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Home My WebLink AboutCO 360Conservation Order Cover P 9e 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 plotter/scanner) [] Maps: [] Other items OVERSIZED (Not suitable for plotter/scanner, may work with 'log' scanner) [] Logs of various kinds [] Other ' BY: ,"~ARIA Scanning Preparation DATE:/~___~ _~,¢.-h _,~,~ .~_,~/S/(....~...j ~'-?__ ~ ~.~._~ TOTALPAGES / ~0 Production Scanning Stage1 PAGE COUNT FROM SCANNED DOCUMENT: 'l (~O PAGE COUNT MATCHES NUMBER IN SCANNING PREPARATION: ~ YES NO BY; Stage 2 IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: ~ YES NO (SCANNING IS COMPLETE AT THIS POINT 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 INDEX CONSERVATION ORDER NO. 360 Prudhoe Bay Unit 1. March 9, 1996 Letter from James Smith to Dave Johnston 2. March 17, 1996 Note to file: Transcripts checked out to James Smith 3. May 22, 1996 Contract with James Smith 4. May 28, 1996 Standard Agreement form to James Smith 5. May 22, 1996 Letter from AOGCC to Randall Ebner, Exxon, regarding NGL 6. June 14, 1996 Confidentiality agreement with James Smith 7. June 20, 1996 Letter from AOGCC to Ultimate Recovery Participants regarding James Smith's testimony 8. July 31, 1996 Proposed Amended contract with James Smith 9. July 31, 1996 Amended contract with James Smith 10. September 30, 1996 Second amended contract with James Smith 11. December 3, 1996 Letter from AOGCC to James Smith regarding discovery materials 12. January 6, 1997 Letter from AOGCC to James Smith regarding discovery materials 13. January 23, 1997 Letter from AOGCC to BP and ARCO regarding resolving the MUNGL issues 14. February 24, 1997 Prepared testimony of James Smith 15. December 7, 2011 Public comments 16. December 21, 2011 BPXA's letter to Lt. Governor Treadwell 17. March 18, 2014 Letter from AOGCC to BPXA regarding impacts of natural gas liquids sales on ultimate recovery from the Prudhoe Bay Oil Pool, close of investigation INDEX CONSERVATION ORDER NO. 360 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501 In the matters of: A hearing to review the plan of development and operation and other agreements as they affect Natural Gas Liquid (NGL) throughput, Miscible Injectant (MI) utilization and ultimate recovery from Prudhoe Bay; The Petition of ARCO Alaska, Inc.. for a ruling on maximization of NGL blending; and The Petition of BP Exploration (Alaska) Inc. requesting action or an order after the Commission's review of the plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoe Bay. ORDER CONCERNING NATURAL GAS LIQUIDS AND MISCIBLE INJECTANT VOLUMES IT APPEARING THAT: In a Pre-Hearing Order issued August 15, 1996, the Commission notified participants in the above- captioned proceeding that it proposed to adopt a rule substantially as set out in Attachment A to that order as a permanent rule to take effect at or after the current expiration date of Rule 1 of Conservation Order 360. Subject to clarification of the relationship of the rule to current operating conditions, the Commission did not receive an objection to Paragraph 1 of Attachment A concerning natural gas liquid volumes. Objection or requests to defer action were received with respect to the remainder of Attachment A. As reflected in Findings 7 and 15 of Conservation Order 290, the owners contemplated a miscible injectant ("MI") capacity of 700 MMCFPD as pan of the expansion of the Prudhoe Bay Miscible Gas Project. In Conservation Order 360 hearings, the owners testified that 700 MMCFPD is considered a peak rate equivalent to an annual average rate of at least 600 MMCFPD. Based on the evidence it has heard to date, the Commission has reason to believe that provision for an annual average MI volume of at least 600 MMCFPD by no later than January, 1, 1999 (subject to potential future decline because of pool depletion but not because of the need to satisfy NGL production rates under the rule adopted below) would be in accordance with good oil field engineering practices and would avoid waste. In the absence of the operators' plan to timely achieve an annual average MI volume of at least 600 MMCFPD, the Commission currently anticipates re-opening Conservation Order 290, unless it is shown that the estimated cost of implementing such a plan will exceed the value of additional oil anticipated to be recovered, that such a plan would not be in accordance with good oil field engineering practices, or that it would otherwise cause waste. 16. 1996 _Z Thc Department of Natural Resources. Division of Oil and Gas, has sought from thc operators of the Pmdhoc Oil Pool a briefing no later than December 15, 1996. on thc results of"ongoing engineering work and facility studies to increase thc volume of Miscible Injcctant {MI) available for enhanced oil recovery (EOR) operations." THEREFORE, IT IS ORDERED BY THE COMMISSION THAT: 1. Effective October 1. 1996. Rule I of Conservation Order 360 is revised to provide as follows: m. Thc operators of the Pmdhoe Oil Pool shall, from hydrocarbons delivered to the Central Gas Facility, produce thc maximum volume of natural gas liquids that could be blended with Pmdhoc Oil Pool separator liquid production and tendered to TAPS at the current TAPS vapor pressure limit of 14.2 psia TV'P, whcthcr or not such volume is actually blended and tendered to TAPS. In addition, the operators shall backfill with additional blcndable liquids to fill the vapor space made available by thc taking of natural gas liquids for use in thc Kupamk Large Scale EOR Prqicct. up to the current TAPS vapor pressure limit of 14.2 psia TVP. B. No later than December 15. 1996, tile operators of tile Prudhoe Oil Pool shall report to the Commission on their plan io increase thc vohunc of miscible injectant ("MI") available for enhanced oil recovery CEOR") operations. If this plan does not provide for an annual average MI volnmc of at least 6011 MMCFPD by no later than January 1, 1999 (subject to potential future decline because of pool depiction but not because of the need to satisfy NGL production rates under Rule I of Conservation Order 360). the operators should present information to show whether operation of thc pool with a lesser availability of MI would be in accordance with good oil field engineering practices and would otherwise avoid waste, or whether a January 1, 1999. implcmcntation date is impractical and. if so, what implementation date would be practicable. If the operators believe provision for an annual average MI volume of at least 600 MMCFPD would not be in accordance with good oil field engineering practices or would otherwise cause waste, such information should include, among other things, an analysis of whether the estimated cost of achieving an MI volume of at least 600 MMCFPD would exceed thc value of thc additional oil anticipated to be rccovered. C. DONE at Upoll application or the Commission's own motion, this rule may be administratively amended in tl'm event of a material change from current conditions or if thc change does not cause waste. violate corrclativc rights and is based on sound engineering principles. Anchorage, Alaska and dated September 16, 1~ ~~ ' ~'. l, j. '. ) .~. ,~ ,/, {, , ~ 5 · ?'" . ~,~t.,v j~ .?"~, ::'~," /Tuckerman Babcock. Commissioner :'::{~ ~:"'~:~~}~q~ 'Alaska Oil and Gas Conse~ation Commission Within 20 days alter receipt ot'xwitten notice of cntr~' of this order a person affected by it may tile with the Commission an application for rehearing. Thc Commission shall grant or rcti~sc the application in whole or in part within 10 days. Thc Conmfission can refilse an application by not acting within thc 10 day period. An alii:tied person has 30 days ti'om the date that the Conmfission's refi. isal of thc application or order upon rehearing (both being the tinal order or'the Conmfission) is mailed or otherwise distributed to appeal the decision to the superior cottrt. Where a reqticst tbr rehearing is denied by nonaction of the Commission, the 30 day period tbr appeal to superior COtlH runs fi'om thc date on which the request is deemed denied (i.c., 10th day alter the application fi,r rehearing was filed). STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501 In the matters of: A hearing to review' the plan of development and operation and other agreements as they affect Natural Gas Liquid (NGL) throughput, Miscible Injectant (MI) utilization and ultimate recovery from Prudhoe Bay; The Petition of ARCO Alaska, Inc.. for a ruling on maximization of NGL blending; and The Petition of BP Exploration (Alaska) Inc. requesting action or an order after the Com- mission's review of the plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoe Bay. ORDER REGARDING RULES 4 AND 5 OF CONSERVATION ORDER 360 On July 30, 1996, the Commission issued public notice of a hearing on, among other things, whether to amend Rule 4 of Conservation Order 360 to require Commission approval of an annual plan of operation and development for the Prudhoe Oil Pool and any amendment to that plan, and whether to extend or make permanent Rules 4 and 5 of Conservation Order 360. A hearing was commenced on October 29. 1996. at which several working interest owners and the Department of Natural Resources (in writing) presented statements addressing Rules 4 and 5. Tile xvorking interest owners also agreed to submit voluntarily to the Commission copies of any agreements falling within Rule 5. Based on its consideration of the record in this matter to date, the Commission has concluded that the goals of preventing waste, protecting correlative rights, and ensuring a greater ultimate recovery of oil and gas can be served by continued surveillance of the development and operation of the Prudhoe Oil Pool and the use of the Commission's investigative and regulatory powers to inquire into and respond to possible problems, without requiring Commission approval of an annual plan of operation and development. Tile Commission had sought to more fully infbrm its decision-making in this matter with testimony from an independent expert, which however required access to certain documents whose production has awaited the resolution of litigation challenging Commission subpoenas. The term of one of the two members of the Commission is scheduled to expire at the end of 1996, and there is now little or no chance that the expert's testimony could be available before then. Under these circumstances, the Commission has determined that it is in the interest of sound administration to resolve the pending questions concerning Rules 4 and 5 based on the existing record rather than leave the matter open for an extended period during which a new Commissioner or Commissioners would have to become familiar 26989 Order Regarding Rules 4 and 5 Page 2 with the extensive proceedings that have already taken place. A future Commission ~vill of course be fl'ce to exercise its own judgment as to whether to inquire anew into the subjects of Rules 4 and 5 or other subjects regarding the development and operation of the Prudhoe Oil Pool. THEREFORE, IT IS ORDERED THAT: 1. Rules 4 and 5 of Conservation Order 360 will be allowed to expire by their own terms; and 2. The subpoenas issued on or about July 30, 1996, to ARCO Alaska, Inc., BP Exploration (Alaska) Inc., Exxon Corporation, and Chevron U.S.A. Inc. are withdrawn without prejudice. DONE at Anchorage, Alaska and dated December 13, 1996. Tuckerman Babcock, Commissioner Alaska Oil and Gas Conservation Commission Within 20 days iit~wreegqS[ of written notice of issuance of this order a person affected by it may file wath the Comrmss~on an application for rehearing. Th~ Commission shall grant or refuse the application in whole or in part within 10 ciavs. T~e Commission can refuse an application by not acting vithin the 10 day period. An affected person has 30 days fi.om the date that the Commissi;n's refusal of the application or order upon rehearing (both being the final order of the Commission) is mailed or otherwise disXributed to appeal the decision to the superior court Where a request for rehearing is denied by nonaction of the Commission. the 30-day period for appeal to superior court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing w~ filed). In the matters of: ALA?k _~. STATE OF ALASKA OIL AND GAS CONSERVATION COMM--{- 3001 Porcupine Drive Anchorage, Alaska 99501 A heating to review the plan of development and operation and other agreements as they affect Natural Gas Liquid (NGL) throughput, Miscible Injectant (MI) utilization and ultimate recovery from Pmdhoe Bay, The Petition of ARCO Alaska, Inc., for a ruling on maximization of NGL blending; and The Petition of BP Exploration (Alaska) Inc. requesting action or an order after the Commission's review of the plan of development and .. operation and other agreements as they affect NGL throughput, MI _. utilization and ultimate recovery from Prudhoe Bay. ,ON ORDER EXTENDING RULE 1, RULE 4 AND RULE 5 OF CONSERVATION ORDER 360 IT APPEARING THAT: The Alaska Oil and Gas Conservation Commission on its own motion proposed to emend the expiration date of Rule 1, Rule 4 and Rule 5 of Conservation Order No. 360 from August 31, 1996, to September 30, 1996. Notice of public hearing was published in the Anchorage Daily News on July 26, 1996 pursuant to 2O AAC 25.540. No objections to this proposed extension were 'received. NOW, THEREFORE, IT IS ORDERED: 1. The ex'piration date of Rule 1, Rule 4 and Rule 5 of Conservation Order No. 360 is extended to September 30, 1996. 2. The hearing scheduled for August 31, 1996, is canceled. BONE at Anchorage, Alaska and dated August r> id w Cmi na. I ~]~;I'~.._.._. '- ...~-.~.~..~" ;"' ! Alaska Oil and~as C°nsetat/°n C°mmissi°n' ""'?']'-~[Y~. ...... ~] if 72:'.':'C~d;7 / T-~ck~rmanBabcock, Commissioner "( .[!~i--~~!:~i,, :'-7 Alaska Oil and Gas Conservation Commission Within 20 days after receipt of written notice of entry of this ord~ a person affected by it may file with the Commission an application for reheating. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting within the 10 day period. An affected person has 30 days from the date . that the Commission's refusal of the application or order upon rehearing (both being the final order of the Commission) is mailed or otherwise distributed to appeal the decision to the sup~ior court. Where a reque.~ for rehearing is denied by nonaction of the Commission, the 30 day period for appeal to superior court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501-3192 In the matters of: A heating to review the plan of development and operation and other agreements as they affect Natural Gas Liquid (NGL) throughput, Miscible Injectant (MI) utilization and ultimate recovery from Prudhoe Bay; The Petition of ARCO Alaska, Inc., for a ruling on maximization of NGL blending; and The Petition of BP Exploration (Alaska) Inc. requesting action or an order after the Com- mission's review of the plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoe Bay. Conservation Order No. 360 Prudhoe Bay Oil Field Prudhoe Oil Pool August 9, 1995 (Revised November 3, 1995) IT APPEARING THAT: The Alaska Oil and Gas Conservation Commission ("Commission"), in December 1994, was informed that Alyeska Pipeline Service Company ("Alyeska") was considering changing the operating parameters of the Trans-Alaska Pipeline System ("TAPS"). . In response to the Commission's inquiry dated December 22, 1994, the operators of the Prudhoe Oil Pool ("POP"), ARCO Alaska, Inc. ("ARCO") and BP Exploration (Alaska) Inc. ("BPXA"), on December 29, 1994, expressed divergent views concerning ultimate recovery from the POP. o The Commission, on its own motion on January 23, 1995, scheduled a public hearing to review the plan of development and operation and other agreements as they affect natural gas liquid (NGL) throughput, miscible injectant (MI) utilization and ultimate recovery from Prudhoe Bay. . ARCO submitted a petition dated February 14, 1995, requesting a ruling on maximization of NGL blending. o BPXA submitted a petition dated April 11, 1995, requesting action on an order after the Commission's review of the plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoe Bay. Conservation Order No.~ 5'uo August 9, 1995 (Revised November 3, 1995) Page 2 . Notice of pre-hearing conference was published March 30, 1995 in the Anchorage Daily News and a notice of date change for the pre-hearing conference was published April 5, 1995. . A pre-hearing conference was held on April 19, 1995 at the offices of the Commission, 3001 Porcupine Drive, Anchorage, Alaska. In an order following the conference, the Commission determined that evidence pertaining to ARCO's or BPXA's petition would be heard commencing May 16, 1995 and that, at the conclusion of the portion of the heating concerning ARCO's and BPXA's petitions, the Commission intended to continue the hearing to a later date, tentatively June 21, 1995, to further review the plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoe Bay. The order further stated that the Commission would consider making an interim ruling on ARCO's and BPXA's petitions at the conclusion of the portion of the hearing concerning those petitions. Notice of public hearing was published in the Alaska Star on February 1, March 1, March 10, April 5, April 22 and May 3, 1995. Notice of public hearing was published in the Anchorage Daily News April 5 and April 19, 1995. Additional notice of public hearing regarding rebuttal testimony was published in the Anchorage Daily News on June 9, 1995. . Pre-filed testimony was received May 12, 1995. Pre-filed rebuttal testimony was received on June 12, 1995. 10. A public hearing was held on May l6, 17, 18, 22, 23, 24, 25, 26 and 31and June 1,20, and 21, 1995. 11. Participants in the hearing were ARCO, BPXA, Phillips Petroleum Company ("Phillips"), Exxon Company U.S.A. ("Exxon"), Yukon Pacific Corporation ("Yukon Pacific"), Shell Land and Energy Company ("Shell"), Mobil Oil Company ("Mobil"), Texaco Exploration and Production Company ("TEPI"), Chevron USA Production Company ("Chewon"), Amerada Hess Corporation ("Amerada Hess"), Marathon Oil Company ("Marathon"), the Alaska Department of Natural Resources CADNR"), and the Alaska Department of Revenue. 12. Post-hearing briefs were received June 30, 1995. FINDINGS: BACKGROUND AND HISTORY The Commission issued Conservation Order 290, which approved fieldwide expansion of the Prudhoe Bay Miscible Gas Project ("PBMGP") in 1991. The PBMGP is an enhanced oil recovery ("EOR") project designed to substantially increase the ultimate recovery of oil from the POP. The PBMGP utilizes MI manufactured from separator off gas for recovering additional oil. ARCO and BPXA in the 1991 PBMGP hearings testified to the Commission that no trade-off would exist between manufacture of maximum blendable NGLs and sufficient volume of MI for planned EOR. Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 3 . The Central Gas Facility ("CGF") is designed to yield three products from separator off-gas: residue or lean gas, NGLs and MI. . C.O. 290 did not establish a required volume of MI for EOR, although it did find that PBMGP expansion would require modifying the CGF at Prudhoe Bay to handle up to 7.5 bscfpd of gas and upgrading the MI distribution system to handle 700 mmscfpd of MI. . The Commission granted original certification of the PBMGP with Conservation Order 195 in 1984. At that time, the working interest owners ("WIOs") envisioned injecting MI in approximately 50 patterns. By the time the project started in 1987, expectations of scope increased to 100 patterns. In 1987 almost 50 pattems were on-line. In the 1991 PBMGP hearing, unit expectations were between 130 and 160 patterns. In 1991, the unit had approximately 70 patterns on-line. In May, 1995, 112 patterns were on-line and unit approval granted for almost 150 patterns. The 1994 Field Development Plan envisions approximately 225 patterns. . The Commission first approved MI for EOR for the Flow Station 3 Injection Project with Conservation Order 187 in 1982. . The GHX-1 project increased field gas off-take from 3.7 bscfpd to 5.3 bscfpd. The project was fully implemented in 1992. The GHX-2 project, completed September 1994, increased field gas off-take from 5.3 bscfpd to 7.5 bscfpd. . The current configuration of the CGF does not allow production of maximum blendable NGLs for transportation down the TAPS and manufacture of a nominal 640-700 mmscfpd of MI for EOR. The current MI capacity at the CGF with blending NGLs at 74,000 bpd is 520 mmscfpd. The maximum blendable NGL volume is a function of vapor pressure limitations in TAPS. In February 1995, Alyeska implemented new vapor pressure control criteria which made it possible to increase NGL shipment through TAPS an additional 10 mbpd to 20 mbpd, raising NGL production volume from the POP to between 84 mbpd and 94 mbpd. . The TAPS tariff vapor pressure limit has been 14.7 psi for all relevant years. Safety concerns have apparently influenced Alyeska not to allow blending of POP NGLs to the TAPS tariff vapor pressure limit. 10. Before February 1995, Alyeska established volume limits for NGLs blended with POP separator liquid production ("SLP") in addition to vapor pressure control limits. The ceilings were 55 mbpd from December, 1986, to January, 1991; 58 mbpd and 60 mbpd in January, 1991; 61 mbpd in February, 1991; 62 mbpd from March, 1991 until May, 1992; 67 mbpd from May, 1992, until December, 1992; and 74 mbpd from December, 1992, until February, 1995. Effective in February, 1995, Alyeska removed all ceilings other than one dependent on a vapor pressure control limit of 14.2 psi. 11. A unit technical team was convened in January, 1995, to address disagreements between ARCO and BPXA concerning ultimate recovery. The technical team met until the third week in April, 1995, attempting to reach a technical consensus. They were not successful. Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 4 12. On February 9, 1995, ARCO, as operator of the CGF, increased the production of NGLs to meet Alyeska's new vapor pressure control limit. 13. Skid 50 is the facility where POP SLP and NGLs are blended for delivery to TAPS. On February 9, 1995, BPXA, as operator of Skid 50, restricted blending of NGLs to prevent production of an additional 10 mbpd to 20 mbpd of NGLs. ARCO attempted to blend additional NGLs through Flow Station 3, but BPXA further reduced Skid 50 blending to offset ARCO's efforts. 14. ARCO has asked the Commission to rule that the best conservation practice concerning NGLs and MI is to blend and ship the maximum volume of NGLs allowed by TAPS. 15. BPXA has asked the Commission to rule that the best conservation practice concerning NGLs and MI is to produce at least 700 mmscfpd of MI for EOR. SURFACE FACILITIES AND PROCESSING 16. Flow stations and gathering centers could be operated so as to recover as part of SLP some of the hydrocarbon components that are otherwise recovered as NGLs at the CGF. However, all parties agree operation in this manner would reduce ultimate hydrocarbon recovery from the POP. 17. The maximum capacity of the NGL pipeline leaving the CGF under current conditions is approximately 100,000 barrels per day. 18. BPXA contends the capacity of the CGF as it exists today is 700 mmscfpd of MI. TEPI contends C.O. 290 quantified 700 mmscfpd as the volume of MI needed for EOR in the POP. 19. ARCO does not consider the 700 mmscfpd MI capacity a valid option and argues this option is without technical or economic merit. ARCO asserts the most feasible rate is an annual average of 640 mmscfpd, assuming estimates of 1996 feed gas compositions are accurate and planned upgrades to the CGF are funded and successful. 20. ARCO maintains the distribution system for MI was never upgraded to handle 700 mmscfpd as outlined in the 1991 PBMGP hearings and that the installed system is capable only of handling nominally 600 mmscfpd. 21. ARCO contends that the CGF could achieve a peak rate of 700 mmscfpd of MI if the distribution system were capable of handling 700 mmscfpd of MI, if artificial lift gas were limited to 800 mmscfpd, and ifNGL shipments were limited to 67,000 bpd (volume in 1991). 22. BPXA testified that there were two reasons for a decrease in the anticipated MI capacity of 700 mmscfpd: wet gas problems and increases in NGL production. Conservation Order No. 3~,, August 9, 1995 (Revised November 3, 1995) Page 5 23. BPXA testified that the design of GHX-2 included capacity to handle 1.28 bscfpd of artificial lilt. 24. ARCO stated that while the work of the GHX-2 Conceptual Engineering Task Force was based on artificial lilt rates of 1.28 bscfpd, GHX-2 was designed and constructed for 800 mmscfpd. Actual artificial lilt rates have been nmning in the range of 1.1 bscfpd, lowering CGF efficiency. Dehydration upsets at the CGF and elsewhere in the field adversely affect MI production rates by as much as 20 to 35 mmscfpd. 25. BPXA testified that the dehydration system in the field is pushed to absolute capacity. Dehydration problems do not affect field gas off-take volume, but have reduced the volume of gas that can be turned into MI. 26. ARCO testified that 1991 predictions of CGF efficiency were predicated in part on less than 800 mmscfpd of artificial lilt. Oil dm owners have increased artificial lilt to 1.1 bscfpd, leaving the dehydration system undersized. Oil rim owners decided not to fund GHX-2 scope to add additional dehydration. 27. Testimony from hearing participants suggested operational changes or upgrades to the CGF to produce additional MI: for example, re-wheeling existing MI compressors, adding a third MI compressor, upgrading the CGF refrigeration system, pumping salable NGLs into MI, pumping stabilizer reflux into MI, pumping low temperature separator bottoms into MI, installing a third plant to recover MI components in the residue gas from the CGF, upgrading the dehydration system and optimizing existing equipment. 28. ARCO projected an increase during 1995 of 30 to 58 mmscf-pd of MI as a result of facility upgrades and increased experience in operating the CGF. 29. BPXA contends the CGF, with some upgrades, can produce 700 mmscfpd of MI and 70 mbpd of NGLs. 30. ARCO asserts incremental efficiency of the CGF to recover returned MI components can decline from 70 percent to 30 percent with increasing MI production. BPXA concurs, but contends pump-up modifications to the CGF could return recovery to 70 percent. BPXA testified facility upgrades that return incremental recovery from 30 percent to 70 percent clearly prevent waste. 31. CGF production during the first quarter of 1995 was 520 mmscfpd of MI and 74 mbpd of NGLs. 32. Incremental NGLs above 74,000 bpd produced under current conditions at the CGF are predominantly butanes. 33. If the CGF produced 50-55 mbpd of NGL and 700 mmscfpd of MI, the increased NGL/MI production potential of GHX-1 and GHX-2 would go toward producing 250 mmscfpd more MI but no more NGLs than before the expansions. Conservation Order No. 3o0 August 9, 1995 (Revised November 3, 1995) Page 6 EOR PROCESS AND RESERVOIR DEVELOPMENT 34. The 1994 Field Development Plan updates trait consensus for operation and development of the POP. It is not legally binding nor may it violate voluntary agreements or applicable regulations, orders or statutes. The plan references MI distribution guidelines designed to allocate MI injection volumes for patterns. Under the guidelines, EOR pattern performance is assessed annually and MI injection rates and targets are revised as needed. 35. All WlOs acknowledge the benefits derived from the PBMGP have exceeded initial projections and agreed that 1 tscf of MI has been injected, and 200 bscf returned MI ("RMI") and 85 mmb of EOR oil have been recovered. 36. Each PBMGP pattern performs best in its initial stage of MI injection. 37. ARCO asserts that up to 10 percent total pore volume ("TPV"), MI efficiency is high, requiring less than 6 mcfofMI per barrel of EOR oil, or .75 barrels of EOR oil for each barrel of NGL converted to MI. For 10-20 percent TPV, efficiency is modest, requiring 13 mcfof MI per barrel of EOR oil or .35 barrels of EOR oil for each barrel of NGL converted to MI. Above 20 percent TPV, MI efficiency is poor, requiring 23 mcr of MI per barrel of EOR oil, or .20 barrels of EOR oil for each barrel of NGL converted to MI. 38. BPXA contends that under increased NGL blending, expected cumulative MI injection by 2015 would be approximately 4 tscf, which is approximately 16 percent TPV based on the scope of the 1994 Field Development Plan. 39. BPXA contends that expanding EOR scope depends on expanding MI supply. BPXA suggested the ultimate scope of miscible flooding at the POP could easily exceed 360 patterns. 40. BPXA contends that 50,000 bpd ofoil is attributable to existing patterns on MI in 1995. 41. BPXA asserts that for every barrel of NGL used for MI in the POP, more than 1.3 barrels of combined total liquid production is recovered, consisting of .6 barrels of EOR oil and the equivalent of .7 barrels of NGLs as RMI. ARCO's estimates are different and lower. 42. ARCO contends a constant supply 500 mmscfpd of MI through 2015 would recover 411 tomb of EOR oil; a constant supply of 600 mmscfpd of MI through 2015 would recover 444 mmb of EOR oil; and a constant supply of 700 mmscfpd of MI through 2015 would recover 463 mmb of EOR oil. 43. BPXA contends reduction of MI supply is magnified through time because MI normally cycled through the reservoir is no longer available for reinjection. 44. ARCO contends that the PBMGP project scope and reserves are essentially unchanged from the 1994 Field Development Plan, which is consistent with the 1991 PBMGP hearings. ARCO asserts that current MI supply at the POP is adequate to achieve 20 percent TPV in the PBMGP. Conservation Order No. llUv August 9, 1995 (Revised November 3, 1995) Page 7 45. ARCO contends there is no risk in maximizing NGL blending because sufficient MI is still available to flood all existing EOR projects identified in the 1994 Field Development Plan. Although ARCO asserts all obvious EOR oppommities have been identified in the 1994 Field Development Plan, it contends that if an attractive EOR project is approved in the future, more MI can be created at that time. ARCO admits several EOR opportunities are under study. 46. ARCO contends the recovery and expansion objectives of the PBMGP, as envisioned in C.O. 290, can be met. Exxon contends the recovery objectives of the PBMGP can be met. BPXA does not agree that PBMGP goals will be realized if NGLs are blended to the maximum. 47. BPXA contends there is insufficient MI supply to fulfill the patterns and pore volumes contemplated in C.O. 290 and that the current MI supply will provide 25 percent TPV for those patterns envisioned during the 1991 PBMGP hearings but not the 200 plus patterns identified in the 1994 Field Development Plan. 48. BPXA asserts there is currently enough MI with 500 mmscfpd to supply 18-19 percent TPV to existing patterns by 2010. 49. BPXA contends that 5 tscf of MI must be injected to achieve approximate 30 percent TPV for 130-160 patterns by 2015. BPXA contends that for approximately 200 patterns identified in the 1994 Field Development Plan, 4.6 tscf of MI will be needed through 2015 and that if blending were allowed to rise to 84 mbpd, only 4 tscf of MI would be injected in those patterns. 50. BPXA asserts there are more attractive pattems for development beyond those identified in the 1994 Field Development Plan. 51. BPXA has expanded its view of EOR opportunities for the POP from that presented to the Commission in 1991. BPXA also asserts that gas sales offer another opportunity to transport NGLs from the POP later in field life. 52. The technical team did not consider the effects of a major gas sale on late-life recovery of NGL components or the effects of pressure maintenance through waterflooding the gas cap (i.e., the PSI project). 53. There was no consensus study done to analyze future recoveries using a single data set and assumptions or common tools. ARCO's and BPXA's EOR predictions are not comparable because they use different critical assumptions, project scope and conversion ratios for transforming NGLs to MI: · ARCO testified that the lean gas chase to recover late life NGLs is an unproven process; BPXA concurs insofar as its specific application in the POP, but elsewhere it has been successfully employed. · BPXA predictions include lean gas chase, ARCO's does not. · ARCO testified that PSI (i.e., water injection into gas cap) is a speculative high risk pressure support process; BPXA disagrees but admits that probably gas cap Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 8 owners bear a disproportionate share of the risk with PSI. BPXA predictions include PSI, ARCO's does not. · ARCO characterizes Eileen West End as uncertain recovery and high cost; BPXA agrees and both include the project in their predictions. BPXA, however, included a larger scope project in its predictions. · ARCO describes Northwest Eileen as uncertain reservoir quality and high cost; BPXA agrees but is more optimistic. BPXA predictions include Northwest Eileen, ARCO's does not. · ARCO describes the DS 15/18 Romeo project as a very high risk process; BPXA disagrees and uses DS 15/18 in its predictions, ARCO does not. · ARCO refers to gravity drainage miscible injection ("GDMI") as speculative high risk; BPXA describes GDMI as not being high risk, but needing additional work. BPXA extended case includes 360 patterns; 55 percent of them are in the GDMI. ARCO does not use GDMI in its predictions. 54. It is unlikely that a one or two year extension in waterflood will result in lost reserves. With each additional year however, due to the potential of corrosion and maturing waterflood, deferred EOR reserves might become lost reserves. 55. ARCO testified that original expansion plans called for MI facilities to be installed at Drill Site 4 and 11 in 1995. ARCO contends current MI supply is sufficient for Drill Site 4 to come on line in 1996 and for Drill Site 11 to come on line in 1997. ARCO issued an AFE for Drill Site 4 in 1994, which was signed by ARCO and BPXA but not Exxon. An AFE for Drill Site 11 was not issued. BPXA contends Exxon disapproved MI expansion to Drill Site 4 solely because of insufficient MI supply. Exxon contends its disapproval was based on economic considerations, not lack of MI supply. 56. ARCO and BPXA are the only participants to run detailed reservoir studies to predict NGL/MI recovery. ADNR testified that it does not have resources on-hand to perform the type of analysis necessary to replicate each petitioner's detailed reservoir studies regarding the MI/NGL allocation issue. WASTE AND ULTIMATE RECOVERY 57. ARCO asserts maximum NGL blending yields an additional 100 nunb of NGLs, offset by a loss of 15 to 30 mmb of oil. 58. Exxon asserts maximum NGL blending yields an additional NGL recovery of 70 tomb, offset by a 10-15 million barrel reduction in EOR oil. 59. BPXA asserts potential total hydrocarbon recovery can be improved by 150-200 tomb by increasing MI supply capacity to 700 mmscfpd and extending the PBMGP scope. 60. BPXA asserts that the appropriate NGL rate to maximize total hydrocarbon liquid production is lower than the current rate under current operating conditions. BPXA stated that limiting production to 50-55,000 bpd of NGL would avoid waste. Conservation Order No. >u August 9, 1995 (Revised November 3, 1995) Page 9 61. BPXA and ARCO disagree on how much MI will remain trapped in the reservoir. BPXA contends about 30 percent of all MI will remain trapped. ARCO's estimates are higher. 62. BPXA testified that if NGL blending is increased to 84 mbpd and MI supply and EOR scope are reduced, liquid hydrocarbon production would decrease by 60-80 mmb. 63. Exxon contends increased blending today will not jeopardize EOR operations in the future because the balance between NGLs and MI can always be shitted with additional knowledge. Exxon testified that the ideal MI supply is the maximum available from unblendable NGLs that can be made economically. 64. ARCO defended maximum blending, suggesting that (1) under established MI guidelines supply will always be directed toward most promising projects; (2) any pattern at risk due to maturing waterflood would receive priority treatment; (3) there appear to be a number of facility upgrades available which will yield a substantial increase in MI; and (4) if any shortage existed that could not be dealt with under guidelines or extending injection period a couple years, MI supply can always be ramped up by converting some or all blendable NGLs. 65. Without late-life recovery of NGLs, there would be less than a barrel for barrel recovery of EOR oil for each barrel of NGL injected as MI. 66. The timing, recovery and salability of late-life NGLs reinjected as MI are uncertain. 67. ARCO stated that the situation at Prudhoe Bay's Skid 50 on or around February 9, 1995, when ARCO attempted to increase NGL production and BPXA refused to blend the increased volume, is not typical of good oil field management. 68. BPXA asserted that ARCO's actions on and around February 9, 1995 were not representative of good oil field practices and knows of no other field in the United States where such events could have occurred. 69. ARCO contends that between February 9, 1995, and June 20, 1995, 1.5 mmb ofblendable NGLs had not been sent through TAPS because of BPXA's refusal to blend additional NGLs at Skid 50. ARCO further contends that reduced field gas offiake caused 200 mb of SLP to go unproduced. 70. BPXA asserts its actions at Skid 50 were taken to ensure greater ultimate recovery and to prevent waste in conformance with state oil and gas conservation statutes, even though operational procedures governing the CGF require blending the maximum NGL volume allowed by TAPS. 71. BPXA testified conditions have changed in the POP since the Commission held the 1991 PBMGP heatings. At the time, BPXA asserts, the WlOs thought maximum NGL blending was the preferred alternative in part because they anticipated insufficient liquid volume moving offthe Slope to carry all the NGLs in later field life; that WlOs also expected up to 700 mmscfpd of MI following GHX-2; and, that no trade-off would exist between NGL and MI production. Conservation Order No. 30o August 9, 1995 (Revised November 3, 1995) Page 10 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. TEPI contends that increasing NGL production will not promote conservation and will violate all efforts by the WlOs to collaborate in the best long term recovery plan for the POP. ARCO and Exxon, jointly the majority equity owners of the gas cap, support the immediate sale of the greatest volume ofNGLs blendable for transportation to market using the TAPS. BPXA and the minority WIOs, jointly the majority equity owners of the oil rim, request up to a maximum of 700 mmscfpd of MI, or the maximum volume permitted by the MI distribution system, and endorse using salable NGLs if necessary to produce MI for EOR. There is disagreement among the WlOs about the current market value of NGLs. Substantial uncertainty attaches to predicting the relative values of NGLs and EOR oil into the future. ADNR has entered into settlements with BPXA, ARCO and Exxon that for royalty purposes value NGLs which are blended with POP crude oil and condensate and shipped through TAPS the same as SLP. ADNR does not rely only on Quality Bank methodology to value NGLs. ARCO and Exxon value NGLs on the basis of the royalty settlement with the ADNR, which assigns that value essentially at crude parity. BPXA stated that actual value of NGL is not on parity with POP SLP notwithstanding the ANS gas royalty settlement agreement between BPXA and ADNR establishing royalty payments for blended NGL on parity with SLP. Other dispositions of NGLs are reserved. ADNR contends some components of NGLs are less valued than POP SLP, but the addition of NGLs still has a positive value. NGLs sold blended with crude are more valuable than NGL components sold in the gaseous state as part ora major gas sale. TAPS Quality Bank payments are intended to compensate for differences in the values of petroleum streams tendered to TAPS. Prior to December, 1993, API gravity was used to calculate differences in relative value. Today, the Quality Bank uses a distillation or assay methodology, including component market prices, to calculate differences in relative value. Blending NGLs increases the APl gravity of the POP hydrocarbon stream. Prior to December 1993, because Quality Bank value was a function of API gravity, the blending of NGLs increased the value of a SLP owner's share of the blended stream for TAPS Quality Bank purposes. There was no internal quality bank adjustment for NGLs blending with POP SLP within the Prudhoe Bay Unit. Blending NGLs currently decreases the Quality Bank value of the POP hydrocarbon stream. Blending NGLs lowers the value of a SLP owner's share of the blended stream for TAPS Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 11 Quality Bank purposes. There is no internal quality bank adjustment for NGLs blending with SLP within the Prudhoe Bay Unit. 84. ARCO agreed the effect of NGL blending with SLP from Prudhoe Bay reduced the Quality Bank value ora barrel of the mixed stream but argued that the addition of NGL was no different than blending condensate, which increases the value of a barrel of the mixed stream. Voluntary agreements make a specific value adjustment for condensate. Voluntary agreements do not make a specific value adjustment for NGLs. 85. Estimates of expected recovery, value and costs become highly speculative as the forecast period lengthens. For example, BPXA testified that in 1977 an average well cost $7 million (adjusted to 1995 dollars), while today an average well costs $1.5 million. During this period, the predicted recovery from the POP has risen from 9.6 billion barrels to over 13 billion barrels and the value ofoil has been erratic. In addition, BPXA contends that in 1982 the WlOs expected 200-300 wells were lett to drill to the POP. The unit has been drilling in excess of 50 wells each year and BPXA still anticipates there are some 200-300 wells to be drilled. 