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Home My WebLink AboutERIO 007ERIO 7 1. November 29, 2021 Hilcorp Alaska, LLC application for pilot project for water flood and polymer 2. December 6, 2021 Notice of public hearing, affidavit 3. January 11, 2022 Hearing transcript and Hilcorp presentation 4. January 21, 2022 Hilcorp supplemental filing 5. ----------------------- Annual reports 6. April 11, 2025 Hilcorp Request for extension of ERIO 7 (ERIO 7.001) 7. October 27, 2025 Hilcorp Request for admin approval (ERIO 7.002) Jeremy Price Digitally signed by Jeremy Price Date: 2022.04.14 15:59:14 -08'00' From:Salazar, Grace (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] AOGCC Enhanced Recovery Injection Order No. 7 (Hilcorp) Date:Thursday, April 14, 2022 4:05:38 PM Attachments:ERIO 7.pdf The Alaska Oil and Gas Conservation Commission has issued the attached Enhanced Recovery Injection Order No. 7, granting Hilcorp Alaska, LLC approval to conduct a pilot enhanced recovery injection project in the Ugnu Reservoir Milne Point Unit. Grace ____________________________________ Respectfully, M. Grace Salazar, Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 Direct: (907) 793-1221 Email: grace.salazar@alaska.gov https://www.commerce.alaska.gov/web/aogcc/ __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: grace.salazar@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/grace.salazar%40alaska.gov AOGCC 333 W 7th Avenue, Anchorage, AK 99501 TO: BERNIE KARL K&K RECLYCLING, INC. PO BOX 58055 FAIRBANKS, AK 99711 Mailed 4/18/22 gs Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov ADMINISTRATIVE APPROVAL ENHANCED RECOVERY INJECTION ORDER 7.001 Ms. Jamie Wilson Sr. Landman Hilcorp Alaska, LLC 3800 Centerpoint Drive, Suite 1400 Anchorage, AK 99503 Re: Docket Number: ERIO-25-001 Request to extended expiration date given in 20 AAC 25.402(i) for the Milne Point Unit Ugnu Pilot Project as authorized by enhanced recovery injection order No. 7 Milne Point Unit, Ugnu Undefined Oil Pool Dear Ms. Wilson: By letter dated April 11, 2025, Hilcorp Alaska, LLC (Hilcorp) requested to extend the automatic expiration of an enhanced recovery injection order (ERIO) when injection is not commenced by a certain date. ERIO 7 was issued by the Alaska Oil and Gas Conservation Commission (AOGCC) on April 14, 2022. 20 AAC 25.402(i) states “If injection operations are not begun within 24 months after the date of the order authorizing enhanced recovery, that order expires unless a letter of application for extension is approved by the commission.” The injection authorized by ERIO 7 did not commence by April 14, 2024, thus by regulation ERIO 7 expired at that time. Rule 10 of ERIO 7 states “This Enhanced Recovery Injection Order shall expire three years after the month in which injection activity commences unless an extension is granted by the AOGCC.” The intent of this rule was to allow the pilot project to inject for three years after injection commences, but it wasn’t intended to override 20 AAC 25.402(i). The rule was not written clearly so there is ambiguity as to when ERIO 7 actually expires. In accordance with 20 AAC 25.402(i) Hilcorp applied to extend the expiration date to eliminate the ambiguity. In accordance with 20 AAC 25.556(d) and 20 AAC 25.402(i), the AOGCC hereby GRANTS Hilcorp’s request to extend the expiration date for ERIO 7. ERIO 7.001 April 17, 2025 Page 2 of 2 Now Therefore it is Ordered: Rule 10 of ERIO 7 is revised to read as follows: Rule 10 Expiration Date This Enhanced Recovery Injection Order shall expire 24 months after the issuance of this administrative approval if injection is not commenced by that date unless an extension is granted by the AOGCC. If injection does commence prior to the automatic expiration date for inactivity, this Enhanced Recovery Injection Order shall expire three years after the month in which injection activity commences unless an extension is granted by the AOGCC. DONE at Anchorage, Alaska and dated April 17, 2025. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2025.04.17 08:07:42 -08'00' Gregory C. Wilson Digitally signed by Gregory C. Wilson Date: 2025.04.17 08:43:43 -08'00' From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Enhanced Recovery Injection Order 7.001 (Hilcorp) Date:Thursday, April 17, 2025 8:51:09 AM Attachments:ERIO7.001.pdf Docket Number: ERIO-25-001 Request to extended expiration date given in 20 AAC 25.402(i) for the Milne Point Unit Ugnu Pilot Project as authorized by enhanced recovery injection order No. 7 Milne Point Unit, Ugnu Undefined Oil Pool Samantha Coldiron AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov ADMINISTRATIVE APPROVAL ENHANCED RECOVERY INJECTION ORDER 7.002 Mr. Taylor Wellman Milne Point Wells Manager Hilcorp Alaska, LLC 3800 Centerpoint Drive, Suite 1400 Anchorage, AK 99503 Re: Docket Number: ERIO-25-002 Request for Administrative Approval to Enhanced Recovery Injection Order 7: Water Only Injection Milne Point Unit (MPU) S-203 (PTD 2191090), Ugnu Undefined Oil Pool Dear Mr. Wellman: By emailed letter dated October 27, 2025, received on December 8, 2025, Hilcorp Alaska, LLC (Hilcorp) requested administrative approval to continue water injection in the subject well. The well has a completion with a high set tubing packer that reduces the monitorable inner annulus (IA). The packer design doesn’t meet the requirement of 20 AAC 25.412(b) that “an injector be equipped with tubing and a packer… the packer must be placed within 200 feet measured depth above the top of the perforations…”. The well, currently, has no known pressure communication integrity issues. In accordance with 20 AAC 25.556(d), the Alaska Oil and Gas Conservation Commission (AOGCC) hereby GRANTS, subject to conditions, Hilcorp’s request for administrative approval to continue water injection in the subject well. On August 3, 2025, Hilcorp performed passing state-witnessed mechanical integrity test (MIT) of the IA (MITIA) and separately on the outer annulus (MITOA). This confirms integrity of the tubing to the packer and separately the inner annulus integrity to 5,204 ft which is within the authorized Ugnu injection zone for this well. Accordingly, the AOGCC believes that the well’s condition does not compromise overall well integrity so as to threaten human safety or the environment. ERIO 7.002 December 22, 2025 Page 2 of 2 AOGCC’s approval to continue water injection only in S-203 is conditioned upon the following: 1. Hilcorp shall record wellhead pressures and injection rate daily; 2. Hilcorp shall submit to the AOGCC a monthly report of well pressures, injection rates, and pressure bleeds for all annuli. Bleeds to be flagged on the report; 3. Hilcorp shall perform a MIT-IA every four years to the greater of the maximum anticipated injection pressure or 0.25 x packer TVD, but not less than 1500 psi; 4. Hilcorp shall perform a MIT-OA every four years to the greater of the maximum anticipated injection pressure or 0.25 x packer TVD, but not less than 1500 psi; 5. Hilcorp shall immediately shut in the well and notify the AOGCC if there is any change in the well's mechanical condition; 6. After well shut in due to a change in the well's mechanical condition, AOGCC approval shall be required to restart injection; and 7. The next required MITIA and MITOA shall be completed before or during the month of August 2029. AOGCC must be provided the opportunity to witness the MIT for a test to establish a new test due date. DONE at Anchorage, Alaska and dated December 22, 2025. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Gregory C Wilson Digitally signed by Gregory C Wilson Date: 2025.12.22 08:22:59 -09'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2025.12.22 08:39:23 -09'00' From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Enhanced Recovery Injection Order 7.002 (Hilcorp) Date:Monday, December 22, 2025 10:15:06 AM Attachments:ERIO7.002.pdf Docket Number: ERIO-25-002 Request for Administrative Approval to Enhanced Recovery Injection Order 7: Water Only Injection Milne Point Unit (MPU) S-203 (PTD 2191090), Ugnu Undefined Oil Pool Samantha Coldiron AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v 7 Hilcorp Alaska, LLC Taylor Wellman, MPU Wells Manager 3800 Centerpoint Dr, Suite 1400 Anchorage, Alaska 99503 10/27/2025 Commissioner Jessie Chmielowski Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, Alaska 99501 Subject: Ugnu PWI Injection Well MPS-203 (PTD# 2191090) Request for Administrative Approval. Dear Commissioner Chmielowski, Hilcorp Alaska, LLC requests administrative approval for PWI injection well MPS-203 to perform a 4 year MIT-OA and a 4 year MIT-IA in order to comply with ERIO 7, Rule 6 – Demonstration of Tubing/Casing Annulus Mechanical Integrity. MPS-203 was converted from a JP producer to a PWI injection well per sundry #325-149 in order to provide pressure support for grassroots producer MPS-204. The completion design for MPS-203 has a 7 5/8” tieback string inside of 9 5/8” Casing with a 4 ½” slotted liner inside of open hole. Due to the completion design, both an MIT-IA and MIT-OA are required to test the tubing and the lower most packer for out of zone injection. In most instances, an MIT-IA only fulfills the “Demonstration of Tubing/Casing Annulus Mechanical Integrity”. Hilcorp Alaska, LLC requests to operate MPS-203 under administrative approval for continued water injection based on the following: 1. Every 4 years complete both a MIT-IA and MIT-OA, with an initial AOGCC witnessed MIT-IA and MIT-OA having been completed on 8/3/2025. If you have any questions, please call me at 907-777-8449 or Ryan Thompson at 907-564-5005. Sincerely, Taylor Wellman MPU Wells Manager Attachments: 1. Technical Justification 2. Casing and Cementing Report 3. Proposed operating and monitoring plan 4. Wellbore Schematic By Samantha Coldiron at 7:58 am, Dec 08, 2025 Digitally signed by Taylor Wellman (2143) DN: cn=Taylor Wellman (2143) Date: 2025.11.24 15:53:15 - 09'00' Taylor Wellman (2143) Technical Justification MPS-203 was drilled in 2019 as a Jet Pump producer in the Ugnu sand. During well construction the 4 ½” x 9 5/8” liner hanger/packer was landed at 5204’ MD / 3832’ TVD. The top of the Ugnu pool in MPS-203 is at 4959’ MD / 3809’ TVD. This makes the liner hanger/packer setting depth 245’ MD and 23’ TVD below the top of the Ugnu pool. Below is the casing and cementing report from the 9 5/8” casing cement job. The first stage cement job was completed with 100% returns and cement to surface indicating cement coverage at the 9 5/8” shoe. A 12.25 EMW FIT was performed after drilling out the 9 5/8” casing shoe. The details above indicate a passing MIT-OA will prove in zone injection due to: 1. The liner hanger/packer is set below the approved injection zone. 2. 