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Home My WebLink AboutCO 117Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. ~_/_. ~;~_ Conservation Order Category Identifier Organizing RESCAN [] Color items: [] Grayscale items: [] Poor Quality Originals: [] Other: NOTES: DIGITAL DATA [] Diskettes, No. [] Other, No/Type OVERSIZED (Scannable with large plotte~ [] Other items OVERSIZED (Not suitable for plotter/scanner, may work with 'log' scanner) [] Logs of various kinds [] Other BY: /~.¢.~ARIA Scanning Preparation Production Scanning ' Stage I PAGE COUNT FROM SCANNED DOCUMENT: PAGE COUNT MATCHES NUMBER IN SCANNING PREPARATION: ~ YES NO BY; Stage 2 'IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: ~ YES ~ NO RIA DATE: '__ /SI (SCANNING IS COM~OINT UNLESS SPECIAL ATTENTION IS REQUIRED ON AN INDIVIDUAL PAGE BASIS DUE TO QUALITY, GRAYSCALE OR COLOR IMAGES) General Notes or Comments about this Document: 5/21/03 ConservOrdCvrPg.wpd STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska 011 and GAs Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Re: The application of BP Alaska Inc. ) for an exception to Rule 2 of Conserva- ) tion Order No. 98-B for relief from the ) the footage spacing requirements for ) nineteen wells in a specified area. ) Conservation Order 117-A Prudhoe Bay Field Prudhoe Oil Pool September 7, 1973 IT APPEAR I NG THAT: I. BP Alaska Inc. submitted the referenced application dated July 26, 1973. 2. Notice of the hearing on this request was published in the Anchorage Daily News on August 3, 1973 pursuant to Title II, Alaska Administrative Code, Section 2009, and no protest was received. F INDI NGS: I. Rule 2 of Conservation Order No. 98-B requires that no pay be opened to well bore closer then 3000 feet to any pay in the same pool opened to the wel I bore of another wel I. The appl icant requested that the 3000 foot distance be changed to 2000 feet. 2. Accurate directional drilling of a well to a precise target is difficult. 3. The pay section of a deviated well may be perforated for production over a horizonal interval of several hundred feet, thereby limiting the permissible target areas for future wells. 4. It is prudent to locate wells to permit future development on a 160 acre pattern if required to increase ultimate recovery of oil. CONCLUS ION: The granting of applicant's request wi l not result in waste nor impair corre- lative rights of affected parties. NOW, THEREFORE IT IS ORDERED THAT: Applicant, BP Alaska, Inc. is hereby granted an exception to Rule 2 of Conservation Order No. 98-B to permit the opening of pay in the well bore Con se rvat i on 0 rde r NIL I 17-A Page 2 September 7, 1973 no closer than 2000 feet to any pay in another well in the same pool in each of the following sections: Township II N- Range 13E, tJ.M. Sec. 5, 8, I0, II, 14, 16, 22, 23, 24, 25, 26, 36. Township II N- Range 14E, IJ.M. Sec. 6, 7, 18, 30, 31, 32. Township 12 N - Range 14E, U.M. Sec. 32. DONE at Anchorage, Alaska and dated September 7, 1973. Thomas R. Marshall, Jr., Executive Secretary Alaska Oil and gas Conservation Committee Concurr Ing: Homer L. Burrell, Chairman Alaska 011 and Gas Conservation Committee Alaska Oil and Gas Conservation Committee STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska 0II and Gas Conservation Committee 3001 Porcup I ne Drl ve Anchorage, Alaska 99501 Re: THE APPLICATION OF BP ALASKA, INC. for an exception to Rule 2 of Conservation Order No. 98-B to permit the drilling and completion of two oll wells per governmental section on selected sectlons In the Prudhoe 0II Pool. Conservation Order No. 117 Prudhoe Bay Fleld Prudhoe Ol I Pool March 5, 1973 IT APPEARING THAT: I. BP Alaska, Inc. by letter dated January 16, 1973, requested the referenced exception for 19 wells to be drilled and completed In the Prudhoe Bay Field, .Prudhoe 0II Pool. 2. Notlce of publlc hearing was published In the Anchorage Dally News on February I, 1973, pursuant to Tltle II, Alaska Administrative Code, Section 2009. 3. A public hearlng was held on February 16, 1973, In the City Council Chambers of the Z.J. Loussac Library, 5th Avenue and F Street, Anchorage, Alaska, at which time the applicant and affected partles were heard. FINDINGS: I. Applicant Is developing leases it operates In the westerly portion of the Prudhoe Bay Field with one active drilling rig. 2. Forty-one wells capable of producing oll have been drilled and suspended by applicant, and under Rule 2 of Conservation Order No. 98-B only three additional Prudhoe 011 Pool locations remain undrllled on the applicant- operated leases in the westerly portion of the Prudhoe Bay Field. 3. Negotiations on the proposed Prudhoe Bay Unit are continuing, and applicant Is unwllllng to drlll outside the operating area tentatively assigned to It. Three of the 19 proposed wells will not be drilled until applicant reaches agreement with other lessees In Its operating area. 4. Unless the requested exception Is granted, applicant may cease drill lng operatlons within the referenced pool wlthln a few months. Conservation Order 117 Page 2 March 5, 1973 5. Delays In approval of the trans-Alaska plpellne will delay the start- up date; therefore, applicant plans to Increase the field production rate during the early stages of production. 6. An Increased field production rate necessitates additional producing wells, Inasmuch as (a) testing of recently drilled wells Indicates a wide variation In productivity Index, and (b) some wells will occasionally be shut-in for service and repair. 7. The drilling of the 19 wells would not reduce the ultlmate recovery from the pool but might result in a greater ultimate recovery by more efflclent dral nage patterns. 8. There Is no evidence that the drllllng and completion of the proposed 19 wells would result In waste. 9. Correlative rlghts of affected operators can be protected by allowing them to drill on the same spacing or by restricting production rates of the 19 wells requested by the applicant and/or other wells In proxlmlty thereto. I0. Exxon Company, USA was the sole objector to applicant's request, but failed to offer any evidence in support of Its objection. CONCLUSION: I. The granting of applicant's request will not result In waste nor Impalr correlative rights of affected parties. NOW:, THEREFORE, IT IS ORDERED THAT: Applicant, BP Alaska, Inc. Is hereby granted an exception to Rule 2 of Conservation Order No. 98-B to permit the drllllng, completion and pro- duction of two oll wells In each of the following sections in the referenced pool: Townshlp lin - Range 13E, U.P.M. Sec. 5, 8, I0, ii, 14, 16, 22, 23, 24, 25, 26 and 36. Townshlp liN - Range 14E, U.P.M. Sec. 6, 7, 18, 30, 31 and 32. Township 12N - Range 14E, U.P.M. Sec. 32. Conservat!on Order 117 Page 3 March 5, 1973 DONE at Anchorage, Alaska and dated March 5, 1~73. Thomas R. Marshall, Jr., E×ecutlve Secretary Alaska 0II and Gas Conservation Committee Concurrence: Homer L. Burrell, Chalrman = Alaska 0II and Gas Conservation Committee O. K. Gl lbreth, Jr., Alaska 011 and Gas Conservatlon Committee BP ALASKA INC. Mr. Homer L. Burrell, Director State of Alaska Department of Natural Resources Division of Oil & Gas 3001 Porcupine Drive Anchorage, Alaska 99504 P.O. BOX 4-1379 3111 - C - STREET ANCHORAGE. ALASKA 99503 TELEPHONE (907) 279-0644 August 7, 1973 1 CT,DE 2 GF. OL .... DRAFT SEC CONFER: / ! 7--A- Dear Mr. Burrell: Reference a recent telephone conversation with our Mr. A. K. Howard regarding our application by letter of July 26, 1973 for an exception to Conservation Order 117 as it incorporates Rule 2 of Conservation Order 98-B to permit a closer well spacing for the nineteen (19) wells referred to in Conservation Order 117, we wish to confirm as requested that the information has been relayed to Exxon Company, U.S.A., and further that Exxon Company, U.S.A. have indicated verbally that they have no technical objection to our application for an exception to drill the aforementioned nineteen (19) wells on a closer well spacing. Should you require additional information concerning this matter, please contact us. Very truly yours, D~anager CGM;vjp;hw cc: Mr. Judd Miller, Jr., Exxon Company, U.S.A., Los Angeles Vice President Production & Planning, BP Alaska, New York Manager Field Development Planning, BP Alaska, New York File DEV-PB-741/4 ,tdJ 9 At~anticRichfie]dCompany North American ?roducin~t Division Post Off,c%. ,='ox 360 Anchorage, .A~asks 99510 Telephone 907 277 5637 O. G. Simpson No~h Alsska D~stdct Msnager August 2, 1973 ~4r. Homer Burrell, Director Division of Oil and Gas Department of Natural Resources State of Alaska 3001 Porcupine Drive Anchorage, AK 99504 5 ENG I~ · . 2 GEOL - ,.-., 3 G'...,t R.r.-v DR,AFT- _. SEC CONFER: Dear Mr. Burrell' Atlantic Richfield has no objection to granting BP Alaska Inc. a spacing exception to Conservation Order 117, as it incorporates Rule 2 of Conservation Order 98-B. Specifi- cally, we, Atlantic Richfield, have no objection to BP Alaska Inc. receiving permission to drill any of the nineteen wells referred to in Conservation Order 117 in such a manner that the pay open to production be up to, but no closer than, 2000 feet from the pay open to production in an adjacent well. The maximum distance between wells on a regular 320-acre spacing pattern is approximately 3700 feet. The 3000 foot spacing rule currently in effect requires that. direc- tional control be very precise to obtain this regular spacing and not violate the 3000 foot rule on these '320-acre spaced wells. Additionally, many of the original BP Alaska Inc. wells do not conform with a rigorous 320-acre spacing pattern. In order to effect this pattern for the nineteen wells covered by Conservation Order 117 and any future 320- acre locations, exceptions to the 3000 foot spacing rule are required. It is Atlantic Richfield's opinion that ultimate recovery will be improved if future wells are drilled on regular spacing patterns. Thus we have no objection to this spacing relief request of BP Alaska Inc. Very truly yours, OGS: PBN: j a ~ BP ALASKA INC. August 2, 1973 Mr. Homer L. Burrell Director State of Alaska Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99504 P.O. BOX 4-1379 3111 - C - STREET ANCHORAGE. ALASKA 99503 TELEPHONe (907) 279-0644 [ 2 GEOL t 3 c~oC I ,~v .... !'