Point# 1 well pad to get in shape to accommodate the reentry and testing of the Moose Point #1 well. The site's water well was redrilled and a new water pump was installed August, 2006. White's negotiations to sell ADL38992Ts gas to the Agnum Fertilizer were continued Agrium with reasonable diligence. 2. On June 13, 2007, actual boring in the well commenced when the upper portion of the well was drilled out to remove a 4 inch diameter metal pipe that had been wrongful] concreted inside the well's 7 inch casing when it was originally plugged and abandoned back in 1978. At this point the drilling rig was positioned over the wellbore. It has since been temporarily moved aside to install the blow-out prevention equipment on the well. Drilling as defined in the lease includes many activities in addition to well milling or boring a hole. The fall of 2007 Agrium announced that that the Agrium Fertilizer plant would be shut down the winter of 2007-2008 because dependable gas feed stock was not available to Agrium for a price that Agrium was willing to pay. The following spring of 2008 Agnum announced that their fertilizer was being permanently shut down due to no cheap gas feed stock. At that time White had no other potential market for and ADL 389922's gas until the Palin/LNG two year export license agreement was announced providing for the LNG plant to purchase up to 30 mmcf of gas per day from Independents such as White and Alaskan Crude Corporation. Late freeze-up caused ACC to postpone its re -commencement of its 2008 winter Moose Point#1 drilling operations until December 20, 2008 when the unimproved access North Kenai Road to the Moose Point drill site had frozen hard enough to support travel by light pick-up trucks. The North Kenai Road had not frozen hard enough to support needed travel by heavy trucks December 31.2008. 3. ACC is the operator on the lease. Alaskan Crude's drilling operations met the definition of drilling described in Paragraph 34 of the lease contract. On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from your office witnessed the continuation of drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922. including site preparation, building the pad, drilling a water well with the rig and conducting drilling operations with the rig. Such drilling operations have been conducted with reasonable diligence. 4. The DNR advertised and sold a state -drafted lease with the clear contract right to automatically extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otherwise have expired. The annual delay rental payment was timely paid, thereby automaticallv extending the lease beyond its primary term. 5. Significant risk capital has already been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL 389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent Palin/LNG agreement allowing export license gas deliveries to Japan worth millions of dollars over the next two years. This gas -sale opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is the first time during the seven year primary term of the lease that this lease has finally had the opportunity to market its gas at an acceptable price. We will suffer huge losses if we are not able to deliver gas from this lease commencing this spring. Alaska gas marketing opportunities for small independent oil and gas operators are almost non- existent. Future gas marketing operations are at risk as long as the division's decision is not reversed or withdrawn. 6. This lease is adjacent to the ConocoPhillips natural gas transmission pipeline that runs u vua the aNi �r u, r'.wk ii iei Soi {wid iv 11 0a and uat; idaIG piaui. 7. ConocoPhillips has committed to buy 30kmcf of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009 and running for 24 months. This is a i �h P( 1, potential 50 million dollar plus per year gas market available for Alaska's independents that have gas deliverability readily available. 8. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 9. Access to this lease area by heavy �.yauaaaw axw.N« air wtnwa monua� wucat the ground is solidly frozen, which for this winter season did not occur by December 31, 2008. However, the access road became suitably frozen to safely support a light duty pickup on December 20, 2008. 10. The DNB's notice dated January 2, 2009 stating that the lease had expired immediately caused the title to this lease to be clouded. If the DNR continues to assert that this lease is expired, then title to the lease continues to be clouded. I will be forced to take whatever legal actions are necessary to protect my interests. Selling gas from a lease with a clouded title is unheard of It never happens. 11. I paid the annual delay rental in full prior to the due date. Mr . A.:11;., .. «1.e a ....«:.... A.+— —r.t,_ a ...... _ __ a_aC.._ :...a_a__.a :� o______a. IA _r ac. Wry ua uaaaas v11 ula, Gxpilauvaa uaM V1 Il1G 1G a WIIII lg lb UGIlllGll HI ralag/apll .34 VI the lease. 13. The lease is automatically extended under paragraph 4 of the lease if drilling is underway on the expiration date of the lease_ Drilling was underway both prior to and on the expiration date. The lease is automatically extended —it is not a discretionary decision. 14. Mr. Matt Rader is aware of the wrongful termination of my lease and the mistake made by your office, yet no action has been forthcoming from your office. 15. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling operation. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. 16. Director Banks was informed of this wrongful lease termination by fax copy on January 15, 2009. This is not a matter of agency expertise or discretion. The lease was automatically extended by drilling. This is a direct breach of my lease contract As lessee and purchaser of ADL 389922, I relied on the patently clear contract provisions in the lease that was sold to me to extend the lease. I have been and continue to be damaged by the division's actions and misinterpretation of the lease provisions. Under I 1 AAC 02.030 this letter is also my notice of intent to file additional materials in support of this appeal within the allotted 20 day period. N 415 If you have any questions conceming this appeal please contact me. Sincerely, -fames W. White Lessee of Record Enclosures —sent by US mail service Email addressed to Kevin Banks Pictures of drilling operations Memo/Notes addressed to Matt Rader You Tube Video of Drilling Operations: http://www.youtube-com/watch?v=HOKcwuu5aXw 15.A rs AMA A James W. White 4614 Bohill Street San Antonio, TX 78217-1413 Phone Number: 210-651-0777 Cell Number: 907-394_1829 Email: jimwhite@satx.rr.com To: Brian Stibitz, Reeves Amodio LLC Fax number: 907-222-7199 From: James W. White, Alaskan Crude Corp Fax number: 210-651-0777 Date: 2/20/2009 Regarding: Correspondence to J. Havelock Phone number for follow-up: 210-651-0777 Comments: # of pages including cover page: 6 Brian, Please find attached the e-mail correspondence to John Havelock dated 1/22/2009, and also the memorandum regarding the later than normal winter freeze up of the North Kenai Borough Road. Sincerely, James W. White, President Alaskan Crude Corporation Page 1 of 2 James From: "jim whiter <jimwhite@acsalaska.net> To: <bdan.havelock@alaska.gov>; <matt.rader@alaska.gov>; <jim@applecapital.net> Sent: Thursday, January 22, 2009 10:16 AM Subject: Brian Havelock, Amerex termination Date: January 22, 2008 To: Mr. John Havelock, Division of Oil and Gas Re: DNR's representatives' visit to the private property where Moose Point# 1 well is located on ground owned by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the State of Alaska Hello John. I believe your ride out over the unimproved North Kenai Road to the Moose Point#1 well site was as precarious as my ride was to meet you yesterday at the well site. This road was a virtual slick mud quagmire in many places 2 days earlier due to nearly two weeks of above freezing temperatures and warm rains. If the present cold temperatures continue this North Kenai Road should soon support a loaded 18 wheeler to either bring supplies in are take the drilling rig out as the case may be. As we discussed yesterday, by letter January 2, 2009, the Division terminated and gas lease with the declaration "ADL 389922 expired on December 31, 2008. The case has been closed in this office." I as lessee of ADL389922 have seen my lease be wrongfully terminated. Therefore it follows, absent the Division reinstating this lease in writing this lease title remains clouded in a duly appeal pending status because this issue has been duly timely appealed January 20, 2009, be me to the DNR Commissioner. As of January 1, 2009 by virtue of the Division terminating the subsurface ADL 389922 oil and gas lease and "the case file been closed in this office" land surface activity on the drill site, from that precise time forward, became a private matter between White and the private land owner only, at least as far as the DNR is concerned From January 1, 2009, on White's relationship with the lands owner to store the rig on this private property or not store rig on this property is absolutely no concern of the DNR. This is strictly private enterprise between private patties. We discussed the water well on this privately owned property. Alaskan Crude Corporation (ACC) reworked and completed this water well in 2006. This well is owned by the land owner. The land owner owns the water beneath its land. ACC has the right to use water from this water well to rework the Moose Point #1 well. I hope we have cleared up any DNR concerns about ACC's use of the small amount of water that has been used from this water well to rework the Moose Point # 1 well. Actual drill rig dwell time over the Moose Point#1 well needed to rework and initially test this well is expected to take about 5 days or less_ Should the well prove up, well completion of course would take more time depending on what we found testing the well. It is important that this rig be removed from this location by the end of February, 2009, before spring breakup. It is hoped that we will have timely lease activation feedback from the Division, yea or nea, to minimize the economic impact on me addressing this current ADL389922 appeal process. 