86. The volume of NGLs that could be produced exceeds the blending capacity of POP SLP. Every barrel of crude that goes by unblended is a lost opportunity for blending. Blending NGLs with SLP or selling them to another North Slope oil and gas field is the only viable means to market NGLs today. The ability to blend and transport NGLs with POP SLP declines with each day. 87. There is no oppommity to recapture MI components once they are sent down TAPS as NGLs. There is no evidence that enough MI components will not continue to be available in the POP to inject into any feasible EOR project. 88. BPXA characterized conversion of NGL into additional MI as investing a relatively low value product with the expectation of recovering a higher value product, at least from the oil dm perspective. BPXA testified that the CGF should make the maximum volume of MI and that failing to do that causes a reduction in ultimate recovery. 89. BPXA testified that deferred production caused by deferred expansion of EOR pattems due to lack of MI can become lost production because watefflood and facilities mature. This timing constraint can cause loss in ultimate production. 90. Exxon describes reservoir management, including identification of new opportunities to improve recovery, as a complex, continual and dynamic process which at times leads to different technical conclusions among owners. 91. Yukon Pacific. contends a major gas sale will maximize ultimate economic recovery of oil and gas. A major gas sale could begin as early as 2003 with continuing oil production. The Trans-Alaska Gas System ("TAGS") could move methane, butane, propane and ethane that would otherwise be undeliverable to market. A gas conditioning plant to process gas for shipment down TAGS could produce MI for reinjection on the North Slope. Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 12 92. Yukon Pacific contends the dual equity at the POP complicates future gas sales and does not benefit TAGS. 93. ADNR testified its understanding of the recovery mechanisms in the reservoir has evolved since initial depletion plans were formulated by the WIOs and approved by the ADNR. ADNR recommends approving reservoir production strategies that preclude flexibility in future operations only if there is no other choice available. 94. BPXA testified existing levels of MI injection and NGL sales are currently causing waste to occur. BPXA testified that to prevent waste a nominal 640-700 mmscfpd of MI must be injected in the reservoir to recover additional oil. 95. Exxon contends MI beyond that manufactured from unblendable components is too expensive in that it requires either additional investment or a loss of revenue. Remaining EOR expansions at the POP using MI can only be economic if they utilize unblendable NGL components. 96. ARCO testified existing levels of MI injection and NGL sales are causing waste, and that anything less than maximum blending of salable NGLs under the approved Plan of Development constitutes physical waste. Unless it can be demonstrated that injecting salable hydrocarbons is reasonably certain to produce more or higher value salable hydrocarbons, waste would occur. 97. BPXA claimed the trade-off for additional NGLs that could be converted to MI results in waste. BPXA testified that if 100,000 extra barrels of NGL are shipped today the trait will lose the opportunity to produce, at a minimum, 60,000 EOR barrels and potentially 200,000 barrels of EOR oil. The effect would be immediate. 98. BPXA stated that at the core of this disagreement are two very different views of how best to achieve greater ultimate recovery of oil and gas from the POP. PROPERTY AND CONTRACTUAL ARRANGEMENTS 99. To prevent, or to assist in preventing waste, to insure a greater ultimate recovery of oil and gas, and to protect correlative rights of persons owning interests in tracts of lands affected, persons may validly integrate their interests to provide for the unitized management, development and operations of such tracts as a unit. AS 31.05.110. 100. The WlOs of the POP are Amerada Hess Corporation, ARCO Alaska, Inc., BP Exploration (Alaska) Inc., Chevron U.S.A., Inc., Exxon Corporation, U.S.A., Texaco Exploration and Production Inc., Louisiana Land and Exploration Company, Mobil Oil Corporation, Marathon Oil Company, Shell Western E & P Inc., and Phillips Petroleum Company. 101. The land owner, or royalty owner, is the State of Alaska as represented by ADNR. The State of Alaska has leased multiple properties overlying the POP. The State of Alaska retains a royalty share of 12.5% of all hydrocarbons produced from the POP. Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 13 102. The WlOs and ADNR entered into an agreement entitled, "Unit Agreement, Prudhoe Bay Unit, State of Alaska" on April 1, 1977. The Prudhoe Bay Unit Agreement ("PBUA") purportedly unitized all oil and gas rights in each lease overlying the POP so that unit operations may be conducted as if the unit area had been included in a single lease executed by the State of Alaska and any other party who may have authority to execute oil and gas leases, as lessor, in favor of all working interest owners, as lessees. Article 3.1. The PBUA established two participation areas, the Oil Rim Participating Area ("PA") and the Gas Cap PA. Article 5.2. The PBUA established two unit operators, now BPXA in the western half of the pool and ARCO in the eastern half of the pool. Article 4.1. 103. The PBUA provides that production from the gas cap be allocated to the Gas Cap Participating Area and production from the oil rim be allocated to the Oil Rim Participating Area. Article 6.1 Within each participating area, the agreement further provides that production be allocated among WIOs on the basis of tract participation agreed to by the WIOs. Article 5.2. The current approximate share of production for each working interest owner for each participating area is: WlO Oil Rim Participating Area Gas Cap Participating Area BPXA 50.68% 13.84% ARCO 21.78% 42.56% Exxon 21.78% 42.56% Mobil 1.89% .28% Phillips 1.88% .26% Chevron .67% .48% Amerada Hess .54% 0.00% TEPI .55% 0.00% LL&E .04% 0.00% Marathon .05% 0.00% Shell .14% 0.00% 104. All oil derived from EOR is allocated to the oil rim owners. Approximately 90 percent of NGLs are allocated to the gas cap owners. 105. In signing the PBUA, the working interest owners agreed to develop with due diligence the unit area in accordance with good engineering and production practices. Article 4.2. 106. ADNR approved the PBUA with the understanding that unitization would prevent economic and physical waste by eliminating redundant expenditures and duplication of facilities for a given level of unit production, and that unitization would maximize ultimate recovery by the adoption of a unified reservoir-wide depletion strategy. 107. The WlOs entered into an agreement entitled, "The Prudhoe Bay Unit Operating Agreement" on April 1, 1977. The Pmdhoe Bay Unit Operating Agreement CPBUOA") provides, among other things, for unit operations, allocation of unitized substances, allocation of unit expenses and the establishment, enlargement and contraction of participating areas. The PBUOA provides that any portion of unit expense that is incurred by or directly related to and identified with a particular participating area shall be allocated to such participating area. Any portion of unit expense that is incurred by or directly related to and identified with Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 14 more than one participating area shall be allocated among such participating areas in accordance with the provisions of the [PBUOA] applicable thereto .... PBUOA Section 11.002 108. The PBUOA provides for the owners of the Gas Cap PA and the owners of the Oil Rim PA to develop and produce the POP using common facilities. The WlOs agreed to allocate costs of joint operations so that each participating area shares proportionally in the savings that occur as a result of joint operations. Article 32. For joint cost allocation purposes, unit operations were divided into three phases to reflect the change over from oil-oriented operations to gas-oriented operations. The first phase occurs until a major gas sale. The second phase is from commencement of major gas sales until operations in certain parts of the field become predominately gas oriented. The third phase applies after major gas sales to those areas of the field that have become predominately gas oriented and last until termination of the agreement. The PBUOA originally anticipated a major gas sale and initiation of the second phase to occur as early as seven years after signing. The POP, now 18 years later, continues under phase one management. 109. The POP is the only oil pool in Alaska where the WIOs attempt to unitize a reservoir while maintaining separate and disparate equities between that portion of the pool that is gas (gas cap) and that portion of the pool that is oil (oil rim). All other unitized gas cap reservoirs in Alaska are integrated with common equity between oil and gas. 110. No party to these proceedings identified any other unitized reservoir in the United States that attempts to develop the reservoir while maintaining separate and disparate equity interests between oil and gas where oil and gas are in communication in a common accumulation. 111. ADNR has not sought to create, nor has it approved, the formation of both a gas cap participating area and a oil rim participating area for any other reservoir in Alaska. 112. In order to produce the POP while trying to protect correlative rights, prevent waste and provide for maximum hydrocarbon recovery, the WIOs negotiated and signed the following documents which have amended the PBUOA since the unit was formed in 1977: · The Prudhoe Bay Unit NGL/EOR Operating Procedures and Flow Station 3 Injection Project Operating Procedures in 1983, · The Prudhoe Bay Unit Gas Handling Expansion Agreement in 1988, · The Prudhoe Bay Unit Issues Resolution Agreement ("IRA"), effective in 1990, and signed by all parties by 1993, · The Amended and Restated Prudhoe Bay Unit NGL/EOR Operating Procedures and Flow Station 3 Injection Project Operating Procedures, effective 1992, and signed by all parties in 1993. 113. The ADNR was not a signatory, nor did ADNR object, to amendments to the PBUOA. 114. The original PBU NGL/EOR Operating Procedures Agreement established a ten year limit for the Gas Cap PA to provide, without additional compensation, MI produced at the CGF to the Oil Rim PA for EOR. The new limit established by the Amended and Restated PBU NGL/EOR Operating Procedures Agreement, as modified by the Issues Resolution Conservation Order No. 300 August 9, 1995 (Revised November 3, 1995) Page 15 Agreement, is for the Gas Cap PA to provide, without additional compensation, MI produced at the CGF to the Oil Rim PA for the life of the EOR project, unless the WIOs vote otherwise to terminate. 115. The Amended and Restated PBU NGL/EOR Project Operating Procedures also addressed the priority given to NGL and MI production. The WlOs disagree about the application of voluntary agreements governing NGL and MI production. 116. The WlOs negotiated and signed the Gas Handling Expansion Agreement to provide the contractual basis for construction of gas handling expansion projects. The Agreement was required, at least in part, because working interest owners had differing interpretations of the PBUOA for the sharing of costs between the Gas Cap PA and Oil Rim PA for gas handling expansion projects. 117. The Gas Handling Expansion Agreement defined the CGF as the gas processing facility built pursuant to the NGL/EOR Project Operating Procedures. 118. The IRA established the original gas cap gas reserves at 24.8 tscf, the original oil rim gas reserves at 10.7 tscf, and the original condensate reserve at 1.175 mmstb. The IRA provides that when cumulative condensate production volumes equals the final redetermined original condensate reserves, all base separator liquid volumes shall thereafter be allocated to the Oil Rim PA in accordance with PBUOA Article 28.007. 119. The IRA also amended the PBUOA, 30.008.04. "Unit Expense Allocation for Fuel Supplied" (Fuel Gas Supply Option). The value of fuel gas, established by arbitration, was set at $3.04 per million BTU for the term of the Fuel Gas Supply Option ("FGSO"). IRA Article 6.2. The IRA established that the FGSO ends in 2005 or with a major gas sale, whichever comes first. 120. ADNR testified that the entire FGSO and subsequent arbitration would not have had to take place if there had been only one participating area. 121. The PBUOA, as amended, specifies that the manufacture and shipping of NGL will take priority over the manufacture and injection of MI. This priority was set prior to significant competitive demand between NGL and MI. There is no commitment to a volume of MI or NGL in the PBUOA, as amended. 122. ARCO contends the reason the impasse on NGL blending could occur at the POP is that there are two participating areas with different equities. ARCO contends BPXA's action violates the PBUOA and commitments made to the Commission to maximize production and economic recovery from the POP. 123. ARCO testified that they must operate under both field rules and voluntary contracts. ARCO asserts the contracts require maximization of NGL blending. ARCO asserts that the first and foremost goal is maximization of ultimate recovery from the POP in the context of approved plans of development. ARCO testified that the unit provision that require operating conditions be reviewed are to ensure appropriate crude stabilization to allow maximum NGL blending and maximum total hydrocarbon liquid recovery. Conservation Order No. August 9, 1995 (Revised November 3, 1995) Page 16 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. Exxon asserts it is the responsibility of the unit owners to determine the operating parameters that achieve maximum economic recovery from the POP. Exxon asserts the appropriate course is obvious: NGL blending should be maximized and owners should put the unit technical teams to work to iron out differences. Exxon contends the IRA established that unblendable NGLs were dedicated primarily to the owners of the Oil Rim PA as MI for EOR and blendable NGLs were dedicated to the owners of the Gas Cap PA. Exxon asserts that any MI produced from blendable NGLs are an operational cost primarily to the owners of the Gas Cap PA not covered by any agreement. Phillips contends there is a disagreement among WlOs regarding the meaning of agreements about appropriate level of NGL blending. Phillips asserts that the unit should determine what MI and NGL rates will maximize economic hydrocarbon recovery in the Prudhoe Bay Unit and recommends a sequestered technical team to work out the best solution for ultimate economic recovery. TEPI views the POP as one unitized property with two equity ownerships. TEPI is not aware of any other field unitized in such a manner. TEPI asserts that maximum NGL blending destroys the only key IRA benefit it will receive as a minority owner in only the Oil Rim PA. BPXA argues that the PBUOA, as amended, requires prudent maximization of total liquid hydrocarbon recovery before blending maximum NGL volumes. BPXA asserts that if either participating area is adversely affected by production, the unit operators must review the operating conditions and, where prudent, revise them to address adverse impacts. BPXA proposes Module 880 to take its share of SLP production in-kind and bypass existing blending facilities at Skid 50. BPXA argues that ARCO and Exxon have no contractual right to blend their allocated volumes of low value NGLs and degrade BPXA's SLP without compensation for BPXA. BPXA argued blending NGLs with SLP forces BPXA to incur a severe penalty when the combined stream is measured by the Quality Bank. Module 880 will not increase ultimate recovery from the POP. ARCO described Module 880 as a BPXA effort that violates the NGL/EOR Operating Agreements which expressly require the maximization of NGL production and separator liquid production. The State of Alaska, in a response dated January 13, 1994, filed with the Alaska Public Utilities Commission ("APUC"), Docket Nos. P-89-1, et. al., argued that BPXA, in voluntary cooperation with other Prudhoe Bay Unit interest owners, negotiated voluntary agreements that allow for NGLs and SLP to be commingled and offered at Pump Station 1 as a single stream. The State asserted that the threat by BPXA to construct separate facilities to deliver its own SLP by taking what BPXA termed a "vastly inefficient" step of constructing separate facilities need not be a concern of the APUC because the Alaska Oil and Gas Conservation Commission possesses sufficient regulatory authority to ensure that Conservation Order No. 300 August 9, 1995 (Revised November 3, 1995) Page 17 waste is not committed in the production of oil or gas citing AS 31.05.030(b); and AS 31.05.095. 134. In the same January 13, 1994, response the State also argued that the TAPS Quality Bank had no legal or logical responsibility to account for the addition of NGLs to the SLP within the Prudhoe Bay Unit. The State asserted BPXA should handle the question of whether NGLs blended at Skid 50 are lower in value than the remainder of the oil as the internal Prudhoe Bay Unit matter that it is. 135. On April 21, 1995, BPXA filed a request for declaratory relief in Alaska Superior Court, Case No. 3AN-95-3321-CIV, in which BPXA, in part, asserts that it has a contractual right under the PBUOA to take Prudhoe Bay Unit production in-kind and tender it as BPXA sees fit and that it has no obligation to blend its allocated SLP with other WIO's NGLs without compensation. 136. On May 11, 1995, Exxon filed a complaint in Alaska Superior Court, Case No. 1JU95-1013 CI, in which Exxon, in part, accuses BPXA of willful violation of the PBUOA, the NGL/EOR Agreement and the Amended NGL/EOR Agreement and unreasonable interference with unit operations. 137. On May 11, 1995, ARCO filed a complaint in Alaska Superior Court, Case No 1JU-95- 1012 CI, in which ARCO claims, in part, BPXA has violated its contractual obligations as a unit operator, is contemplating building facilities that will unreasonably interfere with unit operations and has repudiated the basic allocation of hydrocarbons under the operating agreements underlying the entire organization and operation of the Prudhoe Bay Unit. 138. Notwithstanding the PBUA and the PBUOA and its amendments, the WlOs cannot agree on implementing a plan of development for the POP, at least as it pertains to the balance between NGLs and MI, that will prevent waste, protect correlative rights and ensure greater ultimate recovery. 139. The WlOs' failure to agree on implementing a plan of development, as it pertains to the balance between NGLs and MI, is not in accordance with good oil field practices, is leading to the inefficient operation and production of the POP and is contributing to a reduction in the quantity of oil and gas that can be recovered from the POP. 140. If there were an integrated ownership of oil and gas within the POP, it is unlikely the WlOs would be before the Commission on whether to maximize blendable NGLs or make more MI. CORRELATIVE RIGHTS 141. During 1995, the WlOs have been unable to cooperatively resolve differences with respect to how their voluntary agreements protect their respective correlative rights. 142. ARCO testified BPXA's refusal to blend is a repudiation of contractual obligations motivated by its economic interests. Conservation Order No. 3t~u August 9, 1995 (Revised November 3, 1995) Page 18 143. BPXA has stated that the negative economic impact of NGL blending is increasingly becoming an impediment to full cooperation in the Prudhoe Bay Unit. 144. BPXA testified there is competition between the oil rim and gas cap owners to produce their just and equitable shares of their respective resources manifested in the competition for MI and NGLs from the CGF. 145. Exxon testified cost of MI is a key variable affecting EOR scope, and that, as a gas cap owner, it had no problem selling NGLs back to the unit to use as MI, but as an oil rim owner it might have a problem with purchasing an expensive MI. 146. TEPI testified that if it had only gas cap ownership and no oil rim ownership, it would be in a position to support increased blending. 147. BPXA contends it will be deprived of its just and equitable share of the total oil reserves if the MI supply is allowed to be depleted by increasing the NGL blending rate. 148. ADNR stated that even if the WIOs, ADNR, the Commission and all other interested parties could agree on a common reservoir behavior and a common production forecast model using the same set of given assumptions, the differing oil rim versus gas cap ownership interests may mean that the different owners will favor different operating and depletion strategies based on each owner's specific economic position. As long as there are two participating areas those commercial differences are going to exist and have to be considered. 149. BPXA suggested that if the disagreement were only technical, resolution by unit owners would be possible. 150. ARCO contends the fight of the gas cap to sell marketable components to the oil rim within the POP is analogous to selling to a different reservoir. 151. ARCO testified it has no further obligation to provide salable NGLs for EOR and asserts its correlative rights to produce its gas would be harmed if forced to manufacture MI from salable NGLs. ARCO suggests the Commission require the oil rim to pay for converting blendable NGLs into MI to protect its correlative rights. 152. BPXA and TEPI testified they had already paid for MI for EOR by investing in the gas handling expansions. They assert their correlative rights to produce oil would be jeopardized if they were unable to use all that gas for EOR. They stated that 700 mmscfpd of MI has been purchased by the oil rim by constructing GHX-2 for use in the EOR project. 153. ARCO or Exxon each own roughly 42 percent of a barrel of NGL but each own roughly 22 percent of a barrel of EOR oil that might be recovered using MI converted from salable NGLs. BPXA owns approximately 14 percent of each barrel of NGL but owns approximately 51 percent of a barrel of EOR oil that might be recovered using MI converted from salable NGLs. TEPI sacrifices no potential revenue converting salable NGLs to MI because it owns no appreciable share of NGLs and about .5 percent of each EOR barrel. For ARCO or Exxon, the return on a barrel of EOR oil versus a barrel of NGL must be two or three times that of BPXA's return to have a roughly equivalent economic impact. Conservation Order No. 300 August 9, 1995 (Revised November 3, 1995) Page 19 154. The separate equities between the Gas Cap PA and the Oil Rim PA fosters differing commercial interests, which have led to competition to produce the POP between each participating area. REQUESTED REMEDIES 155. BPXA, TEPI, Mobil, Marathon, Chevron, Shell, Phillips, Amerada Hess and Exxon all support reconvening the unit technical team to review the question of what balance of NGL and MI production will lead to greater ultimate recovery. WIO participants supporting reconvening the technical team estimate 90 to 120 days will be needed for the technical team to complete work. BPXA recommends the technical team, if ordered to reconvene, report back to the Commission within 90 days. 156. Except for Exxon, all the WlOs recommending reconvening the technical team request that in the interim the Commission limit NGL blending to 74,000 bpd. 157. Exxon recommends that maximum NGL blending to the TAPS limit be implemented "until sufficient data/studies dictate otherwise." 158. ARCO opposes an order reconstituting a unit technical team because it contends additional unit technical work is unlikely to change anyone's view of NGL/MI utilization. ARCO asserts technical teams cannot address business and contract issues which are the ultimate drivers in the current dispute. ARCO contends business issues are too complex and the economic interests of the companies are too different to be resolved by a technical team. For example, ARCO suggests a technical team cannot assign risk to speculative projects or judge the willingness of one company to risk another's resource. 159. ARCO requests the Commission require BPXA to allow NGL blending to the maximum allowed by TAPS. 160. ADNR testified the Commission, with respect to unitization and unitized operations of pools, has a responsibility to prevent or to assist in preventing waste, to ensure a greater ultimate recovery of oil and gas, and to protect the correlative rights of persons owning interests in the affected tracts of land. ADNR asserts the correlative rights of the owners of the Oil Rim PA and the Gas Cap PA in the POP need to be considered and protected. ADNR requests the Commission consider what operating plans and depletion strategies best maximize ultimate recovery of both oil and gas from the POP, then the economic interests of the various parties can be weighed and balanced. 161. ADNR also submitted a post-hearing brief contending the Commission should defer to ADNR to address the issues. JURISDICTION AND AUTHORITY 162. The authority of the Commission applies to all land in the state subject to its police powers including land of the United States and land subject to the jurisdiction of the United States. The authority of the Commission further applies to all land included in a voluntary Conservation Order No. 3o0 August 9, 1995 (Revised November 3, 1995) Page 20 cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). AS 31.05.027. 163. ADNR has standing before the Commission to raise all issues relating to state-owned land without regard to the type of proprietary interest held by the State in the land. ADNR has the same standing (no more or less) before the Commission as granted by law to any other proprietary interest. AS 31.05.026(a)(e). 164. The waste ofoil and gas in the state is prohibited. AS 31.05.095. 165. The Commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of AS 31. The Commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it. The Commission shall adopt regulations and orders and take other appropriate action to carry out the purposes of this chapter. The Commission may require the filing and approval of a plan of development and operation for a field or pool in order to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected. The Commission may regulate, for conservation purpose the quantity and rate of the production of oil and gas from a well or property; this authority shall also apply to a well or property in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). AS 31.05.030(a), 31.05.030(b), 31.05.030(d)(9) and 31.05.030(e)(6). 166. ARCO, Exxon and BPXA suggest the Commission can protect the State's interest and ensure maximum recovery of economic hydrocarbons without deciding the contractual disputes between ARCO, Exxon and BPXA now pending before the Alaska Superior Court. 167. ARCO, BPXA, and Exxon agree that the Commission has the jurisdiction and authority to determine the appropriate level of NGL blending based on considerations of preventing waste and maximizing recovery. ADNR argues that at most the Commission's authority is limited to deciding matters of physical waste and that it may not base its decision on "economic analysis." Phillips argues that there is no issue of physical waste in this case because BPXA is at worst putting "to some use" the blendable NGL components that are being made into MI. 168. Economics necessarily plays a role in some of the decisions that may face the Commission. For example, economic practicability is implicit in the statutory standard of"eondueted in accordance with good oil field engineering practices." AS 31.05.170(14)(A). The role of economics in a similar provision of Wyoming's conservation statute ("prudent and proper operations") was acknowledged by the Wyoming Supreme Court in Majofi~ of Working Interest Owners in Buck Draw Field Area v. Wyoming Oil and Gas Conservation Corem'n, 721 P.2d 1070 (Wyo. 1986). 169. Despite the fact that the relative values of NGLs and EOR oil were addressed and disputed by the parties, it is not necessary for the Commission to consider economics to the extent of determining the relative values of those substances. The basis of the Commission's decision does not require that determination nor does the Commission's decision pertain to "economic Conservation Order No. I~,~ August 9, 1995 (Revised November 3, 1995) Page 21 waste" as that term is used in certain other states' conservation statutes in which it relates to market prorationing. 170. Phillips' interpretation of waste is not consistent with the Alaska Oil and Gas Conservation Act. AS 31.05.170(14) defines "waste" as including the "operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices." 171. ADNR urges the Commission to defer jurisdiction to ADNR because it asserts it has jurisdiction over the entire dispute and economic expertise. ADNR has scheduled a hearing to address similar issues as those before the Commission. 172. It is not clear action by ADNR pursuant to its own authorities would resolve the controversy. A WIO aggrieved by ADNR's decision could seek recourse at the Commission. 173. There is a claim before the Commission that waste has been taking place and continues to take place. The Commission has jurisdiction and is obligated to make a determination in this controversy as quickly as practicable. 174. ADNR also argues that voluntarily unitized state leases are solely within the purview of ADNR and that the Commission has extremely limited or even non-existent jurisdiction to address issues relating to unitization and management of the Prudhoe Bay Unit, or even issues of waste and conservation within the Prudhoe Bay Unit. 175. ADNR's assertion is not consistent with the Alaska Oil and Gas Conservation Act. Among other provisions of the act, AS 31.05.027 expressly provides, in relevant part: "The authority of the commission further applies to all land included in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p)." 176. If a failure to achieve unitization within the meaning of AS 31.05.110 results in problems unitization is designed to rectify, notwithstanding that a unit agreement has been entered into by the working interest owners and approved by ADNR under AS 38.05.180(p), "it is [the Commission's] duty to... do the things necessary or proper to carry out the purposes of" AS 31.05.110. CONCLUSIONS: The eleven WIOs have agreed to unitized management, development and operation of the Prudhoe Oil Pool under the terms of the Prudhoe Bay Unit Operating Agreement as amended. The management, operation and development of the Prudhoe Oil Pool has not been able to proceed as approved in the Prudhoe Bay Unit Operating Agreement without a number of voluntary amendments to the PBUOA. . The Alaska Department of Natural Resources endorsed unitized management, development and operation of the Prudhoe Oil Pool under the terms of the Prudhoe Bay Unit Agreement. Conservation Order No. 300 August 9, 1995 (Revised November 3, 1995) Page 22 o The Commission has jurisdiction regarding the conservation of oil and gas in Alaska. Leases subject to voluntary units and voluntary cooperative or unit plans of development and operation entered into in accordance with AS 38.05.180(p) are not exempt from Commission regulation to prevent waste or assist in preventing waste, ensure greater ultimate recovery of oil and gas or protect the correlative rights of persons owning interests in the tracts of land affected. AS 31.05.027, AS 31.05.030 and AS 31.05.110 ° Resolution of the controversy presented in this proceeding concerning the appropriate rate of NGL blending falls squarely within the Commission's authorities to prevent waste, AS 31.05.030(b), to require the filing and approval of a plan of development and operation, AS 31.05.030(d)(9), and to regulate for conservation purposes the quantity and rate of the production ofoil and gas from a well or property, AS 31.05.030(e)6). . Conservation Order 290, authorizing the Prudhoe Bay Miscible Gas Project, need not be amended. However, the commitment to EOR contemplated by Conservation Order 290 requires that the Central Gas Facility (CGF) be capable of producing a supply of MI consistent with commitment to EOR without competition with production of salable NGLs. Testimony during 1991 heatings leading to C.O. 290 convinced the Commission that those twin objectives were integral to greater ultimate recovery and were not, and would not be, in competition. Failure to pursue and achieve those twin objectives may compel the Commission to reconsider C.O. 290. . Competition exists between the production of blendable NGLs and the manufacture of MI. There are facility upgrade options that can eliminate or reduce competition between the manufacture of NGLs and MI at the CGF. . The WlOs disagree about how their property and contractual arrangements affect the management, development and operation of the unit to ensure greater ultimate recovery of oil and gas. The WlOs disagree about how their property and contractual arrangements protect the correlative rights of both the oil rim owners and the gas cap owners to produce their just and equitable share of oil and gas without waste. This is possible because of separate and disparate equity interests between two participating areas within the Prudhoe Oil Pool. . It appears that all persons' correlative tights will be best protected by complete integration of interests in the Prudhoe Oil Pool under AS 31.05.110. 10. To the extent, if any, that correlative rights may be affected by the Commission's order conceming the volume of NGL production, the need to prevent waste is paramount. Gilmore v. Oil and Gas Conservation Comm'n, 642 P.2d 733 (Wyo. 1982). 11. Maximizing blendable NGL production does not compromise correlative rights because it allows the owners of the gas cap to produce all the gas cap hydrocarbons they seek to produce and does not prevent the oil rim owners from producing all the oil dm hydrocarbons they seek to produce without using gas cap products the gas cap owners wish to produce and sell. To the extent the oil dm owners contend they have paid for MI made with blendable NGLs, that is a contractual matter not determined by this Order. Conservation Order No. 300 August 9, 1995 (Revised November 3, 1995) Page 23 12. ARCO and BPXA agree that current production practices are producing physical waste from the Prudhoe Oil Pool, but disagree why. Current property and contractual arrangements governing the operation and development of the Prudhoe Oil Pool are inadequate to prevent, and may promote, physical waste. 13. If NGL production is increased to the current TAPS vapor pressure control limit, on average less than one barrel of EOR oil, and probably not more than 0.6 barrel of EOR oil, will be foregone, at least temporarily, for each barrel of additional NGLs produced during the next year. The volume of foregone additional hydrocarbon recovery in the form of "late-life NGLs," that BPXA asserted could be as much as 0.7 barrel per barrel of additional NGLs produced, is highly speculative in quantity and salability. 14. IfNGL production during the next year is increased to the current TAPS vapor pressure control limit, and if it later appears some lower volume of NGL production is the optimal conservation practice, there will remain an adequate volume of MI components in the Prudhoe Oil Pool with which to make sufficient MI for any EOR project. It is likely any interim loss in EOR oil production (and any late-life NGL recovery) will be made up by extending the EOR project, by making other modifications in EOR facilities or operations, or by a combination of such changes. 15. If NGL production during the next year is not increased over the level at which BPXA is currently constraining it, and if it later appears that maximum NGL production is the optimal conservation practice, it is unlikely any interim loss in NGL production will be made up because of the limited and declining capacity of the Prudhoe Oil Pool stream to accept NGL. 16. At least in the short term, the quantity and rate of production of oil and gas most likely to prevent waste and ensure greater ultimate recovery is to produce the maximum blendable volume of NGLs from hydrocarbons delivered to the CGF. 17. Module 880 will not contribute to greater ultimate recovery or prevent waste. WlOs disagree whether voluntary agreements seeking to protect correlative rights allow or do not allow such a facility to be constructed. WlOs are involved in civil suits in an attempt to resolve the dispute. If equity within the Prudhoe Oil Pool were integrated as a single property, there would be no need for an owner to build such a facility to protect its correlative rights. 18. Sufficient evidence has been heard regarding the effects of property and contractual arrangements on Prudhoe Bay development and operation to convince the Commission that the next phase of these proceedings should be more focused than the general investigation previously anticipated. It appears that more complete unitization and integration of interests in the Prudhoe Oil Pool will be necessary to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect correlative rights. Consequently, in the absence of voluntary efforts, further hearings in this matter will be directed toward developing a plan of compulsory unitization. Conservation Order No. 300 August 9, 1995 (Revised November 3, 1995) Page 24 19. Competition between the gas cap and oil dm has compromised conservation principles in the development and operation of the Prudhoe Oil Pool. If the competitive effects of disparate equity interests are eliminated, the working interest owners should be able to recommend a cooperative and uniform plan of operation and development to prevent waste and ensure greater ultimate recovery of oil and gas from the Prudhoe Oil Pool. Therefore, a permanent rule governing the production of NGLs and MI is unnecessary at this time. THEREFORE, IT IS ORDERED BY THE COMMISSION THAT: Effective immediately, the operators of the Prudhoe Oil Pool shall, from hydrocarbons delivered to the CGF, produce NGLs to the maximum volume that could be blended with POP SLP and tendered to TAPS from the Prudhoe Oil Pool, whether or not such volume is actually blended and tendered. This section of this Order expires on August 31, 1996, unless extended by this Commission after notice and oppommity for hearing. The authority for this section of this Order is AS 31.05 generally and AS 31.05.030(b), 31.05.030(d)(9), and 31.05.030(e)(6) specifically. . A hearing is scheduled for January 11, 1996, to develop a plan for compulsory unitization of the Prudhoe Oil Pool. Upon receipt of a written request, this heating may be postponed if, in the judgment of the Commission, the owners of the Prudhoe Oil Pool are working to integrate the separate and competing equities of the gas cap and oil rim within the Prudhoe Bay Unit. The authority for this Order is AS 31.05 generally and AS 31.05.027, 31.05.030, 31.05.095 and 31.05.110 specifically. . Written submittals in response to the Commission's questions and inquiries concerning the plan of development and operations and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from the Prudhoe Oil Pool (Appendix A, April 20, 1995 Procedural Order) are now due September 1, 1995. Upon receipt of a written request, this deadline may be postponed if, in the judgment of the Commission, the owners of the Prudhoe Oil Pool are working to integrate the separate and competing equities of the gas cap and oil rim within the Prudhoe Bay Unit. The authority for this Order is AS 31.05 generally and AS 31.05.030(b), 31.05.060 and 31.05.070 specifically. , An annual plan of operation and development for the Prudhoe Oil Pool and any amendment to that plan must be submitted to the Commission by October 1, 1995, and by August 15 thereafter. The plan must include a report on the feasibility and progress made toward eliminating the competition between NGLs and MI at the CGF. This section of this Order expires on August 31, 1996, unless extended by the Commission after notice and opportunity for hearing. The authority of this section of this Order is AS 31.05 generally and AS 31.05.030(d)(9) specifically. . Each agreement executed hereafter modifying any provision of the PBUA or PBUOA or any agreement listed under Finding 112 that may affect operation of the Prudhoe Oil Pool must be submitted to the Commission to afford it an opportunity to investigate whether the agreement contains anything that may impair correlative rights, reduce ultimate recovery or otherwise lead to waste. This section of this Order expires on August 31, 1996, unless extended by the Commission after notice and opportunity for hearing. The authority of this section of this Order is AS 31.05 generally and AS 31.05.030(d)(9) specifically. Conservation Order No. 3o0 August 9, 1995 (Revised November 3, 1995) Page 25 o This Order is not intended to preclude any person from seeking to enforce contractual fights, subject to compliance with the provisions of this Order. DONE at Anchorage, Alaska and dated August 9, 1995 (Revised November 3, 1995). Davi~ W. Johnston,~Chaimaan Alaska O~x~d Gas~onservation Commission Russell A. Douglass, Commiss~er Alaska Oil and Gas Conservation Commission Yuckerman Babcock, Co~unissioner Alaska Oil and Gas Conservation Commission IThis decision is the final order of the Alaska Oil and Gas Conservation Commission. Any appeal to superior court must be brought within 30 days fi.om the date that this decision is mailed or otherwise distributed. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501-3192 In the matters of: A hearing to review thc plan of development and operation and othcr agreements as they affect Natural Gas Liquid (NGL) throughput, Miscible Injcctant (MI) utilization and ultimate recovery from Prudhoe Bay; The Petition of ARCO Alaska, Inc., for a ruling on maximization of NGL blending; and The Petition of BP Exploration (Alaska) Inc. requesting action or an order after the Com- mission's review of the plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoc Bay. Conservation Order No. 360 Prudhoc Bay Oil Field Prudhoc Oil Pool August 9, 1995 IT APPEARING THAT: The Alaska Oil and Gas Conservation Commission ("Conmfission"), in December 1994, was informed that Aiycska Pipeline Service Company ("Alyeska") was considering changing the operating parameters of thc Trans-Alaska Pipeline System ("TAPS"). In response to the Commission's inquiry dated December 22, 1994, the operators of the Prudhoe Oil Pool ("POP"), ARCO Alaska, Inc. ("ARCO") and BP Exploration (Alaska) Inc. CBPXA"), on December 29, 1994, expressed divergent views concerning ultimate recovery from the POP. The Commission, on its own motion on January 23, 1995, scheduled a public hearing to review thc plan of development and operation and other agreements as they affect natural gas liquid (NGL) throughput, miscible injcctant (MI) utilization and ultimate recovery from Prudhoe Bay. . ARCO submitted a petition dated February 14, 1995. requesting a ruling on maximization of NGL blending BPXA submitted a petition dated April I. 1, 1995, requesting action on an order after the Commission's review of the plan of development and operation and other agreements as they affect NGL throughput, MI utilizatioa and ultimate recovery 'from Prudhoe Bay. Conservation Order No.( s .... ,~ August 9, 1995 Page 2 . . 10. 11. Notice of pre-hearing conference was published March 30, 1995 in the Anchorage Daily News and a notice of date change for the pre-hearing conference was published April 5, 1995. A pre-hearing conference was held on April 19, 1995 at the officcs of the Commission, 3001 Porcupine Drive, Anchoragc, Alaska. In an order following thc conference, the Commission determined that evidence pertaining to ARCO's or BPXA's petition would be heard commencing Ma5' 16, 1995 and that, at thc conclusion of thc portion of the hearing concerning ARCO's and BPXA's petitions, the Commission intended to continue the hearing to a later date. tentatively June 21, 1995, to further review thc plan of development and operation and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from Prudhoe Bay. Thc order further stated that the Commission would consider making an intcrim ruling on ARCO's and BPXA's petitions at the conclusion of the portion of the hearing concerning those petitions. Notice of public hearing was published in the Alaska Star on February' 1, March 1, March 10, April 5, April 22 and May 3, 1995. Notice of public hearing was published in the Anchorage Daily News April 5 and April 19, 1995. Additional notice of public hearing regarding rebuttal testimony was published in the Anchorage Daily News on June 9, 1995. Pre-filed testimony was received May 12, 1995. Pre-filed rebuttal testimony was received on June 12, 1995. A public hcaring was held on Mav i 6, 17, 18, 22, 23, 24, 25, 26 and 31 and June '!, 20, and 21, 1995. Participants ill'the hearing were ARCO, BPXA, Phillips Petroleum Company ("Phillips"), Exxon Company U.S.A. ("Exxon"), Yukon Pacific Corporation ("Yukon Pacific"), Shell Land and Energy Company ("Shell"), Mobil Oil Company ("Mobil".), Texaco Exploration and Production Compm~y ("TEPI."), Chevron USA Production Company ("Chevron"), Amerada Hess Corporation ("Amcrada Hess"), Marathon Oil Company ("Marathon"), the Alaska Department of Natural Resources ("ADNR"), and the Alaska Department of 'Revenue. 12. Post-hearing briefs were received June 30, 1.995. FINDINGS: BACKGROUND AND HISTORY Thc Connnission issued Conservation Order 290, which approved fieldwide expansion of the Prudhoe Bay Miscible Gas Project ("PBMGP") in 1991. The PBMGP is an enhanced oil recovery ("EOR") project dcsigned to substantially increase the ultimate recovery of oil from the POP. The PBMGP utilizes MI manufactured from NGLs for recovering additional oil. ARCO and BPXA in thc 1991 PBMGP hearings testified to the Commission that no trade- off would exist between manufacture of maximum blendable NGLs and maximum volume of MI for planned EOR. Conservation Order No.':'.( ,.,I August 9, 1995 Page 3 . . 10. The Central Gas FaciliB, ("CGF") is designed to yield three products from separator off-gas: residue or lean gas, NGLs and MI. C.O. 290 did not establish a required volume of MI for EOR? although it did find that PBMGP expansion would require modifying the CGF at Prudhoe Bay to handle up to 7.5 bscfpd of gas and upgrading the MI distribution system to handle 700 mmscfpd of MI. The Commission granted original certification of the PBMGP with Conservation Order 195 in 1984. At that time, the working interest owners ("WlOs") envisioned injecting MI in approximately 50 patterns. By the time the project started in 1987, expectations of scope increased to 100 patterns. In 1987 ahnost 50 patterns were on-line. In the 1991 PBMGP hearing, unit expectations were between 130 and 160 patterns. In 1991, thc unit had approximately 70 patterns on-linc. In May, 1995, 112 patterns were on-line and unit approval granted for ahnost 150 patterns. Thc 1994 Field Development Plan envisions approximately 225 patterns. The Commission first approved MI for EOR for the Flow Station 3 Injection Project with Conservation Order 187 in 1982. The GHX-1 project increased field gas off-take from 3.7 bscfpd to 5.3 bscfpd. Thc project was fully implemented in 1992. Thc GHX-2 project, completed September 1.994, increased field gas off-take from 5.3 bscfi~d to 7.5 bscfpd. The current configuration of the CGF does not allow production of maximum blendable NGLs for transportation down the TAPS and manufacture of a nominal 640-700 mmscfpd of MI for EOR. The current MI capacity at the CGF with blending NGLs at 74,000 bpd is 520 mmscfpd. The maximum blendable NGL volume is a fi~nction of vapor pressure limitations in TAPS. In February 1995, Alyeska implemented new vapor pressure control criteria which made it possible to increase NGL shipment through TAPS an additional 10 mbpd to 20 mbpd, raising 'NGL production volume from the POP to between 84 mbpd and 94 mbpd. The TAPS tariff vapor pressure limit has been 14.7 psi for all relcvant years. Safety concerns have apparently influenced Alyeska not to allow blending of POP NGLs to the TAPS tariff vapor pressure limit. Before February 1995, Alyeska established volume limits for NGLs blended with POP separator liquid production ("SLP") in addition to vapor pressure control limits. The ceilings were 55 mbpd from December, 1986, to January, 1991; 58 mbpd and 60 mbpd in January, 1991; 61 mbpd in February, 1991; 62 mbpd from March, 1991 until May, 1992; 67 mbpd from May, 1.992, until December, 1992; and 74 mbpd from December, 1992, until February, 1995. Effective in February, 1995, Alyeska removed all ceilings other than one dependent on a vapor pressure control limit of 14.2 psi. Conservation Order No.......' August 9, 1995 Pagc 4 11. A unit technical team was convened in January, 1995, to address disagreements between ARCO and BPXA concerning ultimate recovcD'. The technical team met until the third week in April, 1995, attempting to reach a technical consensus. They were not successful. 12. On February 9, 1995, ARCO, as operator of thc CGF, increased the production of NGLs to meet Alycska's new vapor pressure control limit. 13. Skid 50 is thc facility where POP SLP and NGLs are blended for delivery to TAPS. On February 9, 1995, BPXA, as operator of Skid 50, restricted blending of NGLs to prevent production of an additional 10 mbpd to 20 mbpd of NGLs. ARCO attempted to blend additional NGLs through Flow Station 3, but BPXA further reduced Skid 50 blending to offset ARCO's efforts. 14. ARCO has asked the Commission to rule that the best conservation practice concerning NGLs and MI is to blend and ship the maximum volume of NGLs allowed by TAPS. 15. BPXA has asked thc Commission to rule that thc best conservation practice concerning NGLs and MI is to produce at least 700 mmscfpd of MI for EOR. SURFACE FACILITIES AND PROCESSING 16. Flow stations and gathering centers could be operated so as to recover as part of SLP some of the hydrocarbon components that are otherwise recovered as NGLs at the CGF. However, all parties agree operation in this manner would reduce ultimate hydrocarbon recovery from thc POP. 17. The maximum capacity of thc NGL pipeline leaving the CGF under current conditions is approximately 100,000 barrels per day. 18. BPXA contends the capacity of the CGF as it exists today is 700 mmscfpd of MI. TEPI comcnds C.O. 290 quantified 700 mmscfpd as thc volume of MI needed for EOR in the POP. 19. ARCO does not consider the 700 mmscfpd MI capacity a valid option and argues this option is without technical or economic merit. ARCO asserts thc most feasible rate is an annual average of 640 n~nscfpd, assuming estimates of 1996 feed gas compositions are accurate and planned upgrades to the CGF are funded and successful. 20. ARCO maintains the distribution system for MI was never upgraded to handle 700 ]mnscfpd as outlined in the 1991 PBMGP hearings and that the installed system is capable only of handling nominally 600 mmscfpd. 21. ARCO contends that the CGF could achieve a peak rate of 700 mmscfpd of MI if the distribution system were capable of handling 700 mmscfpd of MI, if artificial lif~ gas were limited to 800 mmscfpd, and ifNGL shipments were limited to 67,000 bpd (volume in 1991). Conservation Order No.{. ..... ~ August 9, 1995 Page 5 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. BPXA testified that them were two reasons for a decrease in the anticipated MI capacity of 700 mmscfpd: wet gas problems and increases in NGL production. BPXA testified that thc design of GHX-2 included capacity to handle 1.28 bscfpd of artificial lift. ARCO stated that while the work of the GHX-2 Conccptual Engineering Task Force was based on 1.28 bscfpd, GHX-2 was designed and constructed for 800 mmscfpd. Actual artificial lift rates have been running in the range of 1.1 bscfpd, lowering CGF efficiency. Dehydration upsets at thc CGF adversely affect MI production rates by as much as 20 to 35 mmscfpd. BPXA testified that thc dehydration system at the CGF is pushed to absolute capacity. Dehydration problems do not affect field gas off-take volume, but have reduced the volume of gas that can be turned into MI. ARCO testified that 1991 predictions of CGF efficiency were predicated in part on less than 800 mmscfpd of artificial lift. Oil rim owners have increased artificial lift to 1.1 bscfpd, leaving thc dehydration system undersized. Oil rim owners decided not to fund GHX-2 scope to add additional dehydration. Testimony from hearing participants suggested operational changes or upgrades to the CGF to produce additional MI: for example, re-wheeling existing MI compressors, adding a third MI compressor, upgrading the CGF refrigeration system, pumping salable NGLs into MI, pumping stabilizer reflux into MI, pumping low temperature separator bottoms into MI, installing a third plant to recover M1 components in the residue gas from the CGF, upgrading thc dehydration system and optimizing existing equipment. ARCO projected an increase during 1995 of 30 to 58 mmscfpd of MI as a result of facility \ upgrades and increased experience in operating thc CGF. BPXA comcnds the CGF, with some upgrades, can produce 700 mmscfpd of MI and 70 mbpd of NGLs. ARCO asserts efficiency of the CGF to recover MI componems can decline from 70 percent to 30 percent with increasing MI production. BPXA concurs, but contends pump-up modifications to the CGF could return recovery to 70 percent. BPXA testified facility upgrades that return recovery from 30 percent to 70 percent clearly prevent waste. CGF production during the first quarter of 1995 was 520 mmscfpd of MI and 74 mbpd of NGLs. Incremental NGLs above 74,000 bpd produced under current conditions at the CGF are predominantly butanes. Conservation Order No. :~. August 9, 1995 Page 6 33. If the CGF produced 50-55,000 mbpd of NGL and 700 mmscfpd of MI, the increased NGL/MI production potential of GHX- 1 and GHX-2 would go toward producing 250 nm~scfpd more MI but no more NGLs than before thc expansions. EOR PROCESS AND RESERVOIR DEVELOPMENT 34. Thc 1994 Field Development Plan updates unit consensus for operation and development of thc POP. It is not legally binding nor may it violate voluntary agreements or applicable regulations, orders or statutes. The plan references MI distribution guidelines designed to allocate MI injection volumes for patterns. Thc guidelines are assessed and revised annually. 35. All WlOs acknowledge the benefits derived from thc PBMGP have exceeded initial projections and agreed that I tscf of MI has been injected, and 200 bscf returned MI CRMI") and 85 mmb of EOR oil have been recovered. 36. Each PBMGP pattern performs best in its initial stage of MI injection. 37. ARCO asserts that up to 10 percent total pore volume ("TPV"), MI efficiency is high, requiring less than 6 mcf of MI per barrel of EOR oil, or .75 barrels of EOR oil for each barrel of NGL converted to MI. For 10-20 percent TPV, efficiency is modest, requiring 13 mcf of MI per barrel of EOR oil or .35 barrels of EOR oil for each barrel ofNGL converted to MI. Above 20 percent TPV, MI efficiency is poor, requiring 23 mcfofMl per barrel of EOR oil, or .20 barrels of EOR oil for each barrel of NGL converted to MI. 38. BPXA contends that under increased N'GL blending, expected cumulative MI injection by 2015 would be approximately 4 tscf, which is approximately 16 percent TPV based on the scope of the 1994 Field Development Plan. 39. BPXA contends that expanding EOR scope depends on expanding iMI supply. BPXA suggested thc ultimate scope of miscible flooding at the POP could easily exceed 360 patterns. 40. BPXA contends that 50,000 bpd ofoil is attributable to existing patterns on MI in 1995. 41. BPXA asserts that for every barrel of NGL used for MI in thc POP, more than 1.3 barrels of combined total liquid production is recovered, consisting of .6 barrels of EOR oil and the equivalent of .7 barrels of NGLs as RMI. ARCO's estimates are different and lower. 42. ARCO contends a constam supply 500 mmscfpd of MI through 2015 would recover 411 n~nb of EOR oil; a constant supply of 600 mmscfpd of MI through 2015 would recover 444 nunb of EOR oil; and a constant supply of 700 mmscfpd of MI through 2015 would recover 463 mmb of EOR oil. 43. BPXA cOntends reduction of MI supply is magnified through time because MI normally cycled through the reservoir is no longer available for reinjection. Conservation Order No ('' August 9, 1995 Page 7 44. ARCO contends that the PBMGP project scope and reserves are essentially unchm~ged from the 1994 Field Development Plan, which is consistent with the 1991 PBMGP hearings. ARCO asserts that current MI supply at the POP is adequate to achieve 20 percent TPV in the PBMGP. 45. ARCO contends there is no risk in maximizing NGL blending because sufficient MI is still available to flood all existing EOR projects approved in the 1994 Field Development Plan. Although ARCO asserts all obvious EOR opportunities have been identified in the 1994 Field Development Plan, it contends that if an attractive EOR project is approved in the future, more MI can be created at that time. ARCO admits several EOR opportunities are under study. 46. ARCO and Exxon contend they can fully implement thc PBMGP as envisioned in C.O. 290. BPXA and other WIOs disagree PBMGP goals will be realized if NGLs are blended to the maximum. 47. BPXA contends there is insufficient MI supply to fulfill the patterns and pore volumes contemplated in C.O. 290 and that the current MI supply will provide 25 percent TPV for those pattcms envisioned during the 1991 PBMGP hearings but not the 200 plus patterns identified in thc 1994 Field Development Plan. 48. BPXA asserts there is currently enough MI with 500 mmscfpd to supply 18-19 percent TPV to existing patterns by 2010. 49. BPXA contends that 5 tscf of M! must be injected to achieve approximate 30 percent TPV for 130-160 patterns by 2015. BPXA contends that for approximately 200 patterns identified in the 1994 Field Development Plan, 4.6 tscf of MI will be needed through 2015 and that if blending were allowed to rise to 84 mbpd, only 4 tscf of MI would be injected in those patterns. 50. BPXA asserts there are more attractive patterns for development beyond those identified in the 1994 Field Development Plan. 51. BPXA has expanded its view of EOR opportunities for the POP from that presented to the Commission in 199 i. BPXA also asserts that gas sales offer another opportunity to transport NGLs from thc POP later in field life. 52. Thc technical tcam did not consider the effects of a major gas sale on late-life recovery of NGL components or the effects of pressure maintenance through waterflooding the gas cap (i.e., the PSI project). 53. There was no consensus study done to analyze future recoveries using a single data set and assumptions or common tools. ARCO's m~d BPXA's EOR predictions are not comparable because they use different critical assumptions, project scope and conversion ratios for transfomfing NGLs to MI: Conservation Order No.".'( August 9, 1995 Page 8 · ARCO testified that thc lean gas chase to recover late life NGLs is an unproven process; BPXA concurs insofar as its specific application in the POP, but elsewhere it has been successfully employed. · BPXA predictions include lean gas chase, ARCO's docs not. · ARCO testified that PSI (i.e., water injection into gas cap) is a speculative high risk pressure support process; BPXA disagrees but admits that probably gas cap owners bear a disproportionate share of the risk with PSI. BPXA predictions include PSI? ARCO's docs not. · ARCO characterizes Eilcen West End as uncertain recovery and high cost; BPXA agrees but includes thc project in its predictions while ARCO does not. · ARCO describes Northwest Eilccn as uncertain reservoir quality and high cost; BPXA agrees but is more optimistic. BPXA predictions include Northwest Eileen, ARCO's docs not. · ARCO describes the DS 15/18 Romeo project as a very high risk process; BPXA disagrees and uses DS l5/18 in its predictions, ARCO does not. · ARCO refers to gravity drainage miscible injection CGDMI") as speculative high risk; BPXA describes GDMI as not being high risk, but needing additional work. BPXA extended case includes 360 patterns; 55 percent of them are in the GDMI. ARCO docs not usc GDMI in its predictions. 54. It is unlikcly that a one or two year extension in watcrflood will result in lost reservcs. With each additional year howcvcr, duc to thc potential of corrosion and maturing xvatcrflood, deferred EOR rescrvcs might bccome lost rcscrvcs. 55. ARCO supported MI expansion to Drill Site 4 and 11. in 1995. ARCO contends current MI supply is sufficient to inject in those patterns. BPXA contends Exxon disapproved MI expansion to Drill Sites 4 and 11 solely because of insufficient MI supply. Exxon contends its disapproval was based on economic considerations, not lack of M1 supply. 56. ARCO and BPXA are thc only participants to run detailed reservoir studies to predict NGL/MI recovery. ADNR testified that it does not have resources on-hand to perform the type of analysis necessary to replicate each petitioner's detailed reservoir studies regarding the MI/NGL allocation issue. WASTE AND ULTIMATE RECOVERY 57. ARCO asserts maximum NGL blending yields an additional 100 nunb of NGLs, offset by a loss of 15 to 30 nunb ofoil. 58. Exxon asserts maximum NGL blending yields an additional NGL recovery of 70 tomb, offset by a 10-15 million barrel loss in EOR oil. 59. BPXA asserts potential total hydrocarbon recovery can be improved by 150-200 nunb by increasing MI supply capacity to 700 mmscfpd and extending the PBMGP scope. Conservation Ordcr No.(' .' August 9, 1995 Page 9 60. 61. 62. 63. 64. 65. BPXA asserts that the appropriate NGL rate to maximize total hydrocarbon liquid production is lower than thc current rate under current operating conditions. BPXA stated that limiting production to 50-55,000 bpd of NGL would avoid waste. BPXA and ARCO disagree on how much MI will remain trapped in the reservoir. BPXA contends about 30 percent of all MI will remain trapped. ARCO's estimates are higher. BPXA testified that ifNGL blending is increased to 84 mbpd and MI supply and EOR scope are reduced, liquid hydrocarbon production would decrease by 60-80 mmb. Exxon contends increased blending today will not jeopardize EOR operations in the future because the balance between NGLs and MI can always be shifted with additional knowledge. Exxon testified that thc ideal MI supply is the maximum available from unblendable NGLs that can be made economically. ARCO defended maximum blending, suggesting that ( I ) under established MI guidelines supply will always be directed toward most promising projects; (2) any pattern at risk due to maturing watcrflood would receive priority treatment; (3) there appear to be a number of facility upgrades available which will yield a substantial increase in MI; and (4) if any shortage existed that could not be dealt with under guidelines or extending injection period a couple years, Mt supply can always be ramped up by converting some or all blendable NGLs. Without late-life recovery of NGLs, there would be less than a barrel for barrel recovery of EOR oil for each barrel of NGL injected as MI. 66. The timing, recovery and salability of late-life NGLs reinjectcd as MI are uncertain. 67. 68. 69. 70. ARCO stated that thc situation at Prudhoe Bay's Skid 50 on or around February 9, 1995, when ARCO attempted to increase NGL production and BPXA refused to blend the increased volume, is not typical of good oil field management. BPXA asserted that ARCO's actions on and around February 9, 1995 were not representative of good oil field practices and knows of no other field in the United States where such events could have occurred. ARCO comcnds that between February 9, 1995, and June 20, 11995, 1.5 mmb of blendable NGLs had not been sent through TAPS because of BPXA's refusal to blend additional NGLs at Skid 50. ARCO further contends that reduced fuel gas offiake caused 200 mb of SLP to go unproduced. BPXA asserts its actions at Skid 50 were taken to ensure greater ultimate recovery and to prevent waste in conformance with state oil and gas conservation statutes, even though operational procedures governing thc CGF require blending thc maximum NGL volume allowed by TAPS. Conservation Order No.'~'-( .... 3 August 9, 1995 Page 10 71. 72. 73. 74. BPXA testified conditions have changed in the POP since the Commission held thc 1991 PBMGP hearings. At the time, BPXA asserts, the WIOs thought maximum NGL blending was the preferred alternative in part because they anticipated insufficient liquid volume moving off thc Slope to carry, all the NGLs in later field life: that WlOs also expected up to 700 mmscfpd of MI following GHX-2: and, that no trade-off would exist between NGL and MI production. TEPI contends that increasing NGL production will not promote conservation and will violate all efforts by the WIOs to collaborate in the best long term recovery plan for the POP. ARCO and Exxon, jointly the majority equity owners of the gas cap, support the immediate sale of the greatcst volume of NGLs blendable for transportation to market using the TAPS. BPXA and thc minority WlOs, jointly thc majority equity owners of the oil rim, request up to a maximum of 700 mmscfpd of MI, or the maximum volume permitted by the MI distributiOn system, and endorse using salable NGLs if necessary to produce MI for EOR. 75. There is disagreement among thc WlOs about the current market value of NGLs. 76. 77. 78. 79. 80. 81. 82. ADNR has entered into settlements with BPXA, ARCO and Exxon which value NGLs for royalty purposes thc same as SLP. ADNR does not rely only on Quality Bank methodology to value NGLs. ARCO and Exxon value NGLs on the basis of the royalty settlement with the ADNR, which assigns that value essentially at crude parity. BPXA stated that actual value of NGL is not on parity with POP SLP notwithstanding the ANS gas royalty settlement agreement between BPXA and ADNR establishing royalty payments for NGL on parity with SLP. ADNR contends some components of NGLs are less valued than POP SLP, but the addition of NGLs still has a positive value. NGLs sold blended with crude are more valuable than NGL componems sold in the gaseous state as part of a major gas sale. TAPS Quality Bank payments are intended to compensate for differences in the values of petroleum streams tendered to TAPS. Prior to December, 1993, APl. gravity was used to calculate differences in relative value. Today, the Quality Bank uses a distillation or assay methodology, including component market prices, to calculate differences in relative value. Blending NGLs increases thc API gravity of the POP hydrocarbon stream. Prior to December 1993, because Quality Bank value was a function of APl gravity, the blending of NGLs increased thc value ora SLP owner's share of the blended stream for TAPS Quality Bank purposes. There was no internal quality bank adjustment for NGLs blending with POP SLP within the Prudhoe Bay Unit. Conservation Order No August 9, 1995 Page 11 83. Blending NGLs currently decreases the Quality Bank value of the POP hydrocarbon stream. Blending NGLs lowers the value of a SLP ox~ner's share of thc blended stream for TAPS Quality Bank purposes. There is no internal quality bank adjustment for NGLs blending with SLP within the Prudhoe Bay Unit. 84. ARCO agreed thc effect of NGL blending with SLP from Prudhoc Bay reduced thc value of that stream but argued that the addition of NGL was no different than the blending of condensate, which increases thc value of the stream. All three hydrocarbon streams, condensate, crude and NGL, come from thc POP. Voluntary agreements do make a specific value adjustment for condensate. Voluntary agreements do not make a specific value adjustment for NGLs. 85. Estimates of expected recovery, value and costs become highly speculative as the forecast period lengthens. For example, BPXA testified that in 1977 an average well cost $7 million (adjusted to 1995 dollars), while today an average well costs $1.5 million. During this period, the predicted recovery from the POP has risen from 9.6 billion barrels to over 13 billion barrels and the value of oil has been erratic. In addition, BPXA contends that in 1982 the WlOs expected 200-300 wells were left to drill to thc POP. The unit has been drilling in excess of 50 wells each year and BPXA still anticipates there are some 200-300 wells to be drilled. 86. The volume of NGLs that could be produced exceeds thc blending capacity of POP SLP. Every barrel of crude that goes by unblcnded is a lost opportunity for blending. Blending NGLs with SLP or selling them to another North Slope oil and gas field is the only viable means to market NGLs today. The ability to blend m~d transport NGLs with POP SLP declines with each day. 87. There is no opportunity to recapture MI. components once they are sent down TAPS as NGLs. There is no evidence that enough MI components will not continue to be available in the POP to inject into any feasible EOR project. 88. BPXA characterized conversion of NGL into additional MI as investing a relatively low value product with the expectation of recovering a higher value product, at least from the oil rim perspective. BPXA testified that the CGF should make thc maximum volume of MI and that failing to do that causes a reduction in ultimate recovery. 89. BPXA testified that deferred production caused by deferred expansion of EOR patterns due to lack of MI can become lost production because waterflood and facilities mature. This timing constraint can cause loss in ultimate production. 90. Exxon describes reservoir management, including identification of new opportunities to improve recovery, as a complex, continual and dynamic process which at times leads to different technical conclusions among owners. 91. Yukon Pacific. contends a major gas sale will maximize ultimate economic recovery of oil and gas. A major gas sale could begin as early as 2003 with continuing oil production. The Conservation Order No. August 9, 1995 Page 12 Trans-Alaska Gas System ("TAGS") could move methane, butanc, propane and ethane that would otherwise be undeliverable to market. A gas conditioning plant to process gas for shipment down TAGS could produce MI for rcinjcction on thc North Slope. 92. Yukon Pacific contends the dual equi~' at the POP complicates future gas sales and does not benefit TAGS. 93. ADNR testified its understanding of the recovery mechanisms in the reservoir has evolved since initial depletion plans were formulated by the WIOs and approved by the ADNR. ADNR recommends approving reservoir production strategies that preclude flexibility in future operations only if there is no other choice available. 94. BPXA testified existing levels of MI injection and NGL sales arc currently causing waste to occur. BPXA testified that to prevent waste a nominal 640-700 nunscfpd of MI must be injected in the reservoir to recover additional oil. 95. Exxon contends MI beyond that manufactured from unblendable components is too expensive in that it requires either additional investment or a loss of revenue. Remaining EOR expansions at thc POP using MI can only be economic if they utilize unblendable NGL components. 96. ARCO testified existing levels of MI injection and NGL sales are causing waste, and that anything less than maximum blending of salable NGLs under thc approved Plan of Development constitutes physical waste. Unless it can be demonstrated that injecting salable hydrocarbons is reasonably certain to produce more or higher value salable hydrocarbons, waste would occur. 97. BPXA claimed the trade-off for additional NGLs that could be converted to MI results in waste. BPXA testified that if 100,000 extra barrels of NGL are shipped today the unit will lose the opportunity to produce, at a minimum, 60,000 EOR barrels and potentially 200,000 barrels of EOR oil. The effect would be immediate. 98. iBPXA stated that at thc core of this disagreement arc two very different views of how best to achieve greater ultimate recovery of oil and gas from the POP. PROPERTY AND CONTRACTUAL ARRANGEMENTS 99. To prevent, or to assist in preventing waste, to insure a greater ultimate recovery of oil and gas, and to protect correlative rights of persons owning interests in tracts of lands affected, persons may validly integrate their interests to provide for the unitized management, development and operations of such tracts as a unit. AS 31.05. l 10. 100. The WlOs of the POP arc Amerada Hess Corporation, ARCO Alaska, Inc., BP Exploration (Alaska) Inc., Chevron U.S.A., Inc., Exxon Company, U.S.A., Texaco Exploration and Production Inc., Louisiana Land and Exploration Company, Mobile Oil Company, Marathon Oil Company, Shell Westem E & P Inc., and Phillips Petroleum Company. Conservation Order No.[ x'. . · ~ August 9, 1995 {" Page 13 l 01. The land owner, or royalty owncr, is the State of Alaska as represented by ADNR. The State of Alaska has leased multiple properties overlying thc POP. Thc State of Alaska retains a royalty share of 12.5% of all hydrocarbons produced from thc POP. 102. The WlOs and ADNR entered into an agreement entitled, "Unit Agreement, Prudhoe Bay Unit, State of Alaska" on April 1, 1977. The Prudhoe Bay Unit Agreement ("PBUA") purportedly unitized all oil and gas rights in each lease overlying the POP so that unit operations may be conducted as if thc unit area had been included in a single lease executed by the State of Alaska and any other party who may have authority to execute oil and gas leases, as lessor, in favor of all working interest owners, as lessees. Article 3.1. The PBUA established two participation areas, the Oil Rim Participating Area ("PA") and the Gas Cap PA. Article 5.2. The PBUA established two unit operators, now BPXA in the western half of thc pool and ARCO in the eastcm half of the pool. Article 4.1. 103. The PBUA providcs that production from the gas cap be allocated to the Gas Cap Participating Area and production from the oil rim be allocated to thc Oil Rim Participating Area. Article 6.1 Within each participating area, the agreement further provides that production be allocated among WIOs on the basis of tract participation agreed to by thc WIOs. Article 5.2. The current approximate share of production for each working interest owner for each participating area is: WlO Oil Rim Participating Area Gas Cap Participating .Area BPXA. 50.68% 13.84% ARCO 21.78% 42.56% Exxon 21.78% 42.56% Mobil 1.89% .28% Phillips 1.88% .26% Chevron .67% .48% Amcrada Hess .54% 0.00% TEPI .55% 0.00% LL&E .04% 0.00% Marathon .05% 0.00% Shell .14% 0.00% 1. 04. All oil derived from EOR is allocated to the oil rim owners. Approximately 90 percent of all NGLs are allocated to the gas cap owners. 105. In signing the PBUA, the working interest owners agreed to develop with due diligence thc unit area in accordance with good engineering and production practices. Article 4.2. 106. ADNR approved the PBUA with the understanding that unitization would prevent economic and physical waste by eliminating redundant expenditures and duplication of facilities for a given level of unit production, and that unitization would maximize ultimate recovery by the adoption of a unified reservoir-wide depletion strategy. 107. The WlOs entered into an agreement emitled, "The Prudhoe Bay Unit Operating Agreement" on April 1, 1.977. The Prudhoc Bay Unit Operating Agreement ("PBUOA") provides, Conscrvation Order No. ~ . ,~ August 9, 1995 Page 14 108. 109. 110. 111. 112. 113. 114. among other things, for unit operations, allocation of unitized substances, allocation of unit expenses mad the establishment, enlargement and contraction of participating areas. The PBUOA provides that costs incurred by or directly related to a particular participating area be allocated to that participating area. Article I 1. Thc PBUOA provides for thc Gas Cap PA and the Oil Rim PA to develop and produce the POP using common facilities. Thc WIOs agreed to allocate costs of joint operations so that each participating area shares proportionally in thc savings that occur as a result of joint operations. Article 32. For joint cost allocation purposes, unit operations were divided into three phases to reflect thc change over from oil-oriented operations to gas-oriented operations. Thc first phase occurs until a major gas sale. Thc second phase is from a major gas sale until operations in certain parts of the field become predominately gas oriented. The third phase applies to those areas of the field that have become prcdominately gas oriented and last until termination of the agreement. The PBUOA originally predicted a major gas sale within seven years and thc initiation of second phase management. The POP, now 18 years later, continues under phase one management. The POP is the only oil pool in Alaska where the WlOs attempt to unitize a reservoir while maintaining separate and disparate equities between that portion of the pool that is gas (gas cap) and that portion of the pool that is oil (oil rim). All other unitized gas cap reservoirs in Alaska are integrated with common equity between oil and gas. No party to these proceedings identified any other unitized reservoir in the United States that attempts to develop the reservoir while maintaining separate and disparate equity interests between oil and gas where oil and gas are in communication in a common accumulation. ADNR has not sought to create, nor has it approved, the formation of both a gas cap participating area and a oil rim participating area for any other reservoir in Alaska. In order to produce the POP while trying to protect correlative rights, prevent waste and provide for maximum hydrocarbon recovery, the WlOs negotiated and signed the following documents which have substantially amended the PBUOA since the unit was formed in 1.977: · The Prudhoe Bay Unit NGL/EOR Operating Procedures and Flow Station 3 Injection Project Operating Procedures in 1983, · The Pmdhoe Bay Unit Gas Handling Expansion Agreement in 1988, · Thc Prudhoe Bay Unit Issues Resolution Agreement ("IRA"), effective in 1990, and signed by all parties by 1993, · The Amended and Restated Prudhoc Bay Unit NGL/EOR Operating Procedures and Flow Station 3 Injection Project Operating Procedures in 1991, and · The September 1991 Amcnchnent Agreement. The ADNR was not a signatory, nor did ADNR object, to amendments to the PBUOA. The 1984 NGL/EOR Operating Procedures Agreement established a ten year limit for the Gas Cap PA to provide, without additional compensation, MI produced at the CGF to the Conservation Order No ....... August 9, 1995 Page 15 Oil Rim PA for EOR. The new limit established by thc Amended and Restated NGL/EOR Operating Procedures is for thc Gas Cap PA to provide, without additional compensation, MI produced at thc CGF to the Oil Rim PA for thc life of the EOR project. 115. Thc Amended and Restated NGL/EOR Project Operating Procedures also addressed thc priority given to NGL and MI production. Thc WlOs disagree about the application of voluntary agreements governing NGL and MI production. 116. The WlOs negotiated and signed the Gas Handling Expansion Agreement, at least in part, because each working interest owners had differing interpretations of the PBUOA for the sharing of costs between thc Gas Cap PA and Oil Rim PA for gas handling expansion projects. 117. The Gas Handling Expansion Agreement defined the CGF as the gas processing facility built pursuant to thc NGL/EOR Project Operating 'Procedures. 118. The IRA established thc original gas cap gas reserves at 24.8 tscf, the original oil rim gas reserves at 10.7 tscf, and the original condensate reserve at 1.175 mmstb. The IRA provides that when cumulative condensate production volumes equals thc final rcdetcnnined original condensate reserves, all base separator liquid volumes shall thereafter be allocated to the Oil Rim PA in accordance with PBUOA Article 28.007. 119. The IRA also amended the PBUOA, 30.008.04. "Unit Expense Allocation for Fuel Supplied" (Fuel Gas Supply Option). Thc value of fuel gas, established by arbitration, was set at $3.04 per million BTU for thc term of the Fuel Gas Supply Option ("FGSO"). IRA Article 6.2. The IRA established that the FGSO ends in 2005 or with a major gas sale, whichever conics first. 120. ADNR testified that the entire FGSO and subsequent arbitration would not have had to take place if there had been only one participating area. 121. The PBUOA, as amended, specifies that the manufacture and shipping of NGL will take priority over the manufacture and injection of MI. This priority was set prior to significant competitive dcmm~d bctwccn NGL and MI. There is no commitment to a volume of MI or NGL in the PBUOA, as amended. 1122. ARCO contends the reason the impasse on NGL blending could occur at the POP is that there are two participating areas with different equities. ARCO contends BPXA's action violates the PBUOA and commitments made to the Commission to maximize production and economic recovery from thc POP. 123. ARCO testified that they must operate under both field rules and voluntary contracts. ARCO asserts the contracts require maximization of NGL blending. ARCO asserts that the first and foremost goal is maximization of ultimate recovery from the POP in the context of approved plans of development. Conservation Order No. ~3... August 9, 1995 Page 16 124. Exxon asserts it is the responsibility of the unit owners to determine the operating parameters that achieve maximum economic recovery from the POP. Exxon suggests the appropriate course is obvious: NGL blending should be maximized and the unit technical teams put to work to iron out differences. 125. Exxon contends thc IRA established that unblendable NGLs were dedicated to the owners of the Oil Rim PA as MI for EOR and blendable NGLs were dedicated to the owners of the Gas Cap PA for marketing. Exxon asscrts that any MI produced from blendable NGLs are an operational cost to the owners of thc Gas Cap PA not covered by any agreement. 126. Phillips contends there is a disagreement among WlOs regarding tile meaning of agreements about appropriate level of NGL blending. Phillips asserts that the unit should determine what MI and NGL rates will maximize economic hydrocarbon recovery in the Prudhoe Bay Unit and recommends a sequestered technical teton to work out the best solution for ultimate economic recovery. 127. TEPI views the POP as one unitized property with two equity ownerships. TEPI is not aware of any other field unitized in such a manner. 128. TEPI asserts that maximum NGL blending destroys the only key IRA benefit it will receive as a minority owner in only thc Oil Rim PA. 129. BPXA argues that the PBUOA, as amcndcd, requires prudent maximization of total liquid hydrocarbon recovery before blending maximum NGL volumes. BPXA asserts that if either participating area is adversely affected by production, the unit operators must review the operating conditions and, where prudent, revise them to address adverse impacts. 130. BPXA proposes Module 880 to take its share of SLP production in-kind and bypass existing blending facilities at Skid 50. BPXA argues that ARCO and Exxon have no contractual right to blend their allocated volumes of low value NGLs and degrade BPXA's SLP without compensation for BPXA. BPXA argued blending NGLs with SLP forces BPXA to incur a severe penalty when thc combined stream is measured by the Quality Bmlk. 131. Module 880 will not increase ultimate recover5' from the POP. 132. ARCO &scribed Module 880 as a BPXA effort that violates the NGL/EOR Operating Agreements which expressly require the maximization of NGL production m~d separator liquid production. 