-DRAFT' t i Dear Mr. Burrell: With reference to our application by letter of July 26, 1973 for an exception to Conservation Order 117 as it incorporates Rule 2 of Conservation Order 98-B to permit a closer well spacing for the nineteen (19) wells referred to in Conservation Order 117 and, further to recent telephone communications with our Mr. A. K. Howard, we submit the following information for your consideration to substantiate our application. The development scheme proposed for the initial phase of field production is based on the following principles: (1) The area initially being developed is restricted to the thicker part of the oil column where there might be a later requirement for production or injection wells on a .density equivalent to 160-acre spacing. (2) Problems as to the geological configuration of the margins of the oil accumulation are not a primary concern in locating wells internally within this part of the field, and in the thick sand section with' low structural dips the area can be treated as grossly homogeneous. (3) The principal concern with well positions in this area then is one of equally spacing wells for drainage, minimum interference, and possible efficiency of recovery from injection processes in the future. (4) The spacing pattern that achieves this is an equilateral triangular (or hexagonal) pattern. Wells should be 5674 ft. apart for 640-acre spacing, 4012 ft. apart for 320-acre spacing, and 2837 ft. apart for 160-acre spacing. It is apparent that a 320-acre pattern cannot be infilled equally to achieve a 160-acre pattern. Mr. Homer L. Burrell Director Division of 0il and Gas - 2 - August 2, 1973 (5) As we see a possible need for future 160-acre spacing wells in the middle part of the field, a development location grid has been drawn in that area' on this basis (i.e.' 2837 ft. between Wells) adjusted as necessary to compromise existing locations. In practice the plan needs constant minor revision as each well is drilled and does not exactly reach target. For the first stage of development we plan to drill approximately half the locations in this grid and of necesSity ~(4. above) this does not result in a completelY regular pattern. This is not considered significant considering the spacing involved, but does imply that some locations will have to be Programmed' in theory to be 2837 ft. from~existing wells, which, with practical restrictions as outlined in our application by letter~ of July 26, 1973, may be a somewhat lesSer dis tance. ' Should you reqUire additional information concerning this matter' please contact us. CGM: vjp VerY truly yours BP ~'~K~ INC. ~L:/~--t~i~frict Manager cc: Vice President, Production and Planning, ' New York Manager, Field DevelOpment Planning, New' York File DEV-PB- 741/4 STATE OF ALASKA, ) THIRD JUDICIAL DISTRICT, ) ss. .... ~a~.y..L...S h ak.e ................ being first duly sworn on oath · sba deposes and says that ................ is the ...... ..~..e..~..EI..1.....C.]-...e.?l~f the Anchorage News, a daily news- paper. That said newspaper has been approved as a legal news- paper by the Third Judicial Court, Anchorage, Alaska, and it is now and has been published in the English language continually as 'a daily newspaper in Anchorage, Alaska, and it is now and during all of said time was printed in an office maintained at the aforesaid place of publication of said news- paper. That the annexed is a true copy of a .--Le~-~q.].-.-N-o-t;.:j..oG as it was published in regular issues (and not in supplemental form) of said newspaper for. a period of .... OZ3~. ....... insertions, commencing on the ..3. ........ day of ........ ...7.3, ,nd ending on the .........3 ........ day of of ........ .~g.l:l..$.t ........ , 19...7..3, both dates inclusive, and that such newspaper was regularly distributed to its subscribers dur- ing all of sa,id period. That the full amount of the fee charged for the foregoing publication is the sum of $13.75~ which amount has been paid in full at the rate of 25¢ per line; Mini- mum charge t;7.50. Subscribed~ sworn to before me this .3. ...... day of ..... 19.?.~.. Nota~ Public in and f~ the State ~ Alaska, Third Division, A~horage, Alaska '~O~I~ION EXPIRES ' /? ........ ..... 8029 lie ,PUBLICATION NOTIOE OF PUBLIC HEARING' STATE OF ALASKA .DEPARTM. EN? OF NATURAL EESOL~ECE$ OIVI,~ION OF OIL. AND GAS AI,asba:?~'Dil ~n,d Gas Conservation ', · .,:; , Committee : Con'~erv~i,on ,'~Ha rio. $17 A~,' for,:,ien or~er gra,r~ing on a6di- · io~!,i exceFtion t~ ~onse~a*lon ,O~der ,Nq;' 98B ~ ,el, i,~ from · ll,e~'fOo~ege epa,~ing reqUi,remen~ ~or ~ ' , a,i~eteen, wel~ls ,in:the '~Jas~",ln,'O./ ,b~:~',', ,~U~d' 'th,e' Oi, I ','"~ '" ' ' ~ ....... ..... ,L ' "'~%'~' ' , , ',e~oed ',~e! I~',"':fro~. ~,~,,,:~,~" mini, mum d~ot~6,oe, ~o~ire~e~, of the ~eferen~..~rden }',,~,~&fion ,'Order. end prO~u~l,on' ~f~,' ~';,~j~ill, ~el,Is in', ,e~oh,'of?'~lg,sPeo~?~':'S~qns in the' ,'~PrudhoeOJl Pool.~'~'artiej who m~y ,, %grieved':,,.E ~be'f:~eque~eW or6er ~issued ',a~re' el, jo,:ed:' ,l~'~a~S' from ~h,e ,fil,e a ~.'~:D~: c'~ rc:.:st for hear-' i,n,g. F.o:e of ~...;.~ i~ jO01 pi, ne O~,ive, ,~,oh,~n~ge,, Al,~s~a.:: J~h · ~t',,is,~i, mel,y fi'led~',l }ng on, ~ matter ,wHI be held' ~ '1,4, '1'9~3~, et,Whi,oh *ime and ,o~ers may: be ~ea,~d~ If~'jO]:J:g,~h '~rofO~''i's 'tim~ y :,filed~ ,fha Chum,rte ~ Wil4 :..,o~nS~ider,::',':~he~:'' :.i~U~n~oI ~:~' , , ,,' ,~ ; . , ,, ,., , , ,,,. ,, ~,~,~..., '~,~,j,, j~.,, ., EXeO~tiVe ~e~a~, , ' Cons'e'rv~i,on' ' ', ~i, "P'~rcupinje'. D~ive , ~, , , ., . , NOTICE OF PUBLIC HEAR I~,IP~ STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AHF) GAS Alaska Oil and Gas Conservation Oommittee Conservation File No. 117 A Re: The application B P Alaska Inc. for an order granting an additional exception to Conservation Order Ho. 98B for relief from the footage spacing requirements for nineteen wells in the Prudhoe Oil Pool of the Prudhoe Bay Field. Notice is hereby given that B P Alaska Inc., has requested the Oil and Gas Conservation Committee to issue an order exempting the referenced wells from the 3000 - foot minimum distance requirement of the referenced order. Conservation Order I17 permitted the drilling completion and production of two oil wells in each of 19 specified sections in the Prud- hoe Oil Pool. Parties who may be aggrieved if the requested order is issued are al lowed I0 days from the date of this publication in which to file a protest and request for hearing. Place of filing is 3001 Porcupine Drive, Anchorage, Alaska. If such a protest is timely fi led, a hearing on the matter will be held at the above address at 9:00 AM August 14, 1973, at which time protestants and others may be heard. If no such protest is timely fi led, the Committee will consider the issuance of the order without a hearing. Thomas R. Marshall, Jr. Execut i ve Sec reta ry Alaska 011 and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Publish August 3, 1973 II BP ALASKA INC. P.O. BOX 4-1379 3111 - C - STREET ANCHORAGE. ALASKA 99503 TELEPHONE (907) 279-0644 July 26, 1973 Mr. Homer Burrell, Director Division of Oil & Gas Department of Natural Resources State of Alaska 3001 Porcupine Drive Anchorage, Alaska 99504 Dear Mr. Burrell: c.c. //7,4 In our request of January 16, 1973 for a change in the Prudhoe Bay Oil Pool rules to permit us to drill two wells in selected sections, and at the subsequent hearing on February 16, 1973, we did not request a change in the required distance between wells. Our intention at that time, pending the completion of unitization negotiations, was not to unnecessarily request changes in the existing rules unilaterally. It was our expect- ation that we could continue our drilling program honoring the 3000-ft spacing rule, although that rule is not necessarily consistent with any proposed ultimate development scheme. However, two factors in practice and one in principle have indicated to us that the procedure is too restrictive and we see considerable advantage and no disadvantage to any party in relaxing this spacing requirement. The factors are (1) the difficulty in drilling a well to a precise target and the reli- ability of directional surveying during drilling; (2) with the deviations achieved and anticipated, the pay section of a well could be required to be perforated for production over a hori- zontal interval of several hundred feet, a factor which restricts the available distance between wells; and (3) although not proven to be necessary, it is prudent to locate present wells to allow in the future for possible regular spacing of wells for production or pressure maintenance on a grid equivalent to 160 acres. We appreciate that the 3000-ft spacing rule was initially adopted to avoid an uneven pattern of development well locations. It is in an effort to achieve this objective that we now feel that this spacing requirement