1 i)Innno Page 2 of 2 However I did appreciate seeing you again and meeting Mr. Peterson. Please feel free to discuss this issue with me at any time. Kindly Regards Jim White email - jimwhite@satx.rf.com Ph 907-335-1829 cell ph 907-394-1829 1/22/2009 Alaska Crude Corporation, 4614 Bohitl, San Antonio, Texas 78217 SUBJECT: Discussing the later than normal winter freeze up of the North Kenai Borough Road. FROM: Alaska Crude Corporation DATE: December 31, 2008 June 13, 2007, actual well boring commenced to reach the bottom hole location of the Moose Point #1 well. The well was reentered to remove the 16 foot long 4 inch metal pipe and concrete that was cemented in 6 feet below the final grade when the well was plugged and abandoned in 1978. Drilling operations are being performed pursuant to Lease contract: Article 34 Definitions, Paragraph (4) Article 34 DEFINITIONS (4) "Drilling" means the act of boring a hole to reach a proposed bottom hole location through which oil or gas may be produced if encountered in paying quantities, and includes redrilling, sidetracking, deepening, or other means necessary to reach the proposed bottom hole location, testing, logging, plugging, and other operations necessary and incidental to the actual boring of the hole-," Other operations necessary and incidental to the actual boring of the hole to reach the bottom hole location occurred when Alaska Crude Corporation (ACC) redrilled and completed the lease's 120 foot water well with a pump to provide water required to drill the Moose Point #1 well. Additionally, the workover rig, blow out preventer, mud tanks, drill pipe and other major equipment necessary and incidental to reach the proposed bottom hole location of this well are currently located at the lease well site. Drilling operations are now continuing on ADL389922 lease's Moose Point # 1 well whose bottom hole is located on this lease. The Moose Point # 1 well AOGCC API drilling permit number is 50-133-20312-9000. Drilling has duly commenced on ADL 389922 and will continue with reasonable diligence on the day that this lease would otherwise expire, December 31,2008,and continue thereby automatically extending this lease pursuant to lease paragraph 4(c)(1) until 90 days after cessation of reasonable diligence. Article 4 (c)(1) of the lease provides: "if the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, this lease will continue in effect until 90 days after cessation of that drilling and for so long as oil or gas is produced in paying quantities from the leased area." Development of ADL 389922 is dependent upon having a road that is capable of carrying heavy equipment to remote well site and finding a market for gas that might possibly come from this well. The 8 mile North Kenai road beyond Captain Cook Park is a Kenai Borough unimproved road. It will only support truck travel in the winter when the ground is frozen deep enough to support a heavy truck. It was not until December 201h, 2008 that the road became frozen enough to support limited light duty pick-up travel to and from ADL 389922 lease's Moose Point #1 well site. The road will not be frozen sufficiently to safely support large vehicle travel to the Moose Point #1 well until after December 31, 2008. If the weather remains cold, road conditions should improve so heavier equipment may be able to travel after December 31, 2008 to and from the well site as needed. Finding a market for the gas is important. Available markets justify the investment of wildcat risk capital in exploration and drilling oil and gas wells. The Birch Hill well, located only 2 miles from the Moose Point #1 well, has been capable of selling gas since 1967, but has not sold one cubic foot of gas the last 40 years. ACC had ongoing gas sale negotiations with Agrium until they shut their plant down in 2007. This meant there were no other possible markets to market gas from ADL 389922 until Governor Palin bargained to approve Phillip/Marathon's gas export license to ship Kenai gas to Japan. Governor Palin forced Phillip/Marathon to agree to purchase up to 30,000,000 cubic feet of gas per day from new independents like ACC and include that purchased gas in the Japanese gas delivery. Because of her actions. ACC now believes that it may be profitable to take the risk to invest more risk capital to continue exploring the ADL389922 lease. ACC believes that ACC has a reasonable chance to market gas to the LNG plant partners if gas can be found timely during this very short two year new Phillips/Marathon export license to Japan. ACC now intends to invest more risk capital to explore the ADL 389922 for gas on the risky premises gas could be sold to the LNG plant. Phillips has a 20" pipeline to their liquefied natural gas plant that runs over ADL 389922 and is within 800 feet of the Moose Point #1 well. If gas is found in the Moose Point #1 well, the physical act of connecting an 600 foot gathering line could be accomplished within a few days. ACC currently knows of no other market to sell gas in Alaska. ACC now believes it can get a reasonable rate of return if it can get the Moose Point #1 proved up and flouring before too much time goes by when Phillips/Marathon commences its new gas exports to Japan. Then royalties from this state lease can begin flowing to the state's coffers. HP Officejet 6310 Personal Printer/Fax/Copier/Scanner Last Transaction Date Time Type Station ID Feb 20 2:14PM Fax Sent 9072227199 Lag for Intrepid Production 2106510777 Feb 20 2009 2:17PM Duration Pages Result 2:47 6 OK SARAH PALIN, GOVERNOR P. P.O. BOX 111000 JUNEAU, ALASKA 99811-1000 PHONE: (907) 465-2400 FAX (907) 465-3886 DEPARTMENT OF NATURAL RESOURCES/ El 550 WEST 7' AVENUE, SUITE 1400 ANCHORAGE, ALASKA 99501-3650 OFFICE OF THE COMMISSIONER PHONE: (907) 269-8431 FAX: (907) 269-891 1 a(aV- �Vl February 18, 2009 k J Ir el James W. White Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 1 Re: Request for Reconsider 'on - ADL 389922 Notice of Expiration of Lease Dear Mr. Wbite: By a letter dated and received on February 11, 2009, you requested that I reconsider my decision on the expiration of your oil and gas lease (ADL 389922). You assert that I unreasonably conditioned the extension of your lease, and presented 17 material facts that you believe are in dispute. Your request was received within the time allowed by law (11 AAC 02.040)_ I have decided to order reconsideration. You have until February 26, to submit additional written material or request a hearing with supporting factual issues to be considered. If you request a hearing, please identify the format and methodology you request, whether you will want to present the testimony of witnesses and their names and contact information, and any other preferences. If you do not request a hearing, I will make a decision on reconsideration based on the information provided in your February 11, 2009 letter and the facts available to me. My January 27, 2009, decision remains in effect for you to pursue continued drilling operations. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans. " • • 'y ~~ ~ ~ _ ~ ~: . _ ~ ~''~ ~'~,~ ,, ! ~~~~~.' #; K~_ ~ :~~ , ~ ~ ~ ~ '~ -~- Q~ s`~1 ' ~ ~ ~ ~ ~ ~ O ~ ~ ~ ~ ~ ~~.. ; ~ ~ - . ~ - ,~ V Y .. ' '~t'~°'~ ~ ~ ~ . ~ ~ ~4* - ~ ., ..r.. __ . . ~. .. ~.-.~c_ ~~A S~ ~ ~ ~' ~ ~ C ",m~ a ~ ~h _;,~ ' ~ ~~ ~~~ ah ~ 1 ~~~ ~ ~~~ h , ~.. '«~i ' . .. ~ e;. ~4 I ~~ ~Py ' _~..; ~' . ` ..-. . ~- .r,~- . . ,;:..:. : ~.. ~ ~:::._... .. ,~. . 4M` " ~~5.'.y. 7"" °~.r°~ .'~' 'x .,., l . .-'--- , ~ „~,s.,d,.vr' ~5+""~'r~s„~ ''. {.~•"~~``~" ~ ` , ~ ~` ~ ~t~ ~~~dg ~ ~.,. , . .•- .3i,. ~ M ~^~~1.~. 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'~ . ~ i~~'~~ ~ ;:z v ~ . ~~ ~ ~ .: ...:~. _ ~ ~ ~~~ ~ ~~ ~ ~~ .. ~~ ~ ''""+'~ ~;;;~ _ , '~ ~°5`~ - `~ ~. . ~ ~~ ~. ~:~ ~ ~q ~ = ~ ~ '~s~. ~K . ~`~. ~ ~~~,; ~k~~~ -~ ~ .~ ~ _ ~, - ~ ~ ~ -~ ..:8,. .. ... ~ - ~ II ~~ ~ { ;~ '` ~ ' '"~, ;: ~ ~:'. * ~;~ ,~ ;~~. k ~~ ;i,;~; ~ ~,: ~~~ ~ ~„~, .. ^ ^ ~ 9 . . . °'~~1ii' ~' >: ~ w ~~ ~ ~~ t 1 ~ i;~ ~F .ay. ~fiR ~x ~` ^ '~ 3• ~. ~ ` _ ,*'~ ~ „~ ~ ~ ~ ~ ` ~~ ' ~: ~~,~ r ~ _ ~ ~~~ ~ ~ ~ ~. ;;~°>; ,~~~ '~ .~ Y' ~ 2 ii~; ~.?x.. .~ F , ~ . ~4 JY ~Y ~ ~; ` ~ ~~ . ~: ~~ r ~ ;~~ ~ ~. ~ ~ ~ ~'~ ; , "t `~ ~. /' . f ~:- .,~ ~' ~,. ,. _ , ,. ~ ~Y ~~ ~~ ~ ~k ~ `~ ;~ _ ~~ :~ .x,~.. ~ a~r.~..::~~.