9 5/8” 1st stage cement job was executed as per plan. MPS-203 9 5/8” Casing and Cementing Report Proposed operating and monitoring plan 1. Every 4 years complete both a MIT-IA and MIT-OA, with an initial AOGCC witnessed MIT-IA and MIT-OA having been completed on 8/3/2025. MIT’s must be to a surface pressure of 1,500 psig or at a surface pressure of 0.25 psi/ft multiplied by the true vertical depth of the casing shoe, whichever is greater. 6 April 11, 2025 Attn: Dave Roby Alaska Oil and Gas Conservation Commission Division of Oil and Gas 333 West 7th Avenue Anchorage, AK 99501 RE: Request for Extension of Enhanced Recovery Injection Order No. 7 (ERIO 7) Ugnu Pilot Milne Point Unit Dear Mr. Roby: On April 14, 2022, the Alaska Oil and Gas Conservation Commission (“Commission”) approved Hilcorp Alaska, LLC’s (“Hilcorp”)application to conduct a pilot enhanced recovery injection project in the Ugnu Reservoir within the Milne Point Unit (“ERIO 7”). Per ERIO 7 Rule 11 Reporting Requirements, on March 4, 2025, Hilcorp submitted an annual progress report to the Commission indicating plans to initiate injection operations under this order in 2025 which was received of record by the Commission with no comments. Additionally, on March 14, 2025, Hilcorp submitted a sundry application for the Milne Point Unit S-203 well to begin polymer injection in the Ugnu Reservoir as early as June 2025, pursuant to this order. Hilcorp had been operating under the assumption that the order remained active pursuant to ERIO 7 Rule 10 which states: Rule 10 Expiration Date This Enhanced Recovery Injection Order shall expire three years after the month in which injection activity commences unless an extension is granted by the AOGCC. However, it has come to our attention that ERIO 7 may have expired on April 14, 2024, in accordance with 20 AAC 25.402(i), which states: “If injection operations are not begun within 24 months after the date of the order authorizing enhanced recovery, that order expires unless a letter of application for extension is approved by the commission.” To avoid any uncertainty regarding the current status of this order, Hilcorp respectfully requests that the Commission extend the expiration date of ERIO 7 to December 31, 2025, by Administrative Approval. Should you have any questions or require additional information, please feel free to contact me at (907) 777-8341 or via email at jamie.wilson@hilcorp.com. PO Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive, STE 1400 Anchorage, AK 99503 Phone: (907) 777-8341 Fax: (907) 777-8301 Email: jamie.wilson@hilcorp.com By Samantha Coldiron at 8:11 am, Apr 14, 2025 ERIO 7 Request for Extension April 11, 2025 Sincerely, Jamie Wilson Sr. Landman Hilcorp Alaska, LLC 5 March 4, 2025 Attn: Dave Roby Alaska Oil and Gas Conservation Commission Division of Oil and Gas 333 West 7th Avenue Anchorage, AK 99501 RE: Enhanced Recovery Injection Order No. 7 (ERIO 7) Ugnu Pilot Project Progress Report Milne Point Unit Dear Mr Roby: On April 14, 2022, the Alaska Oil and Gas Conservation Commission (“Commission”) approved Hilcorp’s application to conduct a pilot enhanced recovery injection project in the Ugnu Reservoir within the Milne Point Unit (“ERIO 7)”. As part of its approval, the Commission imposed a condition on Hilcorp to provide annual progress reports by April 1st of each year. 2025 Progress Report Hilcorp planned to drill one S-Pad Ugnu well, either S-202 or S-204, in 2024. However, due to changes in the rig schedule, this drilling has been rescheduled to the first half of 2025 with S-204 now being the anticipated well. Doyon 14 is currently on the S-Pad completing a Schrader Bluff Oil Pool program, after which it will drill the S-204 before moving off location. Additionally, the conversion of S-203 to a polymer injector is expected to be completed by June 2025. As of the date of this progress report, no injection activity has occurred under this ERIO. Hilcorp will provide its next progress report to the Commission by April 1, 2026. Should you have any questions or require additional information, please feel free to contact me by telephone at (907) 777-8341 or by email at jamie.wilson@hilcorp.com. Sincerely, Jamie Wilson Sr. Landman Hilcorp Alaska, LLC PO Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive, STE 1400 Anchorage, AK 99503 Phone: (907) 777-8341 Fax: (907) 777-8301 Email: jamie.wilson@hilcorp.com June 24, 2024 Dave Roby Alaska Oil and Gas Conservation Commission Division of Oil and Gas 333 West 7th Avenue Anchorage, AK 99501 RE: Enhanced Recovery Injection Order No. 7 (ERIO 7) Ugnu Pilot Project Progress Report Milne Point Unit Dear Mr Roby: On April 14, 2022, the Alaska Oil and Gas Conservation Commission (“Commission”) approved Hilcorp’s application to conduct a pilot enhanced recovery injection project in the Ugnu Reservoir within the Milne Point Unit (“ERIO 7)”. As part of its approval, the Commission imposed a condition on Hilcorp to provide annual progress reports by April 1st of each year. 2024 Progress Report Hilcorp intends to drill and complete one well as a producer in Q4 2024 which will be either the S-202 or S-204 well. The well is scheduled to be spud in November. By the end of the 2024 calendar year, Hilcorp plans to convert the existing S-203 to a polymer injector. A second grass roots well to complete the pilot is planned to be drilled by the end of the 2025 calendar year. Hilcorp will provide its next progress report to the Commission by April 1, 2025. Should you have any questions or require additional information, please feel free to contact me by telephone at (907) 777-8341 or by email at jamie.wilson@hilcorp.com. Sincerely, Jamie Wilson Sr. Landman Hilcorp Alaska, LLC PO Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive, STE 1400 Anchorage, AK 99503 Phone: (907) 777-8341 Fax: (907) 777-8301 Email: jamie.wilson@hilcorp.com 4 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:Michael Schoetz To:Roby, David S (OGC) Cc:Almas Aitkulov; Graham Emerson; Ted Kramer; Salazar, Grace (OGC) Subject:Docket ERIO-21-001: Hilcorp Alaska, LLC Ugnu Sand Pilot Project Application - Additional Material Requested Date:Friday, January 21, 2022 1:46:27 PM Attachments:Copy of frac_gradient_LOT_AOGCC_Jan2022.xlsx Ugnu_Fracmodelling_AOGCC.pdf Mr. Roby, During Hilcorp’s January 11th Public Hearing, the Commissioners requested additional material be submitted addressing Hilcorp’s fracture gradient calculation. Attached is a spreadsheet with raw compressional and shear sonic log data from the Liviano-1A and Pesado-1A wells. This data was used to calculate Poisson’s ratio through the wellbore- you can see the formula we used in Excel. The closure pressure (frac gradient) was calculated using the Poisson’s ratio using assumptions on overburden (1.05psi/ft) and pore pressure (assumed hydrostatic). You can interrogate the spreadsheet to follow the steps we took. The graphs show the frac gradient (blue curve) for each well. Tops are shown on the plot too for reference. LOT data is provided on the ‘LOT_data’ tab. You will note that fieldwide there is very limited LOT data to calibrate our frac gradient logs. The LOT data generally shows that the frac gradient is on the lower side of our log based frac gradient (blue curve). Fracture propagation modelling We would like to reference the fracture modelling reports (attached above) used in support of the application to amend the Moose Pad disposal injection order (Appendix B and C of the application dated July 2018). FracCADE model done by Schlumberger in support of a disposal injector at B pad Milne. The key points from this study are that Fracture propagation is limited to approximately maximum height of 100ft and that this length is likely an overestimate due to rates being much smaller than used in the Schlumberger study (35,000 bpd in study vs 1000 bpd for pilot). Furthermore, the Schlumberger study used a vertical well (55’ net pay) and our pilot will be strictly using horizontal wells (~5000-6000ft lateral length). Injector near wellbore rates for horizontal wells are much smaller compared to vertical injectors used in the study. We plan to inject polymer; therefore, we will be very cautious not to create and extend a fracture. Should there be any further information required we will make ourselves available to discuss at AOGCC’s convenience. Thank you, Michael W. Schoetz, CPL Hilcorp Alaska, LLC Senior Landman Main: (907) 777-8300 Office: (907) 777-8414 Mobile: (281) 685-0902 Email: mschoetz@hilcorp.com 3800 Centerpoint Dr., Suite 1400 | Anchorage, Alaska 99503 The information contained in this email message is confidential and may be legally privileged and is intended only for the use of theindividual or entity named above. If you are not an intended recipient or if you have received this message in error, you are hereby notified that any dissemination, distribution, or copy of this email is strictly prohibited. If you have received this email in error, please immediately notify us by return email or telephone if the sender's phone number is listed above, then promptly and permanently delete this message. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient to ensure that the onward transmission, opening, or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by the company in this regard and the recipient should carry out such virus and other checks as it considers appropriate. y = 40000x -24600 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 TVDSS (ft)Visual Trend line Data-Frac LOT Points FIT Points Liviano 1A Dipole Son Calc Pesado 1A Dipole Sonic Calc Hilcorp-Supplied Points Linear (Visual Trend line) Gradient (psi/ft) MPU S-Pad Area: Frac Gradients from Dipole Sonic and LOT / FIT Points Ugnu -4 Ugnu -LA2 Ugnu -MA S Bluff -NA S Bluff -OA Liviano 1A Sand Tops Sum of OilColumn LabelsRow Labels 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015MILNE PT UNIT H‐02 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ MILNE PT UNIT S‐203MILNE PT UNIT S‐22 2,212 14,534 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ MILNE PT UNIT S‐37 511 ‐ ‐ ‐ ‐ ‐ ‐ ‐ MILNE PT UNIT S‐3935,644 33,350 ‐ ‐ MILNE PT UNIT S‐41A33,961 ‐ ‐ ‐ MILNE PT UNIT S‐43294 1,556 ‐ ‐ Grand Total ‐ 2,212 14,534 ‐ ‐ ‐ 511 ‐ ‐ 33,961 35,938 34,906 ‐ ‐ 2016 2017 2018 2019 2020 2021 2022 Grand Total‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 22,831 85,694 68,476 8,407 185,408 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 16,746 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 511 ‐ ‐ ‐ ‐ ‐ ‐ 68,994 33,961 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1,850 ‐ ‐ ‐ 22,831 85,694 68,476 8,407 307,470 Pre‐2019: 122,062 3 AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Application of ) Hilcorp Requesting Approval for a Pilot ) Enhanced Oil Recovery Project in the Ugnu ) Formation in the Milne Point Unit. ) ) Docket No.: ERIO-21-001 PUBLIC HEARING January 11, 2022 10:00 o'clock a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net 1 TABLE OF CONTENTS Page 2 2 Opening remarks by Chairman Price 03 3 Testimony by Michael Schoetz 05 4 Testimony by Graham Emerson 09 5 Testimony by Almas Aitkulov 15 6 Testimony by Ted Kramer 28 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 3 1 P R O C E E D I N G S 2 (On record - 10:00 a.m.) 3 CHAIRMAN PRICE: Good morning. We are now on 4 record. It is approximately 10:00 a.m., Wednesday, 5 January 11th, 2022. This is a public hearing on 6 docket number ERIO-21-001 to consider Hilcorp's 7 application requesting approval for a pilot enhanced 8 oil recovery project in the Ugnu formation in the Milne 9 Point Unit. This is Jeremy Price, Chairman and 10 Commissioner. With me today are Commissioners Dan 11 Seamount and Jessie Chmielowski. 12 Today's hearing is being held telephonically 13 and by Microsoft Teams. Please be mindful of any 14 background noise and make sure you are muted when 15 you're not testifying or addressing the Commission. 16 If you require any other special accommodation 17 please contact Abby Bell, she can be reached at 279- 18 1433 or send her a message through the Microsoft Teams 19 chat icon. She will do her best to accommodate you. 20 Computer Matrix will be recording the hearing 21 today. Upon completion and preparation of the 22 transcript persons desiring a copy will be able to 23 obtain it by contacting Computer Matrix. 24 This hearing is being held in accordance with 25 Alaska statute 44.62 and 20 AAC 25.540 of the Alaska AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 4 1 Administrative Code. 2 On November 29th, 2021 Hilcorp filed an 3 application requesting approval for a pilot enhanced 4 oil recovery project in the Ugnu formation in the Milne 5 Point Unit. Notice of this hearing was published in 6 the State of Alaska online notices website as well as 7 the AOGCC's website. It was also sent through the 8 AOGCC email list serve on December 6th, 2021. The 9 AOGCC also published the notice in the Anchorage Daily 10 News on December 7th, 2021. To date the AOGCC has not 11 received any public comment on the matter. 12 Before asking Hilcorp to provide their 13 presentation do any of the Commissioners have questions 14 or comments? 15 Commissioner Seamount. 16 COMMISSIONER SEAMOUNT: Not I at this time. 17 CHAIRMAN PRICE: Commissioner Chmielowski. 18 COMMISSIONER CHMIELOWSKI: No, thank you. 19 CHAIRMAN PRICE: Representatives from Hilcorp, 20 can I get who will be testifying today? 21 MR. SCHOETZ: Yes. So testifying today will be 22 myself, Michael Schoetz, landman, we have Graham 23 Emerson, a geologist, Almas Aitkulov, reservoir 24 engineer and Ted Kramer, operations engineer. 25 CHAIRMAN PRICE: Can you tell me the name of AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 5 1 the third person, I heard Michael Schoetz, Graham 2 Emerson, who was that third person? 3 MR. SCHOETZ: Almas Aitkulov. 4 CHAIRMAN PRICE: Thank you. Okay. If you 5 folks are ready I'm going to swear you in at this time. 6 And I'll just have you -- even though we're doing this 7 remotely I'm going to trust that you're raising your 8 right hand. So please raise your right hand. 9 (Oath administered) 10 IN UNISON: I do. 11 CHAIRMAN PRICE: Thank you, gentlemen. Please 12 proceed with your presentation. 13 MICHAEL SCHOETZ 14 called as a witness on behalf of Hilcorp Alaska, 15 testified telephonically as follows on: 16 DIRECT EXAMINATION 17 MR. SCHOETZ: Okay. Good morning. As stated 18 my name is Michael Schoetz, senior landman for Hilcorp 19 Alaska. Testifying with me again is Graham Emerson, 20 geologist, Dr. Almas Aitkulov, reservoir engineer and 21 Ted Kramer, operations engineer. Mr. Emerson and 22 myself have been recognized as technical experts in 23 past hearings. At this time we'd like to provide a 24 more detailed introduction for the team members and 25 request that Mr. Kramer and Dr. Aitkulov be recognized AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 6 1 as technical experts. 2 To start my name is Michael Schoetz, landman. 3 And I've been certified as a certified professional 4 landman. I've been working the Milne Point Unit as a 5 landman for the last four years. And that is the 6 extent of my experience as it pertains to this project. 7 Graham. 8 MR. EMERSON: I'm Graham Emerson, I'm a 9 geologist. I've got an undergraduate degree in geology 10 and a master's degree in geology from the University of 11 Aberdeen in the United Kingdom. I've got about 14, 15 12 years industry experience predominantly with BP working 13 in basins in the North Sea, Azerbaijan, Angola. I've 14 spent the last eight years working in the North Slope 15 predominantly with BP and then with Hilcorp after the 16 Hilcorp -- BP sale to Hilcorp. So that's me. 17 DR. AITKULOV: Hello. My name is Almas 18 Aitkulov. I did my undergrad, master's, Ph.D. and 19 (indiscernible) fellowship at University of Texas at 20 Austin in petroleum engineering and my Ph.D. was in 21 chemical (indiscernible) and stuff like that, metals 22 for heavy oil recovery. And the last four years I've 23 been working for Hilcorp as a reservoir engineer for 24 Milne Point. 25 MR. KRAMER: My name is Ted Kramer, I'm a AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 7 1 senior operations engineer for Hilcorp. I graduated 2 with a bachelor of science in petroleum engineering 3 from Colorado School of Mines in 1991 and I've been in 4 the industry working as an operations engineer or 5 completions engineer for about 30 years and worked for 6 Hilcorp for the last nine years and 10 months. And I 7 had worked in the Permian Basin for approximately 10 of 8 those years and the remainder have been up here other 9 than two years I spent in deepwater Gulf of Mexico. 10 CHAIRMAN PRICE: Thank you, gentlemen. Mr. 11 Schoetz, just to make sure I heard you correctly, did 12 you say you all wished to be recognized as expert 13 witnesses today? 14 MR. SCHOETZ: Yes, sir. Two of us have been. 15 We would like to add in there Dr. Aitkulov and Mr. 16 Kramer. 17 CHAIRMAN PRICE: Okay. Are there any further 18 questions regarding the witnesses' qualifications from 19 Commissioners? 20 COMMISSIONER SEAMOUNT: I have no questions and 21 I support them being designated as expert witnesses in 22 their stated fields. 23 COMMISSIONER CHMIELOWSKI: I agree with 24 Commissioner Seamount. 25 CHAIRMAN PRICE: Okay. It's unanimous. All of AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 8 1 you are recognized as expert witnesses. Please 2 proceed. 