should .be amended. Correlative rights can be protected and ultimate recovery possibly enhanced in this mmanner or, if the State should feel concern in this regard, it could invoke a rule based on Finding 9 of Conservation Order 117. We w~ould therefore request that we be granted an exception to Conservation Order 117 as it incorporates Rule 2 of Conservation Order 98-B. Specifically, we require permission to drill any of the ~ 19 wells referred to in Conservation Order 117 ia ~q~ ~ %~ ~ manner that their respective pay zones may be open~~~ ~ ~" Mr. Homer Burrell -]- July 26, 1973 completion for production to no closer than 2000 feet to any pay in the same pool opened to the well bore of another well. As we anticipate no objection to this request from any affected party with holdings in the Prudhoe Bay Pool and we have no further 'testimony to offer beyond that presented on February 16 and the above comments, we would apprec- iate your ruling as to whether this request could be acted upon immediately, formally published and ruled on by your Department without a hearing. hw cc: VP Production & Planning .Mgr., Field Development Planning Very truly yours, D~'~trl.ct Manager STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska 011 and Gas Conservation Committee CONSERVATION ORDER NO. 117 Prudhoe Bay Fleld Prudhoe Ol I Pool HEAR lNG February 16, 1973 P R O C E E D I N G S Mr. Burrell: Good Morning, Ladies and Gentlemen. This is a hearing of the Alaska Oil and Gas Conservation Committee. My name Is Homer Burrell, I'm Chairman; to my right, is Mr. Tom Marshall, member of the Committee and Executive Secretary; to my left is Mr. O. K..Gllbreth, member of the Committee; and to his left, on the end, Is Mr. Hoyle Hamilton, a Petroleum Reservoir engineer with the Division of Oil and Gas. Mr. Hamilton will aSsist us, and probably participate In questions today. This is a publlc hearlng, Conservation~Flle # 117 the application of BP Alaska Inc. for an exception to rule 2 of Conservation Order #98- B, to permit the drilling an~ completion of two oli wells per governmental section on selected sections in the Prudhoe Bay Field, Prudhoe Oil Pool. This was published February ~, 1973 in the Anchorage Daily News. We will open the Public Hearing on this and ask the applicant to testify. For your information we will ask anybody who testifies to come up where they can be picked up by the microphone and anybody who testifies or wishes to make a written statement at any time, and everybody here will have the opportunity to do that at the conclusion of the applicant's testimony and our questions. We may proceed now. Harlan Fllnt: Mr. Chairman, my name is Harlan Flint. I am Managerof Services for BP and an attorney. I'm here on behalf of BP Alaska. Wlth me this morning is Mr. A. K. Howard, who will be our only witness to be presented. Would you like to have him sworn at this time? Mr. Burrell: Yes, could I ask you speak a little louder, Nr. Flint? We are just barely catching you, according to our blinking light on the tape recorder. Mr. Flint: Right. Mr. Burrell: Thank you. Nr. Marshall will swear Mr. Howard in. Mr. Marshall: Would you please stand? Raise your right hand. In the matter now at hearing do you swear to tell the truth, the whole truth and nothing but the truth so help you God? Mr. Howard: i do. Mr. Flint: WIll you please state your full name? Mr. Floward: My name is A. K. Howard. Mr. FIlnt: And what Is your position with BP Alaska, Mr. Howard? Mr. Howard: ! am Manager of Operatlons for BP Alaska, inc., In Anchorage. Mr. Flint: Would you please give the Committee a brief resume of your education and experience? Mr. Howard: Yes I received a BS honors degree in electrical engineering at the University of Nottingham in England In 1956. I am a fellow of the Institute of Petroleum in London and am currently Chairman of the Southwest Alaska Section of the Society of Petroleum Engineers of A IME. I commenced work with the British Petroleum Company Ltd. in 1956. Having received 15 months training In oll field drill lng, production and reservoir engineering,..I was transferred to BP Trinidad Ltd. as a assistant Production Engineer. During my period with BP Trinidad, I was assigned to the production department as a production engineer for three years, petroleum reservoir engineer for three years, and production superintendent for two years. ! was transferred to the Middle East in 1966 and became Senior Petroleum Engineer with the Abu Dhabt Petroleum Company Ltd. in 1967. In 1969 -2- I was appointed Senior Petroleum Engineer for BP's North Sea operations, and the following year came to Alaska as Senior Technical Advisor for BP Alaska. In this capacity my duties Include fleld development planning of the Prudhoe 0II Pool and responsibility for engineering data collected from BP Prudhoe wells~ In April 1972, I received my present appointment in which I carry the responsibllity to BP Alaska's drilling and engineering activities conducted on the North Slope. Mr. Flint: Mr. Chairman, Mr. Howard has prepared his testimony In form of a narrative statement for the Committee's approval. We would like to have hlm proceed to present that, then answer any questions you may have following his statement. Mr. Burrell: That'll be fine, Mr. Flint, I would like the record~ito reflect that Mr. Howard has previously qualified as a expert witness, at a previous hearing before this Committee. You have not? Mr. Howard: No sir. Mr. Burrell: Dldn't you testify in the Prudhoe Bay hearing? Mr. Howard: No, I dld not. Mr. Burrell: 83 or 98? Mr. Howard: No Mr. Burrell: The first one or the second one? Mr. Howard: No sir. Mr. Burrell: Alright, I thought you had. I'm wrong and want the record to reflect that you now are a accepted as an expert witness. Mr. Howard: Thank you, Mr. Chairman. Mr. Flint: Mr. Howard, will you then proceed wIth your statement? -3- Before the record, Mr. Chairman, before we proceed with the testimony we did file an application with attachments, exhibit type attachments which are the subject of thls hearing. Am I correct in my understanding that that would be considered to be a part of the record of this hearing? Mr. Burrell: Yes, the application for a permit to drill, is that correct? Mr. Flint: No, the application letter dated, dated January 1973 and attached Exhibit ~A~'~. Mr. Burrell: Yes, that will be part of the record. It is in the file at this t~me. Excuse me, Mr. Flint, I presume that was a request that you made? Mr. Flint: Yes, we do prefer that it be made part of the record. Mr. E~urrelI: Thank you. Mr. Flint: AIright Mr. Howard, you may now proceed. Mr~ Howard: Mr. Chairman and members of the Alaska Oil and Gas Conservation Committee. Since the discovery of the Prudhoe Bay Fietd~ two hearings have been he~d (in November 13-~4, 1969 and February 197~) to establish Pool Ru~es. During the course of this presentation, t shall refer to testimony presented to you at botl~ of these hearings. BP Alaska Inc. has requested this hearing to seek an exception to Rule 2 of Conservation Order No. 98-B which~ If approved, would permit the completion of two oil wells per governmental section in 19 selected sections w~thin the BP A~aska operating area. In this context, reference is made to a ~etter from BP A~aska to the Director of the Division of -4- 011 and Gas, dated January 16, 1973, and to Exhibit "A" attached thereto whtch counsel has asked to be included in the record. As is generally known, BP Alaska is operating In the western part of the Prudhoe Bay Field. An initial plan for this operating area, showtng actual and proposed bottom hole well locations, is presented as Exhibit ':A~. The 72 wells shown comprise the first stage development wells In this portion of the field. I don't know whether you can see this. Mr. Burrell: I think a man on the iIght switch might help.a little blt. Mr. Howard: I will briefly Indicate what this map represents and this Is In fact the western part of the field, which I'm referring to. The area to the east Is the ARCO operating area, this area is the BP Alaska operating area. The map indicates a number of pads, drilling pads, and these are Indicated in red on this map, although they are not red on your Exhlblt. Thls map in fact was the base map on which the Exhibit which you have was prepared. The darker dots represent, with the exception of this one, and one, two, three~ four, five, six wells on there, which in fact are in green, and I don't know whether you can see them clearly. The darker dots, the remainder, are in fact wells which have already been drilled and suspended. The yellow dots are the, represent the bottomhole locations of the wells that we proposed to drill and to which we are taking applications today, is that clear, can I give any further explanations of that? Mr. Burrell: That's adequate for my purposes. Does anybody have any questions? Mr. Flint: For the sake of the record, I might note that Mr. Howard -5- has been referring to a slide projected on the wall which corresponds generally with what has been Identified as ap011cant's E×hiblt "A~'. Mr. Burrell.' Thank you, Mr. Flint. Mr. Howard: At the present time, development drilling is proceeding with one active rig, and 41 scheduled future ~roduction wells have been drilled and suspended. It is BP Alaska's wish to continue drilling first stage development wells and the planned sequence for this drilling calls for a number of so-cai led 320 acre spaced wells. It Is readily apparent 'from the Field Development Map (that's Exhibit '~A") that, having drilled three more