>,.. /Ell SARAH PALIP.O. BOX RN 00 JUNEAU, ALASKA 99811-1000 PHONE: (907) 465.2400 FAX (907) 465-3886 DEPARTMENT OF NATURAL RESOURCES ❑ 550 WEST 7r AVENUE, SUITE 1400 ANCHORAGE, ALASKA 99501-3650 OFFICE OF THE COMMISSIONER PHONE: (907) 269-8431 FAX (907) 269-8918 February 18, 2009 James W. White Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: Moose Pt. # 1 drilling activities and bonding requirements Dear Mr. White, This letter requests information relative to ongoing drilling activities at Moose Pt. # 1 well, on lease ADL 389922, and further requests establishment of a bond for those activities. A. Ongoing Drilling Activities: In accordance with AS 38.05.180(m) and paragraph 4(c)(1) of your lease, and as referenced in the Commissioner's letter to you of January 27, 2009, your lease is extended for so long as drilling is continued with reasonable diligence. Please provide the following to inform our understanding of the ongoing activities: a. A description of all ongoing drilling activities at Moose Pt. # 1 well since December 31, 2008; b. A copy of all written communication relative to the drilling -related regulatory requirements of the Alaska Oil and Gas Conservation Commission, such as permits, inspections, or authorizations. B. Establishment of a Bond: Matt Rader's letter to you dated January 29, 2009 (enclosed) requests that you properly establish a bond for the subject activities. In an effort to simplify the effort required, Mr. Rader further attached a draft letter (enclosed) that you may choose to use to meet the State's bonding requirement. "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." J. White 2/18/09 Page 2 of 2 To date, we have received no communication from you regarding establishment of a bond. You are reminded that a properly executed bond is immediately required. Sincerely, Jonne Slemons Petroleum Land Manager Cc: Kevin Banks Mr. J. White at: Mr. J. White at: Matt Rader Bruce Buzby j imwhite(&satx. IT. com iimwhite6a,acsalaska. net DEPARTMENT OF NATURAL RESOURCES DIYISION OF OIL & GAS January 29, 2009 James W. White Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas 78217 Re: Single Lease Oil and Gas Performance Guarantee LO/CI 03-019 Dear Mr. White: SARAH PALIN, GOVERNOR 550 WEST 7T" AVENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3550 PHONE: (907) 269-8800 FAX (907) 269-8938 Please submit as soon as possible a signed and correctly dated original of the attached draft letter necessary to perfect the bonding requirements for the Moose Point Unit No.l Gas Well Re -Entry plan of operations LOCI 03-019. If you have any questions, contact Brian Havelock at 269-8807. Sincerely, Matt Rader Natural Resource Specialist ec. Jonne Slemons jimwhite@acsalaska.net jimwhite@satx.rr.corn "Develop, Conserve, and Enhance Natural Resources for Present and Fttlare Alaskans." Division of Oil & Gas Alaska Department of Natural Resources Page Two Crude for the work plan. Should you need any further information in this regard, please contact the undersigned. Sincerely, Intrepid Production Company James W. White, President Alaskan Crude Corporation James W. White, President Intrepid Production Company 4614 Bohill San Antonio, Texas 78217 (210) 651-0777 Instruction: ENTER CORRECT DATE HERE Division of Oil & Gas Atm. Matt Rader Alaska Department of Natural Resources 550 W 7th Avenue, Suite 800 Anchorage, Alaska 99501-3560 Re: Performance Bond Requirements Alaskan Crude Corporation Gentlemen: Currently the State of Alaska has a $100,000 Certificate of Deposit issued by First Interstate Bank of Alaska (now Northrim Bank, CD No. 1290303500) on record with the Department of Natural Resources ("DNR") Financial Services office made payable to State of Alaska ITF Intrepid Production Company ("Intrepid CD"). The purpose of this letter is to confirm to DNR that the Intrepid CD is intended to serve as the performance guarantee of Alaskan Crude Corporation ("Alaskan Crude") in connection with Alaskan Crude's work activities described in Plan of Operations LOCI 03-019, Alaskan Crude Corporation, Moose Creek Unit No.1 Re - Entry, approved by the Division of Oil and Gas on January 22, 2004 ("Work Plan"). The undersigned James W. White is the President of both Intrepid Production and Alaskan Crude and is in all matters authorized to sign this letter on behalf of both parties. As such, the undersigned attests and certifies as follows: Intrepid Production, at the request of Alaskan Crude has agreed to allow the Intrepid CD to serve as the performance guarantee of Alaskan Crude with respect to the Work Plan. 2. Intrepid Production grants to the State of Alaska, acting through the DNR or otherwise, the right to exercise the Intrepid CD as the performance guaranty of Alaskan Crude with respect to all obligations under the Work Plan, and leases. We trust that this letter, along with the completed bond form submitted by Alaskan Crude satisfies DNR's requirements with respect to the required performance guaranty of Alaskan C033059 ALASKA OIL AND GAS CONSERVATION COMMISSION January 27, 2009 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7005 1160 0001 2499 6095 Jim White Alaskan Crude Corporation 4614 Bohill San Antonio TX 78217 Re: Moose Pt. Unit # I PTD No. 205-038 Dear Mr. White: SARAH PALIN, GOVERNOR 333 W 7th AVENUE. SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) issued Permit to Drill No. (PTD #) 205-038 to Alaskan Crude Corporation for re-entry into the plugged and abandoned Moose Pt. Unit # I well (which was first drilled under PTD # 179-001). In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit # I well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or completed. Nor does the Commission know the status of any other work at the well. Accordingly, by February 28, 2009, please provide the following for the Moose Pt. Unit # 1 well: (1) a detailed report describing the history, present status, and plans for the well; (2) all records and reports referenced in 20 AAC 25.070; (3) all geologic data and logs referenced in 20 AAC 25.071; and (4) an explanation detailing why any required submissions were not previously made. Requesting and receiving this information in no way affects the Commission's right to take any action, including any enforcement action. Sincerely, Daniel T. Seamount, Jr. Chair ■ Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. M Print your name and address on the reverse so that we can return the card to you. ■ Atth this card to the back of the mailpiece, or on the front if space permits. t. Arti eAddressed to: A. Sigp't �� m I ge X ❑ tldressee H Received b,%f 1-Antt1edName) C. Date of Delivery i -� SIU UC D. Is delivery address different from item 1? ❑ Yes If YES, enter delivery address below: ❑ No 3. Se Type W—ettified Mail ❑ Express Mall ❑ Registered LWturn Receipt for Merchandise ❑ Insured Mail ❑ C.O.D. 4. Restricted Delivery? (Fxtm Fee) ❑ Yes 2. Article Number (transfer fmm service label) 7005 1820 0001 2499 6095 'S Form 3811, February 2004 Domestic Return Receipt 102595-02-M-1540 I DCERTIFIED MAIL,. RECEIPT - o(Domestic � SA�,ri(aill'EiMI-'f1r; 7 n' Pgstege s 50.42 J �ST,� a o ceroeed Fee NA O �"bYpoytmadc O O Retum Receipt Fee (Endorsement Required) f2.20 T � ResMcted Delivery Fee �Q � (Endorsement Required) O'FAK 995 r� 55.32 Ol Total PostaOe 8 Fees rn Cl TO u,,.Ot Apt No., or POBaxNa�O m Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. ® Print your name and address on the reverse so that we can return the card to you. a Attachthis card to the back of the mailpiece, or on ife front if space permits. 1. Article Addressed to: Ile — A. bigTKe..� % CC Agerit X❑ ddressee w. Received by ( Printed Name) C. Date of Delivery Is delivery address different from item 14 ❑ Yes If YES, enter delivery address below: ❑ No 3. Se Type ertified Mail ❑ Express Mail ❑ Registered Receipt for Merchandise ❑ Insured Mail ❑ C.O.D. 4. Restricted Delivery? (Extra Fee) ❑ Yes 2, Article Number 7005 1820 0001 2499 L095 (transfer from service label) PS Form 3811 ,February 2004 Domestic Return Receipt 1025e5-02-M-15G0 Vostal SerwceT,,'n CERTIFIED MAIL CEIPT t7(Domestic ur s fD $ $0.42 Postage r3 Cortifted Fee $2.�� . rk C3 Return Receipt. Fee (Endorsement Required) $2.20 o aa �^ Rasaicted Delivery Fee•oo rL (Endorsement Requled) —' 03 r-i Total Postage 8 Fees $ $5.32 01/27i2009 to C3 Sent o - GN:Blefe, ➢Ph4 /' �) D UNITED STATES:PbSTAL $9WJCE - .kNsi-Class Mail Restage-& Fees Paid .. .. ,) ,i p.q p914'fhtj"�tjd •Pa-10 0 Sender: Please print your name, address, and ZIP+4 in this box Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Thursday, August 02, 2007 9:03 AM To: 'Jim White' Cc: 'Bruce Webb' Subject: RE: Moose Point Unit #1 Re-entry (205-038) Importance: High Jim or Bruce, I have not heard back regarding my request for information as to the activities conducted this summer on the Moose Point well. I'd appreciate if a summary of the operations could be provided. This should include the dates work was conducted. I'd appreciate your reply by August 15. Call or message with any questions. Tom Maunder, PE AOGCC -----Original Message ----- From: Thomas Maunder [mailto:tom maunder@admin.state.ak.us] Sent: Tuesday, June 12, 2007 12:34 PM To: Jim White Cc: Bruce Webb Subject: Moose Point Unit #1 Re-entry (205-038) Jim, We talked a while back of the difficulties you were encountering "chipping the cement" around the DP marker on this well. I was wondering if you could provide a summary of the operations you have been able to conduct and what work you might have planned for the summer. Thanks in advance. Call or message with any questions. Tom Maunder, PE AOGCC 1 Maunder, Thomas E (DOA) From: Internet Mail Delivery [postmaster@ancmaill.state.ak.us] Sent: Thursday, August 02, 2007 9:03 AM To: Maunder, Thomas E (DOA) Subject: Delivery Notification: Message successfully forwarded Attachments: ATT42642.bct; ATT42643.bd MCN. PYi.Y ATr42642.bd(788 ATT42643.bct(2 8) KB) This report relates to a message you sent with the following header fields: Return -path: <tom.maunder@alaska.gov> Return -path: <tom.maunder@alaska.gov> Return -receipt -to: tom.maunder@alaska.gov Received: from tcp-daemon.ancmaill.state.ak.us by ancmaill.state.ak.us (iPlanet Messaging Server 5.2 Hot Fix 2.14 (built Aug 8 2006)) id <OJM500351OPEGZ@ancmaill.state.ak.us> (original mail from tom.maunder@alaska.gov); Thu, 2 Aug 2007 09:03:14 -0800 (AKDT) Received: from SOAANCMSGBHO2.soa.alaska.gov (localhost [127.0.0.11) by ancmaill.state.ak.us (iPlanet Messaging Server 5.2 Hot Fix 2.14 (built Aug 8 2006)) with ESMTP id <OJM5003W30OI89@ancmaill.state.ak.us> for jimwhite@satx.rr.com; Thu, 02 Aug 2007 09:02:43 -0800 (AKDT) Received: from SOAANCMSGO2.soa.alaska.gov ([10.200.1.18)) by SOAANCMSGBHO2.soa.alaska.gov with Microsoft SMTPSVC(6.0.3790 02 Aug 2007 09:02:42 -0800 Date: Thu, 02 Aug 2007 09:02:40 -0800 From: "Maunder, Thomas E (DOA)" <tom.maunder@alaska.gov> Subject: RE: Moose Point Unit #1 Re-entry (205-038) In -reply -to: <466FO32E.2090003@admin.state.ak.us> To: Jim White <jimwhite@satx.rr.com> Cc: Bruce Webb <bwebb@aurorapower.com> Message-id:<8B9E4A9OA438C34882B1DO3D21CA9F34294AD9@SOAANCMSGO2. MIME -version: 1.0 X-MIMEOLE: Produced By Microsoft Exchange V6.5 Content -type: text/plain; charset=us-ascii Content -transfer -encoding: 7BIT Content -class: urn:content-classes:message Importance: high Priority: Urgent X-Priority: 1 Thread -topic: Moose Point Unit #1 Re-entry (205-038) Thread -index: Ace6gCG1FMLYn76jS62I6axPh1Q6LgapVEgQ X-MS-Has-Attach: X-MS-TNEF-Correlator: X-OriginalArrivalTime: 02 Aug 2007 17:02:42.0522 (UTC) FILETIME=[FO968BAO:O1C7D526] Your message has been successfully relayed to the recipients 1830); Thu, soa.alaska.gov> Recipient address: jimwhite@satx.rr.com Reason: Message successfully relayed to a system that does not support receipts Diagnostic code: dns;hrndva-Ol.mgw.rr.com(TCP1146.63.92.66141564124.28.204.21125) (hrndva-mx-02.mgw.rr.com ESMTP) smtp;250 recipient <jimwhite@satx.rr.com> ok Remote system: dns;hrndva-Ol.mgw.rr.com(TCP1146.63.92.66141564124.28.204.21125) (hrndva-mx-02.mgw.rr.com ESMTP) on a remote system that does not support the generation of successful delivery receipts. This does NOT mean that your message has actually been placed in the recipients' mailboxes; merely that it has passed through a part of the message transport infrastructure. In the event of a nondelivery you should expect to receive a nondelivery notification; in the event of successful delivery, however, you are unlikely to receive a positive confirmation of delivery. 