3 MR. SCHOETZ: Thank you. Okay. Hilcorp is 4 seeking approval to initiate a polymer injection pilot 5 project in the undefined Ugnu sand located in the Milne 6 Point Unit. Special approval for this proposal is 7 required for two reasons. First polymer is not 8 currently approved for enhanced oil recovery under area 9 injection order 10B. And section -- prior temporary 10 approval for water/gas injection into the Ugnu sand 11 given under area injection order 10B(1) has since 12 expired. 13 Conservation orders and area injection orders 14 have not yet been established for the Milne Point Unit 15 sand as it is geographically contained within the 16 Schrader Bluff oil pool which is currently subject to 17 area injection order 10B. 18 So that is what has brought us here today. 19 Looking on the -- this -- the map on the first slide 20 here, what we have is the Milne Point Unit boundary 21 detailed or shown in blue. We have the Kuparuk River 22 Unit to the southwest in kind of dull yellow. And 23 Prudhoe Bay Unit to the south in red. The hatched area 24 here is the effected area by the prior pilot project 25 that was approved, area injection order 10B(1) which is AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 9 1 the same as the area that we are seeking approval for 2 here. And where this is on the southern portion of 3 Milne Point Unit also surrounding our S pad and you can 4 see the frozen wellbores coming from that pad. 5 So that's we are. 6 Moving on to slide two. That's -- we'll have 7 Graham Emerson present that one. 8 Graham. 9 CHAIRMAN PRICE: Actually before you speak, Mr. 10 Emerson, as you guys switch between speakers just go 11 ahead and put your name on the record when you take 12 over. 13 Thanks. 14 GRAHAM EMERSON 15 previously sworn, called as a witness on behalf of 16 Hilcorp Alaska, testified as follows on: 17 DIRECT EXAMINATION 18 MR. EMERSON: Sure. Okay. This is Graham 19 Emerson and I'm moving to slide number 2 which is the 20 (indiscernible) of our presentations. So today we will 21 hold -- we'll go through Hilcorp's proposal and 22 application, briefly talk about geology and reservoir 23 fluids. We'll talk about Hilcorp's proposed Ugnu 24 development plan, the injection zones and confining 25 intervals, injection pressures and fracture AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 10 1 information. And we'll talk about the wellbores within 2 the one-quarter mile, the radius of our proposed 3 injectors and their mechanical well condition. So 4 the outline here is intended to highlight the main 5 points that we submitted in our -- in our hearing -- in 6 our application. And we'll also take whatever 7 questions you have as we go through. 8 Okay. So I'm going to move to slide number 3. 9 So it's still Graham Emerson on slide number 3. So 10 Hilcorp's proposal is to drill up to two injectors 11 around the currently active S-203 Ugnu producer. So 12 going to the map here, S-203 is a horizontal producer 13 in the Ugnu MB. It's shown as a green horizontal line 14 here, it's approximately 6,000 feet measured depth 15 long. And with approval Hilcorp would like to add 16 injection support around the S-203 producer. Shown 17 here are two blue lines. This blue line to the north 18 which we called S-204 is a proposed horizontal injector 19 to support S-203 from the north. And to the south we 20 have was we've called S-22-L1-L2. This would be an 21 injector to support S-203 from the south. 22 So that -- that's what we're calling our 23 initial pilot phase. So the area that we've got here 24 in red would be what we're calling our -- our pilot 25 phase. We'll get into some of the details of that in AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 11 1 following slides. Really the pilot is designed to 2 gather the necessary basis to determine appropriate 3 space for producer and injector pairs within the Ugnu 4 reservoir, specifically in the S pad area. So this map 5 that I'm showing on here is entirely the S pad area of 6 the Milne Point Unit. 7 In addition to this initial what we're calling 8 pilot phase we have a potential pilot expansion which 9 is highlighted in this purple polygon here. And that 10 would be potential to drill additional producers and 11 injectors. You can see we've put blue horizontal -- 12 blue and green horizontal lines on this map to indicate 13 potential development of S pad Ugnu. And that would 14 all be pending our pilot result. And the pilot again 15 just would be the wells in this red area down here to 16 the south. 17 That's the gist of the -- just to reemphasize 18 what Hilcorp is asking for approval for is we want to 19 -- we want to initiate a polymer injection pilot into 20 the Milne Point Unit in the undefined Ugnu sand. 21 COMMISSIONER CHMIELOWSKI: Mr. Emerson, this is 22 Commissioner Chmielowski. I had a question about the 23 well direction change. It looks like your initial 24 pilot the wells go east/west and then for the expansion 25 north/south. Why that change in direction? AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 12 1 MR. EMERSON: Yeah, and I would say that, you 2 know, none of it is set in stone, but I think it's more 3 efficient coming off of S pad. S pad would be -- you 4 can see my red pointer down here, it's just a more 5 efficient geometry coming from the pad. It's really 6 the main reason. 7 COMMISSIONER SEAMOUNT: Mr. Emerson, this is 8 Dan Seamount. Do you think there's any geologic or 9 reservoir reason why the north/south directions would 10 have different results than the pilot project's 11 east/west directions? 12 MR. EMERSON: So I don't -- I do plan to show a 13 slide on the geology and the kind of like depositional 14 geometries if you like. The main interval that we're 15 looking at here is the MB and again I'm going to 16 introduce the M symbol in a following slide here. The 17 MB sand is high net to growth, its vertical effect and 18 also horizontally very continuous. I don't see any 19 reason why it should change our view on the results 20 given the highly connected nature of this MB sand. 21 COMMISSIONER SEAMOUNT: Thank you. 22 MR. EMERSON: Sure. Okay. I'm going to move 23 on to slide number -- moving on to slide number 4 now. 24 This is a slide on geological context. So this on the 25 left here is a schematic cross section through the AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 13 1 Milne Point field. Northwest would be on the left of 2 this cross section and southeast on the right. Just 3 for a quick kind of reference down here we have the 4 Kuparuk and Sag River which are not really on the scope 5 for today's meeting. Above that we have the Schrader 6 Bluff formation which is made up of the N sands, the OA 7 and the OB. All of these sands reservoirs from this 8 point down are in the -- are defined in the pool. 9 Immediately above that we have the Ugnu 10 formation which is currently undefined. This is -- so 11 this is the Ugnu formation up here. It's approximately 12 a 350 foot TVD growth package, relatively high net to 13 growth, so 250 feet of net on average across the field. 14 So then -- so yeah, this is the Ugnu growth package. 15 Before I jump into some of the specifics on the 16 Ugnu I just want to point out the Schrader Bluff below. 17 In the area of S pad where we're proposing this 18 injection pilot we currently have quite a bit of 19 injection, waterflood injection into the N sands of the 20 Schrader Bluff approximately 200 feet TVD below our 21 proposed Ugnu injection depth. And as we get into 22 discussing injection in some of the later slides, I 23 just want to point out that we do have active injection 24 in this MB sand, approximately 200 feet TVD below where 25 we intend to inject in the MB. AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 14 1 I'm just going to introduce the M sands of the 2 Ugnu. So within the -- this large 350 foot package we 3 can break out different -- we can break out different 4 subunits. So shown on here, this is a representative 5 well from S pad, this is S-37. And the -- what we're 6 calling the M sands go from MA through MS. And just -- 7 again just to point out the Schrader Bluff. So once we 8 get down to the MS we get guidance of what we call the 9 Schrader Bluff package and this is the MB which as I've 10 said we are developing in S pad right now, we have 11 active development there. 12 Okay. So the main reservoir intervals within S 13 pad or the best reservoir intervals are the MB, B 14 bravo, and MD, delta. Those are -- these are delta -- 15 the (indiscernible) environment here is delta front to 16 kind of delta top so the MB, the main reservoir that 17 we're going to talk about today is, you know, 18 interpreted as an amalgamated distributory tunnel belt 19 system sourced from the west. And as we move further 20 -- and in the area of S pad this is a distributory 21 tunnel belt system. This is a gamma ray out here so 22 this is shaded in yellow where the API is less than 50, 23 approximately what we're calling reservoir in Ugnu. 24 Other key points to make on here, this 25 particular well is 37, we have core data from. Typical AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 15 1 porosity in the MB and also the MD is greater than 30 2 percent, typically 33 to 37 percent porosity so high 3 porosity. And permeability, typically several hundred 4 millidarcies and often getting up into the darcy range. 5 And that's all I really wanted to say on the 6 introduction to geology. I guess I would just 7 emphasize the active producer, S-203, is producing from 8 the MB, M bravo, and the proposed injectors that we 9 hope to drill would also go into this MB package. 