wells, no programmed additional wells could be completed in the BP A~aska operating area within BP Oil Corporation's lease area under existing rules. I wou~d point out that these wells on your Exhibit are wells C-2, which ls 17-1~-~4.. This well ls currently being drilled. Since Exhibit ~'A'~ was prepared we have in fact moved on to this location. On C-4, which is 18-11-14 on your map, and another well H-6, which is in Section 20- Testimony presented in February 1971 indicated that negotiations were proceeding with the objective of forming a Prudhoe Bay Unit. These negotiations are continuing and BP Alaska's development plan anticipates the successful conclusion of the negotiations prior to production. For this reason, it Is not BP Alaska's wish to drlll wells within BP 0il Corporation leases situated In the ARCO operating area, which could be completed under existing pool rules. That is the area to the west of our demarcation line between the ARCO and the BP operating area. -6- ~lr. G i l breth~ To the west or to the east? Mr. Howard~ Sorry to the east, I beg your ~ardon. Similarly, until a unit is formed, there are difficulties associated with drilling wells on other companies' leases~ and the developemnt drilling program for the immediate future confines the wells to be drilled to BP Oil Corporation leases in the BP Alaska operating area. Having disclosed our progress and outlined our immediate future plans for the development of our operating area~ I will now elaborate a little on the overall philosophy which has led to our request at this time for an exception to Conservation Order No. 9F~-B, Rule #2, regarding Infi II wel The Committee will be aware that, primarily as a result of delays ~n the issuance of the construction permit for the trans-Alaska plpe~ine, drllling activity is at a Iow ebb on the North S~ope~ as compared with the work being conducted at about the time of the 1969 North Slope lease sale. At that time, in the Prudhoe Bay area alone~ $~veral ~tgs were actively engaged In development or appraisal drilling and numerous support services camps were located in the area, providing employment for many hundreds of people. During the past year~ only one r~g has been continuously utilized In this area and the support consists mainly of sporadic projects which provide barely sufficient justification for many service companies to continue operating, if the rig currently on contract to BP Alaska and engaged in drilling Prudhoe E~ay development wells were to shut down, there wou~d be further reductions in employment levels which wou~d not only affect the drilling contractors, but have serious repercussions In other companies as wel~. During the years that BP Alaska Inc. has been engaged In drilling and evaluating the Prudhoe Bay Field, It has acqulred expertise In dealing with the problems peculiar to ~he area. Its staff, and those of the service companles, have become aware, through trainlng and experience, of acceptable and efficient methods of dealing with such mat~ers as the cold envlronment, the permafrost, the dellcate ecosystem, and many others. We belleve that it Is In the interest of our company, the oll Industry In Alaska, and the State of Alaska, to continue operating and so maintain these personnel as an effectlve force. I wlll now make a few remarks concerning the approach BP~'~Alaska Inc. has adopted for the Initial development of Its operating area for the Prudhoe Bay Fleld. , Your committee was presented with geo~toglc and other Information on the Prudhoe 011 Pool, at the Fleld Rules Hearing held on February 9, 1971, whlch gave a general description of the field, Since that hearing BP Alaska has conducted a number of addltlonal well production tests, the results of which are now presented as Exhlblt ~'B". (For the sake of com- pleteness, we have summarized the production test results obtained by BP Alaska to date In Exhibit "B".) Hr. Flint: Hr. Howard, are you now referring to.a sllde which wlll depict the same Information shown on Exhlblt 'B'? Hr. Howard: Yes, ~ am. This exhlblt summarizes the tests that we have conducted to date. Th:Is column Indlcates well number, test date, wellhead flowing pressure, which we have arbltrarlly picked, something between, I thlnk the lowest wellhead flowlng pressure, was 1095, sorry 1076, and the highest was 1360, whlch we antlclpate being wlthln the range of our one one of our oil productlon. The choke sl~e the rate that we -8- obtaln from the well, the gas/oll ratlo, and the productivity Index. I don't think I need say anymore about this. I think the rest of It shou I d be se I f exp I anatory, The President of Alyeska Is on public record as having Indicated the trans-Alaska plpellne Is being designed for an Initial capacity of 600,000 BPD, which capacity may be Increased to an ultimate throughput of 2,000,000 BPD. We cannot at this time commlt ourselves to a maximum oll produclng rate for the Prudhoe Oil Pool, partlcularly as unltlzatlon has not yet been concluded. However, we are confident that the reservolr will sustain a substantially hlgher rate than the lnltlal pipeline capacity of 600,000 BPD. It ls not uncommon In reservoirs of thls nature to anticipate a's a rule of thumb a 25 to 30-year life. The recoverable reserves have been quoted at 9.6 bllll°n barrels and this leads us to believe the reservoir could ~ a crude oll production rate of approximately 1,000,000 : BPD over a 25-year Ilfe. Durlng the early stages of production, It can be reasonably expected the production level could be slgnlficantly higher than the average rate. BP Alaska's flrst stage development plan Is predicated on Its ability to ~ pr. oduce ha'If of the total field offtake during these early stages of production. Verbal testimony presented by Mr. Anderson of ARCO at the November 1969 Fleld Rules Hearing (Reference Is made on thls to R.'.& R Court Reporter's transcrl pt, page 59) I nd I cared that one we I I cou Id adequately dral n a 640-acre section and, assuming each well were capable of producing I0,000 BPD, I00 wells could produce 1,000,000 BPD. We support this testimony, although structural features could lnfluence the drainage pattern In certaln areas. In pursuing thls matter further and with reference -9- to the production test results shown In Exhibit "B", I, Is evident that not all wells will be capable of sustainlng a production rate of I0,000 BPD, and some allowance mus, be made for we l Is shut In for service and other reasons. The Committee wlll note that there Is a wlde varlatlon In productlvl~y Index and hence we antlclpate a wlde varlatlon In Individual well offtake. To go from ,he mlnlmum to the maximum we have well A-6, which Is 26- 11-13, which shows us a productlvl~y Index of six, with a complete production Interval openlng, as compared wlth well 30-11-14 whlch Indicates productlvl~y Index of 68. SIm!larly, by assuming a production rate of hlgher than I million BPD, a need for additional wells obviously arlses. Hence, the 72 wells programmed should adequately provide the required production from the BP Alaska operatl ng area. The Commlt,ee wi II note that the proposed lnfll I wel Is are located In areas of the fleld where a relatively ,hick oli column can be expected and not on the flanks of the s,ruc,ure. We belleve that, by locating ,he wel Is here, the maximum producing life can be expected from them whlle mlnlmizlng overall, well requirements, it may well be necessary later to locate wells on the flank of the structure; however, at the present s,age of our knowledge of the field, we have not planned such W'~I is. In concludlng~thls testimony, the Comml~,ee wlll be aware that an exception to Conservation Order 98-8, RUle 2, Is requlred only at the time of well com-pletlon. The Committee, however, wll I appreclate that BP Alaska could not commlt funds for drill lng without receiving the assurance that thls proposal Is acceptable to the State. -I0- Gentlemen, I wish to thank you for your attention and ! will be glad to answer any questions you may have to the best of my ab llil~/. Mr. Burre l I: Thank you Mr. Howard. Mr. Fllnt: Mr. Chairman, for the sake of completeness here we should move the admission of the statement, of the apl lcant's Exhibit "Bt', It Is not attached to the orlglnal appllcatlon. Mr. Burrell: Thank you very much. We'll Include that as applicant's Exhlblt "B" for the record. Mr. Flint: That then completes our case, Mr. Chairman. Mr. Burrell: Thank you very much. We'll have a few questions of Mr. Howard, I'm sure. Mr. Howard, as you know our statutory duties are limited generally to the prevention of the waste, and the protection of correlatlve rights. ~, you will no doubt be asked several questions by the engineers here, partlcularly about the reservoir condltlons, to justify the necessity for these wells. I'll ask you one about correlative rights rlght now. I've noticed some of your proDosed wel Is on 320 acre spaclng are adjacent to leases belong to other operators and there is no problem If you are unltlzed. ~ you don't .get unitized, It would of course under correlative rights protectlon necessity, they would have the right to drill on the same spacing If they so requested. Mr. Howard: Yes, I:thlnk our company appreciates this, Mr. Chairman. You will perhaps be aware that the testimony that we presented to you today has been made avallable to the people that own the leases adjacent to our area and you will also note that In my testimony I did Indicate that our development plan Is predicated on there being a unit prior to our going on productlon. -11- Mr. Butte I