2 ��..Sd'Oi✓.$E %d �,!%/[�OY QL7G✓U� l�GG� G Grr/Y� iGf�G /7.c.c/Y tic�a�7///�iC ell about -.blank Dear Randy, We have reviewed our files and determined the following for this well: On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) approved and issued a Permit to re-enter and test the Moose Point #1 well, located in Section 14, T9N, R9W Seward Meridian. The Permit (2050380) was issued to Alaskan Crude Corp. Mr. James White is listed as President of Alaskan Crude Corp. The Commissions approval letter states that Operations must be conducted in accordance with AS 31.05 and Title 20, Chapter 25 of the Alaska Administrative Code unless the Commission specifically authorizes a variance. The issuance of the permit does not exempt the Operator from obtaining additional permits or approvals required by law from other governmental agencies, and does not authorize conducting drilling operations until all other required permits and approvals have been issued. In addition, the Moose Point #1 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing to offset any advantage Alaskan Crude Corporation may have over other owners by reason of re-entering Moose Point 41 well to the exception location and to allow affected owners to produce their just equitable share of hydrocarbons. This Permit was issued on March 24, 2005. Therefore, operations conducted under that permit must have begun on or before March 23, 2007. Permits are valid for 24 months from the date of issuance (20 AAC 25.005(14)(g)). The Commission has a staff of field inspectors who are available to assist you if needed. Please contact Jim Regg at 793-1236. Please advise us of ongoing events related to this operation. Please let us know if we can be of any additional assistance. I can be reached at 793-1230 or Steve Davies can be reached at 793-1224. Regards, Art Saltmarsh and Steve Davies cc: file 1 of 1 4/3/2007 12:08 PM 10, lrk I'LL, il-A J 1++J., I FRANK H. MURKOWSKI, GOVERNOR ALA HA OIL AND GAS CONSERVATION COMMISSION Jim White President Alaskan Crude Corporation 4614 Bohill San Antonio, Texas 78217-1413 Re: Moose Point #1 'N� n&AJ d �,; 1! � _1 1 s plov-leI. TbL�z, << Yee .fpl 4 tit_ i4 /)Awt •4 a 0 W U) 4-ui s -,t pp .- Jo fr Alaska Crude Corporation V,4164-- Permit No: 205-038 Surface Location: 2511.5' FNL, 2124' FEL, SEC. 14, T9N, R9W, SM Bottomhole Location: 2511.5' FNL, 2124' FEL, SEC. 14, T9N, R9W, SM Dear Mr. White: Enclosed is the approved application for permit to re-enter and test the Moose Point #1 exploration well. In accordance with conservation Order 488, which grants an exception to the spacing requirements of 20 AAC 25.055(a)(2) for these operations, the Moose Point #1 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing to offset any advantage Alaska Crude Corporation may have over other owners by reason of re-entering Moose Point #1 well to the exception location and to allow affected owners to produce their just and equitable share of hydrocarbons. This permit to drill does not exempt you from obtaining additional permits or approvals required by law from other governmental agencies, and does not authorize conducting drilling operations until all other required permits and approvals have been issued. In addition, the Commission reserves the right to withdraw the permit in the event it was erroneously issued. Operations must be conducted in accordance with AS 31.05 and Title 20, Chapter 25 of the Alaska Administrative Code unless the Commission specifically authorizes a variance. Failure to comply with an applicable provision of AS 31.05, Title 20, Chapter 25 of the Alaska Administrative Code, or a Commission order, or the terms and conditions of this permit may result in the revocation or suspension of the permit. Please provide at least twenty-four (24) hours notice for a representative of the Commission � �to witness any required test. Contact the Commission's petroleum field inspector at (907) 659 (pager). DATED Z�day of month, 2005 cc: Department of Fish & Game, Habitat Section w/o encl. Department of Environmental Conservation w/o encl. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERMIT TO DRILL 7n GOC 04 nna RECEIVED MAR 1 0 2005 ia. Type of Work: Drill Redrill Current I Well lees: Explorerory 1XIDevelopment OII ens Re-entry I Stretigrephlc Operator Name: Toot la servloe Development Gas Ill zone Alaskan Crude Corp. D. bond! X Blanket Ingle Well ell Name end Number 3. Ad reae: 4614 B h i 771 Bond No11�iPoint # Lor,9 8. ropoud Depth: 1T. Plel- oel s); san An�on10 Tx 78217-1413 M0:10,058' TVD:10,058' Unknown Dell notion: 89?22 4a. Location of Wall (Dovammen S CtlFny Surface l 4h, � 4 Top Pr j� SFAL, Land Use Permit: Approximate pea Datc of uCl va o4on: Same rO 6-1-05 Total Depth: roperty: 14. Distance to Nearest Acres Property, APROX 135V' 4b. Location of well (State Base Plane Cocrdlnill tion 15, Olotanes to Nearest Wel9urfacli124'FELy2511.5'FNL zone. eGL): 163 feet wlthlnPool: N/A 16 Deviated wolls: Kickoff depth: Net 17, Maximum An6clpeted Pressure In pslp (ea 29,AAC 25.075) N/A Maximum Hole Angle: N/A degrees Downhols; 4065 prig surface: 3200 psig 18, Casing Program: Specifications SettingDepth - P Quantity of Cement Size Top Bottom c-f. or sacks Hole Casing We{ght Grade Coupling Length MID TVD MD TVp (including stage data) e w e r I 7PHE94# H-40 sx as �� " 7' 72.68 2#29# L- -55 N 10 sx C ass Too 19. PRESENT WELL CONDITION SUMMARY (To be completed for Reorlll and Re -Entry OParations) Total Depth MD (R): Total Depth TV0 (f ): Plugs (msaeured): Effect. Depth MD (8): Effect. Depth TVD (a): Junk (measured). Casino Length size Cement Volume 81 sx MD yen TVD -50 1 SirUctUral _ Conductor - Surface - Intermeolate 7E9032 ' 551 Production _ Liner Perforation Depth MD (a): Perforation Depth TVD (a)'6660-869 5 ' (OPEN) 5045- 507 3' P 1 u ge d 20, ac menta: if it es SOP et tilling Program JXJ Time v, Depth Plot Lj arallpw Hazard Analysit; Li Property Plot Dlverter $Ketch Seabed Report Drilling fluid Program 2 20 AAC 28.050 requirements 21. Verbal Approval: Commission Representative: Date 22. 1 hereby certify that the foregoing le We and correct to the beet of my knowledge. Contact Printed Name J mes W. White Title President sloneture14Z -•--- r Phone 210-651-0777 Date 03/ 10/2005 Commission Use Only ermil to rill API Number Permit roves tuber %US-65E 50- If Z -c�� PP cove, for other Dale: >/.;:y�c-, requirements. Conditions of approval: I E. RO P C 5 50 S i se lee to itad Ye �j No .� Mud log required Yam No H roge title measures jf Yee yI—�I No Directional survey required Yee No ®' Olhe EYZD .Z `iS�l•)U)10.(r6'N P�oPL- 15 el,proveA. APPROVED BY ,ram Approve THE COMMISSION oat FOI1N-14-001 .!_VtW 062004 I N A L (Submit InDuplicate 7: enne. Z0'd £0ZZ £8Z !06 SOAS Dioou rinsNIN3d Wd 91:ZT 90-6T—Nki14 ALASKAN CRUDE CORP. 4614 BOHILL SAN ANTONIO, TX 78217 210-651-0777, e-mail iimwhite@satx.rr.com. March 17, 2005 To: AOGCC Attn: Mr. Winton Aubert From: Jim White, President, Alaskan Crude Corp. Gentlemen: Please revise the approximate spud date on the Moose Point # 1 Permit To Drill, form 10-401 (item 13), filed recently with your office to read March 25, 2005. Thank you. Regards. im White Jc, ct I 'I'Ll "Z (-21 C c�r(r - -;�� T0'd YOZZ PSZ L06 SJAS 01300 UInSNIN3d Wd 9T:ZT 90-0T-Nuw I NO Olt` rA i To: Jim White From: W. Aubert Fax: 907 283-5313 Pages: 3 total Phone: 907 335-1829 Date: 3/9/2005 Re: Moose Pt. #1 CC: RI Urgent ❑ For Review ❑ Please Comment ❑ Please Reply ❑ Please Recycle Mr. White, Please submit the following as we discussed: 1. request to withdraw the current Sundry Notice; 2. new Form 10-401 (example attached); 3. other information listed on the 2nd attachment. Thank you for your attention to this. Winton Aubert, AOGCC 907 793-1231 ALASKAN CRUDE CORP 4614 Bohill, San Antonio, Texas, 78217 210-561-0777, e-mail iimwhite@sotx.rr,com Dote: 3-9-05 To: AOGCC 333 W 7th Ave„ Anchorage, Alaska 99501 From :Jim White, Alaskan Crude Corp. To Commissioners. Attention, Mr, Winton Aubert Alaskan Crude request a variance to use a 2" 5k choke manifold with the 7", 5k BOP stack instead a 3" 5k choke manifold for the re-entry of the ' Moose Point#1 well. Thank you. Regards B Jim White President, Alaskan Crude Corp, b01d £0ZZ £SZ L06 so^s Dioou oinsNIN3d Wd LT:ZI 90-07-NOW ALASKAN CRUDE CORP, 4614 Bohill, San Antonio, Texas, 78217 210-651-0777, e-mail Imwhite®s tx,rrr.com To: AOGCC 333 W 71h Ave. Anchorage, Alaska Attention Mr. Winton Aubert. Please discard the Moose Point # 1 Sundry Application filed with your office 3-8-05, Thank You. Regards. 