133. The State of Alaska, in a response dated January 13, 1994, filed, with the Alaska Public Utilities Conmfission ("APUC"), Docket Nos. P-89-1, et. al., argued that BPXA, in voluntary cooperation with other Prudhoe Bay Unit interest owners, negotiated voluntary agreements that allow for NGLs and SLP to be commingled and offered at Pump Station 1 as a single stream. Thc State asserted that the threat by BPXA to construct separate facilities to deliver its own SLP by taking what BPXA termed a "vastly inefficient" step of constructing separate facilities nced not be a concern of the APUC because the Alaska Oil and Gas Conservation Commission possesses sufficient regulatory authority to ensure that Conservation Ordcr No. '~, . August 9, 1995 Page 17 waste is not committed in thc production ofoil or gas citing AS 31.05.030(b); and AS 31.05.095. 134. In thc same January 13. 1994, response the State also argued that thc TAPS Qualits.' Bank had no legal or logical responsibility to account for the addition of NGLs to the SLP within thc Prudhoc Bay Unit. Thc State asserted BPXA should handle thc question of whether NGLs blended at Skid 50 arc lower in value than thc remainder of the oil as the internal Prudhoc Bay Unit matter that it is. 135. On April 21, 1995, BPXA filed a request for declaratory relief in Alaska Superior Court, Case No. 3AN-95-332 i-CIV, in which BPXA, in part, asserts that it has a contractual right under the PBUOA to take Prudhoe Bay Unit production in-kind and tender it as BPXA sees fit and that it has no obligation to blend its allocated SLP with other WIO's NG'Ls without compensation. 1136. On May 11, 11995, Exxon filed a complaint in Alaska Superior Court, Case No. 1JU95-1013 CI, in which Exxon, in part, accuses BPXA of willful violation of the PBUOA, the NGL/EOR Agreement and the Amended NGL/EOR Agreement and unreasonable interference with unit operations. .137. On May 11, 1995, ARCO filed a complaint in Alaska Superior Court, Case No IJU-95- 1012 CI, in which ARCO claims, in part, BPXA has violated its contractual obligations as a unit operator, is contemplating building facilities that will unreasonably interfere with. unit operations and has rcpudiatcd thc basic allocation of hydrocarbons under the operating agreements underlying the entire organization and operation of thc Prudhoe Bay Unit. 138. Notwithstanding the PBUA and the PBUOA and its amendments, the WIOs cannot agree on implementing a plan of development for the POP, at least as it pertains to the balance between NGLs and MI, that will prevent waste, protect correlative rights and ensure greater ultimate recovery. 139. The WlOs' failure to agree on implementing a plan of development, as it pertains to the balance between NGLs and MI, is not in accordance with good oil field practices, is leading tb the inefficient operation and production of the POP and is contributing to a reduction in the quantity of Oil and gas that can be recovered from thc POP. 140. If there were an integrated ownership ofoil and gas within the .POP, it is unlikely the WIOs would be before the Commission on whether to maximize blendable NGLs or make more MI. CORRELATIVE RIGHTS 141. During 1995, the WlOs have been unable to cooperatively resolve differences with respect to how their voluntary agreements protect their respective correlative rights. 142. ARCO testified BPXA's refusal to blend is a repudiation of contractual obligations motivated by its economic interests. Conservation Order No.[3\', August 9, 1995 Page 18 143. BPXA has stated that the negative economic impact of NGL blending is increasingly becoming an impediment to full cooperation in the Prudhoc Bay Unit. 144. BPXA testified there is competition between the oil rim and gas cap owners to produce their just and equitable shares of their respective resources manifested in the competition for MI and NGLs from the CGF. 145. Exxon testified cost of MI is a key variable affecting EOR scope, and that, as a gas cap owner, it had no problem selling NGLs back to the unit to use as MI, but as an oil rim owner it might have a problem with purchasing an expensive MI. 146. TEPI testified that if it had only gas cap ownership and no oil rim ownership, it would be in a position to support increased blending. 147. BPXA contends it will be deprived of its just and equitable share of the total oil reserves if the MI supply is allowed to be depleted by increasing the NGL blending rate. 148. ADNR stated that even if the WlOs, ADNR, the Commission and all other interested parties could agree on a common reservoir behavior and a common production forecast model using 'the same set of given assumptions, the differing oil rim versus gas cap ownership interests may mean that thc different owners will favor different operating and depletion strategies based on each owner's specific economic position. As long as there are tWo participating areas those commercial diffcrcnccs arc going to exist and have to be considered. 149. BPXA suggested that if the disagreement were only technical, resolution by unit owners would be possible. 150. ARCO contends the right of the gas cap to sell marketable components to the oil rim within the POP is analogous to selling to a different reservoir. 151. ARCO testified it has no further obligation to provide salable NGLs for EOR and asserts its correlative rights to produce its gas would be harmed if forced to manufacture MI from salable NGLs. ARCO suggests the Commission require the oil rim to pay fbr converting blendable NGLs into MI to protect its correlative rights. 152. BPXA and TEPI testified they had already paid for MI for EOR by investing in the gas handling expansions. They assert their correlative rights to produce oil would be jeopardized if they were unable to usc all that gas for EOR. They stated that 700 mmscfpd of MI has been purchased by the oil rim by constructing GHX-2 for use in the EOR project. 153. ARCO or Exxon each own roughly 42 percent of a barrel of NGL but each own roughly 22 percent of a barrel of EOR oil that might be recovered using MI converted from salable NGLs. BPXA owns approximately 14 percent of each barrel of NGL but owns approximately 51 percent of a barrel of EOR oil that might be recovered using MI converted from salable NGLs. TEPI sacrifices no potential revenue converting salable NGLs to MI because it owns no appreciable share of NGLs and about .5 percent of each EOR barrel. Conservation Order No. Y August 9, 1995 Page 19 For ARCO or Exxon, thc return on a barrel of EOR oil versus a barrel of NGL must be two or three times that of BPXA's return to have a roughly equivalent economic impact. 154. Thc separate equities between thc Gas Cap PA mid the Oil Rim PA fosters differing commercial interests, which have lcd to competition to produce thc POP between each participating area. REQUESTED REMEDIES 155. BPXA, TEPI, Mobil, Marathon. Chevron, Shell, Phillips, Amcrada Hess and Exxon all support rcconvcning thc unit technical team to review thc question of what balance of NGL and MI production will Icad to greater ultimate recovery. WlO participants supporting reconvcning the technical team estimate 90 to 120 days will be needed for the technical team to complete work. BPXA recommends thc technical team, if ordered to reconvene, report back to the Commission within 90 days. 156. Except for Exxon, ali thc WlOs recommending rcconvcning the technical team request that in thc interim thc Cmmnission limit NGL blending to 74,000 bpd. 157. Exxon recommends that maximum 'NGL blending to the TAPS limit be implemented "until sufficient data/studies dictate otherwise." 158. ARCO opposes an order reconstituting a unit technical team becm~sc it contends additional unit technical work is unlikely to change anyone's view of NGL/MI utilization.' ARCO asserts technical teams cannot address business and contract issues which are the ul'timate drivers in the current dispute. ARCO contends business issues are too complex m~d the economic interests of the companies are too different to be resolved by a teclmical team. For example, ARCO suggests a technical team cannot assign risk to speculative projects or judge thc willingness of one company to risk another's resource. 159. ARCO requests thc Commission require BPXA to allow NGL blending to the maximum allowed by TAPS. 160. ADNR testified the Commission, with respect to unitization and unitized operations of pools, has a responsibility to prevent or to assist in preventing waste, to ensure a greater ultimate recovery of oil and gas, and to protect the correlative rights of persons owning interests in thc affected tracts of land. ADNR asserts the correlative rights of the ovmers of the Oil Rim PA and the Gas Cap PA in the POP need to be considered and protected. ADNR requests the Commission consider what operating plans and depletion strategies best maximize ultimate recovery of both oil and gas from the POP, then the economic interests of the various parties can be weighed and balanced. 161. ADNR also submitted a post-hearing brief contending the Commission should defer to ADNR to address the issues. Conscrvation Order No., .... August 9, 1995 Page 20 JURISDICTION AND AUTHORITY 162. Thc authority of thc Commission applies to all land in thc state subjcct to its police powers including land of thc United States and land subject to thc jurisdiction of thc United States. The authority of thc Commission further applies to all land included in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). AS 31.05.027. 163. ADNR has standing before the Commission to raise all issues relating to state-owned land without regard to thc type of proprietary interest held by thc State in the land. ADNR has thc same standing (no more or less) before the Commission as granted by law to any other proprietary interest. AS 31.05.026(a)(e). 164. The waste ofoil and gas in the state is prohibited. AS 31.05.095. 165. The Commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of AS 31. Thc Commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it. The Commission shall adopt regulations and orders and take other appropriate action to carD' out the purposes of this chapter. The Commission may require the filing and approval of a plan of development and operation for a field or pool ill ordcr to prevent wastc, cnsurc a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in thc tracts of land affected. The Commission may regulate, for conservation purpose the quantity and rate of the production of oil and gas from a well or property; this authority shall also apply to a well or property in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). AS 31.05.030(a), 31.05.030(b), 31.05.030(d)(9)and 31.05.030(e)(6). 166. ARCO, Exxon and B'PXA suggest the Commission can protect the State's interest and ensure maximum recovery of economic hydrocarbons without deciding the contractual disputes between ARCO, Exxon and BPXA .now pending 'before thc Alaska Superior Court. 1.67. ARCO, BPXA, and Exxon agree that thc Commission has thc jurisdiction and authority to determine the appropriate level of NGL blending based on considerations of preventing waste and maximizing rccovery. ADNR argues that at most thc Commission's authority is limited to deciding matters of physical waste and that it may not base its decision on "economic analysis." Phillips argues that there is no issue of physical waste in this case because BPXA is at worst putting "to some usc" the blcndable NGL components that are being made into MI. 168. Economics necessarily plays a role in some of the decisions that may face the Commission. Economic practicability is implicit in the statutory standard of "conducted in accordance with good oil field engineering practices." AS 31.05. 170(14)(A). The role of economics in a similar provision of Wyoming's conservation statute Cpmdent and proper operations") was acknowledged by the Wyoming Supreme Court in M~jority of Working Interest Owners in Conservation Order No.[ August 9, 1995 Page 21 Buck Draw Field Area v. Wyoming Oil and Gas Conservation Comm'n, 721 P.2d 1070 (Wyo. 1986). 169. Despite thc fact that thc relative values of NGLs and EOR oil were addressed and disputed by the parties, it is not necessary for the Commission to consider economics to the extent of determining thc relative values of those substances. Thc basis of the Commission's decision does not require that determination nor does the Commission's decision pertain to "economic waste" as that term is uscd in certain other states' conservation statutcs in which it relates to market prorationing. 170. Even if it were necessary to consider thc role of relative values for thc purposes of this decision, in applying thc standard of "insurlingl a greater ultimate recovery of oil and gas," AS 31.05.030(d)(9), there is not sufficient reason to depart from a simple volume-for- volume comparison of NGL and EOR production. Substantial uncertainty attaches to predicting the relative values of NGLs and EOR oil into thc future. 171. Phillips' interpretation of waste is not consistent with the Alaska Oil and Gas Conservation Act. AS 31.05.170(14) defines "waste" as including the "operating or producing of any oil or gas well in a manner which results or tends to result in reducing thc quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices." 172. ADNR urges the Commission to defer jurisdiction to ADNR because it asserts it has jurisdiction over the entire dispute and economic cxpcrtisc. ADNR has scheduled a hearing to address similar issues as those before the Commission. 173. It is not clear action by ADNR pursuant to its ovm authorities would resolve the controversy. A WlO aggrieved by ADNR's decision could seek recourse at the Commission. 174. There is a claim before the Commission that waste has been taking place and continues to take place. Thc Comlnission has jurisdiction and is obligated to make a determination in this controversy as quickly as practicable. 175. ADNR also argues that voluntarily unitized state leases are solely within the purview of ADNR and that thc Commission has extremely limited or even non-existent jurisdiction to address issues relating to unitization and management of the Prudhoe Bay Unit, or even issues of waste and conservation within the Prudhoe Bay Unit. 176. ADNR's assertion is not consistent with the Alaska Oil and Gas Conservation Act. Among other provisions of the act, AS 31.05.027 expressly provides, in relevant part: "The authority of the commission 'further applies to all land included in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p)." 177. Ifa failure to achieve unitization within the meaning of AS 31.05.110 results in problems unitization is designed to rectify, notwithstanding that a unit agreement has been entered into by the working interest owners and approved by ADNR under AS 38.05.180(p), "it is [the Conservation Order No. 5~ .... August 9, ! 995 Page 22 Commission's] duty to... do thc things necessary or proper to carD' out the purposes of" AS 31.05.110. CONCLUSIONS: Thc eleven WlOs have agrecd to unitized management, development and operation of the Prudhoc Oil Pool under thc terms of the Prudhoe Bay Unit Operating Agreement as amended. Thc management, operation and development of thc Prudhoe Oil Pool has not been able to proceed as approved in thc Prudhoc Bay Unit Operating Agreement without a number of voluntary amendments to the PBUOA. The Alaska Department of Natural Resources endorsed unitized management, development and operation of thc Prudhoc Oil Pool under the terms of the Prudhoe Bay Unit Agreement. The Commission has jurisdiction regarding the conservation of oil and gas in Alaska. Leases subject to voluntary units and voluntary cooperative or unit plans of development and operation entered into in accordance with AS 38.05.180(p) arc not exempt from Commission regulation to prevent waste or assist in preventing waste, ensure greater ultimate recovery of oil and gas or protect thc correlative rights of persons owning interests in the tracts of land affected. AS 31.05.027, AS 31.05.030 and AS 31.05.110 . Resolution of the controvcrsy presented in this proceeding concerning the appropriate rate of NGL blending falls squarely within thc Commission's authorities to prevent waste, AS 31.05.030(b), to require the filing and approval of a plan of development and operation, AS 31.05.030(d)(9), and to regulate for conservation purposes the quantity and rate of the production ofoil and gas from a well or property, AS 3 !.05.030{c)6). 'Conservation Order 290, authorizing the Prudhoc Bay Miscible Gas Project, need not be amended, iHowcvcr, thc commitment to EOR contemplated by Conservation Order 290 requires that the Central Gas Facility (CGF) be capable of producing a supply of MI consistent with commitment to EOR without competition with production of salable NGLs. Testimony during 1991 hearings leading to C.O. 290 convinced the Commission that those twin objectives were integral to greater ultimate recovery and were not, and would not be, in competition. Failure to pursue and achieve those twin objectives may compel the Commission to reconsider C.O. 290. . Competition exists between the production of blendable NGLs and the manufacture of MI. There are facility upgrade options that can eliminate or reduce competition between the manufacture of NGLs and MI at the CGF. . The WlOs disagree about how their property and contractual arrangements affect the management, dcvclopmcnt and operation of thc unit to ensure greater ultimate recovery' of oil and gas. . The WlOs disagree about how their property and contractual arrangements protect thc correlative rights of both the oil rim owners and the gas cap owners to produce their just and Conservation Order No. ,... · August 9, 1995 Page 23 equitable share of oil and gas without waste. This is possible because of separate and disparate equity interests between two participating areas within thc Prudhoc Oil Pool. It appears that all pcrsons' correlative rights will be best protected by complete integration of interests in thc Prudhoc Oil Pool under AS 31.05.110. 10. To the extent, if an5,, that correlative rights may be affected by the Conunission's order concerning thc volume of NGL blending, thc need to prevent waste is paramount. Gilmore v. Oil and Gas Conservation Comm°n, 642 P.2d 733 (Wyo. 1982). 11. Maximizing blendable NGL production does not compromise correlative rights because it allows the ovmers of the gas cap to produce all the gas cap hydrocarbons they seek to produce and does not prevent the oil rim owners from producing ali the oil rim hydrocarbons they seek to produce without using gas cap products the gas cap ovmers wish to produce and sell. To the extent the oil rim owners contend they have paid for MI made with blendable NGLs, that is a contractual matter not determined by this Order. 12. ARCO and BPXA agree that current production practiccs arc producing physical waste from the Prudhoe Oil Poo~, !':....: ."'~isagrce why. Current property and contractual arrangements governing thc operation and development of thc Prudhoe Oil Pool are inadequate to prevent, and may promote, physical waste. 13. If NGL blending is increased to the current TAPS vapor pressure control limit, on average less than one barrel of EOR oil, and probably not more than 0.6 barrel of.EOR oil, will be foregone, at least temporarily, for each barrel of additional NGLs blended during the next year. The volume of foregone additional hydrocarbon recovery in the form of "late-life NGLs," that BPXA asserted could be as much as 0.7 barrel per barrel of additional NGLs blended, is highly speculative in quantity and salability. 14. If NGL blending during thc next year is increased to thc current 'YAPS vapor pressure control limit, and if it later appears some lower volume of NGL blending is the optimal conservation practice, there will remain an adequate volume of MI components in the Prudhoe Oil Pool with which to make sufficient MI for any EOR project. It is likely any interim loss in EOR oil production (and any late-life NGL recovery) will be made up by extending the EOR project, by making other modifications in EOR facilities or operations, or by a combination of such changes. 15. l'f NGL blending during thc next year is not increased over the level at which BPXA is currently constraining it, and if it later appears that maximum NGL blending is the optimal conservation practice, it is unlikely any interim loss in NGL production will be made up because of the limited and declining capacity of thc Prudhoc Oil Pool stream to accept NGL blending. 16. At least in the short term, thc quantity and rate of production of oil and gas most likely to prevent waste and ensure greater ultimate recovery is to blend for sale the maximum allowable volume of NGLs from hydrocarbons delivered to thc CGF. Conservation Order No. ,. August 9, 1995 Page 24 17. Module 880 will not contribute to greater ultimate rccoveD' or prevent waste. WlOs disagree whether voluntary agreements seeking to protect correlative rights allow or do not allow such a facility to be constructed. WIOs arc involved in civil suits in an attempt to resolve the dispute. If equity within the Prudhoc Oil Pool were integrated as a single property, there would be no need for an ovmcr to build such a faciliB, to protect its correlative rights. 18. Sufficient evidence has bccn heard regarding thc effects of property and contractual arrangements on Prudhoe Bay development and operation to convince the Cormnission that the next phase of these proceedings should be more focused than thc general investigation previously anticipated. It appears that more complete unitization and integration of interests in the Prudhoc Oil Pool will be necessary to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect correlative rights. Consequently, in the absence of voluntary efforts, further hearings in this matter will be directed toward developing a plan of compulsory, unitization. 19. Competition between thc gas cap and oil rim has compromised conservation principles in thc development and operation of the Prudhoc Oil Pool. If the competitive effects of disparate equity interests arc eliminated, thc working interest owners should be able to recommend a cooperative and unifom~ plan of operation and development to prevent waste and ensure greater ultimate recovery of oil and gas from the Pmdhoe Oil Pool. Therefore, a permanent role governing the production of NGLs and MI is unnecessary at this time. THEREFORE, IT IS ORDERED BY THE COMMISSION THAT: Effective immediately, thc operators of the Prudhoe Oil Pool shall, from hydrocarbons delivered to thc CGF, produce and blend NGLs to the maximum volume that can be tendered to TAPS from the Prudhoe Oil Pool. This section of this Order expires on August 31, 1996, unless extended by this Commission after notice and opportunity for hearing. The authority for this section of this Order is AS 31.05 generally and AS 31.05.030(b), 31.05.030(d)(9), and 31.05.030(c)(6) specifically. . A hearing is scheduled for September 11, i 995, to develop a plan for compulsory unitization of thc Prudhoe Oil Pool. Upon receipt of a written request, this hearing may be postponed if, in the judgment of the Commission, the owners of thc Prudhoc Oil Pool arc working to integrate thc separate and competing equities of the gas cap and oil rim within the Prudhoe Bay Unit. The authority for this Order is AS 31.05 generally m~d AS 31.05.027, 31.05.030, 31.05.095 and 31.05.110 specifically. . Written submittals in response to the Commission's questions and inquiries concerning the plan of development and operations and other agreements as they affect NGL throughput, MI utilization and ultimate recovery from the Pmdhoe Oil Pool (Appendix A, April 20, 1995 Procedural Order) arc now duc September 1, 1995. Upon receipt of a written request, this deadline may be postponed if, in thc judgment of the Commission, the owners of the Prudhoe Oil Pool arc working to integrate the separate and competing equities of thc gas cap and oil rim within the Prudhoe Bay Unit. The authority for this Order is AS 31.05 generally and AS 31.05.030(b), 31.05.060 and 3 !.05.070 specifically. Conservation Order No.( August 9, 1995 Page 25 . An annual plan of operation aad development for the Prudhoe Oil Pool and any amendment to that plan must be submitted to the Commission for approval by October 1, 1995, and by August 15 thereafter. The plan must include a report on the feasibility and progress made toward eliminating the competition between NGLs and MI at the CGF. If the Commission does not schedule a hearing to investigate the effect of the plan of operation and development and any amendment to that plan on conservation matters within 15 days of receipt from the operator, the plan may take effect as proposed. This section of this Order expires on August 31, 1996, unless extended by the Commission after notice and opportunity for hearing. The authority of this section of this Order is AS 31.05 generally and AS 31.05.030(d)(9) specifically. . Each agreement executed herea:fier that may affect operation of the Prudhoe Oil Pool .must be submitted to the Commission to afford it an oppommity to investigate whether the agreement contains anything'that may impair correlative rights, reduce ultimate recovery or otherwise lead to waste. This section of this Order expires on August 31, 1996, unless extended by 'rite Conmfission after notice and opportunity for hearing. The authority of this section of this Order is AS 31.05 generally and AS 31.05.030(d)(9) specifically. o This Order is not intended to preclude an3' person from seeking to enforce contractual rights, subject to compliance with the provisions of this Order. DONE at Anchorage, Alaska aad dated August 9, 1995. David W. Johnston, Ch~rm~ Alaska Oil and~ ~on Commission Russell A. Douglass, Commissioner Alaska Oil and Gas Conservation Commission ~uckerman Babcock, Commissioner Alaska Oil and Gas Conservation Commission Within 20 days after receipt of written notice ot'~tt[y ot'this order a pe~on alt~cted by it may file with the C. ommission an application ~br · · · . . ..... ; .~ - ~ ~ · . I reheanng, the Conumsston shall grant or refuse the apphcataon m whole or m part w~thd. 10 days. I~e (,omtmss~on can ret:ase an I application 'by not acting within the 10 day period. An affected pe~on has 30 (lays from the date that the Conm~ission's refusal of the I application or order upOn rehearing (both being the final order of the Commission) is mailed or otherwise distributed to appeal the decision I to the superior court· Where a request for rehearh~g is denied by nora~ction of the Commission, the 30 day period for appeal to superior I court runs from the date on which the reque~ is de~med denied (i.e., ~ (;th da~ after the application tbr rehearing was filed). 17 THE STATE Of 7 .7 77 , GOVERNOR SEAN PARNELL March 18, 2014 Janet L. Weiss President BP Exploration (Alaska) Inc. PO Box 196612 Anchorage, AK 99519 ve�1�.a�';�� tf�ili�.� _n �.eE.,w,hL� �ti_.yu• 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 Re: Impacts of natural gas liquids sales on ultimate recovery from the Prudhoe Bay Oil Pool Dear Ms. Weiss: On August 24, 2012, the Alaska Oil and Gas Conservation Commission (AOGCC) commenced an investigation into whether maximizing the production of miscible injectant, as opposed to maximizing the sale of blendable natural gas liquids (NGLs) authorized by Conservation Order 360 (CO 360), was providing for maximum recovery from the Prudhoe Bay Oil Pool. The investigation culminated with the presentation of evidence at a hearing held January 7, 2014. After extensive review of the evidence presented, the AOGCC has determined that ultimate recovery is currently being maximized by the manner in which NGLs and propane are being utilized at Prudhoe Bay. The conclusions set forth in CO 360 are still valid, the order to sell the maximum volume of NGLs is still appropriate, and no changes to CO 360 are warranted at this time. The AOGCC is closing the investigation and taking no further action on this matter at this time. Sincerely, Cathy P. Foerster Commissioner, Chair 16 ��M December 21, 2011 Lt. Governor Mead Treadwell Atwood Building 550 7th Avenue, Suite 1700 Anchorage, AK 99501 Dear Lt. Governor Treadwell: SP Exploration (Alaska)Inc. 900 East Benson Boulevard P.O. Box 196612 Anchorage, Alaska 99519-6612 (907) 561-5111 Thanks for taking time out to meet with me. I enjoyed our conversation and wanted to follow up on our brief discussion regarding propane on the North Slope. Let me preface my note by saying that BP remains committed to the sale of hydrocarbons to any party on commercially acceptable terms. On this basis, we have been in discussion with ANGDA for over two years on this issue. However, this is not a simple subject. As you know, propane is one of a number of components that can be present in raw natural gas. The composition and volume of propane varies with each particular reservoir. While other operating North Slope fields do contain propane, their volumes are small relative to Prudhoe. Because of its large volume, Prudhoe has been and remains a key source for propane. At Prudhoe Bay, virtually all of the gas produced is routed through the Central Gas Facility (CGF). CGF recovers as many liquids from the gas feed as is operationally possible given the current ambient temperature, facilities operating, gas rate and equipment limitations. This liquid is then fractionated into two products: miscible injectant (MI) and natural gas liquid (NGL). The MI is used in the Prudhoe field as an Enhanced Oil Recovery (EOR) solvent. Much of the NGL is blended with oil for transport through TAPS, while the remainder currently goes to Kuparuk for use in making an FOR fluid. Since it maximizes oil recovery, MI is an important part of our North Slope operations and that is why we maximize its volume. Virtually all of the propane we recover at the CGF is used for MI (>98%) with the remainder going into the NGL stream. As you would expect, therefore, any diversion of propane from the MI flood would have a negative impact on oil production. When we met, you mentioned the propane manufacturing system on the North Slope that "only operates a few days a month." I think it is important that you have all the facts on what this facility is, what it does and what its capabilities are. Lt. Governor Mead Treadwell December 21, 2011 Page 2 For background, the CGF refrigerant system uses propane circulating within a continuous closed cycle that occasionally requires a small amount of "make-up" propane. In the process of fractionation described above, a side -stream of product flows into a small propane manufacturing system used to make commercial grade propane which is then added to the refrigerant system. Normally this system is shutdown except when the CGF needs to add propane to the refrigerant system. As our needs are not that great, the system operates 2 to 3 days per month on average. If we were to operate this system every day, our engineering analysis indicates it is possible to make about 500 barrels per day of commercial grade propane. The Prudhoe Bay owners are currently considering using this spare capacity to manufacture propane for use in the fleet of light vehicles used to operate the Prudhoe Bay field. This 500 barrels per day of potential spare capacity would not meet the requirements ANGDA says it has. In our conversations, ANGDA has advised that it requires 2500 barrels per day. In order to meet those needs, we have considered a couple of different options. However, they are not simple and they are relatively expensive on a per barrel of product basis. First, would be for one or more of the Prudhoe Bay owners, acting independently in compliance with federal anti-trust legislation, to utilize some of the existing gas liquids available at CGF to provide the feed to produce liquid propane for sale. Utilizing these gas liquids for this purpose means there would be a small but real reduction in Ml and thus oil production. Even if the Prudhoe Bay owners were willing to accept this oil production impact, the Alaska Oil and Gas Conservation Commission would still have to approve such an approach. Additionally, investment would be required for new propane manufacturing facilities that could fractionate additional gas liquids above the capacity of the existing system. Thus, propane sold would have to account for not only these additional capital and operating costs, but also the impact to FOR oil production. A second option would be to install new process equipment that would recover more gas liquids and propane from the existing CGF feed gas so that there would be no reduction in MI and NGL produced concurrent with propane sales. This requires processing some of the existing CGF residue gas to a lower temperature level than is currently possible at CGF. Additionally, new propane manufacturing facilities that could fractionate additional gas liquids above the capacity of the existing system would be required. While, we have not developed a specific design and costs estimate for producing the 2500 barrels per day ANGDA has discussed, other projects we have explored that were focused on expanded MI volumes using similar concepts, lead us to believe the cost is quite high and is not justified by the propane sales and enhanced oil production that it would generate. We have advised ANGDA of this on a number of occasions and they have advised they are also unwilling to invest this capital. Lt. Governor Mead Treadwell December 21, 2011 Page 3 It's also important to note that in both options, ANGDA, as the buyer of the propane, would also need to invest in storage, handling and distribution facilities constructed at the CGF to allow the transfer and load out of propane. As you can see from the foregoing, this is significantly more complex than you might have understood. There are significant costs and trade-offs that need to be considered and accounted for in considering the economics of such an approach. I can assure you that BP remains committed to working with any party that is interested in reaching commercially reasonable terms for the sale of hydrocarbons from the North Slope. I hope this helps to answer the questions you have. Sincerely, Phil Cochrane Vice President, External Affairs 15 Harold Heinze RECEIVED DEC 0 1336 Staubbach Circle Anchorage, Alaska 99508 skaU11 & Gas COM Cow'ssion December 7, 2011 To: Alaska Oil and Gas Conservation Commission Dear Commissioners: Over the last two years I have explored several approaches to developing a wholesale propane supply point at Prudhoe Bay. While the Prudhoe Bay Unit Owners have indicated a willingness to sell propane I have been unable to discern the direction and schedule of the needed actions by the Unit Operator BP. I understand that BP is under no obligation to inform me or the public as to plans, if any, for making propane available. But as an Alaskan I am concerned that absent priority attention by BP the potential "waste", per AS 31.05, will continue until the AOGCC formally considers the issue. Attached for your review are: • Observations on Propane Recovery in the Prudhoe Bay Unit — with 3 attached diagrams • Unsolicited Presentation Made to the Prudhoe Bay Unit Owners Earlier This Year (16 slide images) • Letter exchanges with Prudhoe Bay Unit Owners in 2010 & 2011 (4 letters) Thank you for the opportunity to bring my concerns before you and I appreciate your considerations. Copy To: i n.r Sullivan Oil & Gas Director Barron Recoverable Propane Is Potentially Being Wasted In Prudhoe Bay Unit Operations My Maior Observations Are: 1. The PBU CGF capability to recover locally marketable propane from the gas stream is not being utilized (500 BPD to 2,000 BPD). 2. Some propane is being beneficially used for FOR in the PBU, but there is an even larger volume of propane being injected as residue gas (2% of 8 BCFPD = 100,000 BPD). 3. Because of the limited production life of Prudhoe Bay, the propane that could be recovered and marketed at this time will be left in the reservoir at shut down. That future lost recovery is the preventable waste of a valuable hydrocarbon. Points I Would Like The AOGCC To Consider: 1. Does the above circumstances, if validated, describe "waste" under AS 31.05 — Alaska Oil and Gas Conservation Act ? 2. Is NGL and/or propane recovery from the PBU dealt with in any confidential studies, Commission orders, or in the PBU Field Rules? 3. Did the PBU hearings before the Commission in the 1990's on NGL's and the operation of Skid 50 contain any information relevant to propane recovery? 4. Is the attached estimated gas -component compositions and simplified process diagram representative of the current PBU gas handling and re- injection operations (3 pages attached)? 5. Is the Commission prepared to develop public information on the current PBU operating conditions affecting propane? H. Heinze 12106111 KEY Production Facility Flow Schematic Prudhoe Bay Field T ------ O a s F ie I -- Oil Since 1987 Facilities a--- Water Meter Sales and Fuel Gas Line Czntral Gas rMility !Central,�om�r��g�r Plant 3 E TO a� _ Go s t F- St 2 nil k �„ �, F Injection k-cel- uc mpres- 'ire I Is Inlet Sep_ sicn si,^n Miscible In' tent �► To FOR Injeamn VWls NGLs Asecus Mixture Deh ydratio n c n-�pre ss is n Gathering Center z � To TAPS Cnllsite _ � Gas r U1 Pump Stations Pmducticn -- I-4 Wells a -- r I st Sep. th Oil.G7as --- 2nd Sep. & Water "" I PA FCsite Mix Skid Pr^ducticn TAPS u- V n - soells Surge Shipping PAPS Tank. Pump Pullln Statioll #1 rr'�ifif 11K" Simplified Process Diagrarn== PBU CGF Gas From Flow C Booster Stations & Compressors Gathering Centers Inlet Booster Separator Aftercoolers Prudhoe Bay Unit Central Gas Processing Feed/Bottom Exchanger NGL Stabilizer B Residue Gas to Exchanger CCP for & Chiller __F Reinjection �-4 Low Temperature Separators Reboiler C:: . - Condenser E Reboiler NGL Product to Skid 50 Existing Propane Plant 4 A Miscible Iniectant Compressors Reflux Dram M l to Distribution Heinze ANGDA 03/01tf I Estimated Propane Flow In & Out of CGF Propane Volumes At PBU central Gas Facility -Tt Paint Male Percent K Barrels / Bcf Gas Flow K B a r r e I s 1 D a Bcf/d Low High Low HLh Low High A 20.0 25.0 130 163 0.35 40 57 B 1.50 2.00 9.8 13.0 8.00 78 104 C 2.50 3.00 13.3 19.3 8.50 138 100 Calculation Table Prepared by Harold Heinze -- ANGDA -- 0310211 SWE OF AL4 Kn1 ALASKA NATURAL GAS DEVELOPMENT AUTHORITY April 28, 2010 Erec S. Isaacson Vice President Commercial Assets P.O. Box 100360 Anchorage, AK 99510-0360 Dear Mr. Isaacson: SiEAN PARNELL, GOVERNOR 411 WEST 4" AVENUE, FIRST FLOOR ANCHORAGE, ALASKA 99501 TELEPHONE: (907) 257-1393 Thank you for your letter of April 27, 2010, explaining ConocoPhillips' conclusion that the propane extraction facility ANGDA is studying would impair the Prudhoe Bay Unit miscible injectant enhanced oil recovery project. We would like to take you up on the offer to continue discussions to explore feasible technical or operational innovations in PBU facilities that would allow the development of ANGDA's proposed wholesale propane facility on the North Slope. As noted, these discussions would only be from a technical and operational perspective, with commercial discussions, if and when appropriate, in entirely different individual company meetings. A major problem in the technical discussions is a dearth of public information on process volumes and compositions associated with Prudhoe Bay gas handling, reinjection, and enhanced oil recovery. Based on decades old field composition information and gross gas volumes reported to AOGCC we estimate that 50- to 76-thousand barrels a day of propane are returned to the reservoir in the "residue gas" injection not associated with the enhanced oil recovery project. The entire defined in -state market for propane could be satisfied with only a small fraction of this residual production. We also estimate that less than 50% of the propane produced concurrent with oil operations is used in the enhanced recovery process as compared to the 75% plus propane recovery we would expect from this type of a gas handling facility. 