I: I understand ,hat. I'll ask the other members of the Commit,aa. as well as Mr. Hamilton. If they have any questlons of Mr. Howard. Mr. Marshall. do you have any questions at this tlme? Mr. Marshall: Yes. Mr. Howard your application for excep,lon Is to Conservation Order 98-B. One of ,he flndlngs In ,ha, order was ,ha, ,he Saddlerochlt forma,lon con,alned very porous fine demeaning grained well sorted quartz sandstone which are not separa,ed from each other by Impermeable rock of sufflclen, ,hickness to constl,ute a permeability barrier. In ,he lnterlm have you found any data which would con,rover, this finding of the Commlt,ee? Mr. Hc~ard: In certaln areas ,here could be variations. I Vm referring here ,o possible faulting. We are no, at thls ,1me sure whether these faul,s would be a barrier to the migration of fluids across them or whe,her In fac, ,he flulds are ,ransmlsslble across them. We would not be able ,o ge, a firm handle on this Information untll such tlme as we came upon production. Mr. Marshal I: Thank you. Another flndlng of the Comml,,ee in fha, order 98-B, was that ,he permeabl I I,y and pressure communlcatlon in the Saddlerochlt forma, lon Is such that a well should draln 540 acres. Perhaps Mr. Gl Ibre,h ls going ,o commen, on this and I should defer ,ha, question ,o after hls. For ,he ,Ime being then. I will. that wlll flnlsh my questlons. Mr. Howard: Thank you. Mr. Burrell: Mr. Gllbre,h. Hr. Gl Ibre,h: Mr. Howard, you men, loned In your tes,lmony ,ha, the In field wel Is fha, you are proposing here are located in the thlcker par, of ,he s,ruc,ure. Can the Comml~-fee assume that the exhlblts presen,ed -12- the previous cases, that Is the structure maps and the lsopach maps are stlll valid In so far as the Iocatlon of each of these locations Is concerned? Hr. Howard: By and large, and for thls purpose, yes, you can assume that. We have found minor varlatlons with regard to the structural map that was presented to you In February 1971, but there is no significant change to It. Hr. Gllbreth: To the best of your knowledge there Is no significant change In so far as any one of the proposed additional wells is concerned? I~r. Howard: No, could you spell It out for me, please? ~lr. GI Ibreth: Well, we have nothing here to show that these wells might not be over In the real thln area or something Ilke that, and ~ just wondered If there was any significant changes In the thlckness, that have occured In the meantime would effect the Interpretation on any of these wel is that you are proposing? ~lr. Howard: No, It wll I not. The wel Is are in the thickest part of the oi I column. Hr. Gl Ibreth: ~ly recollection Is that the testimony at that hearing Indicated you were going to drlll In the thicker part of the reservoir. Could you tell us to what extent your plans are here to drill In thick or thin sections? How thin are you going down to for drilling these wel Is? Hr. Howard: It's very difficult to answer that at this tlme. Our vlew Is that If we find that wetve got an active water drive It would be quite posslble for us to have wells located down flank and flnd that within posslbly a short period of tlme, by short period of tlme ! mean years rather than months, that these wells would be, I think, useless to us or only useable from the point of view of obtaining reservoir -13- . Pressur. e Informatlon. We feel that where we have located the wel Is we w lll need them there at some stage in the development sooner or later and for the reasons that I~ve given you we would prefer to drill these we l Is now rather than ~heno ~lr. Gl Ibreth: You are convinced In your own mind that ultimately, before the f leld Is abandoned, these wou Id be necessary anyhow for eff i clent dral nage? Mr. Howard: I'm, we're certaln of that, yes. Mr. Gl ibreth: The Committee of course Is charged from a statutory standpolnt of determining that not too few a number of wells are drilled or that not too large a number of wells are drilled. Based on the Information that you have at this time do you foresee that It might be necessary to even drlll to a more dense pattern than what you proposed here? Mr. Howard: Thls Is quite possible In the J~ter stages of develop- ment but I don~t think that a't thls ,lme we should commit ourselves to any well density. We feel that thls'number of wells wi11 meet the requirements that we have for the pr°ductlon for the Inltlal, the early stage of productlon. Hevlng obtained that reservoir data., we shall be feeding It Into a computer model of sure ~m srue you are aware~ I know we have one, I understand that you are having one and many other companies who ,, are connec,ed wlth the Prudhoe Unit also have one or are bul Idlng one. This Information will be fed Into these computers when we have production data but that is the time that I feel that we are i'~n a better posltion to decide how many wells we shall ultimately need. I don't thlnk we should present anything at this tlme. -t4- Hr. Gl lbreth: Well, my question revolves around this, we had the previous testimony that the 640 acre spaclng pattern could draln the field, so then It becomes a matter of plain dellverablll~y. Now my next question would be thls then, do you have any lnformatlon or are you con- · vlnced on what you see rlght now, and ! might say the State's study has not progressed to the extent that we can te,t.I although we have some Ideas - do you see any danger signals here that the rates that you're looking at per well would cause damage to the reservoir? Hr. Howard: No, I don't think so. As was explained In my testimony we feel a reservolr of this nature could substaln an offtake of sub- stantlally more than 1,000,000 BPD. It Is In the Interest of my company as well, as those of the State of Alaska, to seek maximum recovery with- In the framework of a maximum rate, whlch can be substalned fo~ extended period of time wlthout wasting reservoir energy. Our normal pr. oceedure, :., which we plan to adopt, Is to feel our way very carefully durlng the flrst.".phases of production and then to use thls Information to obtaln, to derive, thls maxlmum rate. Hr. GI Ibreth: ~ notice on the west side, the area that you have outlined on Exhibit "A" the hachured area, does not Include the Elleen Area. Is there any plan afoot right now to do anyth!ng over there? Thls would be In the BP operating area, would 'It not? I~r. Howard: Yes, it would and this would be predlcated on our, well thls would be Investigated thoroughly when we formed the unlto Mr. Gllbreth: After unltlzatlon. Mr. Howard: Yes, I thlnk right now we are dealing wlth a first -15- phase, a first stage of development, and that thls would be dealt with at some subsequent stage. Hr. Gllbreth: I touched on this, I would Ilke to approach It from a slightly different angle. With the inf.ill wells that you are pro- poslng here now and the rates that you foresee are ultimately planned to produce, do you see any danger in, letVs say coning or anythlng Ilke that, from the number of wells that you propose at thls time? Hr. Howard: No, Intact I would have thought that by virtue of havlng additional wells the chances of any conlng problems were reduced. ~. [., If you were, If you had to meet a level of production, you coald then average the productlon such as to get a iow average production per well, and hence any chances of conlng would be reduced by vlrtue of having these additional wells. You will obvlously understand that we would not spend money on drilling addltlonal wells if we dldnVt feel that they were worthwhlle. We, like you, would have preferred to have mlnlmum wells to keep the production comml?ments that we are obliged to meet. Hr. Gl lbreth: Based on your best knowledge at this time what, about what type of a average producing rate do you anticipate from wel Is In your operating area? Ultlmately, a maximum amount. ,, Hr. Howard: Yes, okay~ So far relatlvel¥ few wells have been flow- tested, and as we shown In Exhibit '~B', there's a conslderable varlatlon In productivity. Wlth such a small sampling It Is difficult to accurately estimate the average well production rate. However, on the basis of lnformatlon so far to hand,, the average well.production rate wlll probably be around i0,000 BPD. -16- Mr. Gllbreth: That's all ! have for now. Mr. Burrell: Mr. Hamilton, do you have a question? Mr. Hamllton: Mr. Howard, In your Exhibit 'TBS', were these wells perforated in a manner that would be slml lar to perforatlons when they come on production? Mr. Howard: Yes, the majority of them were, but there was one exceptlon, I think Its 18-11-13, where I believe we had 30' of perfor- atl OhS open. Mr. Haml Itoh: But the other wel Is had perforations that would be equlvalent to say a well you planned to bring on later on? Mr. Howard: Yes, that Is true. I think I could say that In the case of the well that was tested last summer where we did penetrate a sub- stantlal oll column, this ls well 26-11-13. The productlvltY of this well was dlsappointly Iow so hence It Is really not posslble to predlct the produc..tlon rate for any given well untll you physical Iy produce It. There are certain Instances where you could get a better handle from wells ; whlch perhaps we have cored, but It Is not easy at thls tlme and we do not feel that we should be testing every well that we have because of the waste. Mr, Hamilton: Are you, you mentioned earlier, I believe, that you ultimately can't tell what spacing you mlght need until you get some productl on I nformatl on? Mr. Howard: That Is correct. Mr. Haml Iron: But In the meantime are you making