10 Okay. I'm going to move on to slide number 5, 11 I'm going to handover to..... 12 DR. AITKULOV: Thank you. 13 ALMAS AITKULOV 14 previously sworn, called as a witness on behalf of 15 Hilcorp Alaska, testified via Microsoft Teams, as 16 follows on: 17 DIRECT EXAMINATION 18 DR. AITKULOV: This is Almas Aitkulov, slide 19 number 5. I will talk about the development history, 20 specifically MB sand. So on the right you see the top 21 of MB on the MB structure map. Filled was oil in 22 green. The wells, historic wells are color coded in -- 23 accordingly on the map and also it is noted which sands 24 these wells were located or currently located. 25 The earliest production attempt by BP at the AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 16 1 time was in H-2 well in 2001. It's color coded in red 2 color here, this is H-2 well. It was open in all 3 sands, but at the time they were unable to produce a 4 significant amount of oil. This followed by in blue 5 (indiscernible) S-22 horizontal MB jet pump producer 6 with screens here. This is the blue color coded 7 location of the S-22 horizontal jet pump producer in 8 2003 drilled and completed by BP at the time. I would 9 like to note this is the well we're trying to drill out 10 from and then convert to injection. This is exactly 11 the same area where BP was drilling and producing for 12 -- trying to produce from. This S-22 well produced 13 approximately 17,000 barrels of oil until it failed in 14 December, 2004 due to excessive sand production. 15 I would like to note their original application 16 to amend area injection of the 10B(1) submitted by BP, 17 it was submitted in 2003 at the time S-22 was active. 18 But in 2004 the only active producer in MB failed. 19 In 2006 color coded in yellow S-14 BP -- again 20 this is an old BP well, it's a horizontal well or it's 21 vertical well. And they used to collect live oil 22 samples to estimate the viscosity of -- in the MB sand 23 (indiscernible) oil. Followed by in orange their -- 24 another test only well, vertical, in MD sand which is 25 -- which is below MB. This was the 12th test well, AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 17 1 (indiscernible) heavy oil production with sand. 2 BP started heavily investing into the Chalks' 3 projects starting 2008. Followed by 2011 in purple two 4 wells here, both are horizontal wells in MB sand, S- 5 41A, S-39, both Chalks's wells, both produced a good 6 amount of oil, however the -- just excessive again sand 7 production, they stopped producing. Followed by in 8 purple 2012 S-43 well in MD sand which is a Chalk's 9 well, they use it for testing the MD sand. And the in 10 -- after that BP stopped Chalk's development. 11 And in 2019 Hilcorp drilled brand new well in 12 S-203 color coded as black, in black color. It's a MB 13 jet pump producer, similar to what has been done by BP 14 in 2003 as -- like S-22. The difference -- the main 15 difference is Hilcorp used finer screen. Currently it 16 is active well, it's been producing since September 17 2019 and it's currently producing still. It produced 18 so far 174,000 barrels of oil at the peak rate of 590 19 barrels per day including the producing couple hundred 20 barrels of oil. We -- our motivation for this 21 meeting is to provide to drilling -- to provide 22 injection support and to prove our waterflood and 23 polymer flood in Ugnu MB sand. The reason we are 24 targeting this area is because of our experience in 25 Schrader MB sand which Graham just now mentioned is AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 18 1 quite similar in geology to our target MB sand. 2 And another point the oil viscosity and the oil 3 viscosity are similar to what we are currently 4 producing under waterflood and polymer flood in 5 Schrader 200 feet above the target area. That's the 6 main motivation why we are targeting this area. 7 On top of that BP already had submitted in 2003 8 application to amend area injection order and our 9 application is very similar to original application 10 with what Michael said slight improvements and updates 11 for original application. 12 Any questions? 13 CHAIRMAN PRICE: I have a question, Mr. 14 Aitkulov. Is that how you say your name, Aitkulov? 15 DR. AITKULOV: Yes. Yes, sir. 16 CHAIRMAN PRICE: On the -- so on the 17 application your -- you've got the -- you're converting 18 the S-22 to an injector, you've got an existing 19 producer, S-203, you've got a new well, S-204 for 20 injector. As you -- assuming you expand at some point 21 to -- you mentioned five producers and five injectors 22 in the application, are you going to be using any of 23 these other wells in your list to convert or are you 24 planning on drilling new wells or have you even thought 25 that far ahead at this point? AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 19 1 DR. AITKULOV: I would say we haven't thought 2 that far ahead because Ugnu never been flooded so we 3 would like to see just how it behaves. But at the same 4 time Schrader MB we have extensive experience in 5 flooding a single type of oil in the single type of 6 sand purposes and we have great success in drilling 7 horizontal wells and doing horizontal polymer flood and 8 waterflood in Schrader. So therefore I would -- I 9 would expect with -- if this initial pilot would be 10 successful we would try to drill more of new wells 11 rather than trying to convert. But of course we'll be 12 opportunistic and if the location and the -- where the 13 well is located and if it's useful we'll try to use it 14 as much as we can. But at the same time from our 15 Schrader experience horizontal polymer and waterflood 16 was -- is a good idea for this type of reservoir and 17 this type of oil. 18 CHAIRMAN PRICE: Thank you. 19 DR. AITKULOV: So if there's no questions I'm 20 moving to slide number 6. This is still Almas 21 Aitkulov. 22 So as I mentioned in the previous slide number 23 5 the main motivation was like Graham said, geology. 24 At the same time another motivation was our experience 25 from Schrader MB sand 200 feet above us -- above our AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 20 1 target area, has single type of oil properties that 2 we're currently producing in S-203. We're currently 3 producing 13.5 API oil and with our correlation of API 4 oil -- API gradient of oil and the live oil viscosities 5 from Schrader and MB combination will -- it equates to 6 1,000 (indiscernible) viscosity which is close to what 7 we're doing in Schrader MB above us, and in doing 8 polymer flooding right now. 9 So that's the main motivation that we have very 10 similar properties above us and would like to repeat 11 our successful polymer flood in Schrader MB sand for 12 Ugnu MB sand. 13 Any questions? 14 (No comments) 15 DR. AITKULOV: So I'm moving to slide number 7 16 and where I would like to -- this is still Almas 17 Aitkulov, slide number 7. 18 This is the expanded view of our target area. 19 On your map you see expanded map that consists of three 20 wells, currently active S-203, a producer and proposed 21 up to two injectors, the (indiscernible) S-204 to the 22 north and to the south S-22-L1-L2 injector. They are 23 approximately spaced several hundred feet away from the 24 producer to the north and to the south. The target 25 area holds approximately estimated 6 million barrels of AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 21 1 oil in place and from our experience from Schrader 2 polymer flood we expect recovery ranges between on a 3 low case 9 percent and on a high case 25 percent 4 recovery factor. 5 So slide number 8, Almas Aitkulov. Up in 6 (indiscernible) of initial pilot was three wells, 7 existing S-203 and proposed two injectors. We'd like 8 to expand to the north with a larger area with more 9 wells. This black highlighted polygon holds 10 approximately an estimated 17 million barrels of oil in 11 place and our expected recovery range is similar to our 12 initial pilot which ranges between 9 to 25 percent 13 recovery factor. 14 Now I'd like to again remind you that this 15 target area, this expansion area, is also within our 16 proposed amendment to area injection order in orange. 17 Now slide number 9 Graham Emerson will talk 18 about. 19 MR. EMERSON: Okay. Graham Emerson, slide 20 number 9. So this talks to the injection zones, I'm 21 consigning it..... 22 CHAIRMAN PRICE: Mr. Emerson, I -- before 23 you..... 24 MR. EMERSON: Oh, yes, sir. 25 CHAIRMAN PRICE: .....before you go on to that AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 22 1 next slide I have a question. How long do you expect 2 this pilot project to proceed until you make the 3 decision on full field development? 4 DR. AITKULOV: Thank you very much for great 5 question actually. We -- from our experience in 6 Schrader and we can talk more if you want, but we've 7 been doing secondary polymer flood in Schrader MB sand 8 in the similar type of properties, geologic and oil. 9 And we haven't seen water breakthrough for over four 10 years. For this type of viscous oil you would -- if 11 you do waterflood you would expect breakthrough to be 12 within months. So we haven't seen water breakthrough 13 up to now and it's been more than four years. So 14 ideally for -- to -- for us to assess properly pilot I 15 would like to see -- we would like to see the point -- 16 the breakthrough point, when we have the breakthrough 17 that's the point. So since we didn't see for four 18 years the breakthrough in our analog location I would 19 say four to five years would be good to have for this 20 pilot. 