1 look forward to clarifying these analyses and other parts of this potential opportunity within the Prudhoe Bay Unit at your earliest convenience. ANGDA is prepared to separately discuss your company's concerns if the scheduling with other PBU owners or the Operator proves difficult. Sincere y, Harold C. Heinze CEO cc: Mr. Trond-Erik Johansen, President ConocoPhillips Alaska, Inc. Mr. John Minge, President, BP Exploration Alaska, Inc. Mr. Dale Pittman, Alaska Production Manager, ExxonMobil Production Co. Conoco hlli ps . Alaska, Inc. April 27, 2010 Mr. Harold Heinze Ms. Mary Ann Pease Alaska Natural Gas Development Authority 411 West 4th Avenue, Suite 100 Anchorage, AK 99501 Dear Mr. Heinze and Ms. Pease: Erec S. Isaacson Vice President Commercial Assets P.O. Box 100360 Anchorage, AK 99510-0360 Phone 907.263.4556 Fax 907.263.4438 The Alaska Natural Gas Development Authority (ANGDA) met with ConocoPhillips and other Prudhoe Bay Unit (PBU) owners in February to. present a proposed propane extraction facility and distribution system. More recently, ANGDA has asked for ConocoPhillips' response to the proposal. As you know, propane is used at the PBU to create "miscible injectant," which is then used to enhance oil recovery. At our February meeting, it .was explained that extraction of propane from the central gas facility (CGF) residue gas or any other location downstream of CGF low temperature separation would reduce production of miscible injectant, and impact enhanced oil recovery. In light of propane's current use within the PBU, ConocoPhillips does not see ANGDA's current proposal as viable. However, we remain willing to continue discussions to determine whether there are technical or operational innovations that are feasible but have not yet been considered. If the project does ultimately appear to be viable from a technical and operational perspective, we anticipate that commercial issues would be discussed individually between each PBU owner and ANGDA. ConocoPhillips looks forward to exploring creative ideas for putting PBU propane to its best use in Alaska. Sincerely, Erec S. Isaacson S;�`' Cc: Mr. Trond-Erik Johansen, President, ConocoPhillips Alaska, Inc. Mr. John Minge, President, BP Exploration Alaska, Inc. Mr. Dale Pittman, Alaska Production Manager, ExxonMobil Production Co. OF ALASKA SEAN PARNELL, GOVERNOR 411 W EST 4�" AVENUE, FIRST FLOOR .w- - ANCHORAGE, ALASKA 99501 ALASKA NATURAL GAS DEVELOPMENT AUTHORITY TELEPHONE: (907) 269-6501 April 8, 2011 BP Alaska c/o Bruce Williams 900 East Benson Blvd. MB 11-2 Anchorage, AK 99508-4254 Dear Mr. Williams, One of Alaska Natural Gas Development Authority's long term objectives has focused on developing an in -state propane supply point(s) related to Prudhoe Bay gas utilization. Propane is the only North Slope sourced fuel that could be made available to many Alaskan communities as an alternative to diesel in the short term. ANGDA developed a design concept for a stand-alone plant to recover additional propane from the Prudhoe Bay Unit (PBU) Central Gas Facility (CGF) residue stream prior to reinjection. The downstream economics and benefits of separately processing this lean propane stream for the small in -state volume (<3,000 bpd) are not sufficient to offset the risks of a prototype operation on the North Slope. The recent alignment of propane petrochemical feedstock shortages and an opportunity to tanker propane direct from the North Slope favors increasing the PBU recovery of propane by 20,000 to 30,000 bpd. This 10% increase in PBU production might be achieved with minimal modifications and the addition of modules for less than $500 million. The attached presentation summarizes ANGDA's screening analysis of the technical and economic aspects of the PBU modifying & adding to the CGF. Included are some suggestions on shifting propane for recovery at the takeoff point for the small existing propane plant and a back calculation of what might be an acceptable investment level given volumes and cost variables. ANGDA asks that the Prudhoe Bay Unit Owners consider further investment in the Unit's Central Gas Facility to make available propane at a wholesale delivery point to ANGDA as a single recipient aggregator based upon the information developed by the Unit Operator. ANGDA stands ready to work with the Unit Operator and the Owners on any of the CGF related topics, as well as, facilitate development of third party projects to carry propane to both in -state or export markets. We greatly appreciate your time and consideration of this propane proposal that will expedite immediate benefits for in -state applications, opportunities for fleet services operations on the North Slope and eventually export opportunities. We would greatly appreciate your timely response on whether this would be a viable business consideration for your teams. Sincerely, Harold Heinze CEO cc: Scott Heyworth, Chairman ANGDA Board ExxonMabii Production Company P. Q Box 196601 Dale Pittman Anchorage, Alaska 99519 6601 Alaska Production Manager 907 5615331 Telephone Joint Interest u 8 907 564 3677 Facsimile RECEIVE[) EvrqnMobil MAY 0 5 2011 Production May 3, 2011 Mr. Harold Heinze Alaska Natural Gas Development Authority 411 West 4th Avenue, First Floor Anchorage, Alaska 99501 Subject: PBU Propane Extraction at Central Gas Facility Dear Mr. Heinze: ExxonMobil has received your letter dated April 8, 2011 requesting Prudhoe Bay Unit (PBU) Owners to consider further investment in the PBU Central Gas Facility (CGF) to enhance recovery of propane from PBU gas volumes and enable sales of propane at the North Slope. We appreciate you bringing the opportunity to our attention. As you have noted, additional technical definition is required in order to assess the Opportunity. ExxonMobil will consult with BP, as PBU operator, to better understand the scope and cost associated with the proposed investment. ExxonMobil is committed to the communities in which we operate and appreciates opportunities to integrate community need with business opportunity. if you have any further questions, please feel free to contact Mr. Peter Velez with ExxonMobil Gas and Power Marketing at 713-656-9487. Sinc%ely, Dale Pittman xe. J. B. Brackin M. A. Pohler P. K Velez A Division of Exxon Mobil Corporation SOUTHERN METHODIST UNIVERSITY ]ames L. Smith Cary M. Maguire Professor of Oil and Gas Management February 24, 1997 David W. Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501-3192 Dear Chairman Johnston: Enclosed you will find two copies of my report, which was prepared in accordance with the instructions provided in your letter of January 10, 1997. Rather than taking the time and expense that would have been required to rewrite or edit the report to remove material that pertains to the subpoenaed documents, I have elected to simply black out all such sections or passages that appeared within my original dratt. The opinions and conclusions that are presented in this version are based on my general knowledge of the theory and practice of unitization agreements, as well as specific information pertaining to the Pmdhoe Bay Unit that I have acquired from various public sources, including transcripts of the Commission's heatings on the question of compulsory unitization. I think the censored version is still quite readable and informative, and it does not compromise the confidentiality of any protected documents. I hope that you find the report to be useful. I will be sending under separate cover a final invoice that brings my account up to date. It was a pleasure to assist you in this matter. If you have any questions, please do not hesitate to call me. Thank you. Sincerely, encl. Edwin L. Cox School of Business PO Box 750333 Dallas TX 75275-0333 214-768-3158 Fax 214-768-4099 E-mail; jsmith~mail.cox.smu.cdu Prepared Testimony of James L. Smith Introduction My name is James L. Smith and I reside at 10537 Beinhorn Road, Houston, Texas. The Alaska Oil and Gas Commission has asked me to provide this testimony, which represents my independent judgment and professional opinion regarding certain economic aspects of unitized operations at the Prudhoe Oil Pool. I am trained as an economist and I specialize in the field of energy economics. I received the B.S. degree (1972) in Economics from the University of Illinois, and the M.A. (1976) and Ph.D. (1977) degrees in Economics from Harvard University. I currently serve on the faculty at the Business School of Southern Methodist University in Dallas, where I hold the Cary M. Maguire Chair in Oil and Gas Management. The views I express here are my own and do not necessarily reflect the views of Southern Methodist University. Previously, I have served on the faculty at the University of Illinois (Champaign-Urbana), the University of Houston, and the University of Maryland (College Park). Most of my teaching, writing, and research deals with the subject of energy economics. In addition to my academic duties, I have served as a consultant to various oil and gas companies and government agencies. I have also served from time to time as an expert witness in regulatory and legal proceedings that involve energy matters, including the Alaska North Slope Gas Royalty case. My resume is included as Attachment 1 to this testimony. The Scope of My Testimony The Commission has asked me to comment on the Oil Rim-Gas Cap structure of the Pmdhoe Bay Unit and its likely impact on field development, resource recovery, and waste. In addition, I have been asked to consider whether it would be appropriate to seek more complete integration of interests in the Pn~oe Oil Pool via compulsory unitization proceedings or other means. I have also been asked to evaluate and comment on pertinent elements of the working interest owners' testimony and contentions in this regard. My report is organized around nine specific questions which the Commission has raised. I will attempt to address each question separately and in tttm, but I recognize that several of the questions are closely related and therefore discussion of certain key issues may spill over into several parts of my testimony. The series of nine questions and my responses follow. (1) Explain the concepts and purposes of unitization and unit as they apply to oil and gas properties or reservoirs. The purpose of unitization is to eliminate incentives for wasteful and competitive practices in the development of a single pool by multiple owners. This goal is achieved by treating the pool as if it were a single asset in which each owner holds an individual interest. Once this unitized structure has been created, the owners then share a common interest in finding and implementing the development program that maximizes the value of their jointly-held asset. This is the principal objective of unitized operations. All owners gain ~om actions that increase the value of the pool All owners lose l~om actions that diminish the value of the pool. None profits at the expense of another. The permanent ali~mment of interests created by unitization produces incentives for each owner to enter into durable and robust commitments to pursue the common good. The economics literature is quite clear regarding the objectives of unitized operations. Professor Stephen McDonald, in his classic exposition on the subject, summarizes the nature of unitization and unit operations as follows: . James L. Smith ~lask-aOi': :~: ;.:¥":" "':"~':' :,,.~,~,:,....:t~$~aa Page 2 In sum, unitization converts a multiplicity of interests in a common reservoir to a single interest for purposes of extractive operations, and at the same time fixes the shares of participants in common net benefits. What then profits the unit as a whole profits each participant proportionately.~ In terms of specific benefits, Professor McDonald lists four main advantages that can be expected to follow t~om unitized operations:2 First, unitization tends to lead to the voluntary adoption of the optimum rate of production. Second, unitization allows the affected operators to adjust the rate of production so as to search continuously for maximum present value as events unfold and prices and costs change. Third, unitization leads to a more rational calculation regarding the disposition of gas produced with oil. And fourth, unitization makes possible a more rational use of cap gas in an oil reservoir. Each of these four separate objectives of unitized operations appears relevant, perhaps critical, to achieving efficient management of the Pmdhoe Oil Pool. (2) Does the existence of separate participating areas for the Oil Rim and Gas Cap with different equity participations, or do other features of the existing contractual and property arrangements, mean that the Pruhoe Oil Pool is not unitized, or is not completely or not perfectly unitized? A pool is completely unitized when all commercial substances (e.g., oil and gas) contained within it are combined to form a single asset, as described above. The contractual arrangements that govern the Pmdhoe Oil Pool have not achieved this. Instead, they have divided the reservoir substances into what are effectively two assets: the Oil Rim asset and the Gas Cap asset. ~ Stephen L. McDonald, Petroleum Conservation in the United States, The Johns Hopkins Press, 1971, page 201. 2 Stephen L. McDonald, The Leasing of Federal Lands for Fossil Fuels Production, Resources for the Future, 1979, pages 135-136. James L. Smith Page 3 Because development and production of one asset significantly impacts recovery of the other, potential conflicts can arise among the owners, despite the appearance of integrated operations. Because certain working interest owners hold a larger share of the Gas Cap asset than of the Oil Rim asset (and vice versa), the interests of individual owners in alternative field development projects and investments are misaligned. There is no natural consensus on a common course of action in developing the field. For example, plans to promote oil recovery at the expense of gas would affect separate owners differently, depending on their relative holdings of the two assets. Lacking a natural consensus on a common course of development and extraction, the owners have to rely on trading, bargaining, and compromise to forge a plan of action that is jointly acceptable. The ultimate impact of this compromise on field operations would depend on the relative bargaining strengths of the various parties and the scope of the disagreements they have to resolve. Unitization of an oil field is distinct bom a simple pooling of interests. The fact that certain interests have been pooled to create the Oil Rim and Gas Cap participating areas does not mean that the field has been unitized and does not ensure that the objectives of unitized operations will be achieved. This fundamental distinction is sometimes overlooked, even within the industry, 'as Burke and Starcher have noted: The terms pooling and unitization are sometimes used interchangeably. However, unitization is normally more than a mere accumulation of acreage to create a drilling unit. Generally, unitization combines the economic interests in a reservoir to permit the joint exploration, development and operation in a more efficient maimer.3 3 Frank M. Burke, Jr., and Mark L. Starcher, Oil and Gas Taxation in Nontechnical Language, PennWell Publishing Co., 1993, page 72. James L. Smith Page 4 Because of the coexistence of Oil Rim and Gas Cap participating areas, the natural ali~tmment of interests that is produced by unitizing all reservoir substances into a single asset does not exist within the Pmdhoe Oil Pool. In that sense, the Pool has not been completely unitized. (2) To what degree do the existing property and contractual arrangements for the t>rudhoe Oil Pool fulfill the purposes of unitization? Although there is no objective scale upon which this question can be answered, I think it is fair to say that the existing contractual arrangements fall far short of achieving the purposes of unitization. Later in this testimony, I will cite specific conflicts between Oil Rim and Gas Cap interests that have jeopardized the optimum recovery of oil, raised questions concerning the rational disposition of gas, and demonstrated the lack of resilience of field development plans to changes in operating conditions. These are the very problem areas that unitization is specifically intended to avoid. Given the existing contractual arrangements that have created dual assets under joint management (Gas Cap and Oil Rim), it is doubtful that the full benefits of unitization can be achieved. The dual participating-area structure of the Prudhoe Oil Pool would be expected to not jeopardize efficient management of the field only if at least one of the following three special requirements were met: (1) no physical communication or interaction between the reservoir substances contained within the Oil Rim and Gas Cap; (2) matching equity shares in the Oil Rim and Gas Cap held by each individual owner of the field, or (3) effective and costless bargaining procedures in place to resolve disputes and achieve compromise on issues where individual interests are not aligned. None of these conditions is met in the case of the Pmdhoe Oil Pool. Consider each factor in mm. James L. Smith Page 5 (1) Physical Communication. If the reservoir substances were not in physical communication, then there would be less need to worry about the effect of the dual-participating area structure in the first place. Actions that benefit the Oil Rim could proceed without adverse consequences for the Gas Cap, and vice versa. However, the situation within the Prudhoe Oil Pool appears to be the opposite. From the outset, the owners have recognized that reservoir pressure provided by the Gas Cap would assist in the production of oil. I believe that the extent of physical interaction between Oil Rim and Gas Cap remains a si~ificant issue as alternative depletion projects and development plans are being debated today. For example, BP's witness before the Commission reports that initiation of a major gas sale around the year 2005 would be expected to reduce ultimate recovery of oil reserves by 400 million barrels.4 Thus, depending on the strength of the next factor (i.e., differences in the extent of each owner's relative holdings in the Gas Cap versus Oil Rim), the potential exists for significant conflict regarding the management and ultimate disposition of the two jointly-held assets. (2) Disparate Holdings. If each owner's equity interest in the Gas Cap matched that same owner's equity interest in the Oil Rim~ potential conflicts that stem from the dual participating- area structure would be much diminished. This is because each owner would then give as much weight to Oil Rim values as to Gas Cap values. Any plan that would enhance the value of the Gas Cap by, say, $2 billion at the expense of reducing the value of the Oil Rim by $3 billion would be rejected by each and every owner. Major conflicts would be less likely if each owner's participation in the Oil Rim was the same as that owner's interest in the Gas Cap. See the testimony of Mr. Stevens at page 853. James L. Smith Page 6 In fact, the differences between Oil Rim and Gas Cap holdings of each owner are quite significant, and therefore potentially divisive. BP holds roughly 51% ofthe Oil Rim~ but only 14% ofthe Gas Cap. Arco and Exxon each hold roughly 22% ofthe Oil rim, but 43% of the Gas Cap. The smaller owners hold roughly 5% ofthe Oil Rim and 1% ofthe Gas Capri These disparities are large enough to create substantial economic conflicts among the owners regarding how the two assets should be jointly managed. (3) Conflict Resolution. The ultimate impact of conflicts that stem l~om the dual participating-area structure depends on the owners' ability to bargain, compromise, and set aside individual interests for the good of the entire unit. If conflicts can be quickly resolved in accordance with the greatest good, at reasonably low cost, and without delaying field development activities, then the conflicts that occasionally arise between Oil Rim and Gas Cap owners would be of little concern to the Commission. However, past experience shows that the process of resolving disputes among these owners is expensive, time-consuming, and disruptive to the planning and execution of field development activities. I will elaborate later on the potential for unresolved Gas Cap-Oil Rim conflicts to impair efficient operation and development of the Pmahoe Oil Pool. It may be helpful to review the parties' own concerns about the extent to which the dual participating-area structure would engender conflict and impede development. There is no doubt tttat this was initially a concern to Arco and Exxon. believe that the Arco and Z'The percentages may not add up to 100% due to roundin~ James L. Smith Page 7 Exxon traders still acknowledge having been concerned back then about the potential for Oil Rim- Gas Cap conflicts--even before any such disputes had arisen.7 ~ Despite repeated efforts to consolidate the Oil Rim and Gas Cap interests, however, the parties failed in their negotiations to form a single participating-area. In lieu of that, and to avoid subsequent conflicts between Oil Rim and Gas Cap interests, the traders carefully crafted provisions of the Pruclhoe Bay Unit Operating Agreement (PBUOA) in a manner that was intended to achieve a balance of interests and to commit all parties to what appeared to be an effective plan of development. Close attention was paid to the matter of how costs and production would be allocated between the two participating areas and the responsibilities of each participating area in meeting Unit plans and objectives. There were also special provisions included in the agreement to maintain balance between the interests of the two participating areas as the field proceeded through different stages of development, and provisions to restore balance if development scenarios deviated from expectations. This approach appears to have worked reasonably well for several years during the first phase of field development. However, by the mid- 1980s the system of trades designed to balance See, for AOGCC testimony at and Mr. Harrison's James L. Smith Page 8 the competing interests and produce consensus on major development issues appears to have broken down. Serious disputes arose between Oil Rim and Gas Cap interests and these conflicts threatened to impair Unit operations,l° Only through a series of protracted legal proceedings and private negotiations, leading in some cases to revisions of the PBUOA, were the owners able to resolve these disputes and move on to implement planned development activities.~ rht between "company economics" versus 'bruit economics" that ran through these disputes confirms the extent to which the dual participating-area structure has failed to fulfill the basic purpose of unitized development.~2 Within a properly functioning unit, the distinction between company-based and unit-based economics would be transparent and innocuous. By looking at the unit, each owner would see an image of himself. The same tradeoffs, opportunities, and costs facing one would be shared by all. This is not how things appear to work within the Prudhoe Oil Pool. Although the original PBUOA may have achieved a certain balance among interests of the competing owners (at least as those interests were perceived at the time), it did not align their interests. This is a key distinction that has not been emphasized much in the testimony of previous witnesses before this Commission. Any balance that is effected through a series of fixed trades among owners is precarious since the value of the constituent trades will very likely change with the passage of time as prices, costs, and reservoir performance evolve. Once certain trades grow less favorable, the owners who are adversely affected will experience individual incentives ~0 The basic centered on the allocation of costs and produced substances between the.,,Oil Rim and Gas Cap participating n The resolution of ~ issues has ~n a piecemeal fashion, with a series of individual agreements being reached (or imposed) on separate issues as they have arisen. Consider, for example, the Sari Diego FGSO arbitration, the GHX Issues Resolution Agreement, and Conservation Order No. 360. a2 See, for the AOGCC testimony of Mr. Meggs at page 785. James L. Smith Page 9 to reinterpret or renegotiate the burdensome contract provisions, perhaps even to the extent of withholding performance. Unitization is intended to mitigate such problems not by balancing the interests of all owners at a certain point in time, but by aligning their interests permanently. By effectively consolidating all interests into one asset which is jointly owned, (i.e., one participating area), the interests of all owners tend to remain aligned in support of a common plan--that which maximizes the value of the unit--even as market conditions, investment timing, and field development oppommities evolve. To summarize my thoughts on this issue, the existing contractual arrangements that treat the Oil Rim and Gas Cap as separate assets are likely to engender conflicts that are difficult to resolve and which have the potential to impair development and operation of the field. This situation is not consistent with the purposes of unitized operations. (4) How significant wouM be the costs, uncertainty, "malincentives, "and other problems that working interest owners claim wouM result from compulsory unitization proceedings? I believe that the costs of a compulsory unitization procedure would be si~ificant. I am in general agreement with other witnesses who have described the inherent difficulty of combining the two participating areas into a single equity structure. We know that the owners have akeady attempted to achieve a single equity structure on several occasions, and failed at each juncture. I believe that the owners' efforts in this direction have been in earnest, and that their repeated failure reflects, at least partially, the difficulty of their task. I do not necessarily agree, however, that the Commission should conclude from these prior failures that the task of compulsory unitization must be viewed as prohibitively difficult. Nor do I agree that the process of compulsory unitization would be chaotic or unfair. The James L. Smith Page 10 principal difficulty that the Commission would face in a compulsory unitization proceeding would be to arrive at appropriate estimates of the net economic values of the Gas Cap and Oil Rim assets. There are three major uncertainties associated with that estimation: (1) furore netback values ofthe oil and gas resources at wellhead; (2) timing of a major gas sale; and (3) expected volumes of oil and gas to be sold from the field. Compulsory unitization would require probabilistic judgments to be made, either explicitly or implicitly, regarding each of these factors, and for the associated development scenarios to be weighted accordingly in arriving at the expected net economic value of future sales from each participating area. Although difficult, these uncertainties are not unlike what the owners must deal with anyway. Evaluation of alternative development plans requires certain assumptions or judgments to be made regarding these three factors whether equities are organized into one or two participating areas. In other words, I do not believe that the owners or the Commission would have to start from scratch in pondering these factors. Further, part of the cost and effort that would be required of the owners and of the Commission in preparing for a compulsory unitization proceeding would probably be incurred anyway somewhere along the line in the normal course of reservoir study, development planning, performance review, and regulatory oversight that is required for diligent and proper management of the Pmdhoe Oil Pool. The most notable cost of a compulsory unitization proceeding, and one that would constitute a large burden borne by the owners, is the cost of uncertainty--each owner having to accept an outcome that would have an unpredictable impact on the value of their holdings. The risk of an adverse outcome is a tree economic cost that the owners cannot afford to ignore. I believe that the owners' reluctance to put their whole equity at risk in any single proceeding has played a dominant role in the failure of the previous voluntary efforts to achieve a single James L. Smith Page 11 participating area. Rather than putting the whole pie up for grabs at once, the owners prefer to continue working within a framework that deals with a series of somewhat smaller and more compartmentalized issues. That approach requires negotiations over each slice of the pie as it is placed on the table, and it may seem less risky for the owners than compulsory unitization. Any one who feels shortchanged at one stage can hope to make it up at the next. And by continuing with voluntary efforts to resolve their conflicts, the owners are able to retain control of the process, including veto power over any outcomes that they strongly oppose. This further reduces the risk they face. Although the fear of losing equity to others would be a burden placed on each owner in the process of compulsory unitization, the Commission would not directly bear any part of that burden or share in the cost of uncertainty. That does not necessarily mean, however, that the Commission should ignore the burden of risk in deciding how to proceed. I believe that a key issue in deciding whether'to move to compulsOry unitization is the question of how much weight (if any) to place on the owners' discomfort with the risk that such a proceeding would entail. If the Commission' s responsibility encompasses a role in assisting owners to minimize costs (including the cost of bearing commercial risk), then more emphasis should be placed on tiffs aspect. If'the Commission's responsibility is limited to protecting the State of Alaska's interest in the field as a whole, then more weight should be placed on the question of whether compulsory unitization would increase the size of the pie and reduce economic waste--letting the chips fall where they may. Several witnesses have described the process of compulsory unitization as almost certainly being chaotic, inherently unfair, and virtually impossible to complete. I disagree. The process of compulsory unitization of the Pmdhoe Oil Pool would benefit si~ificantly from the fact that the James L. Smith Page 12 resource has akeady been fairly divided into two assets. The remaining task that would be the subject of compulsory unitization proceedings would be to consolidate these two participating areas, not to revisit or revise the basis on which initial equity allocations were determined. The only deliberations that should play any role in the proceedings would be focused on the single question of what is the economic value of the Gas Cap asset relative to that of the Oil Rim asset. That ratio is a single number, one parameter. I call that parameter the "e-factor" for "equity." I have akeady commented on the difficulty in arriving at that number, and I am not discounting those remarks here. What I am saying is that the proceedings could be narrowly focused and specifically organized around this one question: what is an appropriate value for the e-factor? Other witnesses have emphasized the extent to which the owners have relied on trades that were made when the Unit was formed, as reflected in provisions of the PBUOA. They also suggest that it would be unfair (and perhaps violate the owners' correlative rights) to abandon or circumvent those provisions now. I agree. But I do not see that issue as being one of the dangers of a compulsory unitization proceeding. In arriving at an appropriate value for the e-factor, I would imagine that the provisions of the PBUOA would be taken into account exactly as the owners have agreed to them_ Each owner of the Gas Cap holds a determinate share of that asset and certain responsibilities as a Gas Cap owner for financing shared unit operations. Likewise for the Oil Rim In determining the net econOmic value of the Gas Cap asset under any particular development scenario, the net present value of Gas Cap revenues less costs would be estimated, in accordance with all relevant provisions of the PBUOA. As I understand that agreement, it translates the various trades between Gas Cap and Oil Rim owners into specific formulae and roles for allocating produced substances and costs. I do not see anything unfair or in violation of James L. Smith Page 13 the owners correlative rights in applying those roles to estimate the net value of the Gas Cap asset or the Oil Rim asset. Once an appropriate value for the e-factor has been determined, the process of compulsory unitization would be straightforward. Each owner's share in the consolidated participating area would consist of the weighted average of that owner's existing equity shares in the Gas Cap and Oil Rirn~ respectively. The e-factor would be the appropriate weighting factor for this calculation and it would be applied uniformly to all owners. Since calculation of the e-factor would incorporate and conform with all agreements that have been mutually agreed by the owners, it would then embody the various trades upon which the existing agreement rests and it would circumvent none of the deals upon which the various owners have been relying. For that reason, I do not see the process of consolidating the two participating areas into a single equity as being unfair to the interests of any owner, or in violation of correlative fights. (5) Are there significant development or operational decisions still to occur in the future that couM be adversely affected by features of the existing contractual and property arrangements for the Prudhoe Oil Pool? There are several major issues remaining where the Gas Cap and Oil Rim interests might conflict. I would start by recalling Mr. John Morgan's testimony to the effect that 50% of the production from the Prudhoe Oil Pool that BP deems possible by the year 2005 depends on investments that have yet to be made.~3 The owners' mutual agreement to fund those investments See the AOGCC testimony of Mr. Morgan at page 797. James L. Smith Page 14 will therefore play a significant role in the remaining life of the field, as it is currently expected to play out. Additionally, we should consider the ability of the owners to respond to various unexpected developments that might affect future operations. What would be the impact on production incentives and development planning at Pmdhoe Bay if world oil prices were to double within the next few years. For example, suppose that civil unrest within Saudi Arabia and elsewhere in the Mideast permanently slows oil production from those areas. What types of enhanced oil recovery at Pmdhoe Bay would make sense under that higher-price scenario, and what portions of the field would be involved in heightened efforts to enhance oil recovery? What types of risk would be associated with relatively high-cost enhanced oil recovery facilities? And is k possible that some of those risks might fall disproportionately on owners of the Gas Cap while the rewards would be concentrated on owners of the Oil Rim? Rising oil prices usually carry gas prices in the same direction. Therefore, we might pursue timber the scenario of high oil prices sketched above. Suppose that due to the rising price trend, the Pmdhoe Bay gas'reserve becomes "commercial" at roughly the same time that oil prices are rapidly appreciating. By "commercial" I mean that the gas could be transported to market leaving a positive, but small, netback value at the wellhead. Should the gas then be sold, or should it be used for enhanced oil recovery? Would all of the owners agree on this type of issue? According to all previous testimony presented to this Commission, the decision to proceed with a major gas sale is a "no-brainer" on which all sides would obviously agree. If the netback value per mcfwere large enough, that might be true. But I have strong doubts. If the netback value were relatively small, especially when compared to the value of 400 million barrels of oil James L. Smith Page 15 production which the major gas sale would be expected to displace, then I see the potential for serious disputes to emerge between the Oil Rim and Gas Cap interests. Exxon's position, as I understand it, is that no such dispute would matter. The owners are already committed by contract to support a major gas sale of 2 TCF per day. The contract is apparently interpreted by Exxon to mean that it and Arco could unilaterally proceed to sell their gas. I find this testimony to be less than convincing. Speaking of plans to unilaterally undertake any type of depletion policy, over the protest of other owners, is far removed from the ideal of unitized operations undertaken to promote the common good. Moreover, I am surprised if it is Exxon's position that a major gas sale of 2 TCF per day has already been determined to promote the common good and therefore must proceed against whatever opposition BP would mount. Prior to knowing the netback value of gas at the wellhead, it would be impossible to know whether its sale does in fact promote the common good. Of course, the eventual netback value has not yet been determined, and that is why the owners have testified that uncertainty in gas values has stymied voluntary efforts to consolidate the two participating areas. Nonetheless, if for the sake of argument we temporarily accept Exxon's claim that it has akeady been determined that it would be in the interest of the Unit for the gas to be sold, there is still a problem: how can we be sure that BP would also agree to produce and sell its gas? If it is appropriate Unit policy for Exxon's gas to be produced and sold, would it not also be appropriate Unit policy for BP's gas to be produced and sold? Whereas Exxon's unilateral action to sell its gas might solve all ofExxon's Problem, it may solve only one-half or one-third of the Unit' s problem Thus, I see management concurrence in the size and timing of a major gas sale as a possible source of future Gas Cap-Oil Rim conflicts. James L. Smith Page 16 Another type of potential conflict between the Gas Cap and Oil Rim interests, and one of major importance, could arise as the field approaches the end of its productive life. Eventually, it will come time for the owners to reach a decision to terminate production and abandon the field. At that point, would the Gas Cap interests gain by prolonging oil production past the economic limit of the oil reserve if the payoff' to them was that continued operations would keep alive the option for an eventual major gas sale? Would the incentive for them to do so be reinforced by the differential allocation of produced liquids (gas condensate and NGL) to the Gas Cap owners? I am not sure of the answers, but I think these questions should be addressed.TM (6) Has the two participating-area structure resulted in benefits for developing the Prudhoe Oil Pool that wouM not have occurred otherwise ? The principal benefit of the two participating-area structure is that it helped to facilitate the negotiations that ultimately lead to formation of the Pmdhoe Bay Unit. If it is presumed that voluntary negotiations would have failed without the two participating areas, and that development of the field would not have proceeded, then we must count the creation of the dual participating-area structure as an enormous benefit to all parties concerned. However, if it is presumed that the State of Alaska would or could have used its powers to intervene and '~revive" the failed negotiations in some manner, as seems likely, then the strategic importance of the two participating areas is diminished. The owners have testified that the structure of competing interests which stems from their Gas Cap-Oil Rim rivalry has also been of significant value in stimulating greater scrutiny of development decisions and promoting more extensive research and better understanding of James L. Smith Page 17 development oppommities than would otheIwise have occurred. What I do not understand about this argtmaent is why, if extra effort and scrutiny are beneficial to the unit in cases where the owners are in conflict, such effort and scrutiny would not also be provided or undertaken in instances where the interests of the owners are more closely aligned. Whether interests are aligned or in contention, aH owners share the incentive to research and debate matters that are vital to the value of their investment. Further, I would expect the exchange of ideas and information among multiple owners to actually work better and carry greater weight in units where the interests and goals of respective owners are aligned--as in a single participating area. At least in that case there would be less incentive for any owner to shade or distort information to reflect favorably on projects that might enhance that owner's individual position at the expense of others. If owners have competing incentives within the unit, I would expect each owner to discount to some degree the information, analyses, and interpretations that are provided by the others. (7) To what degree wouM changes in the contractual and property arrangements for the Prudhoe Oil Pool such as combining the two participating areas reduce or eliminate the ~ncentives for competitive, as distinguished from cooperative, behavior on the part of the working interest owners or otherwise reduce or eliminate disputes among them ? While certain technical differences and commercial conflicts might remain, I believe that representatives of all the major owners agree that consolidation of the two participating areas into a. single equity structure, once achieved, would go very far towards eliminating the conflicts that have accompanied development of the Pmdhoe Oil Pool. Of course, not all potential conflicts can be avoided no matter how the Unit is structured. If there are multiple owners who face significantly different costs of capital or who realize James L. Smith Page 18 different netbacks on produced oil, conflicts may emerge in taking one course of action over another. Such conflict_s are based on circumstances that originate outside the Unit. Unfommately, there is no way to structure the Unit to anticipate the ebb and flow of those external differences or to neutralize them This contrasts with the type of conflicts that stem from the existence of dual participating areas, which are not inherent in the nature of unitized operations, and which could be eliminated by consolidation of equity within a single participating area. It is my opinion that few, if any, of the conflicts that have divided the owners of the Pmdhoe Oil Pool stem from external circumstances. The cost-sharing disputes that caused the parties to adopt the so-called GHX- 1 agreement did not arise because Exxon faced a higher cost of capital than Arco. BP did not initiate the Energy Conservation Task Force to save fuel gas in 1984 because it had a contract to sell petrol in Europe that Arco could not duplicate. The recent standoff on MI-NGL did not arise because Arco pays more federal income tax than BP. The fundamental conflict that drives all of these disputes is the fact that the owners have varying stakes in oil versus gas-related projects. Consolidating the two participating areas would go a long way towards resolving the disputes that have impaired development of the field. James L. Smith Page 19 (8) Are there alternatives to compulsory unitization that couM be employed to reduce or eliminate incentives for competitive behavior on the part of the working interest owners or otherwise reduce or eliminate disputes among them? I am not aware of any other approach, besides consolidating the holdings into a single participating area, that would ensure that the interests of the respective owners are in alignment and remain so as events unfold over the remaining life of the field. I have already commented on the limitations of attempting to balance the interests of multiple owners at one point in time in order to win agreement on a particular issue. The problem with this approach is that it is not robust--the balance is likely to be lost as circumstances and opportunities change. The environment is not static, and even with a binding and well-executed contract in hand, disputes may arise among owners whose interests fall out of alignment. At that point, each owner