any s~o'dles at all Involving density of wells? Mr. Howard: Well density. Yes, we have conducted some pr~llmlnary -17- studies but this was done rather more to get an Idea of what surface facllitles we would be looking at, where our flow lines would run, how much area we would need for drilling pads and these matters rather than It be,lng a firm plan to proceed. At thls time It would be, In our opinion, unwise to proceed with a further stage of deve~lopment until we have Information on productlon from the wells that we are proposlng at thls time. Mr. Burrell: Mr. Gllbreth. Mr. Gllbreth: Mr. Howard, just for the sake of the record I believe you testified that there were 41 wells drilled and suspended, the 41 wells that you testified to are those In what you've outllned as a BP operatlng area on Exhlblt "A"? Mr. Howard: Yes they are. Can I make one point on this? You wlll note that the Exhlblt "A" which was presented to you In January, since that time well C-2, which Is shown as drill lng on Exhibit "A", has In fact been drllled and suspended, and that we are now drilling well C-3. Mr. Gl Ibreth: The point I wanted to make for the record Is that these wells had been drllled and suspended. Are there any wells within this area that right now could be opened up and produced? Mr. Howard: Yes, one well. Well 01-11-12, M-I, does In fact have tubing, It has a tublng plug In the well, so without putting a rig on that well we could In fact produce It. Thls Is the only well. The others have all been In fact been suspended with cement plugs or brldge plugs, Obvlously these wells are confined to the welts that have been tested, The remainder of the wells have not been perforated, The -18- casing Is simply run and cemented and the well capped. Hr. Gl Ibreth: You mentloned In response to a question from Hr. Burrel I regardl ng correlative rlghts that the testimony that you are pre- sentlng here today had been made avallable to the people, I belleve you sald offsetting you there, has the testlmony been made available to all owners In the pool? Mr. Howard: Yes It has. Mr. Gl Ibreth: It has? Mr. Howard: yes. Mr. Gllbreth: That's all I have. Mr. Burrell: Mr. Marshall. Mr. Marshall: Mr. Howard, your application Is silent about any re- quested change In the distance between wells. Finding #10 of our previous Order 98-B for this pool reads: a dlstance of 1,000 feet between wells mlght result In a poor dralnage pattern where not more than one well ls permll"fed on a governmental section and a well 500 feet from a pro- perty Ilne where ownership changes might Impair correlatlve rights. Would you care to comment on thls In view of this clause In thls sentence where not more than one well Is permitted to a governmental sectlon and you're app lyl ng now for two, Mr. Howard: Yes, we're not asking for a change In the rule on the well spacing. We feel, In some ways, the statute or the rule could be consldered posslbly unreallstlc in vlew of the shape of the structure. In other words, If the philosophy of that flndlng was that wells should be spaced 3,000 feet apart then our request here today would conform wlth a rule of that nature. Does that answer your question? -19- Hr. Harshall: Youtve given me an explana,lon. Thank you. Hr. Burrel I: Does anybody else In ,he Committee have any questions? Hr. Howard, ltd like ,o make one comment a, ,his ,Ime. In the even,, ! want everybody to understand and I wan, ,he record ,o ref lec, ,ha, In ,he even, we approve this reques, we're no, only ,he drllllng and com- ple, lon, we're approving ,he producing of ,hese wells and I tm sure ,ha, Is what you wan,, Hr. Howard: Yes s It. Mr. Burrell: And those people who have adjacen, leases, if they don~, unl,lze could be adversely affec,ed or If we don~, Impose unl,l- za,lon could be adveresely affec,ed ,hereby, and ! jus, wan,ed ,he record to reflect ,ha~. Hr. Howard: I unders,and, sir. r~r. Burrell: ^, ,his time I will ask If ,here Is anybody In the audience who has a ques,lon of Hr, Howard and ,hen al,er ,he questlons we'll take people who wan, ,o add or' make s,atemen,s-lf ,here ls anybody who wants to do ,hat. Is there anybody In the audience who has a ques,lon of Hr. Howard a, ,hls time? If not, I guess you're excused Hr. Howard. Thank you. Hr. Howard: Thank you. Hr. Burrell: Is there anybody in the audience who wlshes ,o make a statement at this time? Please come up to the microphone and Identify yourselves. Take ,ha, chalr. Hr. Harrlson: ~lr. Chairman, members of the 011 and Gas Conservation Comml,,ee, my name is W. R. Harrlson~ I~m general at,orney for Hobll 011 Corporation and I am appearing In ,his mat,er on behalf of Hobll -20- 011 Corporatlon. Mobil owns a interest In leases In the western portlon of the Prudhoe Bay Field. These leases lie adjacent to the area for which spacing exceptlons have been requested here today by BP Alaska Inc. Mobll has been furnished a copy of BP~s draft testimony supporting their rec- ommendatlons for exception to the well spacing rule for the Prudhle Bay Field, In this testlmony references were made to the objective of forming a Prudhoe Bay Unit. BP will be the logical operator of the western portion of the Prudhoe Bay Unit. Mobil supports the objective of forming a unit and the proposed well spacing exception. We have reviewed BP~s draft testimony and we support their p~oposal as a necessary step In the development of a unit. That's the end of my statement. Mr. Chairman, for the record ltd I lke to enter th ls statement. .. Mr. Burrell: Thank you very much Mr. Harrison, Is there anybody else who wishes to make a statement? Mr. Swetnam: Mr, Chairman, members of the 0II and Gas Conservation ,. Committee, my ~name Is R. I. Swetnam. I am speaking In represen~ation of Ph I I I I ps Petroleum Company. Phl Illps Petroleum Company owns Interests In ol I and gas leases adjacent to the leases of BP Alaska, Inc. for whlch the exceptions are sought I n thls hearl'ng. Phllllps and the other owners of reserves In the Prudhoe 0il Pool have excuted or ratlfle,~ a letter agreement pertalnlng ~o unitization of the Prudhoe 0II Pool. in antlclpatlon:of completion of deflnltlve Unltlzatlon Agreements, we believe that the prOpoSal Is logical and reasonable as a part of unit development of the Prudhoe 0II Pool and -21- according ly recommend approval of the app I Ica?Ion. Thank you. Mr, Burrel I: Thank you Mr, Swetnam. Is there anybody else who wishes to make a statemen*? Hr. Rosen?hal: Hr. Chalrman, members of the Alaska 0II and Gas Conservation Commll~ee, I am C. H. Rosen?hal, Public Affairs, Exxon Company, U.S.A. I am appearing before you as a representative for Exxon Company, U.S.A. to I ntP. oduce Into the record a statement of Exxon~s posltlon regarding BP~s request for an exception Rule 2, Conservation Order No. 98-B. Exxon does not support BPts proposal for selective Infl II develop- men? on 320-acre spacing. We belleve such development at this time would be premature, not only In vlew of recent rultngs on the Alyeska Plpellne permlt, but also wlth respect to the orderiV and efflclent devel- opment of the field. We continue to support lnltlal development of Prudhoe Bay on 640 acre spacing as the most prudent and efficient means of deflnlng the reservoir, Its productive capacity, and the number of wells requlred for start-up. We support unltlzatlon of the field and believe Inflll development can be best accomplished under a unitized plan that wi II prevent economic waste and minlmlze the cost to all opera?ors. Fur, her, we belleve these activities can be completed In time to allow the drill lng of any Inflll wells whlch may be needed pr~l:or to production start-up. Accord Ing ly, we recommend that BPi s request for an exceptlon to Rule 2 of Conservatlon Order 98-B not be approved at thls time. -22- Mr. Burrell: Thank you Mr. Rosenthal. Could we ask a question sir, before you leave the microphone? Mr. Rosenthal: Yes. Mr. Burrell: Does Exxon Corporation have any geological or engineering data to submit In support of their objectlon? We received some from the appllcant, we have not received any from Exxon. Mr. Rosenthal: We do not have any data to sub.~lt at this tlme. I of course do not have a technical background so I cannot comment. Mr. Burrell: Does Exxon Corporation wlsh to submit some if we hold the record open for a reasonable .perlod of time? Mr. Rosenthal: it Is my understanding that we do not. Mr. Burrell: I see. We are going to be left w~th simply a request for dlsapproval with no substantlatlng data, is that correct sir? Mr. Rosenthal: I can't go beyond the statement that I have made. Mr. Burrell: Thank you, I have no further questions. Mr. GI Ibreth: Could I ask a questlon, Mr. R°senthal? I understood you to say you're objecting to the granting of this request at thls time. Could ! ask you, do you mean because of the tlmlng Or because of the lack of Informatlon? Could you enlighten us any on that'=or Is It just a objec- tion to do It righ.t now? Mr. Rosenthal: I think that the only thing I can do Is to rely on the statement itself, and It seems to suggest the timing. Mr. Gl Ibreth: I understand. Thank you. ,: Mr. Burrel I: Tom, do you have a questl°n? Mr. Flint: Mr. Chairman, could I just comment? Mr. Burrell: Yes, excuse me, yes sir. -23- Hr. Flint: Thls Is Harlan Flint again, attorney for the applicant, and I just would comment wlth respect to the Exxon statement, that as ~Ir. Rosenthal has frankly described it, It Is pretty much a statement of policy and as you gentlemen have mentioned It should not constitute evidence. I would suggest further that the