21 CHAIRMAN PRICE: Thank you. 22 DR. AITKULOV: Thank you. 23 COMMISSIONER SEAMOUNT: I have a question for I 24 think Mr. Emerson. On the map there's an irregular 25 outline and all the north/south wellbores stop at that AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 23 1 boundary on the west. Am I to assume that that's a 2 single fault block that's being outlined there and you 3 don't want to cross that fault block -- that fault for 4 a certain reason? 5 MR. EMERSON: Right. Yeah. So you're correct, 6 there is a -- I'm highlighting it, but yeah, that out 7 west -- inside there is a fault, a significant fault 8 the whole way along that northwestern side. Certainly 9 these wells that we've drawn here, we don't want them 10 to cross the fault just from a drilling execution point 11 of view. And, you know, just keeping -- keeping 12 everything within one hydraulic unit. 13 I would say at this point we've -- this area 14 has been sort of high graded within Hilcorp's area for 15 doing this pilot. There may be opportunities outside 16 of this fault block that we look at in the future. But 17 yes, there's is a fault defining that western edge. 18 COMMISSIONER SEAMOUNT: Thank you. 19 MR. EMERSON: Sure. Okay. So slide number 9, 20 this is Graham speaking here. 21 So this talks to injection zones and confining 22 intervals so that the log that you're seeing on the 23 right here is Geo 1, Gulf 1. And that was the -- for 24 consistency we've kept the same well logs that was 25 provided by the previous operator in the previous amend AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 24 1 -- application. And this log shows our intervals 2 again. So the interval that we propose injection we've 3 gone -- we've said from the top of MA through to the MS 4 which you can see highlighted with the red, in the red 5 lines there. 6 In terms of confining intervals our upper 7 boundary, we're calling it the L interval flooding 8 surface so this is a flooding surface that we can -- 9 well, let me just explain where that is. So that -- 10 that yellow star there is the upper boundary and that's 11 shown on the log on the right here. And so that L 12 interval flooding surface is a flooding surface that -- 13 basically this shows -- interprets -- shale fill is 14 interpreted as an offshore transition zone to pro delta 15 shale. 16 And then our lower boundary is the red star 17 which we've referred to informally here as the MS 18 shale. That red star is down here at the bottom and 19 that is this area here below the -- yeah, in the MS and 20 it's also interpreted as a mudstone/siltstone package 21 separating the M sands to the N, N November, sands 22 below that. 23 We'll move on to the next slide. So this is 24 slide number 10. 25 COMMISSIONER CHMIELOWSKI: Mr. Emerson, this is AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 25 1 Jessie Chmielowski. In Hilcorp's application it states 2 that it is unlikely that injection pressures will 3 breach the integrity of the overlying confining zone. 4 Do you have frack gradient data for the MB, MD as well 5 as the upper and lower confining intervals and how are 6 they determined? 7 MR. EMERSON: Sure. Sure. So yes, we do. So 8 the -- we don't have any of that information in this 9 slide pack. The way that fracture grading was 10 determined through this area, two offset wells have 11 been predominantly used, we use the Louisiana 1-A and 12 the Persoda 1-A wells where they have dyphosonic logs 13 taken in about 2007 those logs were acquired. And 14 starting at the high level we basically have used the 15 dyphosonic, the sheer data, to determine quorthon 16 ratio, quorthon's ratio across the -- across the entire 17 interval so M sands, the L sands above, the shale. And 18 so yes, determine quorthon's ratio using those two 19 wells and then determined the frack pressure using that 20 quorthon's ratio information. Assuming an overburden 21 frack gradient or overburden frack gradient and a port 22 crasher. So at a high level the frack gradient for the 23 shale, I'm just looking at my table here, is about .83 24 to .88 psi per (indiscernible) based on that 25 methodology that I just outlined to you. AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 26 1 And so then I think -- I don't know if you -- 2 moving from that we can talk about some of the 3 rationale behind our injection pressure if that is an 4 adequate answer for you. 5 COMMISSIONER CHMIELOWSKI: Yes, I noticed or we 6 noticed that you had on the next slide, slide 10, 7 reduced your estimated max injection pressure from the 8 application. Is this the next place we should go with 9 this? 10 DR. AITKULOV: Yes, that's a good place to go. 11 Yes, we are basing our maximum injection press -- this 12 is Almas Aitkulov, slide 10. 13 We are basing our maximum injection pressure 14 and average injection pressure to reflect the new data. 15 The old data that BP had in their original application 16 based on 2003 old data, but we have new data in 2007 17 like Graham mentioned, from two wells, the southern 18 Louisiana where we used the -- where we used 19 (indiscernible) to calculate our concentration. Then 20 using that concentration pressure, and that 21 (indiscernible) oil pressure gradient and original 22 pressure, we calculated the (indiscernible) pressure. 23 And using the (indiscernible) pressure to 24 (indiscernible). And the 1,500 psi is what we expect 25 -- injection pressure is what we expect at a lower AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 27 1 bound of estimated frack gradients, 1,500 psi. And we 2 estimate in reality from our experience in Schrader MB 3 and from our currently active S pad MB Schrader 4 injection -- waterflood injection will -- we'd expect 5 would be in the range between 800 to 900 psi injection 6 pressure. We would not go -- we would not want to go 7 over 1,500 psi which is what we see when we calculate 8 that lower bound of fracture gradient range which is 9 .18 in this case. 10 So that's how we updated our maximum injection 11 pressure and we use the actual data from 200 feet below 12 Schrader MB waterflood injection observed pressure, 13 averaging injection (indiscernible) pressure 14 (indiscernible) waterflooding. 15 COMMISSIONER CHMIELOWSKI: Thank you. And at 16 this lower injection pressure versus what was on the 17 application, do you have an updated estimated injection 18 volume as far as barrels per day per injector, I think 19 you had a thousand in the application, would that 20 change? 21 DR. AITKULOV: No, absolutely not. The reason 22 is we have long horizontal injector, very long, five, 23 6,000 feet and maybe longer for the expansion. And we 24 expect -- we see from our experience in Schrader MB 25 those kind of rates are really not going to do anything AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 28 1 and they're not going to take high sheer rate near 2 wellbore. It's -- for this kind of long slotted liner 3 injector we -- this -- it won't affect anything much 4 for this kind of rate. This is the rates we're 5 injecting in the Schrader MB and we're injecting at the 6 900 psi average pressure for our waterflood case. So 7 no, it won't -- it won't affect our injection rates per 8 well. Yeah, our data case won't affect injection rates 9 for each injector. 10 TED KRAMER 11 previously sworn, called as a witness on behalf of 12 Hilcorp Alaska, testified as follows on: 13 DIRECT EXAMINATION 14 MR. KRAMER: Okay. Slide number 11. This is 15 Ted Kramer, operations engineer. I was asked to look 16 at the condition of the wells that are -- that 17 penetrate within the quarter-mile radius surrounding 18 where we'll have the injectors. And after looking at 19 that I would -- can say that there are 11 penetrations 20 that will penetrate the MB interval in this pilot 21 project. And in reviewing those 11 wells, five of 22 those wells are cemented to surface so they're cemented 23 past the MB with -- all the way to surface. Two have 24 logs indicating that the cement is above the MB target 25 interval and the remaining four I calculated a cement AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 29 1 top that was well above the top of the MB pilot flood. 2 So all of these wells do have mechanical integrity and 3 were constructed such that should be able to contain 4 the fluids to the MB interval. 5 MR. EMERSON: And if there's no questions on 6 slide 11, this is Graham Emerson again. This is our 7 last slide and this is just a repeat of the 8 introduction just to refresh Hilcorp's application. 9 Again we're proposing a pilot phase to drill up to two 10 injectors around the active S-203 producer. And that 11 pilot again is designed to gather data to determine 12 appropriate spacing for future Ugnu development. In 13 addition there is a pilot expansion phase which will be 14 pending the results of that initial pilot. 