will find reasons to interpret the provisions of the contract in favor of its own position and to resist interpretations that threaten its interests. James L. Smith Page 20 Several witnesses have discussed the "case-by-case" approach to resolving Unit conflicts, which is an alternative to compulsory unitization that the Commi,qsion must consider. Rather than aligning the owners' interests once and for all via unitization, the case-by-case approach would rely on the Commission's oversight to deal with any future disputes if and when they arise. The idea would not be to eliminate future conflicts, but to get the Commission's help in resolving thellL There are some risks associated with the case-by-case approach. If intervention by the Commission in field operations is not something that the owners generally welcome, certain disputes and conflicts may simmer beneath the surface for an indefinite period of time before any owner would come forward. If the underlying issues are time-sensitive, with physical or economic waste hanging in the balance, such delay could be an important drawback. In addition, the positions and analyses that respective owners might put to the Commission during such proceedings would be subject to the problem ofmalincentives. If the issues in dispute are not purely technical in nature, but based on conflicting equity interests within the pool, some owner may have an incentive to shade its presentation toward the outcome that is most favorable to its vested interest. In adjudicating these disputes, the Commission would very likely have to consider, at least implicitly, many of the same factors that would enter into a compulsory unitizatiOn proceeding. Another danger in waiting for disputes to emerge is that the delay in responding to some potential problem could jeopardize major opportunities to enhance recovery. Consider the prospect of a major gas sale, for example. Any sale of gas t~om Alaska will require a major investment in transportation infrastructure, whether the gas is to be moved by pipeline or tanker. That investment will depend, in part, on the willingness of outside financiers to provide funds. If James L. Smith Page 21 a major conflict between the Gas Cap and Oil Rim owners regarding the size or timing of gas sales remains unresolved at that stage, the resulting project uncertainty would probably impact the financing, and perhaps preclude the project from going forward. There are lots of major gas projects on the drawing boards of producers all over the globe, each poised to proceed under the right market conditions. Anything that delays the ability of Alaskan producers to seize a window of commercial oppommity for a major gas sale also diminishes the likelihood that a major gas sale will ever occur. Other things being equal there is a dear advantage in having put the affairs of the Unit in good working order well in advance, not at the last minute. (9) Has the two participating-area structure or other features of the contractual and property arrangements for the Prudhoe Oil Pool resulted in any delay of or failure to pursue any development project or impaired any operation? James L. Smith Page 22 Conflicts stemming t~om the two participating-area structure have also impaired the implementation of major field development initiatives. Apart t~om the MI-NGL dispute, about James L. Smith Page 23 which the Commigsion has heard bom James L. Smith Page 24 Weighing the Arguments Against Compulsory Unitization Many of the witnesses who have already appeared before the Commission have offered a wide range of reasons why a compulsory unitization proceeding should not be initiated. I will close my remarks by commenting on some of the most prominent reasons given, and in the process attempt to summarize some of my own views. Reason #1: "The Unit is not broken; there is no problem, and therefore no need to fix it." Proponents of this view claim that the interests of the owners are already integrated to the extent poss~le, and that the conflicts that do emerge from time to time stem from external differences between the owners, not from the two participating-area structure of the Pmdhoe Oil Pool. I James L. Smith Page 25 disagree. The two participating-area structure appears to generate major conflicts among owners that put the intended benefits of unitization in jeopardy. Reason #2: "The Unit may be broken; but the Commission shouM not attempt to fix it via compulsory unitization because that cure may be worse than the disease." I have mixed feelings about thi~ argument. The "cure" admittedly involves putting each owner's equity interest at some risk, and this represents a heavy burden--large enough to have prevented the owners from voluntarily consolidating the two participating areas into one. If this burden is a matter that properly falls under the Commission's purview, then it would have to be weighed very carefully against the benefits of achieving a greater alignment of interests among the owners. However, I do not agree that the "cure" is bad for the other reasons often given: I do not think that the process of compulsory unitization would be chaotic, unmanageable, or inherently unfair or in violation of the correlative rights of the owners. Reason #3: "Compulsory unitization shouM not be imposed by the State because it wouM not be a panacea for all that ails the Unit" In my opinion, this argument is a red herring that deflects attention from the issues at hand. It is akin to arguing that we should not vaccinate children against disease because that would not solve the problem of world hunger. Most of the major conflicts that have been associated with Unit developments do stem from the two participating- area structure, and these problems would be resolved if the dual equities were consolidated. If other problems would remain unresolved, then the owners and the Commission might want to consider additional measures to further enhance operations within the Unit. Reason #4: "Compulsory unitization wouM be viewed by many as the State reneging on an agreement and wouM therefore establish a damaging precedent that couM discourage future investment from coming to Alaska." On legal grounds I cannot say whether initiating a James L. Smith Page 26 compulsory unitization procedure at this stage in the life of the field would constitute reneging on a contract. I do believe that the Comminsion operates under a charter that requires it continuously to guard the State's oil and gas resources against preventable waste. In that sense, any owner who enters into an agreement with the State to operate subject to the Commission's authority must know that its operations will be constrained by and subject to such considerations at all times. Moreover, bom an economic perspective, I believe that consolidation of the separate equities into a single participating area can be accomplished without destroying any of the agreements, trades, or deals upon which the owners have been relying. Reason #5: "Compulsory unitization shouM not be imposed because the Commission has no statutory or legal authority to do so." I have no knowledge or opinion regarding the validity of thin claim or the weight that should be attached to it. Reason #6: "Compulsory unitization shouM not be attempted because the problem of maIincentives wouM undermine the process and interfere with fieM operations." The ma[incentives that threaten to interfere with operations at the Pmdhoe Oil Pool stem from the dual participating-area structure, not from the attempts to consolidate the separate equities. Whether or not compulsory unitization is pursued, the same malincentives will exist. It is misleading to argue that by circumventing the process of compulsory unitization we can also circumvent the effects of whatever malincentives are thought to exist within the Unit. Proponents of the "case-by-case" approach to conflict resolution apparently believe that the malincentives of the owners would be less damaging if played out over a long series of disputes than if confronted once and for all during the process of consolidating the two participating areas. My own view is that malincentives that are allowed to linger and persist beneath the surface would probably be James L. Smith more damaging in the long nm, and less predictable, than the rather obvious preference of each owner to emerge from compulsory unitization with the largest poss~'ble equity share. want to thank the Commission for allowing me to present these views. This completes my prepared testimony. James L. Smith Page 28 ATTACHMENT 1 Curriculum Vita of Dr. James L. Smith CURRICULUM VITA DR. ]AMES L. SMITH MAGUIRE CHAIR OF OIL AND GAS MANAGEMENT EDWIN L. Cox SCHOOL OF BUSINESS SOUTHERN ]VIETHODIST UNIVERSITY DALLAS, TX 75275 Birthdate: Address: PERSONAL INFORMATION October 11, 1950 10537 Beinhom Road Houston, TX 77024 (713) 467-2902 home (214) 768-3158 office Marital Stares: Married (Agnes Cheng), two children (Lisa and Stephanie). EDUCATION B.S. [1972] Dept. of Economics, University of Illinois. M.A. [1976] Dept. of Economics, Harvard University. Ph.D. [1977] Dept. of Economics, Harvard University. PROFESSIONAL EXPERIENCE Cary M. Maguire Chair of Oil and Gas Management, Edwin L. Cox School of Business, Southern Methodist University, 1995-to date. Professor, Dept. of Economics, University of Houston, 1989-95. Board of Directors, International Assoc. for Energy Econ., Houston Chapter, 1989-93. Director, Bureau of Business and Economic Research, and Professor of Economics, University of Maryland, 1991. Director, Center for Public Policy, University of Houston, 1987-90. Associate Professor, Department of Economics, University of Houston, 1983-89. Associate Professor, Department of Economics, University of Illinois, Champaign-Urbana, 1981-83. Research Affiliate, Energy Laboratory, Massachusetts Institute of Technology, 1981-83. Research Collaborator, Dept. of Applied Mathematics, Brookhaven Natl. Lab., 1980-81. Visiting Scientist, Center for Energy Policy Research, Massachusetts Institute of · Technology, 1979-80. Visiting Research Associate, Norwegian School of Economics and Business Admini m'ation, Bergen, Norway, summers 1978-79. Assistant Professor, Dept. of Economics, Univ. of Illinois, Champaign-Urbana, 1977-81. Research Analyst, Energy Laboratory, Massachusetts Inst. of Technology, 1976-77. Technical Assistant, National Bureau of Economic Research, Cambridge, Mass., 1975-76. 02/04/97 TEACHING SPECIALTIES Energy Economics and Policy (graduate and undergraduate levels). Managerial Economics (MBA level). Microeconomic Theory (graduate and undergraduate levels). Economic Statistics and Econometrics (graduate and undergraduate levels). REFEREED PUBLICATIONS '°Taxation and Investment in Russian Oil," Journal of Energy Finance and Development (forthcoming). "Optimal Reservation Prices in Auctions," Economic Journal, with Dan Levin (vol 106, no. 438, 1996). "Ranking Auctions with Risk Averse Bidders," Journal of Economic Theory, with Dan Levin (vol. 68, no. 2, 1996). "On the Cost of Lost Production from Russian Oil Fields," The Energy Journal (vol. 16, no. 2, 1995). "Equilibrium in Auctions with Entry," American Economic Review, with Dan Levin (June 1994). "Petroleum Property Valuation: A Binomial Lattice Implementation of Option Pricing Theory," The Energy Journal, with Eric Pickles (May 1993). "Comment on 'Some Evidence on the Winners Curse,'" American Economic Review, with Dan Levin (March 1991). "Option Valuation of Claims on Real Assets: The Case of Offshore Petroleum Leases," Quarterly Journal of Economics, with J. Paddock and D. Siegel (August 1988). "Environmental Liability and Economic Incentives for Hazardous Waste Management," Houston Law Review, with W. Davis Dechert (July 1988). "Failure of the Net Profit Share Leasing Experiment for Offshore Petroleum Resources," The Review of Economics and Statistics, with D. Siegel and C. S. Cheng (May, 1988). "Cost-Volume-Profit Analysis of Offshore Energy Leases: A Reappraisal," Journal of Petroleum Accounting, with C. S. Cheng (Fall/Winter, 1987). "The Common Pool, Bargaining, and the Rule of Capture, "Economic Inquiry, (October 1987). "Valuing Offshore Petroleum Leases with Option Pricing Models," Midland Corporate Finance Journal, with D. Siegel and J. Paddock (Spring 1987); reprinted in The New Corporate Finance: Where Theory Meets Practice, edited by Donald H. Chew, Jr., pp. 108-116, McGraw-Hill, Inc., New York, 1993. "Effects of Taxes and Price Regulation on Offshore Gas," The Energy Journal, with H. Jacoby (Special Tax Issue 1985). "Joint Bidding, Collusion, and Bid Clustering in Competitive Auctions: Reply," Southern Economic Journal, (April 1985). 02/04/97 James L. Smith Page 2 "Further Results on Equilibrium Patterns of Competition in OCS Lease Sales," Economic Inquiry, (January 1984). 'Regional Modelling of Oil Discovery and Production," Energy Economics, with J. Paddock (January 1984). 'Joint Bidding, Collusion, and Bid Clustering in Competitive Auctions," Southern Economic ~lournal (October 1983). "Joint Bidding, Information Pooling, and the Performance of Petroleum Lease Auctions," Bell dournal of Economics, with L. DeBrock (Autumn 1983). "Equih~rium Patterns of Competition in OCS Lease Sales," Econ. Inquiry, (April 1982). "Risk Aversion and Bidding Behavior for Offshore Petroleum Leases," Journal of Industrial Economics (March 1982). "Maximum Likelihood Estimates oft he Size Distribmion of North Sea Oil Fields," Mathematical Geology, with G. Ward (October 1981). "Non-Aggressive Bidding Behavior and the Winner's Curse," Econ. Inquiry (July 1981). "Probabilistic Methods for Estimating Undiscovered Petroleum Resources," Advances in the Economics of Energy and Natural Resources, with F. O'Carroll (1980). "A Probabilistic Model of Oil Discovery," The Review of Economics and Statistics (November 1980). "Oil Supply Forecasting: A Disaggregated Process Approach," Bell Journal of Economics, with P. Eckbo and H. Jacoby (Spring 1978). "The Quality of Economic Writing in Four Newsmagazines," Journal of Business Communication (Spring 1973). TECllNICAL REPORTS AND PUBLICATIONS "Calculating Investment Potential in South America," World Oil, (June 1995). "Russian Oil Update: The Private Investment Climate," Russian Oil & Gas Guide, vol. 4, no. 1, Pennwell Publishing Co., Tulsa, Oklahoma (January 1995). "Restoring Russian Oil Production: The Economic Viability and Potential of Damaged Fields," a report submitted to the U.S. Department of Energy under contract no. DE-APO 193IN00620.A000 (May 31, 1994). "Executive Summary," Proceedings of the Second Annual Russian Oil Conference: "The Russian Petroleum Industry, Foreign Investment Opportunities," sponsored by the Royal Institute of International Affairs, London (February 11-12, 1993). "MAROPT: An Option Valuation System for Oil and Gas Prospects -- User's Manual and Documentation," January 10, 1990. "Profitability of Antarctic Oil Exploration and Development," a report submitted to the U.S. Congressional Office of Technology Assessment under contract no. J3- 4295.0 (January 31, 1989). "The Economic Impact of the University of Houston System," a report submitted to the Chancellor's Office, Univ. of Houston System, with Louis H. Stem (Jan. 1988). "Houston and the UH System: Parmers for the Future," a report submitted to the Chancellors Office, University of Houston System (January 1988). 02/04/97 James L. Smith Page 3 "Oil Import Tax: Pros & Cons," The Professional Geologist, American Institute of Professional Geologists, (October-December 1987). "International Petroleum Taxation: Reasons for Instability," in Proceedings of the North American Meetings of the International Association of Energy Economists, Calgary, July 5, 1987. "The Gasoline Marketing Industry in Texas," a report to the Texas Mid-Continent Oil & Gas Association (March 1985). "An Analysis of the Impact of Federal Tax and Leasing Policies on the Economic Prospects for Oilfield Development in Hostile Offshore Environments," a report to the U.S. Congressional Office of Teclmology Assessment under contract no. 433- 5620.0 (September 1984). "Petroleum Reservoir Simulation Models: A New Tool for Economic Analysis of Public Energy Policies," in Proceedings of the Fifteenth Annual Modeling and Simulation Conference, published by the Instrument Society of America (April 19-20, 1984). "Does Profit-Share Leasing for Outer Continental Shelf Leases Need Finer Tuning?," Oil and Gas Journal, with D. Siegel (May 7, 1984). "The Reservoir Economic Simulation Model: Technical Description and User's Guide," a report submitted to Los Alamos National Lab, 291 pages (November 1981). "Comment: New Theories of Exploration for Energy Resources," in The Economics of Exploration for Energy Resources, ed. J. Ramsey, JAI Press: Greenwich (1981). "Maximum Likelihood Estimates of the Size Distribution of North Sea Oil Deposits," Proceedings of the American Statistical Association, Business and Economic Statistics Section, with G. Ward (1980). "Probabilistic Models of Oil Discovery: North Sea Applications," a report submitted to the Center for Petroeconomic Studies, Christian Michelsens Institute, Bergen, Norway (June 1980). "Needed Exploration Activity Of[shore Norway," Northern Offshore: The Norwegian dournal of Oil and Gas, with P. Eckbo (August 1976). "The Petroleum Refining Industry," chapter 2 of Environmental Contr°ls: The Impact on Industry, ed. by IL Leone, Lexington Books: Lexington, Massachusetts (1976). "The Aluminum Industry," chapter 6 of Environmental Controls: The Impact on Industry, ed. by 1L Leone, Lexington Books: Lexington, Massachusetts, with W. Lee and IL Leone (1976). "The Economic Impact of the Federal Water Pollution Control Act Amendments of 1972 on the Petroleum Refining Industry," report submitted to the National Commission on Water Quality, with IL Leone (June 1975). WORKING PAPERS 'Whe Structure of Complex, Relational Contracts: Theory and Evidence from Oil and Gas Unit Operating Agreements," with Gary D. Libecap, February 1, 1997. '~mplications of Joint and Several Liability for Hazardous Waste Treatment Decisions under a Negligence Rule," with Karen Turner Dunn, November 1996. "Entry Coordination in Auctions: An Experimental Investigation," with Dan Levin, March 25, 1996. 02/04/97 James L. Smith Page 4 "The Elasticity of Demand for Gasoline: A Semi-Parametric Analysis," with Pin T. Ng, February 27, 1995. BOOK REVIEWS "Review of Mineral Resources Appraisal, by DeVerle P. Harris," in The Energy Journal, (January. 1986). "Review of Energy and Resources: An Economic Analysis, by F. Banks," in Natural Resources Journal (July 1983). "Review of North Sea Oil in the Future, by C. Robinson and J. Morgan," in dournal of Energy and Development, (Autumn 1979). RESEARCH GRANTS AND CONTRACTS "Restoring Russian Oil Production: The Economic Viability and Supply Potential of Damaged Fi¢lds," from the Energy Laboratory, University of Houston, 1993. "Restoring Russian Oil Production: The Economic Viability and Supply Potential of Damaged Fields," bom U.S. Dept. of Energy, 1993. "Russian Petroleum Taxation and Foreign Investment," from the Energy Laboratory, University of Houston, 1992. "Experimental and Empirical Research on Auctions With Entry," from Resources for the Furore, 1992. "The Role of Entry in Competitive Bidding," from the Energy Lab., U. of Houston, 1991. "Natural Gas: Bringing Energy and the Environment Into Focus," from a consortium of twenty-two corporate underwriters, 1988. "Option Value Methodology for Energy Research and Development," from the Texas Higher Education Coordinating Board, 1988. "The Impact of the University of Houston System on the Houston Community," from the University of Houston System, Chancellor's Office, 1988. "Retail Shopping Survey of the Downtown Workforce," from the Downtown Houston Association, Houston, TX, 1988. "Workshop on Alaskan Oil Production," from the U.S. Congressional Office of Technology Assessment, 1987. "Valuing Energy Research and Development: An Option Value Approach," from the Energy Laboratory, University of Houston, 1985. "Economic Factors in Developing Oil and Gas in Hostile Environments," from the U.S. Congressional Office of Technology Assessment, 1984. "Economic Determinants of Petroleum Drilling Activity," from Petroplan International, Boston, MA, 1982-83. "Economic Costs and Valuation of Petroleum Reserves," from U.S. DOE, 1981-82. "Reservoir Economic Simulation Model," from U.S. Dept. of Interior and Los Alamos National Laboratory, 1980-81. "Petroleum Supply Modeling," from the C. Michelsens Inst., Bergen, Norway, 1979-80. "Bidding Behavior for Offshore Petroleum Leases," from U.S. Geol. Survey, 1976-77. 02/04/97 James L. Smith Page 5 MANUSCRIPT REFEREE FOR American Economic Review Economic Inquiry Journal of Industrial Economics Jaurnal of Political Economy Quart. Rev. of Econ. & Business Society of Petroleum Engineers The Energy Journal The Review of Econ. and Statistics Columbia University Press Explorations in EcOnomic History Journal of Petroleum Technology National Science Foundation Resource and Energy Economics Southern Economic Journal The MIT Press CONFERENCE PRESENTATIONS "Implications of Joint and Several Liability for Hazardous Waste Treatment Decisions under a Negligence Rule," Southern Economic Association, Annual Meeting, Washington, D.C., November 23, 1996 (with Karen Turner Dunn). "Energy Hedging: Panel Discussion," Financial Management Association, Annual Meeting, New Orleans, LA, October 10-12, 1996. "F'mancial Issues of the Energy Industry," Financial Management Association, Annual Meeting, New Orleans, LA, October 10-12, 1996. '~atry Coordination in Auctions: An Experimental Investigation," Universitat Pompeu Fabra Conference on Auctions, Barcelona, May 30-June 1, 1996 (with Dan Levin). "I'axation and Investment in Russian Oil," International Conference on Petroleum Fiscal Regimes, Anchorage Alaska, May 2-3, 1996. "The Elasticity of Demand for Gasoline: A Semi-Parametric Analysis," Econometric Society, World Congress, Tokyo, Aug. 23-29, 1995 (with Pin Ng). "Russian Oil Update: The Private Investment Climate," Energy and Law Conference, sponsored by the U.S. Department of Energy and the Russian Ministry of Fuel and Energy, Moscow, Nov. 14-18, 1994. "Auctions with Entry: An Experimental Investigation," Economic Science Association, Fall Meetings, Tucson, AZ, Nov. 11-12 (with Dan Levin); also presented at Southern Economics Association, Annual Meeting, Orlando, FL, Nov. 20-22, 1994 (with Dan Levitt). "Russian Petroleum Taxation and Foreign Investment," WEA International Annual Conference, Lake Tahoe, NV, June 20-24, 1993. "World Crude Oil Market: The Long View," Energy Policy Workshop, M.I.T. Center for Energy and Environmental Policy Research, Cambridge, MA May 13-14, 1993. "Tax Considerations in Analyzing International Oil and Gas Agreements," Association of International Petroleum Negotiators, Annual Meeting, The Woodlands, TX, March 11-12, 1993. "Environmental Protection and Economic Competitiveness," Clean Air Texas, 1993 Annual Reunion, Austin, TX, March 3-4, 1993. "Russian Petroleum Taxation and Foreign Investment," North American Conference of the International Association for Energy Economics, New Orleans, October 27, 1992. 02/04/97 James L. Smith Page 6 CONFERENCE PRESENTATIONS (continued) "The Impact of Taxation on Petroleum Development," Joint U.S.-Paraguayan Conference: Model Contracts for Petroleum Investment, Asuncion, Paraguay, May 18, 1992. "Implications of Taxation on Oil and Gas Development," Joint U.S.-Russian Oil and Gas Workshop: U.S. Oppommities in Western S~eria, Tyumen, Western S~eria, January 2%30, 1992. "The Future of OPEC," Workshop on Energy Policy Issues of the 1990s, MIT Center for Energy Policy Keseareh, Cambridge, MA, November 21-22, 1991. "Option Valuation and Contingent Cl~im~ Analysis," ARCO Evaluation Forum, Denver, May 7, 1991. "The National Energy Strategy," Resources for the Future Seminar Series, Wash., DC, April 10, 1991. "The Theory, Practice, and Potential of Leasing Models," American Association for the Advancement of Science, Annual Meeting, New Orleans, February 17, 1990. "Derivative Asset Analysis: Applications to Valuing an Oil Field Development Project," Workshop on New Methods for Project and Contract Evaluation, Massachusetts Institute of Technology, Center for Energy Policy Research, Cambridge, MA, March 3, 1988 (with James Paddock and Daniel Siegel). "Environmental Liability and Economic Incentives for Hazardous Waste Management," Managing Liability from Hazardous Waste, Univ. of Houston Environmental Liability Law Conference, Houston, November 12-13, 1987 (with W. Davis Dechert). "International Petroleum Taxation: Reasons for Instability," Ninth International Conference of the International Association Energy Economists, Calgary, July 1987. "Option Valuation of Claim~ on Real Assets: The Case of Offshore Petroleum Leases," Annual Meetings of the International Association of Energy Economists, Boston, November 1986 (with J. Paddock and D. Siegel). "Option Valuation of Claim~ on Real Assets: The Case of Offshore Petroleum Leases," Annual Meetings of ORSA/TIMS, Atlanta, November 1985 (with J. Paddock and D. Siegel). "The Effects of Taxes and Price Regulation on the Supply of Offshore Gas," Special Conference on Energy Taxation, Center for Economic Policy Research, Stanford University, November 1984 (with H. Jacoby). "Petroleum Reservoir Simulation Models: A New Tool for Economic Analysis of Public Energy Policies," International Assoc, of Energy Economists, Bergen, Norway, June 1984. "Petroleum Reservoir Simulation Models: A New Tool for Economic Analysis," Fifteenth Annual Pittsburgh Conference on Modeling and Simulation, Pittsburgh, April 1984. "Regional Modelling of Oil Discovery and Production," United Nations Conference on the Economics of Exploration and Development of Energy Resources, New York, September 1983 (with J. Paddock). "Financial Option Valuation of Offshore Petroleum Leases," Annual Meeting of the American Finance Association, New York, December 1982 (with J. Paddock and D. Siegel). 02/04/97 James L. Smith Page 7 CONFERENCE PRESENTATIONS (continued) "A Simulation Study of Supply Response to Natural Gas Price Decontrol," North American Meetings of the International Association of Energy Economi~s, Denver, November 1982. "Maximum Likelihood Estimates of the Size Distn'bution of North Sea Oil Deposits," Annual Meetings of the American Statistical Association, Houston, August 1980 (with G. Ward). "Equih'brium Patterns of Competition for Offshore Petroleum Leases," Annual Meetings of the Western Economic Association, San Diego, June 1980. "Comment on New Theories of Exploration for Energy l~esources," Energy Exploration Conference sponsored by New York University, New York, May 1979. "Bidding Behavior for Off~hore Petroleum Leases: Some Empirical Evidence," Joint National Meetings of OI~SA/TIMS, New Orleans, May 1979. "Competitive Bidding Behavior and the Winner's Curse," Joint National Meetings of OP~SA/TIMS, Los Angeles, November 1978. "Forecasting Petroleum Discovery, Development, and Production," North American Meetings of the Econometric Society, Chicago, August 1978 (with P. Eckbo). 02/04/97 James L. Smith Page 8 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 1 DATE FROM NAME TO SUBJECT PAGES _ APUC AOGCC copy Exxon ltr 11/29/94 to APUC w/att tariff summary,DOL ltr and "Protest & Petition" dtd 12/21/94 la-39 12/22/1994 AOGCC BPX,ARCO,SPC 40 -44 BLANK PAGE. 44 - 12/29/1994 SPCO Brossia DWJ ltr. response to 12/22 request 45 -46 01/19/1995 TAPS mtg. agenda/crude oil volatitly task force rpt. 47 ~ 12/29/1994 BPX J. Morgan AOGCC ltr w/arts/exhibits (response to 12/22 request) 48 -112 12/29/1994 ARCO J. Thompson AOGCC ltr w/arts/exhibits (response to 12/22 request) 113 -286 01/04/1995 Alyeska J. Dayton AOGCC 12/6/94 TAPS Crude Oil Volatility Task Force (draft) 287 -384 01/10/1995 SPCO J Brossia AOGCC memo trnsmittng/rqstng comment of TAPS Crude Volatity Rpt 385 -479 01/13/1995 JPO R Mc Whiter AOGCC ltr(fax) to D Webb/rqstng comment on TAPS Crude Volatility Rpt 480 -486 01/17/1995 DNR M. Rutherford AOGCC ltr(fax) State response tO proposed Increase in NGLS in TAPS 487 -493 01/19/1995 JPO J. Santora Alyeska ltr to D Webb rstng comment on TAPS Crude Volatility Rpt 494 -500 01/19/1995 ARCO D. Bose AOGCC ltr - Comments on mtg 1/13/95 NGL Blending & Ceiling Rates 501 -503 01/18/1995 BPX Atul Arya AOGCC fax to J. Hartz - summary of Tue. NGL/MI Charter mtg notes. 504 -506 01/23/1995 BPX D. Woodward AOGCC ltr resp to points raised in ARCO 1/19/95 ltr to AOGCC. 507 -508 01/23/1995 AOGCC Commissioners ARCO & BP ltr- informing of public hearing on 5/16/95. 509 - 01/24/1995 AOGCC DWJ APUC ltr - rstng hold public hearing in bldg. 510 - 01/24/1995 AOGCC DWJ ARCO ltr - 01/19/95 not a proper petition for public hearing. 511 - 01/25/1995 APUC P. Oldenburg AOGCC fax - approved permission to use APUC bldg for 512 -513 ALASKA OIL & SAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 2 public hearing 5/16/95 5!/24/1995 JPO J. Sanora AOGCC itr to D. Webb/Alyeska rqstng comment by 1/13/95 on TAPS rpt dtd 12/27/94 514 -515 01/25/1995 Phillips W. Jaap AOGCC itr - elf. of increasing NGL throughput in TAPS. 516 -517 02/01/1995 JPO graphs dealing w/NGL in TAPS. 518 -537 02/10/1995 ARCO K Rupp AOGCC memo(fax) - to J. Hartz MI/NGL Issues Facility Team Mtg. 538 -539 02/14/1995 ARCO D. Bose AOGCC ltr(fax) - rqstng commission review/rule upon NGL Prod. 539 -543 02/16/1995 AOGCC DWJ ARCO & BP ltr - rqst comment on 5/16/95 Public Hearing. 544 -546 02/22/1995 DOR AOGCC fax - graph of PB Oil & NGLs 547 - 02/23/1995 BPX J. Morgan AOGCC ltr - (response to AOGCC ltr 2/16/95 5/16/95 PH approved. 548 -550 02/23/1995 Phillips W. Jaap AOGCC ltr - (response to AOGCC ltr 2/16/95 5/16/95 PH approved. 551 -553 02/23/1995 Amerda Hess W. Lehmann AOGCC ltr- (response to AOGCC ltr 2/16/95 5/16/95 PH approved. 554 - 02/23/1995 Chevron J. Ricotta AOGCC ltr - (response to AOGCC ltr 2/16/95 5/16/95 PH approved. 555 - 02/23/1995 Texaco R. Hill AOGCC ltr- (response to AOGCC ltr 2/16/95 5/16/95 PH approved. 556 - 02/23/1995 Mobil N. Smith AOGCC ltr - (response to AOGCC ltr 2/16/95 5/16/95 PH approved. 557 - 02/23/1995 Exxon G. Theriot AOGCC ltr - {response to AOGCC ltr 2/16/95 5/16/95 PH approved. 558 - 02/27/1995 AOGCC DWJ Exxon ltr - Thank you for timely response to AOGCC 2/16/95 ltr. 559 - 02/27/1995 AOGCC DWJ Chevron ltr- Thank you for timely response to AOGCC 2/16/95 ltr. 560 - 02/27/1995 AOGCC DWJ Texaco ltr - Thank you for timely response to AOGCC 2/16/95 ltr. 561 - 02/27/1995 AOGCC J. Morgan BPX ltr - Thank you for timely response to AOGCC 2/16/95 ltr. 562 - 02/27/1995 AOGCC DWJ Phillips ltr - Thank you for timely response to AOGCC 563 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 3 2/16/95 ltr. 02/27/1995 AOGCC DWJ ARCO ltr - Thank you for timely response to AOGCC 2/16/95 ltr. 564 - 02/27/1995 AOGCC DWJ Mobil ltr - Thank you for timely response to AOGCC 2/16/95 ltr. 565 - 02/27/1995 AOGCC DWJ Amerada Hess ltr - Thank you for timely response to AOGCC 2/16/95 ltr. 566 -567 03/08/1995 AOGCC COMMISSIONERS PUBLIC Notice of Public Hearing to be held on 5/16/95 - Published Mar 8, Apr 5, May 3 95. 568 - 04/14/1995 AOGCC Com~issioners Public Notice of Pre Hearing to be held on 4/14/95 - not published due to date change. 569 - 03/31/1995 Anch Daily News A Basden AOGCC Affidavit of Publication, Anch Daily News/sworn on 3/31/95 570 - 03/31/1995 Star Pub. Co T. AOGCC Affidavit of Publication, Star Publishing Company/sworn on 5/16/95 57 Oa- 04/19/1995 AOGCC Commission Public Notice of Pre Hearing to be held on 4/19/95 - not 571 - published due to date change. 04/19/1995 AOGCC Commission Public Notice of Pre Hearing to be held on 4/19/95 published on 4/5/95. 572 - 04/16/1995 Anch Daily News E Kaufman AOGCC Affidavit of Publication, Andh Daily News/sworn on 4/6/95. 573 - 04/11/1995 AOGCC TAB PBU WIOs LTR - Rqstng lists of all op agreements/docs concerning opration of PBU. 574 -588 04/11/1995 BPX M. Davis AOGCC ltr- notice to consider AOGCC Notice of PH as a petition from BPX for same. 589 - 04/12/1995 AOGCC D Fleck inter office memo - J. Ricotta phoned & wanted to 590 - combine lists w/WIO(AOGCC ltr 4/11/95). 04/11/1995 BPX M. Davis AOGCC ltr - notice to consider AOGCC Notice of PH as a petition from BPX for same. 591 - 04/13/1995 Exxon G. Theriot AOGCC ltr - rqstng a 1 mo. postponement in the Pre Hearing and Hearing PHs. 592 - 04/13/1995 ARCO J. Dayton AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) Partial lis of agreements 594 -595 04/14/1995 AOGCC G. Theriot Exxon ltr - (response to Exxon ltr 4/13/95) consider a delay in schd. 596 -598 ALA, SKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 4 04/14/1995 Shell D Champlin AOGCC ltr- (response to AOGCC ltr 4/11/95) acknowledge receipt and rqstng more time to comply. 599 - 04/18/1995 DNR K. Boyd AOGCC ltr - (response to AOGCC ltr 4/11/95) list of docs in DNR possession. 600 -602 04/18/1995 BPX M. Davis AOGCC Breif, internal w/copies to AOGCC/Pre Rearing Conference Brief 603 -611 04/19/1995 AOGCC TAB Public Notice of Public Hearing held on 5/16/95 - Pub. 4/19/95 612 - BLANK PAGE. 613 - 04/19/1995 BPX M. Davis AOGCC LS~R - (response to BP/AOGCC mtg) rqst allow 60 days to submit info. 614 - 04/19/1995 A~RCO AOGCC Statement of Petitioner/Pre-Hearing Conference 4/19/95. 615 -617 04/19/1995 Exxon A. Berger AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) list of docs in Exxon's possession. 619 - 04/19/1995 AOGCC Pre Hearing Attendance List. 621 -622 04/20/1995 AOGCC Commissioners WIOs Pre-Hearing Conference Order & Appen A. 623 -629 04/19/1995 Marathon M. Allen AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) list of Marathon agreements. 630 - 04/20/1995 LL&E R. Hawkins AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) list of LL&E agreements. 631 -634 04/21/1995 ARCO M. Johnson AOGCC Memo - J. Hartz/ARCO will pull members from joint team elf Mon. 635 - 04/21/1995 AOGCC TAB DNR MEMO - phon con w/M. Kotowski, to delay response from May 3 to Wed after. 636 - 04/19/1995 Exxon A. Berger AOGCC itt(fax)- (response to AOGCC ltr 4/11/95) list of docs in Exxon's possession 637 -638 04/20/1995 BPX M. Davis AOGCC ltr(fax)- (response to BP/AOGCC mtg) rqstng allow 60 days to submit info. 639 -640 04/20/1995 BPX 04/20/1995 Chevron M. Davis AOGCC J. Ricotta AOGCC Itt(fax)- (response to AOGCC ltr 4/11/95) list of docs in BP's possession ltr(fax)- (response to AOGCC ltr 4/11/95) list of docs in Chevron's possession. 641 -647 648 -655 04/24/1995 AOGCC D. Fleck WlO's FAX- replace pg 2 of Pre Hearing Order - Orig. incorrectly numbered. 656 -661 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 5 04/25/1995 AOGCC TAB Marathon ltr- thank you for timely response to ltr of 4/11/95. 662 - 04/25/1995 AOGCC TAB Exxon ltr - thank you for timely response to Itr of 4/11/95. 663 - 04/25/1995 AOGCC TAB ARCO ltr - thank you for timely response to ltr of 4/11/95. 664 - 04/25/1995 AOGCC TAB DNR ltr - thank you for timely response to ltr of 4/11/95. 665 - 04/25/1995 AOGCC TAB BPX ltr - thank you for timely response to ltr of 4/11/95. 666 - 04/25/1995 AOGCC TAB Chevron ltr - thank you for timely response to ltr of 4/11/95. 667 - 04/25/1995 AOGCC TAB LL&E ltr - thank you for timely response to ltr of 4/11/95. 668 - This page left intentionally blank. 669 - 04/26/1995 Delaney etc. S. Ellis AOGCC ltr - rqstng permission on behalf of Phillips to participate in hrgs. 670 -671 04/27/1995 Phillips H. Cody AOGCC ltr - PBU agreements & related docs. 672 -675 04/27/1995 DOA M. Boyer AOGCC Memo(fax) - ASPS 025-050 676 - 04/28/1995 Exxon G. Theriot AOGCC ltr - response to AOGCC Pre-Hearing Order 4/20/95 questions. 680 - 04/28/1995 BPX M. Davis AOGCC ltr - BPXA Declaratory Relief Action 681 -853 04/28/1995 AOGCC Commissioners Public AOGCC Procedural Order 4/28/95 854 -857 04/28/1995 BPX M. Davis AOGCC ltr(fax) - para 7, AOGCC Pre-Hearing Order 4/20/95. 858 -860 05/02/1995 Yukon Pacific W. Whitmore AOGCC ltr(fax) - rqstng delay response AOGCC Pre-Hearing Order 4/20/95 861 -862 05/02/1995 Texaco R. Hill AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) list of docs in Texaco possession. 863 -865 05/02/1995 AOGCC Co~issioners Public AOGCC Procedural Order 5/2/95. 866 -869 05/02/1995 AOGCC Commissioners DNR ltr - response to AOGCC ltr 4/11/95 to AOGCC by 7/10/95. 870 -871 05/02/1995 AOGCC Commissioners Phillips ltr - response to AOGCC ltr 4/11/95 to AOGCC by 872 -873 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 6 7/10/95. 05/02/1995 Amerda Hess W. Lehmann AOGCC ltr(fax) - (response to AOGCC Itt 4/11/95) list 874 -878 of docs in possession. 05/04/1995 AOGCC D. Fleck AOGCC memo - to TAB/Mobil & Shell have not responded to 879 - AOGCC ltr 4/11/95. 05/04/1995 Mobil N. Smith AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) list 880 - of docs in possession. 05/05/1995 Shell D. Champlin AOGCC ltr(fax) - (response to AOGCC ltr 4/11/95) list 882 -886 of docs in possession 05/02/1995 Texaco R. Hill AOGCC ltr - (response to AOGCC ltr 4/11/95) list of 887 -889 docs in Texaco possession. 05/04/1995 Mobil N. Smith AOGCC ltr - (response to AOGCC ltr 4/11/95) list of 890 - docs in possession 05/02/1995 Amerda Hess W. Lehmann AOGCC ltr - (response to AOGCC ltr 4/11/95) list of 891 -895 docs in possession 04/28/1995 Exxon G. Theriot AOGCC ltr - response to AOGCC Pre-Hearing Order 4/20/95 896 - questions. 05/08/1995 AOGCC Commissioners ARCO,BP,Exxon ltr - rqstng copy of FDPs for 91, 92, 93, 94 & 95. 897 -898 05/09/1995 ARCO D. Bose AOGCC ltr - PBU FDP. 899 - 05/10/1995 Texaco R. Hill AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify 900 - as Texaco, et al. 05/10/1995 AOGCC DWJ WIOs ltr- rqstng all exhibits at 5/16/95 PH have by 901 -902 consecutively numbered. 05/10/1995 Texaco R. Hill AOGCC ltr(fax) - TEPI rqstng to be deemed a participant 903 - in Ultimate Recovery Hearing. 05/11/1995 AOGCC DWJ WIOs ltr- all exhibits at 5/16/95 PH to have Arabic 904 -905 Numerals. 05/10/1995 Texaco R. Hill AOGCC ltr(fax) - Pre-filed testimony for 5/16/95 906 -918 Ultimate Recovery PH 05/11/1995 Exxon A. Berger AOGCC ltr(fax) - PBU FDPs are not a commitment to fund 919 -920 or implement by WIOs 05/05/1995 Shell D. Champlin AOGCC ltr- (follow up on AOGCC ltr 4/14/95) add Ex. A 921 -925 as ref. to those agreements 05/10/1995 Deleney/PHILLIP S. Ellis AOGCC ltr - (response to AOGCC 5/2/95 ltr) rqstng more 926 -927 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 7 time to answer Appn. A. 05/10/1995 Texaco R. Hill AOGCC ltr - TEPI rqstng to be deemed a participant in the Ultimate Recovery Hearing. 928 - 05/10/1995 Texaco R. Hill AOGCC ltr - Pre-filed testimony for 5/16/95 Ultimate Recovery PH. 930 -942 05/12/1995 Phillips S. Ellis AOGCC ltr - Pre-filed testimony for 5/16/95 Ultimate Recovery PM. 943 -949 05/12/1995 Shell D. Schultze AOGCC ltr- Pre-filed testimony for 5/16/95 Ultimate Recovery PH. 950 -951 05/12/1995 AOGCC J. Hartz AOGCC memo - questions for the Ultimate Recovery 5/16/95 PH. 952 -954 05/12/1995 DNR B. VanDyke AOGCC ltr(fax) - does not plan to present detailed tech. testimony at 5/16/95 PH. 955 - 05/12/1995 Yukon Pacific W. Whitmore AOGCC ltr - Pre-filed testimony for 5/16/95 Ultimate Recovery PH. 956 -960 05/12/1995 Exxon A. Berger AOGCC ltr - Pre-filed testimony for 5/16/95 Ultimate Recovery PH. 961 -1009 05/12/1995 ARCO M. Worcester AOGCC ltr- Copy of complaint filed by ARCO in AK Superior Court 5/11/95. 1010 -1039 05/12/1995 Texaco, et al. E. Hrkel AOGCC ltr - Pre-filed testimony for 5/16/95 Ultimate Recovery PH. 1040 -1086 05/12/1995 AOGCC Commissioners Public AOGCC Procedural Order 5/12/95. 1087 -1088 05/12/1995 ARCO M. Worcester AOGCC Pre-filed testimony for 5/16/95 Ultimate Recovery 1089 -1426 PH. 05/12/1995 BPX M. Davis AOGCC Pre-filed testimony for 5/16/95 Ultimate Recovery 1427 -1776 PH. 05/15/1995 Texaco R. Hill AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify as TEPI representative. 1777 - 05/15/1995 Chevron J. Ricotta AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify as Chevron representative. 1778 -1779 05/09/1995 Amerda Hess W. Lehmann AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify as representative. 1780 -1781 05/09/1995 Amerda Hess W. Lehmann AOGCC ltr - rqstng to allow Dr. Hrkel to testify as representative. 1782 - 05/15/1995 Mobil N. Smith AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify 1783 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY iNDEX DATE ~z/25/1997 PAGE 8 as representative. 05/15/1995 Phillips D. Whitney AOGCC itr(fax) - rqstng to allow Dr. Hrkel to testify as representative. 1784 -1787 05/15/1995 BPX M. Davis AOGCC ltr(fax) - ARCO complaint for damages vs BPX. 1788 -1817 05/15/1995 BPX M. Davis AOGCC ltr(fax) - apprise AOGCC of Attnys representing BPX. 1818 -1819 05/15/1995 Texaco C. Walz AOGCC ltr- personal objection in ARCO's proposal. 1820 -1821 05/15/1995 Shell D~ Schultze AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify as representative. 1822 -1823 This Page left intentionaly blank. 1824 -1826 05/15/1995 DNR B. VanDyke AOGCC ltr(fax) - Pre-filed testimony for 5/16/95 Ultimate Recovery PM 1827 -1840 05/12/1995 ARCO M. Worcester AOGCC Errata to Pre-filed testimony of F. Stalkup 1841 -1865 05/12/1995 ARCO M. Worcester AOGCC Errata to Pre-filed testimony of J. Wolflick. 1866 -1883 05/12/1995 ARCO 05/12/1995 ARCO 05/15/1995 BPX 05/12/1995 DNR M. Worcester AOGCC M. Worcester AOGCC M. Davis AOGCC B. VanDyke AOGCC Errata to Pre-filed testimony of J Dana Dayton. Errata to Pre-filed testimony of H Warner JR. ltr(fax) - Errata to Prefiled Testimony by BPXA. ltr - does no plan to present detailed tech. testimony at PH. 1884 -1902 1903 -1905 1906 -1938 1939 - 05/16/1995 Marathon M. Allen AOGCC ltr(fax) - rqstng to allow Dr. Hrkel to testify as representative. 