statement does not allege that the granting of thls appllcation would result In waste as that term is defined In the statute and regulations, nor does It suggest that It would Interfere wlth the full protection of correlative rlghts. Thus we do feel that we have substantiated our case with the expert testimony of Mr. Howard and that the case that has been made entitles us to the teller we requested. Thank you. I believe that does conclude our presentation. Mr. Burrell: Thank you Mr. Flint, I'll ask If there Is anybody else In the audience who wants to make a statement or comment? We have several operators who we haven't heard from or at least owners of Interests In nearby leases, including Standard 0II Company of California, Atlantlc Richfield Company, the Placld group, Amerada and Getty. is there anybody here who wants to m~ke a statement on behalf of any of those companies? Apparently not. Anybody else from the Committee, Mr. Haml Iton, have a questl on? Mr. Hamilton: No. Mr. Burrell: In that case we will adjourn this hearing for a 15 minute br...eak untll ten mlnutes after ten and we'll have another hearing at that time. Thank you. -24- REQUEST FOR EXCEPTION TO RULE 2, CONSERVATION ORDER NO. 98-B .... STATE OF ALASKA HEARING-PRUDHOE BAY FIELD February 16, 1973 Testimony Presented by A. K. Howard, BP Alaska Inc. Mr. Chairman and members of the Alaska Oil and Gas Conservation Committee. Since the discovery of the Prudhoe Bay Field, two hearings have been held (November'13-14, 1969 and February 9, 1971) to establish Pool Rules. During the course of this presentation, I shall refer to testimony presented to you at both of these hearings. BP Alaska Inc. has requested this hearing to seek an exception to Rule 2 of Conservation Order No. 98-B which, if approved, would permit the completion of two oil wells per governmental section in 19 selected sections .within the BP Alaska operating area. In this context, reference is made to a letter from BP Alaska Inc. to the Director of the Division of Oil and Gas, dated January 16, 1973, and to Exhibit "A" attached thereto, which counsel has asked to be included in the record. As is generally known, BP Alaska is operating in the western part of the Prudhoe Bay Field. An initial plan for this operating area, showing actual and proposed bottom hole well locations, is presented as Exhibit "A". The 72 wells shown comprise the first stage development wells in this portion of the field. At the present time, development drilling is proceeding with one active rig and 41 scheduled future production well~ have been drilled and suspended. It is BP Alaska's wish to continue drilling first stage development wells and the planned sequence for this drilling calls for a number of so-called 320 acre spaced wells. It is readily apparent from the Field Development Plan Map (Exhibit "A") that, having drilled three more wells, no programmed addi- tional wells could be completed in the BP Alaska operating area within BP Oil -2- Corporation's lease area under existing rules. Testimony presented in February 1971 indicated that negotiations were proceeding with the objective of forming a Prudhoe Bay Unit. These negot- iations are continuing and BP Alaska's development plan anticipates .the successful conclusion of the negotiations prior to production. For this reason, it is not BP Alaska's wish to drill wells within BP 0il Corporation leases situated in the ARCO operating area, which could be completed under existing pool rules. Similarly, until a unit is formed, there are difficulties associated with drilling wells on other companies' leases, and the development drilling program for the immediate future confines the wells to be drilled to BP Oil Corporation leases in the BP Alask~ operating area. / Having disclosed our progress and Outlined our immediate future plans for the development of our operating area, I will now elaborate a little on the overall philosophy which has led to our request at this time for an exception to COnservation Order No. 98-B, Rule #2, regarding infill wells. The Committee will be aware that, primarily as a result of delays in the issuance of the construction permit for the trans-Alaska pipeline, drilling activity is at a low ebb on the North Slope, as compared with the work being conducted, at about the time of the 1969 North Slope lease sale. At that time, in the Prudhoe Bay area alone, several rigs were actively engaged in develop- ment or appraisal drilling and numerous suppor~ services camps were located in the area, providing employment for many hundreds of people. During the past year, only one rig has been continuously utilized in this area and the support consists mainly of sporadic projects which provide barely sufficient justifi- cation for many service companies to continue, operating. If the rig currently -3- on contract to BP Alaska and engaged in drilling Prudhoe Bay development wells were to shut down, there would be further reductions in employment levels which would not only affect the drilling contractors, but have serious reper- cussions in other companies as well. During the years that BP Alaska Inc. has been engaged in drilling and evaluating the Prudhoe Bay Field, it has acquired expertise in dealing with the problems peculiar to the area. Its staff, and those of the service companies, have become aware, through training and experience, of acceptable and efficient methods of dealing with such matters as the cold environment, the permafrost, the delicate ecosystem, and many others. We believe that it is in the interest of our company, the oil industry in Alaska, and the State of Alaska, to continue operating and so maintain these personnel as an effective force. I will now make a few remarks concerning the approach BP Alaska Inc. has adopted for the initial development of its operating area for the Prudhoe Bay Field. Your committee was presented with geologic and other informatiOn on the Prudhoe Oil Pool, at the Field Rules Hearing held on February 9, 1971, which gave a general description of the field. Since that hearing BP Alaska has c,onducted a number of additional well production tests, the results of which are now presented as Exhibit "B". (For the sake of completeness, we have summarized the production test results obtained by BP Alaska to date in Ex- hibit "B". ) The President of Alyeska is on public record as having indicated the trans- Alaska pipeline is being designed for an initial capacity of 600,000 BPD, which -4- capacity may be increased to an ultimate throughput of 2,000,000 BPD. We cannot commit ourselves to a maximum oil producing rate for the Prudhoe Oil Pool alt present, particularly as Unitization has not yet been concluded. However, we' are confident that the reservoir will sustain a substantially higher rate than the initial pipeline capacity of 600,000 BPD. It is not uncommon in reservoirs of this nature to anticipate as a rule of thumb a 25/30-year life. The recoverable reserves have been quoted at 9.6 billion barrels and this leads us to believe the reservoir could average a crude oil production rate of approximately 1,000,000 BPD over a 25-year life. During the early stages of production, it can be reasonably expected the production level could be significantly hi~her than the average rate. BP Alaska's first stage development plan is predicated on its ability to pro- duce half of the 'total field offtake during these early stages of production. Verbal testimony presented ~by Mr. Anderson~'(ARCO)at the "NOvember 1969 Field Rules Hearing (=efer to R & R Court Reporter's transcript, Page 59), indicated that one well could adequately drain a 640-acre Section and, assuming each well were capable of producing i0,000 BPD, 100 wells could' produce 1,000,000 BPD. We support this testimony, although struct'ural. features could influence the drainage pattern, in certain areas. In pursuing this matter further and with reference to the production test results shown in Exhibit. "B", it is evident that not all. wells will be capable of sus- taining a production rate of 10,000 BPD, and some allowance must be made for wells shut in for service Or?other reasons. Similarly, by assuming a ,. production rate higher than 1 million BPD, a need for additional wells?, arises. / Hence, the 72 wells programmed should adequately provide the required pro- duction from the BP Alaska operating area. -5- The committee will note that the proposed infill wells are located in areas of the field where a relatively thick oil column can be ex- pected and not on the flanks of the structure. We believe that, by loc- ating the wells here, the maximum producing life can be expected from them while minimizing overall well requirements. It may well be necessary later to locate wells on the flank of the structure; however, at the present stage of our knowledge of the field, we have not planned such wells. In concluding this testimony, the Committee will be aware that an exception to Conservation Order 98-B, Rule 2, is. required only at the time of well completion. The Committee, however, will appreciate that BP Alaska could not commit funds for drilling without receiving the assurance that this proposal is acceptable to the State. Gentlemen, I wish to thank you for your attention and I will be glad to answer any questions you may have to the best of my ability. Statement of Exxon's Position BP Request for Exception to Rule 2, Conservation Order No. 98'B State of Alaska Hearing-Prudhoe Bay Field February 16, 1973 Mr. Cha~, members of the Alaska Oil and Gas Conservation Co~ttee, I am C. H. Rosenthal, Public Affairs, Exxon Company, U.S.A. I am appearing before you as the representative for Exxon Company, U.S.A. to introduce into the record a statement of Exxon' s position regard~ ng BP' s request for an exception to Rule 2, Conservation Order No. 98-B.