15 So Hilcorp -- we request approval to initiate 16 polymer injection pilot project into the Milne Unit in 17 the undefined Ugnu sand in S pad. 18 And that concludes Hilcorp's presentation and 19 welcome any questions you have. 20 CHAIRMAN PRICE: I have a question for any one 21 of you. Can you speak to the gas injection or the 22 potential gas injection, is that..... 23 DR. AITKULOV: Yes. 24 CHAIRMAN PRICE: .....and how likely is that, 25 is that the first three wells or is that later with the AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 30 1 10 wells, what..... 2 DR. AITKULOV: This is Almas Aitkulov. We kept 3 it just in case to be honest. I as a reservoir 4 engineer wouldn't want to inject into viscous oil 5 something like gas. And from our experience in 6 Schrader another -- would do waterflood and polymer 7 flood. For gas we haven't really -- we don't have 8 current concrete plans for gas injection, but we just 9 kept it just in case if we change our mind. But right 10 now main goal is to inject waterflood and inject -- in 11 doing waterflooding and then do polymer flooding. 12 Repeat what we are doing currently in Schrader MB. 13 CHAIRMAN PRICE: So you're not -- in Schrader 14 MB or you are or are you not injecting gas? 15 DR. AITKULOV: In Schrader MB we're not 16 injecting gas. We are injecting polymer. 17 CHAIRMAN PRICE: Okay. Thank you. 18 COMMISSIONER CHMIELOWSKI: This is Jessie 19 Chmielowski. I think I'm looking at your front page, 20 it has like this high level map of Milne Point with the 21 orange section that's this S pad area you're talking 22 about. And there's this little section to the right, I 23 think it's number 9 on this map I'm looking at. I'm 24 just curious what's the status of this area, I know the 25 status of all the surrounding acreage, but not that AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 31 1 little section just sort of to the lower right? 2 MR. SCHOETZ: This is Michael Schoetz. The 3 status of the land outside of the Prudhoe Bay Unit is 4 leased by Hilcorp. 5 COMMISSIONER CHMIELOWSKI: Okay. 6 MR. SCHOETZ: Right by section nine, are you -- 7 correct? 8 COMMISSIONER CHMIELOWSKI: Yeah. Nine and then 9 10, that little section that's white on your map 10 outside of Milne Point? 11 MR. SCHOETZ: Yes, that's under lease. 12 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 13 CHAIRMAN PRICE: A quick question on your 14 hydrocarbon recovery. You said 9 to 25 percent. So 15 can you say what in barrels again of what that 16 potential recovery might be with the three wells and 17 then the additional pilot expansion? 18 DR. AITKULOV: Well, our estimate of oil in 19 place for those three wells, that area hold about 6 20 million barrels and if it's successful the expansion 21 holds about 17 million barrels. So on a low case you 22 would -- could multiply it by 9 percent of it on those 23 two combined. On the high case we could multiply it by 24 25 percent to get the range for the volumes. So I can 25 calculate it quickly if you want. AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 32 1 CHAIRMAN PRICE: That's good, we can run the 2 calculation. Thanks a lot, I appreciate it. 3 DR. AITKULOV: Welcome. Thank you. And those 4 volumes are coming from our Schrader experience. 5 CHAIRMAN PRICE: Any other questions for 6 Commissioners -- from Commissioners? 7 (No comments) 8 CHAIRMAN PRICE: At this time, gentlemen, we're 9 going to take a 15 minute break and either Abby or 10 Grace will let you know if we're going to be longer 11 than that. And then we'll reconvene. So if you can 12 just sit tight until about 12:00 o'clock -- or I'm 13 sorry, 11:00 o'clock, my clock is wrong, we'll 14 reconvene then. 15 Thank you. 16 (Off record) 17 (On record) 18 CHAIRMAN PRICE: Okay. We're back on the 19 record, the time is 11:10. Gentlemen, are you still 20 with us? 21 MR. SCHOETZ: Yes, we are. Hi, there. 22 CHAIRMAN PRICE: Okay. Just a couple follow-up 23 questions. I'll take the first one. In the 24 application you mentioned -- I guess this is more a 25 statement than a question, but you can clarify if you AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 33 1 want. In the application you mentioned a desire for a 2 spacing exception. I think this would be a better 3 approach after talking with senior staff and that a 4 spacing exception should be dealt with down the road 5 separately and with the potential for 10 additional 6 wells perhaps pool rules might be more an efficient way 7 to go about dealing with that down the road. Feel free 8 to respond to that or we'll move on. 9 MR. SCHOETZ: No, we're in agreement with that, 10 sir. 11 CHAIRMAN PRICE: Okay. Good deal. Other 12 questions? 13 COMMISSIONER CHMIELOWSKI: This is Jessie 14 Chmielowski. The AOGCC would like to request further 15 information about your estimated shale frack gradient. 16 Hilcorp mentioned some logs I think obtained in 2007 by 17 which your frack gradient estimate of .83 to .88 was 18 calculated. Please provide that supporting information 19 to the AOGCC. And also has that information been 20 calibrated with leak off test data in the area and can 21 that also be provided. 22 MR. EMERSON: Yeah, we can provide -- this is 23 Graham Emerson speaking. We can -- we can provide that 24 information. I'm not sure of the format, just an email 25 or some sort of follow-up; is that appropriate? AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 34 1 COMMISSIONER CHMIELOWSKI: Yeah, we can keep 2 the record open if you -- just let me know how long you 3 need, we'll keep the record open and you can provide 4 that via email probably to our..... 5 MR. EMERSON: Okay. 6 COMMISSIONER CHMIELOWSKI: .....staff engineer, 7 Dave Roby, and we can take a look at it. Do you know 8 how much time you would want to provide that 9 information? 10 DR. AITKULOV: Two weeks would be optimal. 11 COMMISSIONER CHMIELOWSKI: So would you like to 12 say close of business on Friday, January 21st? 13 MR. EMERSON: Sure. 14 COMMISSIONER CHMIELOWSKI: Okay. 15 DR. AITKULOV: Yes. 16 CHAIRMAN PRICE: Then at this time I'd like to 17 ask if there are any members of the public online 18 wishing to testify at this time? Please if so unmute 19 your phone. 20 (No comments) 21 CHAIRMAN PRICE: Okay. Hearing none, 22 gentlemen, did you want to make any further comments or 23 is -- are we good to adjourn the hearing? 24 MR. SCHOETZ: No further comments. We're good 25 to adjourn the meeting. AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net 1 Page CHAIRMAN PRICE: Then we're holding the record 35 2 open until January 21st, close of business? 3 COMMISSIONER CHMIELOWSKI: Right. 4 MR. SCHOETZ: Okay. 5 CHAIRMAN PRICE: Any further -- sorry. 6 COMMISSIONER CHMIELOWSKI: This is Jessie 7 Chmielowski. I just wanted to say that was an 8 excellent presentation. Thank you for doing such a 9 good job on the virtual hearing. 10 DR. AITKULOV: Thank you. 11 MR. EMERSON: Thank you. 12 COMMISSIONER SEAMOUNT: This is Dan Seamount, I 13 agree with Commissioner Chmielowski. I think all four 14 of you professionals put on one of the best 15 presentations I've heard. It was well organized, 16 concise and supported by good science and technology 17 and it looks like a really exciting project to me. 18 Thank you. 19 DR. AITKULOV: Thank you very much. 20 MR. EMERSON: Thank you. 21 CHAIRMAN PRICE: And we will say internally we 22 were discussing it and until now -- now we're seeing 23 you on the screen here we think in the future we should 24 probably have the ability for you guys to see us as 25 well. That might make it easier. AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 36 1 But yeah, appreciate you doing the best with 2 what we've got technology wise. 3 Thank you. 4 DR. AITKULOV: Thank you. 5 MR. EMERSON: Thank you. 6 CHAIRMAN PRICE: Thank you, gentlemen. With 7 that we're adjourned. 8 (Hearing adjourned) 9 (END OF PROCEEDINGS) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AOGCC 1/11/2022 ITMO: APPLICATION OF HILCORP Docket No. ERIO-21-001 Computer Matrix, LLC 329 F Street, Ste. 222., Anch. AK 99501 Phone: 907-227-5312 Fax: 907-243-1473 Email: sahile@gci.net Page 37 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 02 through 37 are a true, 4 accurate, and complete transcript of proceedings in 5 Docket No.: ERIO-21-001, transcribed under my direction 6 from a copy of an electronic sound recording to the 7 best of our knowledge and ability. 8 9 10 DATE SALENA A. HILE, (Transcriber) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ugnu MB Pilot ProjectGeo: Graham EmersonRE: Dr Almas AitkulovOE: Ted KramerLandman: Michael SchoetzDate: 01/11/20224 miles Outline• Proposal and application• Geologic overview and reservoir fluids• Ugnu development plan• Injection zones and confining intervals• Injection pressures and fracture information• Mechanical well condition2 Hilcorp proposal• Pilot phase: drill 1-2 injectors around active S-203 UgnuproducerPilot project• Pilot designed to gather necessary data to determineappropriate spacing for paired Ugnu producer injectorwells at S pad.• Pilot Expansion phase: potential to drill additionalproducers and injectors in S pad area.Hilcorp application• Request approval to initiate a polymer injection pilotproject into the Milne Point Unit (MPU) undefined Ugnusand at S-padLocation Map – Ugnu Mb - Top structure mapProposal and applicationProposed Pilot PhaseS-203S-204Proposed Pilot Expansion(pending pilot results)S-22L1/L24000ft3 Geologic ContextMBMDReservoir Properties:• Avg porosity 0.33-0.37• Avg Sw 0.19-0.45• Avg Net Pay 10-30UndefinedPoolDefinedPool4 Ugnu Development History• 2001 - H-02 Vertical Prod (13 Ugnu sands). Unable to produce.• 2003 - S-22 HorizontalMBJP producer (screens). Failed-sand production.