8y: im White. President Alaskan Crude Corp. £01d £0ZZ £8Z L06 S3AS nI330 v-lnSNIN3d Wd 9S:ZT 90-01-NOW V/0 LID Vw a-p � I i q,,t, F 1 r STATE OF ALASKA w6 ALASKA OIL AND GAS CONSERVATION COMMISSION S� Li� 2005 APPLICATION FOR SUNDRY APPROVAL 1. Type of Request: Abandon Ll Suspend Alter casing❑ Repair well ❑ Change approved program ❑ Pull Tubing 2. Operator Name: A-L-A.S)(Api c G2up r co 3. Address: � r 7 2 r7 7. KB Elevation (it): 6. Property Designation: A 1)C_ 3B49.2 z Plug Perforatlons ❑ Stimulate ❑ Time Extension ❑ Perforate New Pool ❑ Re-enter Suspended Well ❑ irrent Well Class: 5. Permit to Drill Nun alopment ❑ Exploratory __1�- :igraphic ❑ Service ❑ 6. API Number: c P+ Zo7,IZ r MCOEN I vvMu l UNUI I IUK JUMMAKY 3 , __ ( '�'D / Total Depth MD (ft): Total Depth TVD (ft): Effective Depth MD (ft): Effective Depth TVD (ft): Pls m�- k (measured):e g�z) Casing Length Size MD D Bunt Collapse Structural Conductor O i• / Surface ;L_IG _ 3 g" ;L516 Intermediate C1Z' +� Production Liner Perforation Depth MD ft): Perforation Depth TVD (ft): Tubing SI Tubing Grade, Tubing MD (R); 6PEw8 fes b ackers and SSSV Type: Packers and SSSV MD (ft): 12. Attachments: Description Summary of Proposal 13. Well Class after proposed work: Detailed Operations Program P BOP Sketch � Exploratory ❑ Development ❑ Service ❑ 14. Estimated Date for Q t-TE 2 l`fl3 K yp0 15. Well Status after proposed work: Commencing Operations: oil ❑ Gas ❑ Plugged ❑ WAG ❑ GINJ ❑ WINJ ❑ Abandoned ❑ WDSPL El 16. Verbal Approval: D Commission Representative: 17. 1 hereby certify that the foregoing is It and correct to the best of my led knowge. Contact Printed NameTitie j� litions of approval: N 'fy Commission so that a representative may witness Sundry Number: Integrity El BOP Test ❑ Mechanical Integrity Test ❑ Location Clearance ❑ Form Required: by: Form 10-403 Revised 112004 APPROVED BY COMMISSIONER THE COMMISSION Date: Submit in Duplicate STATE OF ALASKA / KA OIL AND GAS CONSERVATION COMM— . JN APPLICATION FOR SUNDRY APPROVAL 9n AAr. 99; 9Rn V u t p P 3(�Ljzoo S- 1. Type of Request: Abandon Suspend Operational shutdown Perforate Waiver Other After casing❑ Repair well ❑ Plug Perforations ❑ Stimulate ❑ Time Extension ❑ Change approved program❑ Pull Tubing ❑ Perforate New Pool ❑ Re-enter Suspended Well ❑" 2. Operator Name: P d�ASKdW G(Lup` 4. Current Well Class: 5. Permit to DNII bar, Development ❑ Exploratory P ry ❑ Stratigraphic ❑ Service ❑ - 3. Address: . I/ �(�/ 1 — �Gsi G. API N bar: : ' / ``C' 7 F z- ! 7 5 f 33 - Zo l Z 7. KB Elevation (ft): Well Name end Number: B NAG U cf 5� �f � %arc 10. Fleld/Pooisisl, 8. Property Designation: L- 3e cizz 11. PRESENT WELL CONDITION SUMMAR Total Depth MD (ft): Total Depth ND (ft): Effective Depth MD (it): Effective De pm N (it): Plugs (me red): z Jur)k (measured): �3 - Casing Length. - Size MD ND Bunt Collapse Structural Conductor a r Surface / _ +g S +• s 6 Intermediate Z Production Liner Perforation Depth MD (ft,): bPeAi ' Perforation Depth ND (it); T Ing Size: Tubing Grade: Tubing �� 6 I ackers and SSSV Type: Packers and SSSV MD (ft): 12. Attachments: Description Summary of P osal 13, Well Class after propose work: Detailed Operations Program A BOP ketch Nr Exploratory ❑ Development ❑ Service �] 14. Estimated Date for A r�E ez 1,71& ,�_M ytOO 15. Well Status after proposed work: Commencing Operations: Oil ❑ Gas ❑ Plugged ❑ Abandoned ❑ WAG ❑ GINJ ❑ WINJ ❑ WDSPL ❑ 16. Verbal Approval: Date: Commission Representative: 17. 1 hereby certify that the forego' g is true and correct to the best of my knowledge. Contact Printed Name T'tlei Signature P ne y _ O 7 Data __ a COMMISSION USE ONLY Conditions of app val: Notify Commission so that a representative may witness Sundry Number: Plug Integri ❑ BOP Test ❑ Mechanical Integrity Test ❑ Location Clearance ❑ Oth . Subsequent Form Required: APPROVED BY Approved by: COMMISSIONER THE COMMISSION Date: Fonn 10-403 Revised 11/2004 Submit in Duplicate To: Winton Aubert - AOGCC Date: March 2, 2005 From: Jim White Alaska Crude Corporation Subject: Moose Point #1 Re-entry API #50-133-20312-00 W4dir— Surtd'ry approval is requested to reenter the Moose Point #1 well to test for gas production potential. We anticipate beginning preparation work the last of March, pending freezing weather conditions. Below please find a summary of the existing well and planned operations: Moose Point #1 is located 2512 feet from the north line (FNL) and 2124 feet from the east line (FEL) of Section 14, T9N, R9W, Seward Meridian. The well site is located on private property. / The well's ground elevation is 163 feet. It is outside of any Corps of Engineers designated wetland area. Moose Point #1 was drilled as a straight hole to a TD of 10,058' and in early 1978. Intervals were tested, the well was suspended for a period of time and ultimately files for abandonment in March 19.$'), Please refer to the attached wellbore schematic. In summary the well has 333' of 20" conductor pipe, 2516' of 13-3/8" surface casing and 9032' of 7" casing.�Openhole from the 7" shoe to drilled TD of 10,058' is filled with cement. -1 / Three cement/plugs/retainers exists in the 7" and will be removed; 55'-140', 4907'-4985' and 8283'-8696' md. There are perforations at 5045'-5075' that have been cement squeezed; and open perfs at 8666'-8696', below the lower retainer. These lower set of open perforations will be the initial interval targeted for testing. The well has about 55' of diesel above the upper cement plug in the 7" casing. This diesel will recovered and recycled as fuel for on -site heating equipment. Expected Pressures: Per DST #1 when this well was initially drilled, at mid perf depth of 8681' 659' TVD (22' RKB), reservoir pressure was reported to be 4065 psi or 0.47 psi/ft gradient 0 g EMW. Using a 0.lpsi/ft gas gradient would result in a maximum anticipated surface pressure(MASP) of approximately 3200 psi. Proposed Rie Operations: 1. Mobilize equipment to wellsite, via the Kenai Peninsula Borough unimproved road right-of- way access that begins at the end of North Kenai Road. Weather will dictate the timing of sufficiently frozen ground conditions to support axle weights. 2. Rig up the location per Attachment. 3. Install a 13-5/8" 5000 psi x 7-1/16" 5000 psi tubing head with seals. Pressure test. 4. Nipple up 7-1/16" 5000 psi WP BOPE consisting of pipe ram, blind ram, an annular preventer, a flow cross with 2" ,Pqu'ipment and a 2" 5000 psi choke manifold (Exhibit A-1) Install test plug. Test BOPE to 3500 psi. Test annular to 2500 psi. Pull test plug. 5. PU work string, RIH to top of first plug at —55'. Circulate out and recover diesel freeze jE protect for reuse. i 6. Mill out the first two cement plugs/retainers with a 6" bit, circulating a minimum of 9.0 ppg NaCl/KCI brine and gel sweeps. Circulate/ream well down to 8283', the top of the lower cement plug. Pressure test 7" casing to 500 psi to determine competency of squeeze perfs at 5045'- 5075' md. 7. Mill out final cement plug/retainer. Circulate well clean down to 8800' md. Recover and isolate the approximate 3-1/2 cubic yards of cuttings expected to be generated from removal of the cement plugs. 8. Run 2-7/8" 6.4# L-80 tubing and packer with the intent of testing the open perforations at 8666'-8696'. Install tubing hanger and test. Pump diesel down inner annulus for freeze protect. Set retrievable production packer. 9. Install two-way check. ND BOPE, NU tree and pressure test. Pull TWC. 10. RU testing equipment and test interval at 8666'-8696' by swabbing liquids from tubing. 11. If the 86951- 8666' interval 44s� not prove up Sundry Applications will be submitted for approval to move the packer antest other intervals in the well bore for gas production. 12. If commercial production of hydrocarbons is establish at this well site, additional plans for development and surface handling of production will be submitted. Should the well be plugged and abandoned, plugging and abandonment of the well bore will be in accordance with regulations established by the State of Alaska. 78 ' KB EIRnuRn 185' 11 drilled to B!2'bH la 10, 'md m 13-3nT CSG. 721. N-aNfia K 53 2616' Contented to surface Glass 0 7- CSG NO a 32p. NSD 9092' 0 10,058' OmumJ Level. Cement Plug 55' • 140' 333' iP 901. N-dO conductor CemeMetl to turlaa Cement Plug 4907'-4885' 4486' Cement RR111RR1 6046,+` Pedommna (Sqi . BS sa) � 60 ' Content Plug 8283' - 8668' 6558' c.wmnn.na 8688'• Pods d JSPF 8886' Wildcat WELL MG05S Pomi pl PERMR No API No 50.733-20372-00 SEC 14. TSN, RSW 2124FEL ?51/ 5 FNL To40D 6hl Frw nk for CEr venGrg ITAM01 a E a Pad Access d Y O L y V C (2 ' 5K Choke TI, Kill Line ('115K Choke i ;7/ Ram Ram Z" 5K Kill Line January 26, 2005 Lorri E. Clark PO Box 101763 Anchorage, AK 99510 Jim White Alaska Crude Corp Intrepid Production Co Jim White, You have my permission to access my property at Gray Cliff Subdivision, lot # 250, and its buildings and structures, with equipment as necessary to explore and ascertain its usefulness to you, your company, and/or me. I look forward to future discussions on your determinations. Thank you, Lorri Clark 907-440-0953 Z'd SStZ-SbZ-L06 sjJejo IJJ01 ejj=t0 so LZ uer January 26, 2005 Lorri E. Clark PO Box 101763 Anchorage, AK 99510 Jim White Alaska Crude Corp Intrepid Production Co Jim White, You have my permission to access my property at Gray Cliff Subdivision, lot it 250, and its buildings and structures, with equipment as necessary to explore and ascertain its usefulness to you, your company, and/or me. I look forward to future discussions on your determinations. Thank you, Ut..' Lorri Clark 907-W-0953 0i/?1/2003 09:58 98,m"9;7542 AWIC PAGE 04 r,e•l, p_ T ' etfeEur IN I'll,.cA r$R STALE OF ALASKA t9„r•nthellm OIL AND OAS CONS11VA11ON COMMITTEE 50- 33-10312 WELL COMPLETION OR RECOMPLETION REPORT AND LOG * ` cNA "" AN "!. T M N1. tiT m,L Olhn S_UBp eRdDtt ML 593, 5I TYPE OP EOMPLSTiONMNfiL RIfT 11Wrx n h C LN ^—,1UCM114VR bV. RGR Y'Rt! iJ OIRAt sG_,ypy,ilyLF>t, O T,P A LQCATmN or 4RLL�FvpdYt InanelvR eAd+lY a'YNr Zp n"grren6e 018 Try $lest'MO IGMNNej AtR"TRte 2511.51 FNLT 2124' FSL1 Set. 14, T9N, R9We S.M. At mp mod. IntenRt mpoMed WOW Seine Al tolnl deDU Same :e TD, .RL a • MO c ❑a 3— —! 