1940 -1941 05/15/1995 DNR 05/16/1995 AOGCC B. VanDyke AOGCC Public ltr - testimony to 5/16/95 PH. AOGCC 5/16/95 Ultimate Recovery PH Attendance List 1942 -1954 1955 -1958 05/16/1995 ARCO 02/22/1995 ARCO 05/11/1995 ARCO J. Donovan AOGCC F. Brown KRU WIOs M. Worcester SOA S. Court Opening statemnt on behalf of ARCO - PH 5/16/95. PH 5/16/95 - ARCO Ex. 120 (KRU large Scale Enhanced Oil Recovery Project Operating Procedures and Exhibits) PM 05/16/95 - ARCO Ex. 122 (ARCO's complaint for damages and injunctive and declaratory relief. Case No. 1JU-95-10120) 1959 -1965 1966 -1983 1984 -2012 05/16/1995 AOGCC Commissioners AOGCC AOGCC PH EX. 1 (94 PBU FDP) '2002 -2039 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 9 05/16/1995 ARCO F. Stalkup AOGCC PH 5/16/95 - ARCO Ex. 123 (Graph of EOR Recovery 2013 - Curve Comparison) 05/16/1995 ARCO AOGCC PH 5/16/95 - ~RCO Ex. 124 (Graph-Observed Liquid 2014 - Production Rate Declines.) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 125 (Graph MI and Lean Gas 2015 - Rate Streams) 05/16/1995 BPX D. Szabo AOGCC PH 5/16/95 - BP Ex. DJS-33 (Graph MI and Lean Gas 2016 - Rate Streams) 05/16/1995 Marathon M. Allen AOGCC ltr(fax) - Authorize Dr. Hrkel to testify in proceedings. 2017 - 05/15/1995 BPX M. Davis AOGCC ltr - errata pages for the pre-filed testimony of the BPXAWitnesses. (M. Davis, D. Szabo, W. Beecroft, A Arya, F. McCorkle, D. Uldrich, W. Meek) 2018 -2050 05/17/1995 AOGCC Public AOGCC 5/16/95 Ultimate Recovery PH Attendance List (5/17/95) 2051 -2054 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 63 CORRECTED (Graph - PB Butanes Sponge) 2054 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 107 CORRECTED (Graph - Avail of NGL/MI Components in 95) 2055 - 10/01/1987 ARCO AOGCC PH 5/16/95 - ARCO Ex. 121 (Area values Oil rim & gas cap participating areas) 2056 - 05/16/1995 ARCO F. Stalcup AOGCC PH 5/16/95 - ARCO Ex. 123 (Graph - EOR Recovery Curve Comparison) 2057 - 05/16/1995 ARCO F. Stalkup AOGCC PH 5/16/95 - ARCO Ex. 123 (Graph - EOR Recovery Curve Comparison) 2058 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 124 (Graph - Obs. Liquid Prod. Rate Declines) 2059 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 125 (Graph - MI & Lean Gas 2060 - Rats Streams) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 125 (Graph - MI & Lean Gas 2061 - Rate Streams) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 126 (Graph - MI supply for 2062 - facility upgrade case) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 127 (Chron. of TAPS limit on NGL Blend. and BP's refusal to Blend above 74 MBPD) 2063 -2084 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 10 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 128 (Graph - CGF stream Compositions) 2085 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 129 (Graph - GCF NGLS market value) 2086 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 130 (Graph - Butanes-more value as liquid than gas) 2087 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 131 (Graph - price diff., incremental NGL value-ANS value) 2088 - 05/16/1995 Marathon M. Allen AOGCC ltr- Authorize Dr. Hrkel to testify in proceedings 2089 -2090 05/16/1995 ARCO F. Stalkup AOGCC PH 5/16/95 - ARCO Ex. 132 (Stalkup Chart) 2091 - 05/16/1995 ARCO F. Stalkup AOGCC PH 5/16/95 - ARCO Ex. 132 (Stalkup Chart) 2092 - 12/29/1994 ARCO J. Thompson AOGCC PH 5/16/95 - ARCO Ex. 133 (response to AOGCC 12/22/94 ltr) 2093 -2135 01/01/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 134 (overview) 2130 -2148 12/29/1994 BPX J. Morgan AOGCC PH 5/16/95 - ARCO Ex. 135 (response to AOGCC 12/22/95 ltr) 2149 -2170 12/29/1994 BPX J. Morgan AOGCC PH 5/16/95 - ARCO Ex. 136 (response to AOGCC 12/22/95 ltr) 2171 -2192 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 137 (graph - demister design) 2193 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 138 (graph - LTS-3 seal pan 2194 - & baffle) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 139 (PBU Central Gas Facility -schematic) 2195 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 140 (Graph Impact on NGL & MI rates of BP's restriction on blending) 2196 - 05/18/1995 AOGCC Public AOGCC 5/16/95 Ultimate Recovery PH Attendance List (5/18/95) 2197 -2199 05/10/1995 BPX T. Meggs AOGCC ltr - (response to AOGCC 05/08/95 ltr) PBU FDP for 91,92,93,94 2200 - 05/15/1995 Phillips D. Whitney AOGCC ltr - Dr. Hrkel is authorized to testify for proceedings. 2201 -2203 05/22/1995 AOGCC Public AOGCC 5/16/95 Ultimate Recovery PH Attendance 2204 -2206 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 11 List (5/22/95) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 128 (Graph - CGF Stream Compositions) 2207 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 130 (Graph - Butanes-more value as liquid than gas) 2208 - 12/29/1994 ARCO J. Thompson AOGCC PH 5/16/95 - ARCO Ex. 133 (response to AOGCC 12/22/94 ltr) 2209 -2382 12/29/1994 BPX J. Morgan AOGCC PH 5/16/95 - ARCO Ex. 135 (response to AOGCC 12/22/94 ltr) 2383 -2447 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 137 (graph - demister design) 2448 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 138 (graph - LTS-3 seal pan 2449 - & Baffle) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 140 (Graph Impact on NGL & MI rates of BP's restriction on blending) 2450 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 1410 (Graph - CGF NGL prod. 2451 - rate) 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 142 (Graph - Impact on NGL/MI rates of BP's restriction on blending) 2452 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 142 (Graph - Impact on NGL/MI rates of BP's restriction on blending) 2453 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 143 SUBSTITUTED (Graph) 2454 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 144 (Graph - Incremental PBU NGL w/ KRU Crude sponge) 2455 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 144 (Graph - Incremental PBU NGL w/ KRU Crude sponge) 2456 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 145 (Graph - CGF Mod. Options) 2457 -2459 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 146 (Graph - Unit Development Process) 2459 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 146 (Graph - Unit Development Process) 2460 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 147 (Graph - ARCO view of BP EOR project expan, scope) 2461 - 05/16/'1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 148 (simp. flow plan of 2462 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTI~fATE RECOVERY INDEX DATE 02/25/1997 PAGE 12 BP's proposed take in kind project) 05/23/1995 Exxon S. Luna AOGCC ltr - filed a complaint in Superior Court A_K against BP. Case #NV95-1013a 2463 -2481 05/23/1995 AOGCC Public AOGCC 5/16/95 Ultimate Recovery PM Attendance List (5/23/95) 2482 -2484 05/16/1995 ARCO AOGCC PM 5/16/95 - ARCO Ex. 149 (oil/gas field units w/two sets of qwnership %) 2485 - 04/21/1995 BPX J. Reeder SOA So Court PH 5/16/95 - BPXA Ex. 2 (complaint for declaratory relief against ARCO) 2486 -2648 04/21/1995 BPX D. Szabo AOGCC PH 5/16/95 - BPXA Ex. DJS-19,DJS-20,DJS-21,DJS-25,DJS-33, DJS-35 CORRECTED (TESTIMONY OF DAVID SZABO FOR BP) 2649 -2655 04/21/1995 BPX D. Szabo AOGCC PH 5/16/95 - BPXA Ex. DJS-39,DJS-40,DJS-41,DJS-42 2656 -2661 NEW (TESTIMONY OF DAVID SZABO FOR BP) 05/24/1995 AOGCC Public AOGCC 5/16/95 Ultimate Recovery PH Attendance List (5/24/95) 2662 -2664 04/21/1995 BPX W. Beecroft AOGCC PH 5/16/95 - Corrected tab 2665 - 04/21/1995 BPX W. Beecroft AOGCC PH 5/16/95 - BPXA Ex. WJB(a)-19,WJB(a)-20,WJB(a)-21 NEW (Testimony of Wayne Beecroft for BP EOR update) 2666 -2669 04/21/1995 BPX W. Beecroft AOGCC PH 5/16/95 - Corrected tab 2670 - 04/21/1995 BPX W. Beecroft AOGCC PH 5/16/95 - BPXA Ex. WJB(b)-13,WJB(b)-14,WJB(b)-15 NEW (Testimony of Wayne Beecroft for BP EOR performance) 2671 -2674 04/21/1995 BPX F. McCorkle AOGCC PH 5/16/95 - BPXA Ex. FAM-3,FAM-4 CORRECTED (Testimony of Frank McCorkle for BP) 2675 -2677 04/21/1995 BPX F. McCorkle AOGCC PH 5/16/95 - BPXA Ex. FAM-35,FAM-36,FAM-37,FAM-38 2678 -2682 NEW (Testimony of Frank McCorkle for BP) 04/21/1995 BPX D. Uldrich AOGCC PH 5/16/95 - BPXA Ex. DOU-11 CORECTED (Testimony of David Uldrich for BP) 2683 -2684 05/25/1995 AOGCC Public AOGCC 5/16/95 Ultimate Recovery PH Attendance List (5/25/95) 2685 -2687 04/21/1995 BPX D. Szabo AOGCC PH 5/16/95 - BPXA Ex. DJS-43, DJS- 44, DJS-45, DJS- 46, DJS-48, DJS- 49DJS- 50, DJ S-51 (TESTIMONY OF DAVID SZABO FOR BP) 2688 -2695 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 13 04/21/1995 RPX F. McCorkle AOGCC PH 5/16/95 - BPXA Ex. FAM 37a,37b,37c,37d,37e,37f,37g,37h, 37i,37j,37k,37i (TESTIMONY OF Frank McCorkle for BP) 2696 -2707 04/21/1995 BPX A. Arya AOGCC PM 5/16/95 - BPXA Ex. AA-4 CORRECTED (TESTIMONY of Atul Arya for BP) 2708 -2709 04/21/1995 BPX A. Arya AOGCC 04/21/1995 BPx G. Meek AOGCC PH 5/16/95 - BPXA Ex. AA-13,AA-14,AA-15 NEW (TESTIMONY of Atul Arya for BP) PH 5/16/95 - BPXA Ex. GM-3,GM-4,GM-9,GM-iO CORRECTED (TESTIMONY of Garry Meek for BP) 2710 -2713 2714 -2718 04/21/1995 BPX G. Meek AOGCC PH 5/16/95 - BPXA Ex. GM-12,GM-13,GM-14,GM-15,GM-16,GM-17,GM-18,GM-19,GM -20 NEW (TESTIMONY of Garry Meek for BP) 2719 -2728 05/26/1995 Exxon S. Luna AOGCC ltr - (response to PH 5/16/95(May 25 session))PBU 2729 -2730 FDP additional information. 04/21/1995 BPX G. Meek AOGCC PM 5/16/95 - BPXA Ex. GM-20,GM-21,GM-22,GM-23 NEW 2731 -2734 (TESTIMONY of Garry Meek for BP) 05/31/1995 AOGCC Public AOGCC Ultimate Recovery PH 5/16/95 Attendance List (5/31/95) 2734 -2756 04/21/1995 BPX D. Szabo AOGCC PH 5/16/95 - BPXA Ex. DJS-52 NEW (TESTIMONY of David Szabok for BP) 2735 - 04/21/1995 BPX S. Jones AOGCC PH 5/16/95 - Tab 2736 - 04/21/1995 BPX S. Jones AOGCC PH 5/16/95 - BPXA EX. STJ-7,STJ-8,STJ-9,STJ-10,STJ-11,STJ-12 STJ-13,STJ-14,STJ-15,STJ-16,STJ-17,STJ-18,STJ-19 NEW (Testimony of Scott Jones for BP) 2737 -2750 05/26/1995 AOGCC Public AOGCC Ultimate Recovery PH 5/16/95 Attendance List (5/26/95) 2751 -2753 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 60 CORRECTED (Graph - g5 CGF Inlet Gas Component Recovery) 2757 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex. 61 CORRECTED (Graph - 95 CGF inlet gas component recovery) 2758 - 05/16/1995 ARCO AOGCC PH 5/16/95 - ARCO Ex.128 (Graph - CGF Stream Compostions) 2759 - 05/31/1995 Exxon A. Berger AOGCC 5/16/95 PH Pre-Filed Testimony May 12, 95 REVISED 2760 -2807 5/31/95 05/31/1995 Texaco AOGCC 5/16/95 PH TEPI Ex. VII (Graph - Excerp ARCO ltr 2808 - to TEPI) ALASKA OIL & GAS CONSERVATION COMMISSION ULTI~TE RECOVERY INDEX DATE 02/25/1997 PAGE 08/23/1991 ARCO 05/16/1995 Texaco 10/01/1992 Exxon 05/16/1995 Texaco 05/16/1995 AOGCC 05/30/1995 Baker/BPX H. Bilhartz Texaco AOGCC Texaco AOGCC Commissioners AOGCC M. Arruda AOGCC 05/12/1995 Texaco C. Walz AOGCC B. VanDyke AOGCC 05/26/1995 DNR 05/23/1995 Exxon S. Luna AOGCC 05/31/1995 Baker/BPX 09/22/1993 BPX M. Arruda AOGCC D. Szabo SOA S. Court Commissioners AOGCC 05/16/1995 AOGCC 05/16/1995 Public 06/02/1995 Skadden/ARCO WIOs J. Donovan AOGCC 06/05/1995 Exxon S. Luna AOGCC M. Arruda AOGCC 06/03/1995 Baker/BPX 06/03/1995 ARCO D. Bose AOGCC J. Donovan AOGCC 06/06/1995 ARCO 5/16/95 PH 5~EPI Ex. 7(a) (ltr PBU issues resolution agreement) 5/16/95 PH TEPI Ex. VIII (Excerpt ltr Exxon to TEPI dtd 10/01/92) 5/16/95 PH TEPI Ex. 8(a) (ltr Exxon to TEPI 10/01/92) 5/16/95 PH ~EPI Ex. ??? (R.W. Hill - education and work experience) Confidentiality Agreement - DRAFT ltr - rqstng for back-up data for ARCO Ex. 39 (regarding BPXA Ex STJ-18) ltr - personal objection in ARCO's proposal. UNSWORN STATEMENT ltr - Pre-filed testimony for 5/16/95 Ultimate Recovery PH. ORIGNAL 05/16/95 - REVISED 05/26/95 ltr - (response to AOGCC 5/12/95 rqst to clarify the WIO's confidentiality claim to the PBU FDP) ltr - (responses to AOGCC questions from 5/26/95 session of 5/16/95 PH) Deposition of David Szabo C~%SE # 1JU-77-847 (regarding use of C4-C10 as MI) AOGCC PH EX. 1 (Confidential - Kept at AOGCC Confidential RM. Not for realease unless approved by AOGCC and a signed confidentiality form) AOGCC 5/16/95 Ultimate Recovery PH (questions asked at hearing 5/16/95 - 6/1/95) ltr - (response to AOGCC question 6/1/95) white oil cases ltr(fax) - (response to AOGCC PH 5/31/95) additional infor to data of Exxon Ex. 15. ltr - (response to AOGCC PM 6/1/95) data in preparation of BPXAEx. STJ-14 & 15. ltr - supp. data AOGCC requested on 6/1/95. ltr(fax) - rqstng convene emergency hearing this afternoon. 2809 -2811 2812 - 2813 - 2814 - 2815 -2816 2817 -2819 2820 -2821 2822 -2834 2835 -2888 2889 -2899 2900 -3001 3040 -3049 3050 -3389 3390 -3451 3452 -3456 3457 -3486 3487 -3513 3514 -3516 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 15 06/06/1995 AOGCC D. Fleck AOGCC Memo - Spoke w/Donovan's ofc. They will fax all parties 06/06/95 ltr. 3517 06/01/1995 AOGCC Public AOGCC Ultimate Recovery PH 5/16/95 Attendance List (6/1/95) 3518 -3519 06/01/1995 Yukon Pacific W. Whitmore AOGCC May 15 PH - YPC Exh 0 through 5. 3519a-3519 f 05/26/1995 Texaco R. Hill AOGCC ltr(fax) - summary of educational and work experience submitted as errata to pre-filed testimony. 3520 -3525 06/07/1995 DOL L. Ostrovsky AOGCC ltr(fax) - BPXA response to ARCO's request for emerg, hearing 3526 -3529 06/07/1995 ARCO J. Donovan AOGCC ltr(fax) (response to BP's response to an emerg. hearing) 3530 -3536 06/08/1995 BPX L. Ostrovsky AOGCC ltr(fax) - BPXA response to ARCO's request for emerg, hearing 3537 -3539 06/07/1995 AOGCC DWJ ARCO ltr - Commission in receipt of your 6/7/95 supp. 3540 - 06/07/1995 AOGCC DWJ BPX ltr - Commission in receipt of your 6/7/95 supp & 3542 - 06/06/95 clarification. 06/05/1995 Texaco M. Said AOGCC ltr- (response to 6/1/95 req.) Dorchester Gas Producing Co. vs. Getty Oil Co. Docket # 83-73137. 3543 -3548 06/09/1995 Exxon S. Luna AOGCC ltr(fax) - rqstng add time to prepare for PH sched. 8/8/95. 3549 -3551 06/08/1995 BPX M. Arruda AOGCC ltr(fax) - Compliance with AOGCC ltr 06/07/95 3552 -3555 06/08/1995 BPX M. Arruda AOGCC ltr(fax) - ANS Gas roylalty docs 3556 -3560 06/09/1995 ARCO M. Worcester AOGCC !tr(fax) - ANS royalty litigation Mat'ls to be used in PH on the max. of NGL Blending. 3561 -3564 06/09/1995 ARCO J. Donovan AOGCC ltr(fax) - BP's compliance w/AOGCC info. req. 3565 -3569 06/09/1995 ARCO M. Worcester AOGCC ltr(fax) - ANS royalty litigation Mat'ls to be used in PH on the max. of NGL Blending. 3584 -3587 06/09/1995 Yukon Pacific J. Lowenfels AOGCC ltr(fax) - BP's compliance w/AOGCC Info. Req. 3588 - 06/09/1995 BPX M. Arruda AOGCC ltr(fax) - BPXA Ex. errata STJ -3,4,5 &15, STJ-14 3589 -3596 06/12/1995 BPX M. Arruda AOGCC ltr(fax) - ANS Gas Royalty Docs. 3597 -3605 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 16 06/09/1995 AOGCC DWJ Public Notice of Public Hearing - Ultimate Recovery rebuttal to testimony presented at 05/16/95 PH. Published 06/09/95. 3606 - 06/13/1995 Anch Daily News E. AOGCC Affidavit of Publication/Anch Daily News - Sworn 3606a- on 06/13/95. Published on 06/09/95 06/08/1995 Skedden (ARCO) J. Donovan AOGCC itr - (response to AOGCC ltr 06/07/95) Total pore 3607 -3613 volumes. 06/09/1995 Baker (BPX) M. Arruda AOGCC ltr - (response to AOGCC ltr 06/07/95) Compliance and rqstng confidential treatment of data & info. pursuant to AS 31.05.035(d) 3614 -3621 06/09/1995 ARCO M. Worcester AOGCC ltr - ANS royalty litigation Mat'ls to be used in 3622 -3741 PH on the Max. of NGL Blending. 06/12/1995 Texaco R. Hill AOGCC ltr(fax) - AOGCC NGL/MI Hearing - Written Rebuttal 3742 -3748 06/12/1995 DNR B. VanDyke AOGCC DNR/Oil & Gas pre filed wriiten rebuttal testimony for Jun 20 95 PH. 3749 -4022 06/09/1995 Texaco R. Hill AOGCC ltr - Texaco pre filed wriiten rebuttal testimony 4023 -4043 for Jun 20 95 PH. 06/08/1995 Texaco E. Hrkel AOGCC ltr - Texaco et al pre filed wriiten rebuttal testimony for Jun 20 95 PH. 4044 -4072 06/07/1995 DOR W. Condon AOGCC ltr - offers staff assistance for fiscal analyses 4073 - to AOGCC. 06/12/1995 Exxon S. Luna AOGCC ltr - Exxon pre filed written rebuttal testimony 4074 -4122 for Jun 20 95 PH. 06/12/1995 Exxon S. Luna AOGCC ltr - (response to May 31' PH) additional info on 4123 -4126 Exxon Exh 15. 06/12/1995 Arty (Phillips) S. Ellis AOGCC ltr - Phillips intends to present an oral rebuttal at 20 Jun 95 PH. 4127 -4131 06/12/1995 Baker (BPX) M. Arruda AOGCC ltr - BPX Pre-filed Rebuttal Testimony & Exhibits 4132 -5199 (except DJS Rebuttal 22 &23) vol 1 & 2. 06/11/1995 ARCO M. Worcester AOGCC ltr - Pre-filed Rebuttal Testimony & Exhibits for 5200 -7230 Jun 20 95 PH.Vols 1 thru 4 06/10/1995 ARCO M. Worcester AOGCC ltr - ANS Royalty Litigation Materials to be used in AOGCC Hearing on the Maximization of NGL Blending. 7231 -7238 06/09/1995 Skadden (ARCO) J. Donovan AOGCC ltr - Complaint re: BP's compliance w/AOGCC's info request. 7239 -7241 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 17 06/12/1995 BPX M. Arruda AOGCC 06/12/1995 BPX M. Arruda AOGCC 06/08/1995 Exxon R. Ehner DOL 06/09/1995 ARCO M. Worcester AOGCC 06/14/1995 ARCO M. Worcester AOGCC 06/15/1995 BPX M. Davis AOGCC 06/15/1995 AOGCC Commissioners ARCO & BPX 06/16/1995 Arty (Phillips) S. Ellis AOGCC 06/16/1995 Exxon S. Luna AOGCC 06/16/1995 DNR J. Sh'ively 06/16/1995 BPX C. Walsh 06/19/1995 Skadden (ARCO) F. Kao ARCO & BPX AOGCC AOGCC 06/19/1995 Exxon S. Luna AOGCC 06/19/1995 ARCO M. Worcester 06/19/1995 BPX M. Davis 06/19/1995 BPX M. Davis AOGCC AOGCC AOGCC ltr(fax) - BP compliance w/AOGCC ltr Jun 7, 95. ltr(fax) - Scheduling of Phase II. ltr - (response to R. Mintz ltr Jun 01, 95) do no raise a confidentiality objection to AOGCC review of expert reports in recently settled royalty litigation between SOA and Notrh Slope producers related to PBU. ltr - ANS Royalty Litigation Mat'ls to be used in PH hearing on the Max. of NGL blending. ltr(fax) - ARCO agrees the FGSO expert rpts were not filed under the protective order in the ANS Royalty Litigation case. ltr - BPX rebuttal testimony errata of exhibits filed on Jun 12 ie: Exh Section II, Text Sec IV, VI, Exh Sec VI, Text Sec IX, Exh Sec IX. ltr - (response to BP ltr Jun 8, 95) Confidential treatment of information. ltr(fax) - authorized to state that Phillips and Chevron hereby joins in the request for confidentiality set forth by Exxon. ltr(fax) - Exxon has a claim of confidentiality w/respect to certain docs filed by ARCO and BP. ltr(fax) - DNR intends to hold a hearing on NGL issues. ltr - AOGCC questions re: Fuel Gas Supply Option doc & Amended and restated PBU NGL/EOR operating procedures agreement (ARCO Ex 133). ltr - errata sheets to prefiled testimony and rebuttal testimony for Jun 20 95 PH. ltr - request for additional time for sched PH Aug 8, 95. ltr(fax) - (resonds to BP ltr Jun 12, 95) rebuttal to BP's complaint. ltr(fax) - Phase II pre-hearing conference request. ltr(fax) - response by BPX and ARCO to AOGCC request of Junl5 95 for PBU WIO approval dates of 7242 -7244 7245 -7247 7248 - 7249 -7251 7252 -7253 7254 -7258 7259 - 7260 -7261 7262 -7264 7265 -7270 7271 -7287 7288 -7305 7306 -7307 7308 -7311 7312 -7316 7317 -7319 ALASKA OIL &tt CONSERVATION COMMISSION ULTIMATE RECOVERY INI)EX DAit~ 2/25/1997 PAGE 18 FDPs. 06/20/1995 AOGCC Com=nissioners wIO Briefin~ Supplement to resolve Ultimate recovery 7320 - from Prudhoe Bay. 06/20/1995 ARCO C. Hcward DNR ltr(fax) - cy fo ARCO ltr to AOGCC concerning possible 6 mo. deferral fo AOGCC phase II hearings 7321 -7325 06/20/1995 Exxon G. Theriot DNR ltr(fax) - rqstg a pre-hearing conference & AOGCC defer any further hearing or submittal of written material for a period of approx 6 mos. 7326 -7327 06/16/1995 DNR J. Shively ARCO/BPX ltr - DNR intends to hold a hearing on NGL issues. 7328 -7332 06/16/1995 AOGCC Commissioners Public Ultimate Recovery - Oral Rebuttal Public Hearing - June 20, 95 Attendance Sheet. 7333 -7336 06/21/1995 AOGCC Commissioners Public Ultimate Recovery - Oral Rebuttal Public Hearing - June 21, 95 Attendance Sheet. 7337 - WIO Public UNIT AGREEMENT PRUDHOE BAY UNIT - STATE OF ALASKA 7338 -7423 06/15/1995 AOGCC DWJ Wio on w/rebuttal testimony. LTR - AOGCC est. Jun 16, 95 as deadline for receipt of any claim of confidentiality w/respect of docs filed in connecti 7424 - 06/15/1995 AOGCC Commissioners ARCO/BPX ltr- rqstng date each FDP for PBU was approved by 7425 - WIO's from '78 -'95. 06/16/1995 AOGCC Commissioners ARCO/BPX ltr - returning BPX confidential material to BPX 7426 - unread. 06/19/1995 BPX C. Walsh AOGCC ltr - BPX errata and fuel gas supply option. 7427 - 06/20/1995 BPX AOGCC BPX Exh not numbered. 7428 -7435 06/20/1995 ARCO F. Garb AOGCC Exh. 239, 240, 247 - Considerations for est. incremental op. revenue. Incremental PBU blending stream barrel Price and rev. analysis and Reconciliation of ARCO's May and Jun 95 NGL/MI data w/Garb's Jun 94 data. 7436 -7442 06/20/1995 ARCO AOGCC Exh. 249 - FDP Pattern Expansion Tables 7443 -7445 06/20/1995 ARCO H. Warner AOGCC Exh. 241,242 & 243 - Particular errors in Dr. Jones' economic analysis, CGF incremental NGLs comp. & Inaccuracy of Dr. Jones' NGL value predictions. 7446 -7449 06/20/1995 ARCO F. Stalkup AOGCC Exh. 244,245,248 - GP~S 3D Model vs COBRA segment 7450 -7454 model (EOR&RMI) & Some BP misrepresentations. ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 19 06/20/1995 ARCO AOGCC Exh. 169 - Overview of Inputs to BP analysis. 7455 - 06/20/1995 ARCO AOGCC Exh 172 - Pattern Expansion Schedules 7456 - 06/20/1995 ARCO A. Simon AOGCC Exh. 246 - EOR type pattern response Curve (w/grades). 7457 -7458 06/20/1995 ARCO D. Dayton AOGCC Exh 226,227,228,229,230,231,232,233,234,235,236,237&23 8. 7459 -7473 06/20/1995 BPX D. Sazbo AOGCC Exh. DJS Rebuttal-32 - BPX vs ARCO type pattern curve comparison. 7474 - 06/20/1995 Exxon AOGCC Exh. 23 thru 38 - Overview of Technical rebuttal. 7475 -7490 06/20/1995 Texaco AOGCC Exh R-20 - R-27 & R-29 - R-30. 7491 -7500 06/12/1995 DNR B. VanDyke AOGCC DNR's Pre-filed written rebuttal testimony. 7501 -7507 06/20/1995 ARCO/BPX AOGCC list of ARCO and BPX docs. 7508 - 06/20/1995 AOGCC Commissioners Public Briefing Supplement - to resolve Ultimate recovery from Prudhoe Bay. 7509 - 06/20/1995 ARCO AOGCC Exh 152 - NGL/MI trades time line. 7510 - 06/20/1995 ARCO AOGCC Exh. 153 - NGL/MI Trade docs. 7511 - 06/19/1995 BPX M. Davis AOGCC ltr - FDP '78 - '95 approval dates. 7512 -7513 06/21/1995 Skadden(ARCO) J. Donovan AOGCC ltr(fax) - excerpt from the transcript of 20 Jun 95 hearing (ARCO exh. 249). 7514 -7519 06/22/1995 Baker(BPX) M. Arruda AOGCC ltr(fax) - objection to ARCO rebuttal exh. 249. 7520 -7522 06/22/1995 Baker(BPX) M. Arruda AOGCC ltr(fax) - exh. 3 - 16. 7523 -7524 06/21/1995 ARCO M. Worcester AOGCC ltr(fax) - ARCO exh. 250 thru 255. 7525 -7534 06/22/1995 BPX C. Walsh AOGCC ltr - BPX errata to DJS Rebuttal-32 & marking of 7535 -7606 BPX exh. 65 FERC 61,277 7607 -7623 12/09/1993 APUC Public Order P-89-1(64)/P-89-2(57) Appendix A 7624 -7629 65 FERC 61,277 7630 -7640 02/16/1994 APUC PUBLIC P-89-1(70)/P-89-2(63) 7641 -7650 65 RERC 61,175 7651 -7655 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 20 12/01/1993 APUC Public P-89-1(76)/P-89-2(69). 7656 -7669 02/16/1995 OXY USA Inc FERC Petition for Review of an Order of the Federal Energy Regulatory Commission. Case No. 94-1061 rev. 7670 -7717 09/22/1995 OXY USA Inc FERC Petition for Review of an Order of the Federal Energy Regulatory Commission. Case No. 94-1061. 7718 -7745 06/15/1995 Baker(BPX) M. Arruda AOGCC ltr(fax) - compliance w/AOGCC ltr of Jun7, 95. Reqst for Confidential treatment of data and info pursuant to AS31.OS.035(d). 7746 -7754 06/22/1995 AOGCC Commissioners WIO's Ruling on Objection. 7755 -7756 06/12/1995 BPX D. Szabo AOGCC Exh. DJS Rebuttal-23. - '92 FDP PBU. 7757 -7814 06/12/1995 BPX D. Szabo AOGCC Exh. DJS Rebuttal-22. - '91FDP PBU. 7815 -7908 06/21/1995 Skadden(ARCO) J. Donovan AOGCC ltr - excerpt from the transcript of 20 Jun 95 hearing (ARCO exh. 249). 7909 -7912 06/21/1995 ARCO M. Worcester AOGCC ltr - exh. 250 thru 255. 7913 -7925 06/28/1995 DNR J. Shively ARCO/BPX Ltr(fax) - asked P. Couglin of DOL to assist me as Hearing Officer in hearing dtd Jul 31, 95. 7926 -7928 06/28/1995 DNR J. Shively ARCO/BPX Ltr(fax) - DNR will delay the pre-hearing from Jul 6 to Jul 13, 95. 7929 -7930 06/30/1995 Yukon Pacific J. Lowenfels AOGCC ltr(fax) - Yukon Pacific Corp. Phase One Closing Brief. 7931 -7933 06/30/1995 ARCO J. Weeks DNR ltr(fax) - rqstg DNR not delay pre-filing of testimony and exh. on July 18. 7934 -7938 06/30/1995 Texaco AOGCC Post-Hearing Brief of TEPI 7939 -7967 06/30/1995 ARCO AOGCC Post-Hearing Brief of ARCO 7968 -8056 06/30/1995 Exxon S. Luna AOGCC Post-Hearing Brief of Exxon 8057 -8082 06/30/1995 Phillips AOGCC Post-Hearing Brief of Phillips. 8083 -8123 06/30/1995 DNR J. Shtvely AOGCC Post-Hearing Brief of DNR. 8124 -8141 06/21/1995 Texaco R. Hill AOGCC ltr - errata to rebuttal testimony by TEPI. 8142 -8'143 06/28/1995 DNR J. Shively ARCO/BPX ltr - asked P. Coughlin of DOL to assist me as Hearing Officer in hearing for Jul 31, 95. 8144 -8145 06/30/1995 BPX AOGCC Post-Hearing Brief of BPX. 8146 -8446 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 21 06/30/1995 DNR J. Shively AOGCC Post-Hearing Brief of DNR. 8447 -8465 08/09/1995 AOGCC Commissioners Public AOGCC Conserva%ion Order No. 360. THIS HEREBY ENDS THE PHASE ONE PORTION OF THE ULTIMATE RECOVERY ISSUE. 8466 -8490 08/11/1995 AOGCC Commissioners Public Notice of Public Hearing on 09/11/95 - published 8491 - Aug 11 & 13, 95. 08/16/1995 Anch Daily News E. Kaufmann AOGCC Notice of Public Hearing affidavit on 09/11/95 - published Aug 13, 95. 8491b- 08/31/1995 Fairbanks News M. Burley AOGCC Notice of Public Hearing affidavit on 09/11/95 - published Aug 13, 95. 8491a- 08/14/1995 BPX M. Davis AOGCC ltr (fax), re: CO 360 - advise AOGCC of complied 8515 -8516 w/ order 1. 08/17/1995 Phillips L Meronek AOGCC ltr (fax), re: CO 360 - Compulsory Unitization 8517 -8518 08/18/1995 Phillips S. Ellis AOGCC Phillips Petroleum Co. Application for Rehearing. 8519 -8539 08/18/1995 AOGCC Commissioners Public Notice of Pre-Hearing on 09/05/95 - published 08/18 & 08/21/95. 8539 - 08/22/1995 Anch Daily News E Kaufmann AOGCC Notice of Pre-Hearing Affidavit on 09/05/95 - published 08/18 & 08/21/95. 8539a- 08/22/1995 AOGCC Co~issioners Public Notice of Pre-Hearing Revised on 09/05/95 - published 08/22 & 08/23/95. 8540 - 08/29/1995 Anch Daily News E. Kaufmann AOGCC Notice of Pre-Hearing Revised Affidavit on 09/05/95 - published 08/22 & 08/23/95. 8540b- 08/31/1995 Fairbanks News M. Burley AOGCC Notice of Pre-Hearing Revised Affidavit on 09/05/95 - published 08/22 & 08/23/95. 8540a- 08/22/1995 BPX M. Davis AOGCC ltr (fax), to DWJ re: DEC Infor rqst regarding NGL. 8541 -8544 08/23/1995 ARCO (Skadden) J. Donovan AOGCC ltr (fax), reqst 09/05/95 pre-hearing conf. be resched. 8546 -8546 08/19/1995 AOGCC Commissioners Public Notice of Public Hearing on 09/11/95 - published 8547 - 08/19 & 08/26/95. 08/25/1995 Star Publishing T. Conrey AOGCC Notice of Public Hearing Affidavit on 09/11/95 - published 08/19 & 08/26/95. 8547a- 08/23/1995 ARCO (Skadden) J. Donovan AOGCC ltr, reqst 09/05/95 pre-hearing conf. be resched. 8548 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 22 08/28/1995 AOGCC Commissioners WIO's Rulin on Reqst to extend time for filing app.s for rehearing and to postpone compulsory unitization plan hearing. 8549 -8550 08/28/1995 AOGCC Commissioners WIO's Order resched, hearing. 8551 -8552 08/28/1995 AOGCC Commissioners WIO's order denying Phillips application for rehearing 8553 -8555 of CO 360. 08/29/1995 Chevron J. Ricotta AOGCC ltr (fax), reqsting postpone 09/11/95 hearing. 8556 -8557 08/29/1995 ARCO M. Worcester BP ltr (fax), re: Hot Taps into the 34" oil gathering lines and the 10" NGL line by BP. 8558 -8562 08/29/1995 DNR B. VanDyke AOGCC ltr (fax), CO 360 - wishes to correct the record w/ regard to certain statements. 8563 -8564 08/29/1995 Chevron J. Ricotta AOGCC ltr (fax), rqsting postpone 09/11/95 hearing. 8565 -8572 08/29/1995 BPX M. Arruda AOGCC BP's Application for Rehearing. 8573 -8634 08/30/1995 Exxon (Bogle) J. Reeves AOGCC Exxon's Application for Rehearing. 8635 -8677 08/28/1995 Exxon J. Branch AOGCC ltr (fax), re: CO 360 - rqst consideration of schedule revisions. 8678 -8681 08/28/1995 BPX M. Davis AOGCC ltr (fax), re: rqst for stay of rehearing deadline and postponement of compulsory unitization hearings. 8681 -8684 08/28/1995 BPX M. Davis AOGCC ltr, re: rqst for stay of rehearing deadline and 8685 -8687 postponement of compulsory unitization hearings. 08/30/1995 AOGCC Cormmissioner Public Notice of change of dates of hearing and Pre-hearing conference 10/24 & 10/17/95 respectivly - published on 08/30/95. 8688 - 08/31/1995 Fairbanks News M. Burley AOGCC Notice of change of dates of hearing and Pre-hearing conference Affidavit 10/24 & 10/17/95 respectivly - published on 08/30/95. 8688a- 08/30/1995 AOGCC Commissioners Public Notice of change of dates of hearing and Pre-hearing conference 10/24 & 10/17/95 respectivly - published on 08/30 & 08/31//95. 8689 - 08/30/1995 Exxon S. Luna AOGCC Exxon's Application for rehearing of portions of 8690 -8730 CO 360. 09/01/1995 BPX M. Arruda Assr Arty Gen. ltr(fax), re: Testimony of D. Szabo. 8731 -8735 09/01/1995 DNR B. VanDyke AOGCC ltr, re: Pre Hearing Conference Order dtd 04/20/95 Appen. A. 8736 -8769 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECObq~RY INDEX DATE 02/25/1997 PAGE 23 09/01/1995 Exxon S. Luna AOGCC itr, re: Pre Hearing Conference Order dtd 04/20/95 Appen. A. 8770 -8785 08/28/1995 Exxon J. Branch AOGCC ltr, re: CO 360 - rqst consideration of schedule 8786 -8787 revisions. 08/29/1995 DNR B. VanDyke AOGCC ltr, CO 360 - wishes to correct the record w/ regard to certain statements. 8787a-8787 b 09/01/1995 DNR B. VanDyke AOGCC ltr (fax), re: Pre Hearing Conference Order dtd 04/20/95 Appen. A. 8787c-8787 e 09/01/1995 BPX (Baker) M. Arruda AOGCC ltr, BP answers to Phase II questions. 8788 -8834 09/01/1995 ARCO M. Worcester AOGCC ARCO's response to AOGCC's questions in Appen. A 8835 -9016 for Phase II. 09/01/1995 BPX J. McCart WIO's PBU Operating Agreement and related agreements Vols 1 - 5 part 2. 9017 -11297 09/02/1995 AOGCC Con~nissioners Public Notice of Change of Dates of Hearing and Pre-Hearing Conference to 10/24 & 10/17/95 respectivly, and Affidavit of Publication/Star Publishing Co. - sworn on 09/08/95. Published 09/02/95. l1279a-l1279b 09/08/1995 AOGCC Co~issioners WIO's Order Granting Rehearing in Part and Denying Rehearing in Part. 11298 -11299 09/08/1995 ARCO M. Worcester Exxon ltr (fax) copy of ltr to D. Woodward - re: Hot Taps by BP into Arco lines. 11300 -11302 09/12/1995 DNR J. Shively Public Notice of Public Hearing 10/03/95. 11303 -11304 09/13/1995 ARCO M. Worcester AOGCC ltr (fax), re: rehearing of CO 360. 11305 -11306 09/14/1995 BPX D. Woodward ARCO ltr (fax), re: BP's draft proposal for WIO's to address CO 360, Rule 4 directive. 11307 -11314 09/14/1995 BPX (Baker) M. Arruda AOGCC ltr (fax), re CO 360 rehearing procedures. 11315 -11317 09/13/1995 ARCO M. Worcester AOGCC ltr, CO 360 - rqst an extension of time to comply 11318 - w/ the Rehearing order09/08/95. 09/14/1995 BPX (Baker) M. Arruda AOGCC ltr, CO 360 - rqst an extension of time to comply 11319 -11322 w/ the Rehearing order09/08/95. 09/14/1995 ARCO (Skadden) J. Donovan AOGCC itt(fax), re: respond to the proposal made in M. 11323 -11325 Arruda's ltr of 09/13/95. 09/18/1995 AOGCC Commissioners WIO's Order on Written Responses to Rqsts for Rehearing. 11326 -11327 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 24 09/15/1995 ARCO J. Weeks BPX Itt(fax), to D. Woodward, re: Of MICE and MIX and 11328 -11354 CO 360 R. 4. 10/05/1995 BPX M. Arruda AOGCC Brief in response to Exxon's application for rehearing. 11340 -11423 09/14/1995 ARCO (Skadden) J. Donovan AOGCC ltr, respond to the proposal made in M. Arruda's 11355 -11357 ltr of 09/13/95. 09/19/1995 BPX D. Woodward. ARCO ltr(fax), rspns to ARCO 09/08/95 ltr. 11358 -11369 09/26/1995 DOL B. Botelho AOGCC ltr, re: BP's rqst for informal ethics opinion from AK Bar Assoc. bar councel. 11370 -11376 This page left intentionally blank. 11377 - 09/28/1995 Exxon S. Luna AOGCC ltr(fax), rqst AOGCC make clear the status of CO 11378 -11380 360 for appeal purposes. 10/02/1995 ARCO AOGCC PBU '95 FDP. Sent in compliance to CO 360 R4 on 10/02/95. FDP is filed in the PBU Field File and is physically located in the Conf. Rm at AOGCC. 11381 - 10/02/1995 BPX D. Woodward ADEC Itt(fax), re: BP response to ADEC 08/17/95 Info. 11382 -11386 rqst re NGLs 10/02/1995 Delaney/Phillip S. Ellis AOGCC ltr, re: CO 360 is a final admin, determination 11387 - as to Phillips. 10/04/1995 Baker/BPX M. Arruda AOGCC ltr (fax), re: Finality of CO 360 11388 -11391 10/05/1995 DNR B. VanDyke AOGCC ltr, re: Responses to app. for rehearing CO 360 11392 -11393 10/05/1995 DNR B. VanDyke AOGCC ltr (fax), re: Responses to app. for rehearing CO 11394 -11395 360 10/05/1995 Exxon S. Luna AOGCC ltr(fax), re: Response of Exxon to Order on Rehearing of CO 360 11424 -11434 10/05/1995 ARCO M. Worcester AOGCC Arco opposition to requests for rehearing 11435 -11897 10/06/1995 Exxon G. Theriot AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11898 -11900 10/06/1995 Phillips J. Meronek AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11901 -11901 10/06/1995 Texaco R. Hill AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11905 -11908 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 25 10/06/1995 Exxon G. Theriot AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11909 -11912 10/06/1995 BPX E. Whitehead AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11916 -11919 10/06/1995 Shell D. Schultze AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11920 -11924 10/1071995 Amerda Hess W. Lehmann AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11925 -11928 10/10/1995 Mobil N. Smith AOGCC ltr(fax) written by Exxon and endorsed, re: rqst postponement of 10/17/95 pre-hearing conf and 10/24/95 hearing. 11929 -11932 10/10/1995 Baker/BPX M. Arruda Superior Court ltr(fax), re: appeal from AOGCC 11933 -11936 10/11/1995 Baker/BPX M. Arruda AOGCC itt(fax), re: CO 360 rehearing; ARCO opposition to order granting rehearing 11937 -11945 10/05/1995 Exxon S. Luna AOGCC ltr, re: rspns to para 3 AOGCC Order granting rehearing in part and denying rehearing in part dtd 09/08/95. 11946 -11955 10/11/1995 ARCO M. Worcester AOGCC itt(fax), re: ARCO Oct 5, 95 submittal - Garb & Wolfman 11956 -11958 10/11/1995 AOGCC Commissioners Public Order postponing hearing and pre-hearing conference. 11959 -11960 10/10/1995 ARCO M. Worcester AOGCC ltr, re: ADEC inquiry regarding increased NGL blending 11961 -11965 10/10/1995 ARCO M. Worcester AOGCC ltr, re: ARCO Oct 5, 95 submittal - Garb & Wolfman 11966 -11994 10/17/1995 Skadden/ARCO N. McArty AOGCC ltr(fax), re respns to BP's ltr of 10/11/95. 11995 -12005 10/23/1995 Baker/BPX M. Arruda AOGCC ltr(fax), re: respns to ARCO's oppisition to BPS's reqst to reply. 12006 -12011 10/31/1995 Skadden/ARCO N. McCarthy AOGCC ltr(fax), re: respns to BPS's reqst to reply 10/23/95. 12012 -12020 11/06/1995 Skadden/ARCO J. Donovon AOGCC ltr, re: respond to BP ltr of 10/23/95 - 3rd rqst. 12021 -12027 ALASKA OIL & %< CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX 10/31/1995 AOGCC TAB WlO 11/03/1995 ACGCC 11/03/1995 AOGCC 11/06/1995 BPX 11/09/1995 LL&E 11/14/1995 ARCO 11/22/1995 BPX 12/12/1995 AOGCC 12/13/1995 AOGCC 12/15/1995 Exxon 12/15/1995 Chevron 12/18/1995 BPX 12/19/1995 AOGCC 12/19/1995 ARCO 12/21/1995 Phillips 12/20/1995 Mobil DA~ ./25/1997 PAGE 26 Commissioners WIO ltr, re: info rcvd after the deadlines est. by AOGCC 'Jill not be considered in the rehearing of CO 360. Decisicn cn Rehearing Commissioners Public CO 360 did 08/09/95 and rev. 11/03/95. D. Woodward ARCO ltr, to J. Weeks VP, ARCO, re: Backfill NGLs to TAPS when Kuparu~ LSEOR deliveries commence. K S Erwin AOGCC ltr(fax), re: J Orth has been replaced by J. D. Morrow J. Weeks BPX ltr(fax) to D. Woodward, re: rspns to 11/06 BP ltr J. Morgan ARCO ltr(fax) to J. Weeks, re: Backfilling after KLSEOR Startup Commissioners WIO ltr, re: additional guidance on the subJ of the hearing sched, for 01/11/96. T. Babcock Public Public Notice - Pre-hearing Conference on 01/04/96 and Hearing on 01/11/96, and Affidavit of Publication/Anch Daily News - sworn on 12/09/95. Published 12/13/95. G. Theriot AOGCC Itt(fax), Exxon ltr w/endorsements listing progress and rqstng postponement of Jan pre-hearing conf. and hearing. J. Ricotta AOGCC ltr(fax), Exxon ltr w/endorsements listing progress and rqstng postponement of Jan pre-hearing conf. and hearing. E. Whitehead AOGCC ltr(fax), Exxon ltr w/endorsements listing progress and rqstng postponement of Jan pre-hearing conf. and hearing. Commissioners Exxon ltr, re: rspns to Exxon ltr 12/15/95 J. Dana Dayton AOGCC Itt(fax), re: ARCO in concurrence w/Exxon ltr 12/15/95. J. Johnson AOGCC Itt(fax), Exxon ltr w/endorsements listing progress and rqstng postponement of Jan pre-hearing conf. and hearing. N. Smith AOGCC ltr(fax), Exxon ltr w/endorsements listing 12027 - 12028 -12033 12033 -12057 12057a-12057b 12057c-12057e 12058 -12061 12062 -12063 12064 - 12065 -12065a 12066 -12072 12073 -12079 12080 -12087 12088 - 12089 -12093 12094 -12100 12101 -12104 progress and rqstng postponement of Jan pre-hearing conf. and hearing. ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 27 12/22/1995 ARCO J. Dayton AOGCC ltr(fax), re: ARCO ltr on the behalf of WIO PBU rspns to AOGCC ltr 12/19/95 rqsting any hearing be post-poned till Mar. 96 12105 -12109 12/22/1995 Exxon A. Berger AOGCC ltr(fax), re: Endorsed ARCO ltr on the behalf of WIO PBU rspns to AOGCC ltr 12/19/95 rqsting any hearing be post-poned till Mar. 96 12110 -12114 12/22/1995 BPX P Zwart AOGCC ltr(fax), re: Endorsed ARCO ltr on the behalf of WIO PBU rspns to AOGCC ltr 12/19/95 rqsting any hearing be post-poned till Mar. 96 12115 -12119 12/22/1995 ARCO M. Worcester AOGCC ltr(fax), re: Holiday schd. 12120 -12121 12/15/1995 Exxon G. Theriot AOGCC ltr, Exxon ltr w/endorsements listing progress and rqstng postponement of Jan pre-hearing conf. and hearing. 12122 -12127 12/27/1995 AOGCC Commissioners WIO Order postponing hearing and pre-hearing conference. 12128 -12133 12/28/1995 ARCO J. Dayton WIO ltr(fax), re: J. Dayton replaces J. Weeks on all 12134 -12135 Pariticipant distribution lists 12/28/1995 Marathon D. Perkins AOGCC L. R. Dartez has been reassigned/David Perkins has taken his place. 12136 - 12/30/1995 AOGCC TAB Public Notice of Change of Dates of Hearing and Pre-Hearing Conference Anch Daily News. Published 12/30/95 12137 - 01/02/1996 Anch Daily News Eva Kaufman AOGCC Affidavit of Publication/Anch Daily News - sworn 12138 - on 01/02/96. Published 12/30/95. 01/02/1996 Phillips J. Meronek AOGCC itt(fax), Jerry Meronek replaces W. Jaap 12139 -12140 02/06/1996 AOGCC Commissioners WIO ltr of intent to listen to APUC hearings P-96-1 12141 - Mod 880. 02/07/1996 Phillips(Ellis) S. Ellis AOGCC ltr(fax) to AOGCC, re: Objection of AOGCC intent 12142 -12144 to attend APUC Case P-96-1. 02/07/1996 BPX M. Davis AOGCC itt(fax), re: welcomes AOGCC attendance to APUC P-96-1 hearings 12145 -12146 02/07/1996 Phillips(Ellis) S. Ellis AOGCC ltr(fax) to AOGCC, re: Objection of AOGCC intent 12147 -12153 to attend APUC Case P-96-1, and affidavit of svc. 02/07/1996 Phillips(Ellis) S. Ellis AOGCC ltr to AOGCC, re: Objection of AOGCC intent to attend APUC Case P-96-1, and affidavit of svc. 12154 -12159 02/07/1996 Shell J. Bowen AOGCC ltr to DWJ, re: Chg D. Schultze fax to 713-544-4745. 12160 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 28 03/12/1996 ARCO(Skadden) J. Donovan AOGCC 03/12/1996 Exxon S. Luna AOGCC 03/14/1996 BPX 03/14/1996 BPX 03/15/1996 Mobil 03/15/1996 AOGCC 03/16/1996 AOGCC 03/16/1996 AOGCC 03/14/1996 Phillips 03/14/1996 Chevron 03/18/1996 ARCO(Skadden) R. Morris AOGCC R. Morris AOGCC N. Smith AOGCC Commissioners WIO DWJ Public DWJ Public J. Johnson AOGCC J. Ricotta AOGCC J. Donovan AOGCC 03/18/1996 Exxon S. Luna AOGCC 03/20/1996 BPX 03/21/1996 AOGCC 03/21/1996 BPX R. Morris AOGCC Public AOGCC ltr(fax) to DWJ, re: reply to 12/27/96 AOGCC order, and ARCO views to procedure to be followed for hearings ltr(fax) to DWJ, re: reply to 12/27/96 AOGCC order, and Exxon's views to procedure to be followed for hearings ltr to DWJ, re: BP's views to procedure to be followed for hearings ltr(fax) to DWJ, re: BP's views to procedure to be followed for hearings ltr(fax) to DWJ, re: Mobil concurs w/BP ltr dtd 03/14/96. ltr to all Participants, re: AOGCC will consider procedural matters at pre-hearing conference sched 03/21/96. Rspnse to ARCO, Exxon & BP ltrs of 12 -14 Mar 96. Notice of Public Hearing and Pre-Hearing Conference - 04/11/96 & 03/21/96. Published 03/16/96 BLank - held for PN affidavit ltr(fax) to DWJ, re: rspns to AOGCC 12/27/95 - Suggest Procedures for hearings commence on 04/11/96 ltr(fax) to DWJ, re: rspns to AOGCC 12/27/95 - Suggest Procedures for hearings commence on 04/11/96 ltr(fax) to DWJ, re: Procedures for compulsory re-unitization of PBU ltr(fax) to DWJ, re: rspns to AOGCC ltr dtd 03/15/96 - advise the scope of testimony Exxon intends to introduce at 04/11/96 hearing. ltr to DWJ, re: suggest procedures for 4/11/96 hearing for use in March 21 prehearing conference. Prehearing Conference Attendance List for 3/21/96 Proposed Procedures for hearings contemplated by AOGCC notice 3/15/96. 12161 -12164 12165 -12167 12168 -12170 12171 -12176 12177 - 12178 -12179 12180 - 12181 - 12182 -12187 12188 -12191 12192 -12197 12198 -12202 12203 -12205 12206 -12207 12208 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 29 03/21/1996 BPX R. b~orris AOGCC ltr(fax) to DWJ, re: Service list for Unitization 12209 -12213 Hearings. 03/22/1996 BP AOGCC Ltr.(fax) to DWJ; Re: Service list for Unitization hearings. 12214 -12218 03/26/1996 DNR AOGCC Ltr(fax) to DWJ; re: Service list for Prudhoe Bay 12219 -12220 Unit hearings 03/27/1996 AOGCC DWJ This notice supplements a notice published March 16, 1996.Re: Location moved to Z. J. Loussac Library. 12221 - 03/28/1996 Chevron J. Ricotta AOGCC Ltr(fax) to DWJ; Re: Service list for Prudhoe Bay 12222 -12223 Unit hearings. 03/28/1996 Delaney/various S. Ellis AOGCC it, Re:Service list for Mobil, Phillips, & Chevron (Rspns to AOGCC 3/21/96 pre hearing order) 12224 -12227 03/28/1996 Exxon S. Luna AOGCC ltr(fax) to DWJ, Re: Service for Exxon. 12228 -12230 03/28/1996 Exxon S. Luna AOGCC ltr(fax) to DWJ, re: rqst chg in appearance of companies during 4/11/96 PH. 12231 -12232 04/01/1996 AOGCC Commisssioners WIO ltr, re: addition to Pre Hearing Order dtd 12233A- 03/21/96 expert witness of Granville Dutton, P E 04/04/1996 Delaney/various S. Ellis AOGCC ltr(fax), re: Pre-filed testimony of Phillips 12234 -12245 04/04/1996 ARCO AOGCC Re: Pre-filed testimony and exhibits of ARCO 12246 -14165 04/04/1996 BPX AOGCC Re: Pre-filed testimony and exhibits of BPX. 14166 -14893 04/04/1996 Exxon AOGCC Re: Pre-filed testimony and exhibits of Exxon. 