• 16,746 Cum BBL Oil• 11/2003 – 12/2004* 2003. BP amend AIO request*• 2006 – S-14 – live oil sample inMBsand• Test Only• 2008 – S-37 – Vertical: MD sand (CHOPS)• Test Only•2011• S-41A – Horizontal –MBsand (CHOPS)• 33,461 Cum BBL Oil• 550 BOPD Peak Rate• 04/2011 – 08/2011• S-39 – Horizontal –MBsand (CHOPS)• 68,994 Cum BBL Oil• 620 BOPD Peak Rate• 04/2012 – 07/2013• 2012 – S-43 – Vertical - MD sand (CHOPS)• Test Only• 2019 – S-203 –Horizontal –MBsand JP producer (fine screen)• 174,000 Cum BBL Oil• 590 BOPD Peak Rate• 09/2019 – presentMBsandMBsandMD sandMBsandMD sandMBsandCompletion TimelineTop Ugnu Mb Structure Map with oil fillPBUKRUMPU5000ft5 Ugnu Mb -API Gravity / ViscosityTop Ugnu Mb Structure Map with oil fillS Pad• Live oil viscosities calculated basedon API gravity and local viscous /heavy oil PVT correlation• Current active Ugnu well S-203 isproducing 13.5 API oil which isroughly equivalent to ~1000cp liveoil. This is similar API oil to that inSchrader NB L-pad wells which hasan active polymer floodS-203 (activeUgnu producer)PBUKRUMPU4000ft6 *Red dashes= MB perfed/slotted liner intervalsPotential MB Sand Development Program: Pilot Phase3 Wells 700’ spacing:• S-204 a rotary injector North of S-203• S-22L1 and S-22L2 a dual CTD lateralTop Ugnu Mb Structure Map with oil fill• OOIP= 6.0 MMBO• Recovery Factor range 9-25%S-203S-204S-22L1/L2S-204S-203S-22L1/L25000ft7S-22 long termshut-in well • Drill additional producers and injectors (black polygon)Potential MB Sand Development Program: PilotExpansion PhaseTop Ugnu Mb Structure Map with oil fill• OOIP=70MMBO• Recovery Factor range 9-25%S-203S-22L1/L2S-2045000ft8 The interval planned for injection is referred to as the ‘Minterval’, defined as 3890’-4150’MD(3731-3987’ TVDRT)in typewell G-01Confining intervals• Upper boundary. ‘L-interval’ flooding surface. In well logs,this shale can be demonstrated as laterally continuousacross the entire injection area• Lower boundary. ‘MF shale’. In well logs, this shale canbe demonstrated as laterally continuous across the entireinjection areaInjection zones andconfining intervalsProposedinjectionTVDRT9 Injection pressures and fracture information• The estimated maximum and average injection pressures anticipatedfor the Ugnu sand wells are in the table belowType Well Est. Max. InjectionPressureEst. Ave. InjectionPressureProduced WaterInjection1500 psig 900 psig• The estimated maximum injection pressures for secondary andenhanced recovery wells will not propagate fractures through theoverlying confining strata• The only freshwater stratum in the area of issue is the PrinceCreek Formation, which is exempted under Aquifer ExemptionOrder No.210 Mechanical well condition• To the best of Hilcorp’s knowledge, the wells within the Milne Point Unit were constructed, and whereapplicable, have been abandoned to prevent the movement of fluids into freshwater sources.• A total of 11 wells penetrate the injection interval of the proposed Ugnu MB Pilot Project. A review of those 11wells has been conducted and all records indicate that casing mechanical integrity exists in all 11 wells.11 Hilcorp proposal• Pilot phase: drill 1-2 injectors around active S-203 UgnuproducerPilot project• Pilot designed to gather necessary data to determineappropriate spacing for paired Ugnu producer injectorwells at S pad.• Pilot Expansion phase: potential to drill additionalproducers and injectors in S pad area.Hilcorp application• Request approval to initiate a polymer injection pilotproject into the Milne Point Unit (MPU) undefined Ugnusand at S-padLocation Map – Ugnu Mb - Top structure mapProposal and applicationProposed Pilot PhaseS-203S-204Proposed Pilot Expansion(pending pilot results)S-22L1/L24000ft12 2 Notice of Public Hearing and Comment Period STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket No. ERIO-21-001 By application received November 29, 2021, Hilcorp Alaska, LLC (Hilcorp) requested the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order approving a pilot enhanced oil recovery (EOR) project in the Ugnu Formation in the Milne Point Unit (MPU). Enhanced recovery regulations (20 AAC 25.402) are in place to ensure that EOR injection projects are conducted in a manner that will lead to increased ultimate recovery, prevent the injected fluids from escaping the injection interval, and protect sources of freshwater. Operators must apply for, and be granted, an order that authorizes EOR injection before they can commence injection operations. Part of the application process requires the operator to notify, and provide a copy of the application to, all operators and surface owners within a ¼-mile radius of the proposed injection well(s). For situations where the viability of a specific EOR process has not been demonstrated as being effective in a certain application, such as this proposal to conduct water and polymer injection for EOR purposes in the Ugnu Formation, 20 AAC 25.450(b) allows the AOGCC to issue an injection order approving a pilot EOR injection project to allow for the gathering the information necessary to show whether or not it is viable before a full field project is pursued. Pilot project EOR orders are usually time limited and often require different data collection and reporting requirements than a conventional EOR injection order since the purpose of a pilot EOR injection project is to demonstrate feasibility of a process before pursuing it on a fieldwide basis. This notice does not contain all the information filed by Hilcorp. You may obtain more information about this filing by contacting the AOGCC’s Special Assistant, Grace Salazar, at (907) 793-1221 or grace.salazar@alaska.gov. The AOGCC has tentatively scheduled a public hearing on this matter for Tuesday, January 11, 2022, at 10:00 a.m. in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501, with an option to participate remotely via MS Teams. The audio call-in information is (907) 202-7104, conference ID no. 603 114 580#. Anyone who wishes to participate remotely using MS Teams video conference should contact Ms. Salazar at least two business days before the scheduled public hearing to request an invitation for the MS Teams. Please note, the hearing will be held if AOGCC receives written request by 4:30 p.m., December 22, 2021. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. If the Commission receives a timely request for the hearing or if the Commission decides to hold the scheduled hearing, the Commission may change the format of the hearing from hybrid to a full virtual hearing using MS Teams in the event of safety restrictions due high or increasing levels of COVID-19 cases. The Commission will update its Events webpage for any changes on or after December 22, 2021. To comment on the Hilcorp’s filing, please submit your comments by 4:30 p.m., January 7, 2022, at the AOGCC address given above or via email at aogcc.customer.svc@alaska.gov, fax at (907) 276-7542, or the State of Alaska Online Public Notices System. Individuals or groups of people with disabilities who require special accommodations to comment or attend the hearing should contact Ms. Salazar at (907) 793-1221, no later than January 7, 2022. Jeremy M. Price Chair, Commissioner Jeremy Price Digitally signed by Jeremy Price Date: 2021.12.06 10:39:03 -09'00' 1 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:Roby, David S (OGC) To:Michael Schoetz Cc:Salazar, Grace (OGC) Subject:FW: Hilcorp Alaska Presentation Date:Monday, January 10, 2022 3:42:23 PM Michael, Thanks for providing the copy of the presentation to us for our review. After reviewing it and the application we have a few questions that we think need a little more discussion and that we’d like you to be prepared to address in the hearing tomorrow. 1. What is the frac gradient for the Ugnu and the upper and lower confining intervals, how were these determined? 2. Is there a frac model to backup the claim in Section L that injection activity is not expected to propagate fractures through the confining strata? 3. How long is this pilot project planned to last before a decision will be made on whether or not to expand to a full field project? 4. In Section E of the application it indicates gas injection might occur, but gas injection is not mentioned in the presentation. Is gas injection actually on the table? Thanks in advance. Regards, Dave Roby (907)793-1232 From: Salazar, Grace (OGC) <grace.salazar@alaska.gov> Sent: Monday, January 10, 2022 2:06 PM Subject: FW: Hilcorp Alaska Presentation Checking with him where the confidential portion is Grace From: Michael Schoetz <mschoetz@hilcorp.com> Sent: Monday, January 10, 2022 2:04 PM To: Salazar, Grace (OGC) <grace.salazar@alaska.gov> Subject: Hilcorp Alaska Presentation Grace, Attached, please find Hilcorp’s presentation for tomorrow’s hearing. If needed, please feel free to give me a call on my cell phone. Thank you, Michael W. Schoetz, CPL Hilcorp Alaska, LLC Senior Landman Main: (907) 777-8300 Office: (907) 777-8414 Mobile: (281) 685-0902 Email: mschoetz@hilcorp.com 3800 Centerpoint Dr., Suite 1400 | Anchorage, Alaska 99503 The information contained in this email message is confidential and may be legally privileged and is intended only for the use of the individual or entity named above. If you are not an intended recipient or if you have received this message in error, you are hereby notified that any dissemination, distribution, or copy of this email is strictly prohibited. If you have received this email in error, please immediately notify us by return email or telephone if the sender's phone number is listed above, then promptly and permanently deletethis message. 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