5 Ta•r.c l6x { CT e1 NTR T A p IW,En RY 1 T 1 W.1W :YANY• ,• ROTA AL' TCOLA 'L CAYLR 14e1A f_r 4enmrmm�. • ... __ __ n — Irn None - D1LRgged back to 551 ND No TW$ LL6{.TRIE ti DTNR1a l.OG3 1 Dc TnA1 a R1t091 nlxn _L TnP loam I porm-m ) 8666-86951 with 4 .3SFF Cement retainers DJMIIINTERVALt.MD) AMW'TfldeDktNDOYAL 5045-50751 with 4 SSFF and cenent plugs gtial set above both -TIILA� 4 1 —^ P perforated zones on - n1S16 _t ®o P p Ktaincs to. 10� vaoavcrtDN •Q�t.-uaai-f SR! D a1rE DATLF!Rd'I- PM1DVVnoN PRDDVCTION MLlIduD (VI 6.4". Rlu I.C1 wm0wdy M And LYpR n pNmRi µ'pp(. 7n'A.1. See D3T infdrmaS+on oAu or Tear. I� a. n(I ��'7 I�t11IRliill9u{I� eP-- onU."larch 29. 19,78 '(See lnetiaEfone end Spaces lot Additionel Data an Reverse Side) w n1 N ^. b� roro I 1 1 1 1 i i d r F.. n n M 1+ r s x N q t l IJ'JI .e.•n::.�,n, YiCJf.[(JI01 z 0.1 exspN ls.; .r� � '•� •i .7 41 �.J E0 3'Jt+d MEM" 4 Zb9L91ZL@6 @5 �6@ E80Z 7LZJI0 Alaska Department of Natural Resources --corder's Office Imaging... http://www.dnr.g` .ak.us/las/Case_Abstract.cfm?FileType=ADL&F... 6 Welcome in the Alaska Department of Natural Resources commissioner: rom rMin Land Administration System Menu I Cred c Carr' Payment Land Administration System Case Abstract Information File Type: DL File Number: 1 389922 See Township, Range, Section and Acreage? C Yes C No New Search Case Summary I Case Detail I Land Abstract File: ADL 389922 As of 03/17/2005 Customer: 000010434 JAMES W. WHITE 4614 BOHILL SAN ANTONIO TX 78217 Case Type: 784 OIL & GAS LEASE COMP DNR Unit: 780 OIL AND GAS File Location: DOG DIV OIL AND GAS Case Status: 35 ISS/APPRV/ACTV AUTH Status Date: 12/17/2001 Total Acres: 4800.000 Date Initiated: 05/09/2001 Office of Primary Responsibility: DOG DIV OIL AND GAS Last Transaction Date: 04/08/2003 Case Subtype: CI COOK INLET Last Transaction: AA-NRB ASSIGNMENT APPROVED Meridian: S Township: 009N Range: 009W Section: 01 Total Acres: 640 Search Plats Meridian: S Township: 009N Range: 009W Section: 02 Total Acres: 640 Meridian: S Township: 009N Range: 009W Section: 03 Total Acres: 640 Meridian: S Township: 009N Range: 009W Section: 10 Total Acres: 640 Meridian: S Township: 009N Range: 009W Section: 11 Total Acres: 640 Meridian: S Township: 009N Range: 009W Section: 12 Total Acres: 640 Meridian: S Township: 009N Range: 009W Section: 14 Total Acres: 320 Meridian: S Township: 009N Range: 009W Section: 15 Total Acres: 640 Case Actions 05-09-2001 NOTIFICATION LESSEE DESIGNATED NEW REL (20) 20 NOTIFICATION LESSEE 1W 1 of 6 3/17/2005 1:10 PM Alaska Department of Natural ResourceF ^gcorder's Office Imaging... http://www.dnr.sl-'-.ak.us/las/Case_Abstract.cfm?FileType=ADL&F... OLD REL CODE 21 DISPOSAL NAME NOTIFICATION CID NUMBER 1364 WAGNER, RICHARD E OLD CID # (SALE NO) 5467 STATE OF ALASKA 05-09-2001 BID RECEIVED STATUS (12) 12 BIDRECEIVED BID TYPE I FIXED ROYALTY RATE TOTAL BONUS BID 24048 DEPOSIT AMOUNT 5131 ROYALTY SHARE % 12.500000 10-01-2001 TRACT DEFINED SALE DATE 05-09-2001 STATUS(11) 11 TRACT DEFINED BID TYPE 1 FIXED ROYALTY RATE SALE NUMBER CI2001 TRACT NUMBER 0272 FORM NUMBER 44 DOG 200004 CONDITIONAL YfN N PRIMARY TERM 7 10-01-2001 INITIAL OWNER SEGMENT CODE 1 CID NUMBER 000005467 STATE OF ALASKA ROYALTY INTEREST % 12.500000 10-01-2001 INITIAL OWNER SEGMENT CODE 1 CID NUMBER 000001364 WAGNER, RICHARD E WORKING INTEREST % 100 ROYALTY INTEREST % 87.500000 11-07-2001 LEASEAWARDED STATUS (l3) 13 LEASE AWARDED 12-17-2001 LEASE ISSUED EFFECTIVE DATE 01-01-2002 EXPIRATN DATE 12-31-2008 STATUS (21) 21 ACTIVE 05-31-2002 COMMENTS 2 of 6 3/17/2005 1:10 PM Alaska Department of Natural Resources Recorder's Office Imaging... http://www.dnr.state.ak.us/las/Case_Abstract.cfm?FileType=ADL&F... FIXED TRANSACTIONS THAT APPEARED TO BE DUPLICATES BECAUSE OF IDENTICAL DATE AND TIME, BY CHANGING THE TIME ON THE TRANSACTIONS 11-04-2002 ASSIGNMENT APPROVED EFFECTIVE DATE 11-01-2002 SEGMENT CODE 1 ASSIGNOR'S CID 000001364 WAGNER RICHARD E ASSIGNEE'S CID 000001714 DONKEL, DANIEL K WORKING INTER % ASSIGNED 15 ROYALTY INTER % ASSIGNED 13.125000 11-04-2002 ASSIGNMENT APPROVED EFFECTIVE DATE 11-01-2002 SEGMENT CODE I ASSIGNOR'S CID 000001364 WAGNER, RICHARD E ASSIGNEE'S CID 000041666 THE KENNETH A. MEHAF WORKING INTER % ASSIGNED 15 ROYALTY INTER % ASSIGNED 13.125000 12-31-2002 STATUS CODE STANDARDIZED STATUS CODE 35 ISS/APPRV/ACTV AUTH ** * * * STATUS CODE STANDARDIZATION *** ** STATUS CODE CHANGED BY BATCH UPDATE 03-28-2003 COMMENTS AOGCC REC'D APPLICATION FOR SPACING EXCEPTION AND WELL REENTRY,MOOSE POINT UNIT NO. 1. APPLICATION FILED BYALASKA CRUDE CORPORATION 04-01-2003 NOTIFICATION LESSEE C14ANGED NEW NL (20) 20 NOTIFICATION LESSEE OLD NL (20) 20 NOTIFICATION LESSEE NEW NOTIF LESSEE CID# 10434 WHITE, JAMES W. OLD NOTIF LESSEE CID# 1364 WAGNER, RICHARD E 04-08-2003 ASSIGNMENT APPROVED EFFECTIVE DATE 04-01-2003 SEGMENT CODE 1 ASSIGNOR'S CID 000041666 THE KENNETH A. MEHAF ASSIGNEE'S CID 000010434 WHITE, JAMES W. WORKING INTER % ASSIGNED 15 3 of 6 3/17/2005 1:10 PM Alaska Department of Natural Resources Recorder's Office Imaging... http://www.dnr.srle.ak.us/las/Case_Abstract.cfin?FileType=ADL&F... ROYALTY INTER %ASSIGNED 12 04-08-2003 ASSIGNMENT APPROVED EFFECTIVE DATE 04-01-2003 SEGMENT CODE 1 ASSIGNOR'S CID 000001714 DONKEL, DANIEL K ASSIGNEE'S CID 000010434 WHITE, JAMES W. WORKING INTER %ASSIGNED 15 ROYALTY INFER %ASSIGNED 12 04-08-2003 ASSIGNMENT APPROVED EFFECTIVE DATE 04-01-2003 SEGMENT CODE I ASSIGNOR'S CID 000001364 WAGNER RICHARD E ASSIGNEE'S CID 000010434 WHITE, JAMES W. WORKING INTER %ASSIGNED 70 ROYALTY INTER % ASSIGNED 56 04-08-2003 ASSIGNMENT APPROVED EFFECTIVE DATE 04-01-2003 SEGMENT CODE 1 ASSIGNOR'S CID 000001364 WAGNER, RICHARD E ASSIGNEE'S CID 000039607 OVERRIDING ROYALTY ROYALTY INTER % ASSIGNED 5.250000 04-08-2003 ASSIGNMENT APPROVED EFFECTIVE DATE 04-01-2003 SEGMENT CODE I ASSIGNOR'S CID 000001714 DONKEL, DANIEL K ASSIGNEE'S CID 000039607 OVERRIDING ROYALTY ROYALTY INTER % ASSIGNED 1.125000 04-08-2003 ASSIGNMENT APPROVED EFFECTIVE DATE 04-01-2003 SEGMENT CODE I ASSIGNOR'S CID 000041666 THE KENNETH A. MEHAF ASSIGNEE'S CID 000039607 OVERRIDING ROYALTY ROYALTY INTER % ASSIGNED 1.125000 Legal Description 4 of 6 3/17/2005 1:10 PM Alaska Department of Natural Resources recorder's Office Imaging... http://www.dnr.s'-*�.ak.us/las/Case—Abstract.cfm?FileType=ADL&F 10-01-2001 ***LEASE LEGAL DESCRIPTION*** TRACT CI2001-0272 T. 9 N., R. 9 W., SEWARD MERIDIAN, ALASKA SECTION], SURVEYED, FRACTIONAL, ALL UPLANDS, 330.99 ACRES; SECTION 1, UNSURVEYED, ALL TIDE AND SUBMERGED LANDS, 309.01 ACRES; SECTION2, PROTRACTED, ALL, 640.00 ACRES SECTION 3, PROTRACTED, ALL, 640.00 ACRES; SECTION 10, SURVEYED, FRACTIONAL, GLO LOT 1, 20.21 ACRES; SECTION 10, UNSURVEYED, ALL TIDE AND SUBMERGED LANDS, 619.79 ACRES; SECTION 11, SURVEYED, FRACTIONAL, ALL UPLANDS, 356.20 ACRES; SECTIONII, UNSURVEYED, ALL TIDE AND SUBMERGED LANDS, 283.80 ACRES,• SECTION 12, SURVEYED, ALL, 640.00 ACRES; SECTIONI4, SURVEYED, N2, 320.00ACRES; SECTION 15, SURVEYED, FRACTIONAL, ALL UPLANDS, 509.36 ACRES; SECTION 15, UNSURVEYED, ALL TIDE AND SUBMERGED LANDS, 130.64 ACRES; THIS TRACT CONTAINS 4,800.00 ACRES MORE OR LESS. 5 of 6 3/17/2005 ] :10 PM S ILTck 7L E 0 A 11 A S K A ALAS 'A OIL AND GAS CONSERVATION COMitIISSION November 6, 2003 Mr. James White Alaskan Crude Corp. 4614 Bohill Street San Antonio TX 78217-1413 In Re: 203-178 Blocker#1 203-179 Moose Point #1 �-- Dear Mr. White: FRANK H. MURKOWSKI, GOVERNOR 333 W. n AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279.1433 FAX (907) 276-7542 This letter is a follow up to your telephone conversations of the past few weeks with Commission Staff. The Commission received Permit to Drill applications for the subject wells on October 15. Since receipt, Commission Staff have been examining the submitted documents and discussing the applications with you. At this time, we are returning the applications to you because in their present form the documents are incomplete and do not meet many of the Commission's requirements. The Commission acknowledges that your discussions with the staff have clarified a number of questions regarding your plans, however the changes resultant from those discussions will make the ultimate permit package quite different from what you have submitted. In order to assure that the most complete document is available for review, you are requested to revise the documents addressing the items listed in the attachments as well as other information you may have. When revised documents have been submitted, the Commission will resume our review. The presently assigned permit numbers will apply to the revised documents as will the originally submitted permitting fees. In the course of the discussions, it has become evident that your operations will likely need permits from other agencies. In order for you to get the best information regarding other permits, you may find it helpful to contact Mr. Patrick Galvin at the Department of Natural Resources here in Anchorage at (907) 269-8775 or patrick_galvin@dnr.state.ak.us.. Sincerely, Randy Ruedrich Commissioner cc: Patrick Galvin-w/att ALAS'" \ OII_ AND GAS CONSERVATION ' -)MISSION PERMIT TO DRILL 20 AAC 25.005 la. Type of Work: Drill ❑ Redrill ❑ -1b. Current Well Class: Exploratory ® Development Oil ❑ Itiple Zone ❑ Re-entry [,� Stratigraphic Test E] Service ❑ Development Gas ❑ Single Zone ❑ 2. Operator 5. Bond: ® Blanket ❑ Single Well 11. Well Nad Number: Name: Alaskan Crude Corp. State wide `Bond No. o o s e Pme n t # 1 3. Address: 4614 Bohi11 St 6. Proposed Depth: 12. Field/P.ol(s): _ MD10,058'#TVD:10,058' UNK WN 4a. Location of Well (Governments[ Section): 7. Property Designation: Surface: 2511 . 