~ ~' Exxon does not support BP's proposal for selective infill develo~x~ent on 320-acre~ spacing. We believe such development at this time would be premature, not only in view of recent rulings on the Alyeska Pipeline permit, but also with respect to the orderly and efficient developr~m~t Of the field. We continue, to support initial development of Prudhoe Bay on 640-acre spacing as the most prudent and efficient' means of defining the reservoir, its · productive. 'capacity, and the number of wells required for starts-up. We support unitization of the field and believe infill development can be best accomplished under a unitized plan that' will prevent economic waste and minimize the cost to all operators. Further, we believe ~these activities can be completed in time to allow' the drilling of any infill Wells which may be needed prior to production start-up. Accordingly, we re~d that BP's request for an excepti°n to Rule 2 of Conservation Order. 98-B not be approved at this time. My name is R.I. Swetnam. I am speaking in representation of Phillips Petroleum Company. Phillips Petroleum Company owns interests in oil and gas leases adjacent to the leases of BP Alaska, Inc. for which the exceptions are sought in this hearing. Phillips and the other owners of reserves in the Prudhoe Oil Pool have executed or ratified a letter agreement pertaining to unitization of the Prudhoe Oil Pool. In anticipation of completion of definitive Unitization Agreements, we believe that the proposal is logical and reasonable as a part of unit development of the Prudhoe Oil Pool and accordingly recommend approval of the application. Oil Corporcafion POST OFFICE POUCH 7-003 ANCHORAGE. ALASKA 99510 ALASKA DIVISION W. R. HARRISON GENERAL ATTORNEY February 15, 1973 RE: The application of BP Alaska InC.. for an exception to Rule 2 of Conservation Order No. 98-B to permit the drilling and completion of two oil wells per governmental section on selected sections in the Prudhoe Bay Field, Prudhoe Oil Pool. My name is W. R. Harrison, General Attorney for Mobil Oil Corporation, and I am appearing in this matter on behalf of Mobil Oil Corporation. Mobil owns an interest in leases in the western portion of the Prudhoe Bay Field. These leases lie adjacent to the area for which spacing exceptions have been requested here today by BP Alaska, Inc. Mobil has been furnished a copy of BP's draft testimony supporting their recommendation for exception to the well spacing rule for the Prudhoe Bay Field. In this testimony, reference is made to the objective of forming a Prudhoe Bay Unit. BP will be the logical operator of the western portion of the Prudhoe Bay Unit. Mobil supports the objective of forming a unit and the proposed well spacing exception. We have reviewed BP's draft testimony and we support their proposal as a necessary step in the development of a unit. /i3c W. R. Harrison Well No. 27-11-14 ~4-11-13 30-11-14 14-11-13 18-11-13 01-11-12 26-11-13 Test Date 6/30/69, 7/01/69 8/21/70 11/10/70 7/26/71 Productivity of Oil Wells Flow-Tested in the Prudhoe Bay Field Sadlerochit Reservoir WHFP Choke Size psig 1/64" Rate STBPD. 1360 N/A 10,020 1105 86 1265 64 · 1076 15,500 12,000." '96 19,400 9/27/71 llO0 1.700 1240 :'33 2,500 , 7/12/72 11/02/72 1095 '48 400 ~ · GOR Scf/bbl 837 722 741 · · ' 750 · · " 730 · 690 · 710 -. · · Exhibit B Productivity Index STBPD/psi 25 37 68 22 STATE OF ALASKA, ) THIRD JUDICIAL DISTRICT, ) ss. Mary L Shake being first duly sworn on oath deposes and says that...~.~?. ...... is the ...... ~.e.~.a..Z.....C..Z..e.?..~.. of the Anchorage News, a daily news- paper. That said newspaper has been approved as a legal news- paper by ,the Third Judicial Court, Anchorage, Alaska, and it is now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all of said time was printed in an office maintained at the aforesaid place of publication of said news- paper. That the annexed Js a true copy of a .... i~.e.g.a..1....~.!p.~.~..c..e...~]?'l as it was published in regular issues (and not in supplemental form) of said newspaper for. a period of ....... .9.~.e. .... insertions, commencing on the ...~ ....... day of ...~.e. br.a..~,~.~' ..... ,19 ~.., and ending on the ............3:. ...... day of of .....~..e. ~.z.;?..a..r...y. ........ , 197.~..., both dates inclusive, and that such newspaper was regularly distributed to its subscribers dur- ing all of sa,id period. That the full amount of the fee charged for the foregoing publication is the sum of $ 15,00 which amount has been paid in full at the rate of 25¢ per line; Mini- mum charge $7.50. / // / S~scribed'~.nd sworn to before me this .; .....day of-Eeb~., the ,State o~ Alaska, Third Division, Anchorage, Alaska (, COMAAISSION EXPIRES ...... ....... /Z.,, D EJ~ARTM ENT OFqgATURA~ RESOI~RCES ". DIV!$1:~,-0F .01L'.A~ Alaska Oil .~...'~ ,Cons~atiOn ,~iff~, ,. ;.~-{~ns~tlen Fill Ne. "~' '~nl~' "~"] '" ", ~ '-" ,,.~: _. . .... ~-- ' ge~ '~; ...... ; .... t~ ~l~n within "eutU ~"'"' :' "t · :' . .... ' - · .~~~[~:. qU&St Will be held ~ 9:~ A,M, · .~t ':~h,leh tlm~ :;L,?:' st~ ~ .............. , ,~"~.~ ~::,,":' .~ . ,~ "~ ' "'~: ~ml~ ,' , '~i,"~,,~.,,.~.~, ,,~, ,~ ' 1, ,.~,: ~ :', ~, "~';,: :': ~; ;' NOTICE OF PUBLIC HEARING STATE OF ALASKA DEPARTHENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska 0II and Gas Conservatlon Committee Conservation File No. 117 RE: The application of BP Alaska Inc. for an exception to Rule 2 of Conservation Order No. 98-B to permit the drilling and completion of two oll wells per governmental section on selected sections in the Prudhoe Bay Field, Prudhoe 0II Pool. Notice is hereby given that BP Alaska Inc. has requested an order granting exception to Rule 2 of Conservation Order No. 98-B which would permit the operator to drlll and complete 19 wells at a density of 2 wells per governmental section within the BP Alaska Inc. operating area as outlined on Exhibit "A" submitted wlth the operators application. No changes are requested in that portion of Rule 2 of Conservation Order 98-B regarding distances to property I lnes where ownership changes and minimum distances between completion intervals of adjacent we l Is In the same pool. , Pursuant to Title ii, Alaska Admlnlstratlve Code, Section 2009 a public hearing to consider this request will be held at 9:00 A.M. February 16, 1973 in the City Council Chambers of the Z.J. Loussac Library, 5th Avenue and "F" Street, Anchorage, Alaska at which time the applicant and affected and interested parties will be heard. Thomas R. Marshall, Jr. Executi ve Secretary Alaska 0II and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Pub I Ish FebrUary I., :197:3 BP ALASKA INC. P.O. BOX 4-1379 3111 - C - STREET ANCHORAGE. ALASKA 99503 TELEPHONE (907) 279-0644 January 16, 1973 Mr. Homer Burrell, Director State of Alaska Department of Natural Resources Division of Oil & Gas 3001 Porcupine Drive Anchorage, Alaska 99504 OAS ANO~ORAOl~ Dear Mr. Burrell: Exception to Rule #2 (Well Spacing) Prudhoe 'Bay Field '- 'Prudhoe 'Oil Pool 'Rules It is the purpose of this letter to seek exceptions to Rule 2 of Conservation Order No. 98-B, in order to permit BP Alaska Inc., as operator for BP Oil Corp- oration, to increase the drilling and completion of oil wells from one to two per governmental section on selected sections situated in the proposed BP Alaska Inc. Operating Area in the Prudhoe Bay Field. Appended hereto, and by this reference made a part hereof, is a field development map identified as Exhibit "A" depicting the proposed wells. It is not the intention at this time to request a change in Prudhoe Oil Pool Rules to permit a general change from one well to two wells per section. Exhibit "A" shows the approximate locations of 72 wells which comprize the first stage development plan for the BP Operating Area. Three oil gathering centers are planned for this area and 24 wells will be connected to each center. In order to maximize producing well life and minimize overall well requirements, the wells have been located where gross oil sand thickness is anticipated to be 200 feet or more. Thus, while the plan for certain areas of the pool is for two wells per governmental section, large areas of the pool are not planned for dev- elopment drilling at this time. Of the 53 sections planned for development at this time, there are 19 on which two wells are planned, and the 1973 schedule of work for the BP Alaska Oper- ating Area calls for the employment of one drilling rig during the year drilling certain of these infill wells. It should be noted that we are not requesting any change of that portion of Rule 2 of the subject rules regarding distances to property line where ownership changes, and to the bottom hole locations of other wells in the same pool. Except for the change in well spacing in nineteen selected sections, it is proposed that the subject wells be drilled as required by the subject pool rules and the applicable statutes and regulations of the State of Alaska. Exception to Rule #2 ..... 2- January 16, 1973 It is our understanding that the request for an exception to Rule ~2 of Con- servation Order No. 98-B may necessitate a public hearing. If this is the case, we would appreciate your scheduling the hearing either in the afternoon of February 15 or the morning of February 16, 1973. Attachment Very truly yours, I EiCEIIVE