5 ' FNL, 2124" FEL, 8. Land Use Permit: 3. Approximate SEC 14, T9N, R9w, S.M Top of Productive N/A Spud Date: 1 - 1 -2004 Horizon: SAME 9. Acres in ProPerty: 14. Distance to APROX Total Depth: 8 Nearest Property: 13 5 ' 4b. Location of Well (State Base Plane Coordinates): 10. KB Elevation 15. Distance to Nearest Surface: x- 2 12 4 ' F E L y2 5 ' F L, Zone- (Height above GL): 1 F, feet Well within Pool: N/A 16. Deviated Wells: 17. Anticipated Pressur (see 20 AAC 25.035) Kickoff Depth: ft. Maximum Hole Angle: Max. Downhofe Pr ,sure: 4O Y �psig. Max.Sudace Pressure: "3 2 prig. 18. Casing Program: Specifications Settin epth Quantity of Cement Size To Bottom c.f. or sacks. Hole Casing Weight Grade Coupling Length MD TV (Including Stage Data) Set with Pile Driver 26" 20 0 781 sx Class G. 17z" 13 3/8 q72�6 L_9 jj 1710 sx Class G 7" 55 0 6700' DV Tool @5593' 19. PRESEWMELL CONDITION SUMMAR o be ociRpleted for Redrill and Re -Entry Operations) Total Depth MD (ft): Total Depth TVD (ft): Plugs (me sur E five Depth MD (ft): Effective Depth TVD(ft) : Junk (measured): Casing Length 14bw MD TVD Structural 0- 5 0' nriirpn 0- 5 0' Conductor 0 -333 , Surface n - , ` , 2 , Intermediate „ , Production Liner Perforation Depth MD (ft): Perforation Depth TVD (ft): 8660-8695 ' / 5045-5073, r 20. Attachments: Filing Fee 4tf B P Sketch E] Drilling Program [y] Time v. Depth Plot ❑ Shallow Hazard Analysis ❑ Property Plat D rter Sketch Seabed Report Drilling Fluid Program 20 AAC 25.050 Requirements 21. Verbal Approval: Commission presentative: Date: 22. 1 herebycertify that the fore dy gong is We and cornett to the best of my knowledge. Contact Printed Name _ Title Signature Phone Date Commission Use Only Permit to Drill Number: 203 _ S API Number: 50- /33 �- � 6 J /z -' Permit Approval Date: See cover letter for other requirements. Conditions of approv Samples required Oyes ONO Mud log required. - ,::❑Yes�Iio, . Hydrogen sulfide measures ❑Yes �No Directional survey required ❑Yes "o-,-- Other: �/''�? 1�-� '� z BY ORDER OF Approved by: —ZOMM193IONER THE COMMISSION Date: or i iu-4U 1 mevlJuu olzvuo Confid 'al Submit in duplicate Moose Point #1 Re -Entry 1) A C-Plan exemption from DEC or an approved C-Plan is required. i 2) The present application is not signed. 3) Your plan does not presently present any information on the present condition of the well. You have provided photographs of the current location condition and these images do provide valuable information with regard to the location condition and what "well assembly" is present. 4) The limited operation plan given states that it is only intended to re-establish the 7" casing. Based on the photos and your conversations with Tom Maunder, it would appears that you may be able to propose some more specific operations or steps than previously submitted. 5) A drawing of the BOP stack, choke and kill lines and choke manifold should be provided. In conversations with Tom Maunder, you have indicated you would wish to employ a manually controlled stack as well as a 2" choke line. If the calculated surface pressure is such that a 5000-psi rated stack is required, a 3" choke line is required. You must make an application to the Commission requesting a variance if you wish to employ the manual stack and 2" choke line. 6) A drawing of the re-established wellhead/tree should be included. 7) No information is provided regarding the disposal of drilling wastes. The abandonment drawing notes that there is diesel in the well above the top plug. Any wastes (solid or liquid) must be disposed of according to state laws. 8) This wellbore and the location have been abandoned according to AOGCC regulations. The Kenai Peninsula Borough has also accepted the "graded", abandoned location. The photos indicate that the site has "grown over". All prior activities on this site have been closed out. The proposed activities are essentially the start of a new project and other approvals besides the AOGCC's permit to drill are likely necessary. In conversations, you have indicated that you has been in contact with Matt Rader at DNR and Lydia Minor at DEC. It would appear that since the well is within the coastal zone that you should also be in contact with Pat Galvin at the Department of Natural Resources so that any additional permits can be determined and coordinated. Pat may be contacted at (907) 269-8775 or patrick_galvin@dnr. state.ak.us. Moose Point #1 Re -Entry 1) A C-Plan exemption from DEC or an approved C-Plan is required. --3)-� plan does not presently present any information on the present condition of the well. You have provided photographs of the current location condition and these images do provide valuable information with regard to the location condition and what "well assembly" is present. --4}-The limited operation plan given states that it is only intended to re-establish the 7" casing. Based on the photos and your conversations with Tom Maunder, it would appears that you may be able to propose some more specific operations or steps than previously submitted. 5) -A-drawing of the BOP stack, choke and kill lines and choke manifold should be -provided-. In conversations with Tom Maunder, you have indicated you would -wish-To mploy a manually controlled stack as well as a 2" choke line. If the -calculated-surface pressure is such that a 5000-psi rated stack is required, a 3" chop Line —is- equired. You must make an application to the Commission requesting a variance if you wish to employ the manual stack and 2" choke line. 6) A drawing of the re-established wellhead/tree should be included. -7- T , :.,formation is provided regarding the disposal of drilling wastes. The abandonment drawing notes that there is diesel in the well above the top plug. Any wastes (solid or liquid) must be disposed of according to state laws. M- c A-?;,r 8) This wellbore and the location have been abandoned according to AOGCC regulations. The Kenai Peninsula Borough has also accepted the "graded", abandoned location. The photos indicate that the site has "grown over". All prior activities on this site have been closed out. The proposed activities are essentially the start of a new project and other approvals besides the AOGCC's permit to drill are likely necessary. In conversations, you have indicated that you has been in contact with Matt Rader at DNR and Lydia Minor at DEC. It would appear that since the well is within the coastal zone that you should also be in contact with Pat Galvin at the Department of Natural Resources so that any additional permits can be determined and coordinated. Pat may be contacted at (907) 269-8775 or patrick_galvin@dnr.state.ak.us. Moose Point #1 Re -Entry 1) A C-Plan exemption from DEC or an approved C-Plan is required. 2) You must make an application to the Commission requesting a variance if you wish to employ the manual stack and 2" choke line. 3) A drawing of the re-established wellhead/tree should be included. 4) Any wastes (solid or liquid) must be disposed of according to state regulations. 5) This wellbore and the location have been abandoned according to AOGCC regulations. The Kenai Peninsula Borough has also accepted the "graded", abandoned location. The photos indicate that the site has "grown over". All prior activities on this site have been closed out. The proposed activities are essentially the start of a new project and other approvals besides the AOGCC's permit to drill are likely necessary. In conversations, you have indicated that you have been in contact with Matt Rader at DNR and Lydia Minor at DEC. It would appear that since the well is within the coastal zone that you should also be in contact with Pat Galvin at the Department of Natural Resources so that any additional permits can be determined and coordinated. Pat may be contacted at (907) 269-8775 or patrick_galvin@dnr.state.ak.us. Alaska Oil and Gas Conservation Conur: -lion - Conservation Orde... http://www.stag-'4.us/local/akpages/ADMIN/ogc/orders/co/co400_.. STATE OF ALASKA http://www.star- OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Alaskan Crude ) Erratum Notice to Conservation Corporation, also known as Alaska Crude) Order No. 488 Corporation, ("ACC") for an order ) granting an exception to the spacing ) Moose Point Unit #1 requirements of 20 AAC 25.055(a)(2) to ) Re-entry Testing provide for the re-entry and testing of the ) and Moose Point Unit #1 well in an undefined ) gas pool. May ) Y 29, 2003 Erratum Notice: Conservation Order No. 488 incorrectly refers to the applicant as "Alaska Crude Corporation." The correct name is "Alaskan Crude Corporation." The Commission further notes that there are other examples in the Commission's records where the name "Alaska Crude Corporation" has been used by various persons to refer to Alaskan Crude Corporation. The Commission considers that references to "Alaska Crude Corporation" are intended to apply to the entity whose correct name is Alaskan Crude Corporation. DONE at Anchorage, Alaska and dated May 30, 2003 Sarah Palin, Chair Alaska Oil and Gas Conservation Commission Randy Ruedrich, Commissioner Alaska Oil and Gas Conservation Commission Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission conservation Order Index Home Webmaster 1 of 1 3/16/2005 9:18 AM Z� -G 80 Note to Well File Moose Point No.1 - Re -Entry Well Files 1780010, 2031790, and 2050380 The Moose Point No. 1 well was originally drilled by Amarex Inc. in 1978 (Permit to Drill No. 1780010). The well was suspended in March of 1978, and subsequently plugged and abandoned in March of 1979. In October 2003, Alaskan Crude Corporation submitted a permit to drill application (PTD No. 2031790) to re-enter and test this well. This application was incomplete, and was denied by the Commission on April 2, 2004. Permit to drill application No. 2050380, submitted on March 10, 2005, is Alaskan Crude Corporation's revised application to re-enter and test this same well. The attached letter from the 2031790 well file lists incomplete items in that denied permit to drill applic tion. Steve Davies March 10, 2005 Conservation Order No. 488 http://www.stat, -':.us/local/akpages/ADMIN/ogc/orders/co/co400 .- STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Conservation Order Alaska Crude ) No. 488 Corporation ("ACC") for an ) order granting an exception to the spacing ) Moose Point Unit #1 requirements of 20 AAC 25.055(a)(2) to Re-entry and provide for the ) Testing re-entry and testing of the ) Moose Point Unit#1 well in an undefined )April 3, 2003 gas pool. IT APPEARING THAT: 1) ACC, by letter dated January 23, 2003 and received by the Commission on January 28, 2002, has requested an order allowing a spacing exception in accordance with 20 AAC 25.055 to re-enter and test the plugged and abandoned Moose Point Unit #1 exploratory well for gas within 1500 feet of a property line. 2) ACC submitted additional information on January 30, February 7, February 10, March 14 and March 25, 2003 in support of the application. 3) The Commission published notice of opportunity for public hearing in the Anchorage Daily News on February 14, 2003 and the Peninsula Clarion on February 14, 2003, pursuant to 20 AAC 25.540. In addition, ACC submitted proof of notice of the application by certified mail to all offset owners, landowners, and operators of all properties within 3000 feet of the proposed test interval in the Moose Point Unit #1 well. 4) No protests to the application or comments were received. FINDINGS: 1) The surface location of this well is 2512 feet from the North line ("FNL") and 2124 feet from the East line ("FEL") of Section 14, T9N, R9W, Seward Meridian ("S.M."). The location of the proposed test interval and the bottom hole location of this vertical well are the same as the surface location. 2) The well was plugged and suspended by the original operator, AMAREX, Inc., on March 15, 1978. The status of the well was changed to plugged and abandoned by the Commission on March 15, 1979. 1 of 2 3/16/2005 9:19 AM Conservation Order No. 488 http://www.sta* -k.us/local/akpages/ADMIN/ogc/orders/co/co400_.. 3) The well is within 140 feet of a property line where ownership changes. 4) An exception to the well spacing provisions of 20 AAC 25.055 (a)(2) is necessary in order to re-enter and test the well for gas within 1500 feet of a property line. CONCLUSIONS: 1) An exception to 20 AAC 25.055(a)(2) is necessary to allow re-entry and testing of the Moose Point Unit #1 well. 2) Granting a spacing exception to allow re-entry and testing of the Moose Point Unit #1 well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners. 3) Before regular production is permitted from the Moose Point Unit #1 well, the Commission must take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the re-entering the well as an exception, and so that drainage to the tract with respect to which the exception is granted will be prevented or minimized. AS 31.05.100(b). ACC's application for exception to the well spacing provision of 20 AAC 25.055(a)(2) for the purpose of re-entering and testing the Moose Point Unit #1 well is approved. The Moose Point Unit #1 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing, to offset any advantage ACC may have over other owners by reason of re-entering Moose Point Unit #1 to the exception location and to allow affected owners to produce their just and equitable share of hydrocarbons. DONE at Anchorage, Alaska and dated April 3, 2003. Sarah Palin, Chair Alaska Oil and Gas Conservation Commission Randy Ruedrich, Commissioner Alaska Oil and Gas Conservation Commission Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission Conservation Order Index 2 of2 3/16/2005 9:19 AM Alaska Department of Natural Resources Recorder's Office Imaging... http://www.dnr.state.ak.us/las/Case_Abstract.cfTn?FileType=ADL&F... End of Case Abstract Back Land Administration System Menu I Land Records(Status Plats I Dept_ of. Natural Resources Nome Page State of Alaska Home Pau I Copyright I Privacy I Disclaimer Last updated on 0311712005. Report technical problems with this page to the Webmaster. This site works best with 4.x or newer version of Internet Explorer and Netscape. This site also requires that all COOKIES must be accepted. 6 of 6 3/17/2005 1:10 PM TRANSMITAL LETTER CHECK LIST CIRCLE APPROPRIATE LETTER/PARAGRAPHS TO BE INCLUDED IN TRANSMITTAL LETTER WELL NAME A/voj�c--- 7t- / /L--eAr,� PTD# Development Exploration Service Stratigraphic CHECK WHAT ADD-ONS "CLUE" APPLIES (OPTIONS) MULTI The permit is for a new wellbore segment of LATERAL existing well Permit No, API No. (If API number Production.sbould continue to be reported as last two (2) digits a function of the original API number. stated are between 60-69) above. PILOT HOLE In accordance with 20 AAC 25.005(f), all (PH) records, data and logs acquired for the pilot bole must be clearly differentiated in both name (name on permit plus PH) and API number (50 70/80) from records, data and logs acquired for well (name on permit). SPACING The permit is approved subject -to full EXCEPTION compliance witb 20 AAC 25.055. Approval to perforate and produce is contingent upon issuance of a conservation order approving a spacing exception. (Company Name) assumes the liability of any protest to the spacing exception that may occur. DRY DITCH All dry ditch sample sets submitted to the SAMPLE Commission must be in no greater tban 30' sample intervals from below the permafrost or from where samples are first caught and 10' sample intervals through target zones. ..ELL PtKMI I UHt:U SL151 riciu a roo�_ _-__ PTD#: 2050380 Company ALASKAN CRUDE Cam _- Initial Class/Type Well Name: MOOSE RT UhllT 1 Re-entry_ .Program EXP EXP / PEND GeoArea $20__ Unit it350_. On/Off Shore On _ Well bore seg Annular Disposal Administration 1 Permit fee attached - - - - - .. - - - - - _ - - - - - - - - Yes - - - - - - - - - ------ - - - - - - - ------- - - - - - _ 2 Lease number appropriate_ - - - - - - - - - - - - - .... - Yes 3 Unique well -name and number - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Yes - - - - - - - - - - - - - - - - - - - - - - - - 4 Well located in a. defined pool.. _ _ _ _ _ _ _ _ _ _ _ _ _ - - - No 5 Well located proper distance from drilling unitboundary ... . ... . . . . ........ . . . No 6 Well located proper distance from other wells . . . . . . ........ . .... . .. . . . . . . . Yes _ .. . 7 Sufficient acreage available in drilling unit- - - - - - - - - - - - - - - - - - - - - - - - - - Yes 8 If deviated, is. wellbore plat. included _ . M. - - _ _ _ 9 Operator only affected party... - . - - _ - _ - _ .... ............. _ No ad 000/0 10 Operator has.appropriate. bond (o force . _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ - , Yes _ " .� a'�o.. 0!c✓_4bi� _-cy _ _ _ / 0s_ - 11 Permit can be issued without conservation order . . ........ . . . . . ... . . . . . No - Conservation Order 4a8.(April 3, 2003) grants a. spacing.exception for this well. Approved operations limited Appr Date 12 Permit can be issued without administrative approval - -- - - - - - - - - - - - - - - - - - - Yes .. - - - - to re-entry and testing.. Suggestedldnguage for approval letter in well file-RPC... RPC 3/17/2005 13 Can permit be approved before 15-day wait Yes 14 Well located within area andstrataauthorized by Injection Order # (put 10# in comments) (For. NA - _ - - - - - - ..... - - 15 All wells within 1/4_mile area of review identified (For service well only)_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ NA _ _ _ _ _ .. _ _ . . _ _ _ _ _ _ _ _ _ , _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ - ..- 16 Pre -produced injector: duration. of pre production less than 3 months (For service well only) - NA 17 ACMP. Finding of Consistency has been issued for this project- - _ - - - - _ . NA Engineering 18 Conductor stringprovided- - - - - .... - - - - - _ - - - - - - NA. 19 Surface casingprotectsall known USDWs 20 CMT vol adequate to circulate -on conductor & surf _csg- 21 CMT vol adequate to tie-in long string to surf csg.. - - - ..... .. .. _ - - - - _ - - NA- 22 CMT will cover all known productive horizons - - - - - - - - - - - - - - --- NA... - - - - - - - - - 23 Casing designs adequate for C, T, B & permafrost_ - _ - - - - - - - _ - - ..... NA.... - - - - - - - - - - - -- --- - - - - - - .. 24 Adequatetankage or reserve pit ..... ... - ....... - - _ Yes - - - .. Truck. mounted rig with frac tank..- 25 If a_re-drill, has_a 10-403 for abandonment been approved - - - - - - - - - NA_ 26 Adequate wellbore separation -proposed- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - NA- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . - . - ... - . - ... . 27 If diverter required, does it meet regulations . . .. . . . ... . ... - _ - - NA_ Appr Date 28 Drilling fluid program schematic .& equip list adequate . . .. . .. ... . . ........ . . . Yes _ - - - Min mud weight 9.0 ppg, WGA 3/22/2005 '29 BOPEs,.do they meet regulation ....... . . ........... - ... _ - _ No _ ... - Alternate -BOPE. approved. 30 BOPE press rating appropriate; test to -(put psig in comments)_ - - - - - - - - - - - -- - -- Yes - - .. - Test to 3500 psi. -MSP 3200 psi....- 31 Choke. manifold complies w/API-RP-53 (May 84). _ - - - - - - - .... - . No - - - _ . Alternate -BOPE approved, - - - - - - - - - - - - 32 Work will occur without operation shutdown- - - - - - - - - - - - - - - - - - - - - - - ---- - Yes- 33 Is presence. of H28 gas probable _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . - _ - - _ - ..... - No _ - ... - - 34 Mechanical condition of wells within AOR verified (For service well only) .. NA_ Geology ;35 Permit can be issued w/o hydrogen sulfide measures ... Yes - - - - - - - - -- - - - - - !36 Data_presented on potential overpressure zones. - .......... - No Appr Date 37 Seismic. analysis. of shallow gas.zones. ................. - NA RPC 3/17/2005 - - - -- - - - 38 Seabed condition survey (if off -shore) - - - - - NA - 39 - Contact name/phone-for weekly progressreports(exploratory only]- Yes 4im White (210) 651-0777. Geologic Engineering Public Commissioner: Date: Commissioner: Date stoner Date �/