14894 -16003 07/06/1995 DNR Public ADOPTED BY AOGCC DURING 4/11/96 UNITIZATION HEARINGS. DNR NGL/MI HEARING FILE. HELD FROM JULY 6, 1995 TO FEB. 19, 1996 16004 -24544 04/04/1996 DNR W. Van Dyke AOGCC ltr(fax) to DWJ; re: Paragraph 5(a) of the commish's 4/21/96 pre-hearg order requird certain testimny & exhibits. DNR doesn't have pre-filed testimny of exhibits on subjects (2) or (3). 24545 -24546 04/04/1996 DNR W. VanDyke AOGCC Original ltr to DWJ; same as Pg 24545. 24547 - 04/08/1996 Skadden,-Arps, J. Dasteel AOGCC ltr to DWJ; re: Confirmation that ARCO has not designatd confidential testimony or exhibits filed w/the Commish on 4/4/96. 24548 -24550 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY I~qDEX DATE 02/25/1997 PAGE 30 04/08/1996 Delaney,various S. Ellis AOGCC ltr to DWJ; re: In accordance w/the Commish's 3/21/96 Pre-HeargOrder, Phillips hereby files the original executed pre-filed testimony of J.P. Johnson & J.L. Meronek. (diskette included). 24551 -24558 04/08/1996 Skadden,various J. Dasteel AOGCC ltr(fax) to DWJ; re: SAF]E AS PAGES 24548-24550. 24559 -24561 04/09/1996 Yukon Pacific S. Nebeker AOGCC ltr(fax) to Di; re: Conformation of Yukon Pacific Corp name, fax #, & address of its representative. 24562 -24563 04/09/1996 Exxon S. Luna AOGCC ltr(fax) to DWJ; re: 1. Confidentiality of certain exhibits, 2.Request Commish publish official service list of participants & representatives. 24564 -24566 04/09/1996 ARCO D. Bose AOGCC ltr(fax) to DWJ; re: Status summy of unit effort 24567 -24579 to competitn between NGLs & MI. 04/10/1996 Delaney,various S. Ellis AOGCC ltr to DWJ; re: Service list. 24580 -24583 04/10/1996 Bogle&Gates T. Jones AOGCC ltr to LJB; re: Providing the Commish w/4 additional sets of Exxon's Pre-Filed testimony. 24584 - 04/08/1996 Skadden,various J. Dasteel AOGCC Notice of Errata. Minor correctns to the pre-filed testimy of P. Norgaard, J. Dayton, G. Gorier, & B. Klein originaly filed on 4/4/96. Service list. 24585 -24594 04/10/1996 BPX D. Ahern AOGCC ltr to DWJ; re: Exhibit list of John Morgan. Service list. 24595 -24603 04/10/1996 BPX R. Morris AOGCC ltr to DWJ; re: Request for Confidential treatment of certain exhibits. Service list. 24604 -24612 04/10/1996 Delaney,various S. Ellis AOGCC Mobil, Phillips, & Chevron's objectn to the Commish's incorporatn of materials fr other proceedgs into the record of this proceedg. 24613 -24618 04/11/1996 Skadden,various J. Dasteel AOGCC Notice of errata. Minor correctns to the pre-filed testimy of B. Klein originaly filed on 4/4/96. Service list. 24619 -24626 04/11/1996 Skadden,various E. McCarthy AOGCC Supplemental notice of errata for pre-filed testimy of ARCO andservice list. 24627 -24630 04/11/1996 AOGCC AOGCC PH Atten doc for 4/11/96. 24631 -24636 04/11/1996 B?X AOGCC AOGCC Exhibits 4/1/96. "Milestones" 24637 - 04/09/1996 ARCO D. Bose AOGCC ltr to DWJ; re: Status summy of unit effort to address conpetitn between NGLs & MI; ARCO Exhibit-964,Exhbt-965,Exhbt-966. 24638 -24665 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 31 04/12/1996 AOGCC AOGCC PH Attendence doc.4/12/96 24666 -26470 04/15/1996 AOGCC AOGCC ?H Attendence doc.4/15/96 24671 -24674 04/15/1996 AOGCC AOGCC Yukon Pacific Confidentiality agreement concerng info produced 24675 -24676 relatg to heargs commencg 4/11/96. 04/16/1996 AOGCC Example #2 thur #7. WIOs Agree to consult w/one another in good faith on any drillg of other developmt activity w/n the Unit Area. 24677 -24683 04/15/1996 ARCO AOGCC ARCO Exhibit-967; APUC doc., APUC Master table of contents: vol I-XII (R & R Court Repts), Service List. 24684 -24735 04/16/1996 ARCO G W Gorier AOGCC ltr to DWJ; re: Mr. Goviers' responses to two questns asked by Commish TAB on 4/12/96. And an attachment to ltr of 4/16/96 to Commish DWJ. (ARCO Exhibit-968) 24736 -24738 04/16/1996 AOGCC PH Attend name list. 24739 -24748 04/19/1996 Exxon J. Lowenfels AOGCC ltr to TAB; re: Question, "If xyz company wanted to buy conditioned gas & build its own delivery system would Exxon sell the gas if the price was fair?" 24749 - 04/19/1996 Exxon AOGCC Exxon Ex.120,122,123,128-137. 24750 -24762 04/24/1996 AOGCC AOGCC PH Attend name list. 24763 -24765 04/24/1996 ARCO AOGCC ARCO Exhibit-545 & 548. 24766 -24767 04/24/1996 Exxon AOGCC Exxon Ex. 138 24768 -24804 05/06/1996 DNR B. VanDyke AOGCC ltr (fax) to DWJ; re: DNR does not have any post-hearg brief orstatement regardg subjects 2 & 3. 24805 -24806 05/06/1996 Yukon Pacific W. Whitmore AOGCC ltr to DWJ; re: Does not have any post-hearg brief of statement. 24807 -24808 05/06/1996 ARCO AOGCC Post-Hearing brief of ARCO Alaska, Inc. 24809 -25270 05/06/1996 Exxon C. Norton AOGCC Post-Hearing brief submitted by Exxon Corp. 25271 -25363 05/06/1996 BPX various AOGCC Post-Hearing brief of BP Exploration (Alaska), Inc. 25364 -25410 05/08/1996 DNR B. VanDyke AOGCC ltr to DWJ; DNR doesn't have any post-hearing 25411 - brief or statement regarding subjects (2) & (3). ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 32 05/06/1996 Yukon Pacific W. Whitmore AOGCC ltr to DwJ; Yukon Pacific does not have any post-hearing brief or statement. 25412 - 05/13/1996 Jones, Day, Rea J. Strauch AOGCC Investlgatn regardg PB Unitizatn. BPX Is not submitting a reply brief in this matter. 25413 -25416 05/22/1996 AOGCC DWJ & TAB WIO AOGCC has decided to ask an independent expert, Professor James L. Smith of S. Methodist University, to Present testimony before the Commisho 25417 - 05/22/1996 AOGCC DWJ & TAB Chevron If WIO agrees to waive the confidentiality restrictns, sign and date and return this ltr to the Commish along w/a copy of Professor Smith's list of covered documts. 25418 -25422 05/22/1996 AOGCC DWJ & TAB Dr. J. Smith Instructions Concerng the services to be performed under your contract w/the AOGCC. 25423 -25424 05/31/1996 Exxon S. Luna AOGCC fax to DWJ; Regarding testimony from Prof. Smith. 25424 -25427 05/31/1996 Jones,Day,Reavi J. Stauch AOGCC ltr to DWJ; BP writes in response to the Commish's 2 ltrs, dated 5/22/96, concerng reopeng proceedgs & requestg BP agree to modify certain existg confidentiality restricns governg the use & of certain docs. 25428 -25433 06/03/1996 ARCO M. Worcester AOGCC ltr to DWJ; Responds to the Commish's ltr dated 5/22/96 notifying the paricipants of testimony from Prof J. Smith & seekg info regardg schedulg conflicts for that testimony. 25434 -25435 06/07/1996 ARCO M. Worcester AOGCC ltr to DWJ&TAB; Response to 5/22/96 ltr to Colin C. Howard. Mr. Howard has retired fr ARCO, & Mr. David W. Marquez is now the Vice President & General Counsel. 25436 -25457 06/07/1996 ARCO M. Worcester AOGCC ltr to DWJ&TAB; Response to 5/22/96 ltr to Colin C. Howard. Mr. Howard has retired fr ARCO, & Mr. David W. Marquez is now the Vice President & General Counsel. (FAX) 25458 -25481 06/14/1996 ARCO M. Worcester Rob Mintz ltr to Rob (faxed to DWJ); AOGCC hearg regardg compulsory reunitizatn limited waiver of ANS royalty litigatn protective order. 25482 -25486 06/29/1996 ARCO M. Worcester Rob Mintz ltr to Rob (faxed to AOGCC); Follow up to the conference call on Friday 5/21/96 concerng docs requested by Prof J. Smith. Service list. 25487 -25491 05/20/1996 AOGCC DWJ & TAB Participants ltr to inform of conference call scheduled at 4:00pm on Friday, 6/21/96 to discuss the terms of the joint response. 25492 - ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 33 06/20/1996 AOGCC 07/03/1996 DOL 07/24/1996 AOGCC 07/25/1996 AOGCC 07/24/1996 AOGCC 07/26/1996 AOGCC 07/30/1996 AOGCC 07/30/1996 AOGCC 08/02/1996 AOGCC 08/02/1996 AOGCC 08/02/1996 AOGCC 08/06/1996 AOGCC 08/08/1996 ARCO 08/08/1996 Exxon Commissioners WIO B. Botelho AOGCC TAB DWJ Commish Commish Commish Comish Commish Commish Con~ish Commish C. Parker J. Reeves ltr; Conference call is scheduled at 4:00pm on 6/21/96. AOGCC/DNR Unitization Jurisdiction. Our file: 663-96-0121 Opinion regardg the respective jurisdictns of the AOGCC & DNR. B. Botelho Response to Mr. Botelhos' ltr. B. Botelho Response to Mr. Botelhos' ltr. Public Order concerng Rule 2 of CO 360; Attorney General issued an opinion that the compulsory unitizatn powers of the Commission do not extend to oil & gas interests. (AG ltr dated: 7/3/96) Public Notice given AOGCC intends to extend the expiratn date of Rule 1, Rule 4 & Rule 5 of CO 360 fr 8/31/96 to 9/30/96. Public Notice given AOGCC will hold a PH at 9:00am on 9/11/96. BP,ARCO,Chev,Ex Subpoena for the productn of docs BPX Re: Subpoena for te Productn of Docs, dated 7/30/96. The 8/19/96 deadline is extended to 10am, 9/3/96. ARCO Re: Subpoena for te Productn of Docs, dated 7/30/96. The 8/19/96 deadline is extended to 10am, 9/3/96. Exxon Re: Subpoena for te Productn of Docs, dated 7/30/96. The 8/19/96 deadline is extended to 10am, 9/3/96. Public PH notice; rescheduled to commence at 9am on 9/18/96 fr the previously scheduled for 9/11/96. AOGCC Complaint of ARCO & Motion to Quash, Summons, ARCO's Motion to Quash Subpoena, Memo in support of ARCO's Motion to Quash Supb, Notice of filing faxed copy of affidavit, Affidavit of J. Dasteel, Proposed Order Quashg Subp, Servicelist. AOGCC Complaint of Exxon & Motion to Quash, Summons,Exxon's Motion to Quash Subpoena, Memo in support of Exxon's Motion to Quash Supb, Affidavit of R. Ebner, [Proposed] Order Quashg Subp. 25492 - 25493 -25534 25535 -25538 25539 -25540 25541 - 25542 - 25543 - 25544 -25555 25556 - 25557 - 25558 - 25559 - 25560 -25708 25709 -26029 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 34 08/09/1996 BPX G. Lyle AOGCC Complaint for Declaratory & Injunctive relief & for an order Quashing Subp, Motion to Quash Subp, Memo in support of Motion to Quash Supb. 26030 -26217 08/12/1996 Chevron S. Ellis AOGCC Complaint of Chevron U.S.A. Inc. for Declaratory relief, Motion to Quash Subp, Memo in support of Motion to Quash Sup, Affidavit of S. Ellis, Proposed order Granting Motion to Quash Subp, Servicelist. 26218 -26437 08/12/1996 BPX G. Lyle AOGCC Notice of filing original Affidavit, Affidavit in 26438 -26442 support of motion to quash subp. 09/12/1996 ARCO C. Parker AOGCC Affidavit of Service, Affidavit of J. Dasteel. 26443 -26454 08/13/1996 BPX Kenny Lang AOGCC ltr to DWJ; PB plan of development, Pre-Hearing comference & Hearing, Discussion of these materials w/the WIOs. 26455 -26457 08/15/1996 AOGCC Commish Pulic Order extending Rule 1, Rule 4 & Rule 5 of CO 360; Extend the expiration date fr 8/31/96 to 9/30/96. The hearing scheduled for 8/31/96 is canceled.' 26458 - 08/15/1996 AOGCC Commish Pulic Pre-Hearing order; is being held on 8/15/96, in preparation for the hearing scheduled to begin on 9/18/96. Attachment A: Rule Governing MI & NGL Volumes. 26459 -26461 08/15/1996 AOGCC AOGCC Pre-Hearing Conference-NGL sign in list. 26462 - 08/19/1996 ARCO C. Parker AOGCC Fax; Certificate of service of surgeons & complaint by certified mail & hand delivery, Service list. 26463 -26474 08/23/1996 DOL R. Mintz ARCO AOGCC Opposition to Motions' to Quash Subp, Order 26475 -26503 Denying Motion to Quash,Notice of filing faxed copy of affidavit. 08/30/1996 BPX R. Morris AOGCC ltr to DWJ; Responds to the Commission's Pre-Hearing Order dated 8/15/96. The extension & Expansion of Rule 1 of CO 360, Attachment' A-Paragraph 2 & 3, Service list. 26504 -26510 08/30/1996 Exxon S. Luna AOGCC Fax to DWJ; Re: Pre-Hearing Order dated 8/15/96. 26511 -26514 Response to Paragraph 1. Service list. 08/30/1996 ARCO J. Donovan AOGCC Fax to DWJ; Re: Proposed Order Extending CO 360, Rule 1. Response to order dated 8/15/96, & specifically to the Commission's proposal to adopt Attachment A w/o further hearing. Service list. 26515 -26520 ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 35 08/30/1996 Delaney, Wiles, S. Ellis AOGCC ltr to DWJ; Mobil E&P Alaska Inc., Phillips Petroleum Co., and Chevron USA Inc. (collectively "MPC"),hereby state concerns to the rule set out in Attachment A to the Commission's 8/15/96, pre-hearing order. Service list. 26521 -26523 07/26/1996 AOGCC DWJ Public Notice given AOGCC intends to extend the expiration date of Rule 1, Rule 4 & Rule 5 of CO 360 fr 8/31/96 to 9/30/96. 26524 - 07/30/1996 AOGCC DWJ Public Public hearing on 9/11/96. 26525 - 08/01/1996 AOGCC Commish Exxon To Exxon; Subp for the production of Docs. 26526 -26527 08/06/1996 ADN Eva K. AOGCC Affidavit of publication. 26527a- 07/31/1996 AOGCC Commish ARCO To ARCO; Subp for the production of Docs. 26528 -26529 08/30/1996 DNR K. Boyd ARCO,BPX PBU, Prudhoe Bay (Permo-triassic) Reservoir. 26530 -26531 08/06/1996 AOGCC DWJ Public Notice given AOGCC has rescheduled to 9/18/1996. 26532 - Meeting was scheduled for 9/11/96. 09/03/1996 ARCO M. Worcester AOGCC ARCO's reply memoratmdun in support of its motion 26533 -26565 to Quash Subp. 09/04/1996 AOGCC G. Lyle BPX Plaintiff BPX's reply in support of its motion to 26566 -26597 Quash Subp. 09/04/1996 ARCO M. Worcester AOGCC ARCO's reply memorandum in support of its motion 26598 -26630 to Quash Subp. 09/04/1996 Exxon C. Symonds AOGCC Service list, Reply brief of Exxon in support of motion to Quash AOGCC Subp, Notice of filing faxed copy of Affidavit, Affidavit of J. Grant in support of Exxon's memo in support motion to Quash Subp, Request for oral argument. 26631 -26681 09/04/1996 Chevron S. Ellis AOGCC Request for oral argument, Notice of hearing, Service list, Reply of Chevron to AOGCC opposition to motion to Quash Subp. 26682 -26704 09/04/1996 ARCO M. Worcester AOGCC Request for oral argument, Service list. 26705 -26709 09/06/1996 ADN Eva K. AOGCC Affidavit of publication. 26709a- 09/16/1996 AOGCC Commish Public Order concerning Natural Gas Liquids & Miscible 26710 -26711 InJectant Volumes. 09/19/1996 Exxon S. Luna AOGCC Faxed to DWJ; Exxon would not oppose a short-term 26712 -26714 extension of existion Rules 4 & 5 of CO 360 through 12/31/96. Service list. ALASKA OIL & GAS CONSERVATION COMMISSION ULTIMATE RECOVERY INDEX DATE 02/25/1997 PAGE 36 09/20/1996 DOL Exxon R. Mintz Chevron,ARCO,BP Momorandum in support of AOGCC's motion tjo strike portions of reply memoranda or, in the alternative, for leave to file a responsive memorandum, Service list. 26715 -26735 09/20/1996 DOL R. Mintz ARCO Case ~ 3AN-96-06304 Civil; ANSWER, Service list. 26736 -26758 09/25/1996 AOGCC Commish Public Order extending Rule 4 & 5 of CO 360. The expiration date is extended to 12/31/96, hearing for 9/27/96 is cancelled. 26759 - 09/27/1996 AOGCC Eva K. AOGCC Affidavit of publication. 26759a- 09/27/1996 DOL Exxon R. Mintz Chevron,ARCO,BP Motion to strike portions of reply memoranda or, in the alternative, for leave to file a responsive memorandum. 26760 -26761 09/27/1996 AOGCC DWJ Public Notice: 1. Whether to extend the expiration date 26762 - of Rule 4&5 beyond 12/31/96 or to make Rule 4&5 permanent; 2. Whether to amend Rule 4 to require Commish approval of the annual plan of operation,ect. 10/04/1996 BPX M. Davis AOGCC ltr to DWJ; Owner agreement to backfill & allocate NGLs. Amendment #1 to amended & restated PBU NGL/EOR project operating procedures & Flow station 3 injection project operating procedures. 26763 -26771 10/22/1996 DOL R. Mintz Exxon AOGCC's reply to BP & Chevron's momoranda in opposition to motion to strike (etc.) & Commission's opposition to BP's motion to defer ruling on motion to Quash, Service list. 26772 -26780 ----~10/22/1996 AOGCC TAB Participant The Commission intends to hear testimony fr Professor James L. Smith on the subject of amending Rule 4. 26781 - 10/28/1996 Exxon S. Luna AOGCC Faxed to DWJ; Response to 10/22/96 ltr fr AOGCC. 26782 -26784 10/29/1996 AOGCC Public Hearing-NGL-CO 360, Rule 4 & 5; Attendence Doc 26785 - 10/29/1996 AOGCC Public Hearing-NGL-CO 360, Rule 4 & 5; Attendence Doc 26786 - 10/29/1996 DNR Commish Shively AOGCC Faxed to DWJ; Re: Amendment of Rule 4 & Regulations Regarding Plan Approval. 26787 -26790 10/29/1996 ARCO J. Donovan AOGCC Fax to DWJ; Re: Hearing on Rules 4 & 5 of CO 360. Text enclosed is fr a statement on behalf of ARCO, Service list. 26791 -26799 ALASKA OIL & GAS CONSERVATION COMMISSION ULTI~%TE .RECOVERY INDEX DATE 02/25/1997 PAGE 37 10/30/1996 Jcnes,Day,Reavi R. ~.~cKnight AOGCC ltr to DWJ; Re: 10/29/96 hearing on Rules 4 & 5 of CO 360. Enclosed a typescript of the quotations that b~r. 5!cKnight read. Service list. 26800 -26858 11/01/1996 Skadden,Arps,S1 J. Donovan AOGCC ltr to DWJ; ~e: Hearing on Rules 4 & 5 of CO 360. Text enclosed is fr a statement on behalf of ARCO, Service list. 26859 -26866 11/01/1995 Jones,Day,Reavi F. McKnight AOGCC Faxed to DWJ; Re: 10/29/96 hearing on Rules 4 & 5 CO 360. Enclosed a typescript of the quotations that Mr. McKnight read. Service list. 26867 -26872 11/05/1996 Exxon S. Luna AOGCC Fax to DWJ; Exxon Statement fr the 10/29/96 hearing. 26873 -26894 11/08/1996 AOGCC DWJ Exxon Thank you for your ltr of 10/28/96, in response to the Commission's ltr of 10/22/96, concerning a public records request. 26895 - 11/08/1996 AOGCC DWJ BPX Thank you for your ltr of 10/28/96, in response to the Commission's ltr of 10/22/96, concerning a public records request. 26896 -26897 11/15/1996 BPX M. Davis AOGCC CONFIDENTIAL 26898 -26976 11/15/1996 ARCO K. Meyers AOGCC Faxed to DWJ; ltr to K. Boyd, Director, DOG, response to ltr dated 8/28/96. 26977 -26979 11/27/1996 BPX D. Woodward AOGCC Faxed to DWJ & K. Boyd; WIO held a regular meeting on 11/19/96 where is was decided that we would continue evaluation of the MIX-IPF project consistent w/a 1999 project schedule. 26980 -26982 12/11/1996 AOGCC DWJ Public Public Meeting; Notice AOGCC will meet to hear a rept fr the operators of the Prudhoe Oil Pool on their plan to increase the volume of MI available for enhanced oil recovery operations. Meeting held at ARCO. 26983 - 12/11/1996 ARCO D. Bose AOGCC Fax to DWJ & K. Boyd; Re: MIX-IPF Review 26984 -26987 12/12/1996 ADN Eva K. AOGCC Affidavit of Publication 26988 - 12/13/1996 AOGCC Commish Public Notice; 1. Rules 4 & 5 of CO 360 will be allowed to expire by their own terms, and 2. The subpoenas issued on or about 7/30/96 to ARCO, BPX, Exxon, Chevron are withdrawn without prejudice. 26989 -26990 02/07/1997 DOL R. Mintz AOGCC fax to Diana; Stipulation of dismissal for resolution of litigation relationg to CO 360. 26991 -27003 TONY KNOWLE$, GOVERNOR ALASKA OIL AND GAS CONSERVATION COM~HSSION 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 January 23, 1997 Kenny Lang BP Exploration (Alaska), Inc. P.O. Box 196612 AnchorageI Alaska 99519-6612 ,,~{~,,~'!'~l~l,e'~',':;'','i''?''cO'''3~'607':'?!'?:!,':~:'',::',:~ ' Dear Messrs. Lang and Bose' Darrel Bose ARCO Alaska, Inc. P.O. Box 100360 Anchorage, Alaska 99510-0360 Thank you for your January 20, 1997 letter concerning the status of the MIX-IPF project. I concur with your assessment that any further consideration of issues surrounding Rule lB, CO 360, is best accomplished after presentation of the project status report to the Commission in April 1997. I wish to congratulate the WlOs in resolving the MI/NGL issues and compliment the many dedicated individuals on your staff whose hard work and long hours made resolution possible. I look forward to seeing business get back to normal at Prudhoe Bay and to a more complete briefing on the MIX-IPF project in April. I recommend that meeting occur on or about April 16. · Chairman~,~~ TONY KNOWLES, GOVERNOR ALASI~A OIL AND GAS CONSERVATION CO~IISSION 3001 PORCUPINE DRIVE ANCHORAGE. AI.~,SKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 January 6, 1997 Dr. James L. Smith Southern Methodist University 440 Fincher Building, School of Business Dallas, TX 75275-0333 Dear Dr. Smith: To reiterate what we recently discussed by phone, as a result of recent COmmission decisions concerning Conservation Order 360 and the Commission's withdrawal of subpoenas for certain documents sought for your testimony under the contract for services dated May 22, 1996, as amended, the Commission will not need you to testify or appear at a hearing as originally contemplated. Accordingly with the exception noted below, your contract ~vill not be extended beyond its expiration date of December 31, 1996, and your further services will not be required. Article 10 of Appendix A of the contract provides that all notes and other v¢ork developed in the performance of the contract remain the sole property of the State of Alaska, and that you as the contractor agree to furnish and provide access to all retained materials at the request of the Project Director. The Commission would appreciate your providing us a copy of any draft testimony or report that you may have already generated under the contract. We understand, however, that due to the protective order from the ANS royalty litigation you are co.nstrained from disclosing certain information obtained from documents produced in that litigation, and that if any existing draft testimony or report refers to or relies on such information, affected portions of the testimony or report would have to be deleted or edited before providing a copy of the testimony or report to the Commission. Assuming that you will not need to spend a substantial amount of time in making such deletions or edits, the Commission will extend the contract through January 31, 1997, and authorize you to incur not more than $750 in further fees and costs for the sole and limited purpose of putting any w~,itten work previously developed under the contract in a form that can be provided to the Commission without your running afoul of the protective order. uestions. Thank you for you cooperation. .. Chairrr?a~...~ \ CURRICULUM VITA DR. JAMES L. SMITH MAGLrIRE PROFESSOR OF OIL AND GAS MANAGEMENT EDWIN L. COX SCHOOL OF BUSINESS SOUTHERN METHODIST UNIVERSITY DALLAS, TX 75275 PERSONAL INFORMATION Birthdate: Address: Marital Stares: October 11, 1950 10537 Beinhom Road Houston, TX 77024 (713) 467-2902 home~ EI)UCATION B.S. [1972] Dept. of Economics, University of Illinois. M.A. [1976] Dept. of Economics, Harvard University. Ph.D. [1977] Dept. of Economics, Harvard University. (214) 768-3158 office ,r,~?W ~7 -. ?-~.,~-~ ~ g4 c3 ~ ~ ~ Ma~ed (A~es Cheng), two c~&en (Lisa ~d St~h~e). ~ ~ PROFESSIONAL EXPERIENCE Cary M. Maguire Professor of Oil and Gas Management, Edwin L. Cox School of Business, Southern Methodist University, 1995-to date. Professor, Dept. of Economics, University of Houston, 1989-95. Board of Directors, International Assoc. for Energy Econ., Houston Chapter, 1989-93. Director, Bureau of Business and Economic Research, and Professor of Economics, University of Maryland, 1991. Director, Center for Public Policy, University of Houston, 1987-90. Associate Professor, Department of Economics, University of Houston, 1983-89. Associate Professor, Department of Economics, University of Illinois, Champaign-Urbana, 1981-83. Research Affiliate, Energy Laboratory, Massachusetts Institute of Technology, 1981-83. Research Collaborator, Dept. of Applied Mathematics, Brookhaven Natl. Lab., 1980-81. Visiting Scientist, Center for Energy Policy Research, Massachusetts Institute of Technology, 1979-80. Visiting Research Associate, Norwegian School of Economics and Business Administration, Bergen, Norway, summers 1978-79. Assistant Professor, Dept. of Economics, Univ. of Illinois, Champaign-Urbana, 1977-81. Research Analyst, Energy Laboratory, Massachusetts Inst. of Technology, 1976-77. Technical Assistant, National Bureau of Economic Research, Cambridge, Mass., 1975- 76. 05/09/96 TEACIIING SPECIALTIES Energy Economics and Policy (graduate and undergraduate levels). Managerial Economics (MBA level). Microeconomic Theory (graduate and undergraduate levels). Economic Statistics and Econometrics (graduate and undergraduate levels). REFEREED PUBLICATIONS "Optimal Reservation Prices in Auctions," Economic dournal, with Dan Levin (forthcoming). "Ranking Auctions with Risk Averse Bidders," dournal of Economic Theory, with Dan Levin (forthcoming). "On the Cost of Lost Production ~om Russian Oil Fields," The Energy dournal (vol. 16, no. 2, 1995). "Equilibrium in Auctions with Entry," American Economic Review, with Dan Levin (June 1994). "Petroleum Property Valuation: A Binomial Lattice Implementation of Option Pricing Theory," The Energy ~lournal, with Eric Pickles (May 1993). "Comment on 'Some Evidence on the Winner's Curse,'" American Economic Review, with Dan Levin (March 1991). "Option Valuation of Claim~ on Real Assets: The Case of Offshore Petroleum Leases," Quarterly Journal of Economics, with J. Paddock and D. Siegel (August 1988). "Environmental Liability and Economic Incentives for Hazardous Waste Management," Houston Law Review, with W. Davis Dechert (July 1988). "Failure of the Net Profit Share Leasing Experiment for Offshore Petroleum Resources," The Review of Economics and Statistics, with D. Siegel and C. S. Cheng (May, 1988). "Cost-Volume-Profit Analysis of Offshore Energy Leases: A Reappraisal," dournal of Petroleum Accounting, with C. S. Cheng (Fall/Winter, 1987). "The Common Pool, Bargaining, and the Rule of Capture, "Economic Inquiry, (October 1987). "Valuing Offshore Petroleum Leases with Option Pricing Models," Midland Corporate Finance Journal, with D. Siegel and J. Paddock (Spring 1987); reprinted in The New Corporate Finance: Where Theory Meet~ Practice, edited by Donald H. Chew, Jr., pp. 108-116, McGraw-Hill, Inc., New York, 1993. "Effects of Taxes and Price Regulation on Offshore Gas," The Energy Journal, with H. Jaeoby (Special Tax Issue 1985). "Joint Bidding, Collusion, and Bid Clustering in Competitive Auctions: Reply," Southern Economic Journal, (April 1985). "Further Results on Equilibrium Patterns of Competition in OCS Lease Sales," Economic Inquiry, (January 1984). 05/09/96 James L. Smith Page 2 REFEREED PUBLICATIONS (continued) "Regional Modelling of Oil Discovery and Production," Energy Economics, with J. Paddock (January 1984). "Joint Bidding, Collusion, and Bid Clustering in Competitive Auctions," Southern Economic dournal (October 1983). "Joint Bidding, Information Pooling, and the Performance of Petroleum Lease Auctions," Bell Journal of Economics, with L. DeBrock (Autumn 1983). "Equilibrium Patterns of Competition in OCS Lease Sales," Econ. Inquiry, (April 1982). "Risk Aversion and Bidding Behavior for Offshore Petroleum Leases," dournal of Industrial Economics (March 1982). "Maximum Likelihood Estimates of the Size Distribution of North Sea Oil Fields," Mathematical Geology, with G. Ward (October 1981). "Non-Aggressive Bidding Behavior and the Winner's Curse," Econ. Inquiry (July 1981). "Probabilistic Methods for Estimating Undiscovered Petroleum Resources," Advances in the Economics of Energy and Natural Resources, with F. O'Carroll (1980). "A Probabilistic Model of Oil Discovery," The Review of Economics and Statistics (November 1980). "Oil Supply Forecasting: A Disaggregated Process Approach," Bell dournal of Economics, with P. Eckbo and H. Jacoby (Spring 1978). "The Quality of Economic Writing in Four Newsmagazines," dournal of Business Communication (Spring 1973). TECHNICAL REPORTS AND PUBLICATIONS "Calculating Investment Potential in South America," Worm Oil, (June 1995). "Russian Oil Update: The Private Investment Climate," Russian Oil & Gas Guide, vol. 4, no. 1, Pennwell Publishing Co., Tulsa, Oklahoma (January 1995). "Restoring Russian Oil Production: The Economic Viability and Potential of Damaged Fields," a report submitted to the U.S. Department of Energy under contract no. DE-AP0193IN00620.A000 (May 31, 1994). "Executive Sutnmary," Proceedings of the Second Annual Russian Oil Conference: "The Russian Petroleum Industry, Foreign Investment Opportunities," sponsored by the Royal Institute of International Affairs, London (February 11-12, 1993). "MAROPT: An Option Valuation System for Oil and Gas Prospects-- User's Manual and Documentation," January 10, 1990. "Profitability of Antarctic Oil Exploration and Development," a report submitted to the U.S. Congressional Office of Technology Assessment under contract no. J3- 4295.0 (January 31, 1989). "The Economic Impact of the University of Houston System," a report submitted to the Chancellor's Office, University of Houston System, with Louis H. Stem (January "Houston and the UH System: Parmers for the Future," a report submitted to the Chancellor's Office, University of Houston System (January 1988). 05/09/96 James L. Smith Page 3 TECHNICAL REPORTS AND PUBLICATIONS (continued) "Oil Import Tax: Pros & Cons," The Professional Geologist, American Institute of Professional Geologists, (October-December 1987). "International Petroleum Taxation: Reasons for Instability," in Proceedings of the North American Meetings of the International Association of Energy Economists, Calgary, July 5, 1987. "The Gasoline Marketing Industry in Texas," a report to the Texas Mid-Continent Oil & Gas Association (March 1985). "An Analysis of the Impact of Federal Tax and Leasing Policies on the Economic Prospects for Oilfield Development in Hostile Offshore Environments," a report to the U.S. Congressional Office of Technology Assessment under contract no. 433- 5620.0 (September 1984). "Petroleum Reservoir Simulation Models: A New Tool for Economic Analysis of Public Energy Policies," in Proceedings of the Fifteenth Annual Modeling and Simulation Conference, published by the Instrument Society of America (April 19-20, 1984). "Does Profit-Share Leasing for Outer Continental Shelf Leases Need Finer Tuning?," Oil and Gas Journal, with D. Siegel (May 7, 1984). "The Reservoir Economic Simulation Model: Technical Description and User's Guide," a report submitted to Los Alamos National Laboratory, 291 pages (November 1981). "Comment: New Theories of Exploration for Energy Resources," in The Economics of Exploration for Energy Resources, ed. by J. Ramsey, JAI Press, Inc.: Greenwich (1981). "Maximum Likelihood Estimates of the Size Distribution of North Sea Oil Deposits," Proceedings of the American Statistical Association, Business and Economic Statistics Section, with G. Ward (1980). "Probabilistic Models of Oil Discovery: North Sea Applications," a report submitted to the Center for Petroeconomic Studies, Christian Michelsens Institute, Bergen, Norway (June 1980). "Needed Exploration Activity Offshore Norway," Northern Offshore: The Norwegian Journal of Oil and Gas, with P. Eckbo (August 1976). "The Petroleum Refining Industry," chapter 2 of Environmental Controls: The Impact on Industry, ed. by R. Leone, Lexington Books: Lexington, Massachusetts (1976). "The Aluminum Industry," chapter 6 of Environmental Controls: The Impact on Industry, ed. by R. Leone, Lexington Books: Lexington, Massachusetts, with W. Lee and R. Leone (1976). "The Economic Impact of the Federal Water Pollution Control Act Amendments of 1972 on the Petroleum Refining Industry," report submitted to the National Commission on Water Quality, with R. Leone (June 1975). WORKING PAPERS "The Elasticity of Demand for Gasoline: A Semi-Parametric Analysis," with Pin T. Ng, February 27, 1995. "Auctions with Entry: An Experimental Investigation," with Dan Levin, January 18, 1995. 05/09/96 James L. Smith Page 4 BOOK REVIEWS "Review of Mineral Resources Appraisal, by DeVerle P. Harris," in The Energy Journal, (January 1986). "Review of Energy and Resources: An Economic Analysis, by F. Banks," in Natural Resources Journal (July 1983). "Review of North Sea Oil in the Future, by C. Robinson and J. Morgan," in Journal of Energy and Development, (Autumn 1979). RESEARCH GRANTS AND CONTRACTS "Restoring Russian Oil Production: The Economic Viability and Supply Potential of Damaged Fields," from the Energy Laboratory, University of Houston, 1993. "Restoring Russian Oil Production: The Economic Viability and Supply Potential of Damaged Fields," from U.S. Dept. of Energy, 1993. "Russian Petroleum Taxation and Foreign Investment," from the Energy Laboratory, University of Houston, 1992. "Experimental and Empirical Research on Auctions With Entry," from Resources for the Future, 1992. "The Role of Entry in Competitive Bidding," from the Energy Lab., U. of Houston, 1991. "Natural Gas: Bringing Energy and the Environment Into Focus," from a consortium of twenty-two corporate underwriters, 1988. "Option Value Methodology for Energy Research and Development," from the Texas Higher Education Coordinating Board, 1988. "The Impact of the University of Houston System on the Houston Community," from the University of Houston System, Chancellor's Office, 1988. "Retail Shopping Survey of the Downtown Workforce," from the Downtown Houston Association, Houston, TX, 1988. "Workshop on Alaskan Oil Production," from the U.S. Congressional Office of Technology Assessment, 1987. "Valuing Energy Research and Development: An Option Value Approach," from the Energy Laboratory, University of Houston, 1985. "Economic Factors in Developing Oil and Gas in Hostile Environments," from the U.S. Congressional Office of Technology Assessment, 1984. "Economic Determinants of Petroleum Drilling Activity," from Petroplan International, Boston, MA, 1982-83. "Economic Costs and Valuation of Petroleum Reserves," from U.S. DOE, 1981-82. "Reservoir Economic Simulation Model," from U.S. Dept. of Interior and Los Alamos National Laboratory, 1980-81. "Petroleum Supply Modeling," from the Christians Michelsens Institute, Bergen, Norway, 1979-80. "Bidding Behavior for Offshore Petroleum Leases," from U.S. Geol. Survey, 1976-77. 05/09/96 James L. Smith Page 5 MANUSCRIPT REFEREE FOR American Economic Review Economic Inquiry Journal of Industrial Economics Journal of Political Economy Resource and Energy Economics Southern Economic Journal The MIT Press Columbia University Press Explorations in Economic History Journal of Petroleum Technology Quart. Rev. of Econ. & Business Society of Petroleum Engineers The Energy Journal The Review of Econ. and Statistics CONFERENCE PRESENTATIONS "The Elasticity of Demand for Gasoline: A Semi-Parametric Analysis," Econometric Society, World Congress, Tokyo, Aug. 23-29, 1995 (with Pin Ng). "Russian Oil Update: The Private Investment Climate," Energy and Law Conference, sponsored by the U.S. Department of Energy and the Russian Ministry of Fuel and Energy, Moscow, Nov. 14-18, 1994. "Auctions with Entry: An Experimental Investigation," Economic Science Association, Fall Meetings, Tucson, AZ, Nov. 11-12 (with Dan Levin); also presented at Southern Economics Association, Annual Meeting, Orlando, FL, Nov. 20-22, 1994 (with Dan Levin). "Russian Petroleum Taxation and Foreign Investment," WEA International Annual Conference, Lake Tahoe, NV, June 20-24, 1993. "World Crude Oil Market: The Long View," Energy Policy Workshop, M.I.T. Center for Energy and Environmental Policy Research, Cambridge, MA May 13-14, 1993. "Tax Considerations in Analyzing International Oil and Gas Agreements," Association of International Petroleum Negotiators, Annual Meeting, The Woodlands, TX, March 11-12, 1993. "Environmental Protection and Economic Competitiveness," Clean Air Texas, 1993 Annual Reunion, Austin, TX, March 3-4, 1993. "Russian Petroleum Taxation and Foreign Investment," North American Conference of the International Association for Energy Economics, New Orleans, October 27, 1992. "The Impact of Taxation on Petroleum Development," Joint U.S.-Paraguayan Conference: Model Contracts for Petroleum Investment, Asuncion, Paraguay, May 18, 1992. "Implications of Taxation on Oil and Gas Development," Joint U.S.-Russian Oil and Gas Workshop: U.S. Opportunities in Western Siberia, Tyumen, Western Siberia, January 27-30, 1992. "The Future of OPEC," Workshop on Energy Policy Issues of the 1990s, MIT Center for Energy Policy Research, Cambridge, MA, November 21-22, 1991. "Option Valuation and Contingent Claims Analysis," ARCO Evaluation Forum, Denver, May 7, 1991. "The National Energy Strategy," Resources for the Future Seminar Series, Wash., DC, April 10, 1991. 05/09/96 James L. Smith Page 6 CONFERENCE PRESENTATIONS (continued) "The Theory, Practice, and Potential of Leasing Models," American Association for the Advancement of Science, Annual Meeting, New Orleans, February 17, 1990. "Derivative Asset Analysis: Applications to Valuing an Oil Field Development Project," Workshop on New Methods for Project and Contract Evaluation, Massachusetts Institute of Technology, Center for Energy Policy Research, Cambridge, M& March 3, 1988 (with James Paddock and Daniel Siegel). "Environmental Liability and Economic Incentives for Hazardous Waste Management," Mana~ng Liability from Hazardous Waste, Univ. of Houston Environmental Liability Law Conference, Houston, November 12-13, 1987 (with W. Davis Dechert). "International Petroleum Taxation: Reasons for Instability," Ninth International Conference of the International .Association Energy Economists, Calgary, July 1987. "Option Valuation of Claim~ on Real Assets: The Case of Offshore Petroleum Leases," Annual Meetings of the International Association of Energy Economists, Boston, November 1986 (with J. Paddock and D. Siegel). "Option Valuation of Claims on Real Assets: The Case of Offshore Petroleum Leases," Annual Meetings of ORSA/TIMS, Atlanta, November 1985 (with J. Paddock and D. Siegel). "The Effects of Taxes and Price Regulation on the Supply of Offshore Gas," Special Conference on Energy Taxation, Center for Economic Policy Research, Stanford University, November 1984 (with H. Jacoby). "Petroleum Reservoir Simulation Models: A New Tool for Economic Analysis of Public Energy Policies," International Assoc, of Energy Economists, Bergen, Norway, June 1984. "Petroleum Reservoir Simulation Models: A New Tool for Economic Analysis," Fifteenth Annual Pittsburgh Conference on Modeling and Simulation, Pittsburgh, April 1984. "Regional Modelling of Oil Discovery and Production," United Nations Conference on the Economics of Exploration and Development of Energy Resources, New York, September 1983 (with J. Paddock). "Financial Option Valuation of Offshore Petroleum Leases," Annual Meeting of the American Finance Association, New York, December 1982 (with J. Paddock and D. Siegel). "A Simulation Study of Supply Response to Natural Gas Price Decontrol," North American Meetings oft he International Association of Energy Economists, Denver, November 1982. "Maximum Likelihood Estimates of the Size Distribution of North Sea Oil Deposits," Annual Meetings of the American Statistical Association, Houston, August 1980 (,~ith ~. Ward). "Equilibrium Patterns of Competition for Offshore Petroleum Leases," Annual Meetings of the Western Economic Association, San Diego, June 1980. "Comment on New Theories of Exploration for Energy Resources," Energy Exploration Conference sponsored by New York University, New York, May 1979. 05/09/96 James L. Smith Page 7 CONFERENCE PRESENTATIONS (continued) "Bidding Behavior for Offshore Petroleum Leases: Some Empirical Evidence," Joint National Meetings of ORSA/TIMS, New Orleans, May 1979. "Competitive Bidding Behavior and the Winner's Curse," Joint National Meetings of ORSA/TIMS, Los Angeles, November 1978. "Forecasting Petroleum Discovery, Development, and Production," North American Meetings of the Econometric Society, Chicago, August 1978 (with P. Eckbo). 05/09/96 James L. Smith Page 8 ~COMM ,,< ~ t_cOMM -- _ -- COMM _ RESENG SR ENG - - ,, __ SR GEOL GEOL ASST 'STAT TECH _ STAT TECH -_ _ _ Pro t'es: ~ 37--- [FILE-. Ho ~""' /i' ';" -:-."u ..... or .lames L. Smith Road .n, TX 77024 DEPARTMENT OF LAW OFFICE OF THE A'I-FORNEY GENERAL December 3, 1996 TONY KNOWLES, GOVERNOR PLEASE REPLY TO: 1031 WEST 4TH A VENUE. SUITE200 ANCHORAGE. ALASKA 9950 I- ;99,,I PHONE (907) 269-5100 FAX' (907) 276-3697 KEY BANK BUILDING 100 CUSHMAN ST.. SUITE 400 FAIRBANKS. ALASKA 99707-.~679 PHONE (907) 451-281 ? FAX' (907) 451-2846 P.O. BOX 110300-DIMOND COURT HOUS~ JUNEAU, ALASKA 99811-0300 PHONE. (90 7) 465-3600 FAX: (907) 465-6735 Re: Exxon et al. v. Alaska Oil and Gas Conservation Commission (-,?-- - ~1-97-0143 As you know, the companies to which the Alaska Oil and Gas Conservation Commission issued subpoenas fbr certain documents relating to the subject of your requested testimony concerning approval of plans of development and operation fbr the Prudhoe Oil Pool have · challenged those subpoenas in court. Whether or not the usual "discovery" process of civil litigation applies to these challenges is potentially a subject of dispute among the parties. However, we have proposed deferring that question until after the court rules on the pending motions to quash the Commission's subpoenas. To obtain the other parties' consent I have agreed that certain documents will be preserved, most or all of which would be in your possession. Accordingly, would you please make sure that you preserve until further notice "all drafts, work Papers, and other materials prepared, used or relied upon by [you] in connection with [your] engagement by the Commission (including both [your] prior work concerning compulsory unitization and [your] present work)"? Thank you for your cooperation. Very truly yours, RECEIVED. DEC 0 4 1996 Alaska Oil & Gas Cons. commission Anchorage BRUCE M. BOTELHO ATTORNEY GENERAL By: cc: Alaska Oil and Gas Conservation Commission REM:ars Robert E. Mintz Assistant Attorney General TONY KNOWLE$, (~OVEFtblOt:t ALASK& OIL AND GAS CONSERVATION COMMISSION 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 September 30, 1996 James L. Smith 10537 Beinhorn Road Houston, Texas 77024 Dear Professor Smith: This letter provides clarifying instructions conceming the services to be performed under your contract with the Alaska Oil and Gas Conservation Commission. As you know, the contract amendment executed on July 31, 1996, provides: "In preparing his written testimony, in order to minimize the expense to the State, the Contractor shall use to the extent practicable any draft testimony previously prepared under the contract before its amendment." I assume that you understood, as the Commission understood, this provision to address those portions of previously prepared draft testimony, if any, that would relate to the subject of your testimony under the contract amendment. I also assume that you expected, as the Commission expected, that your testimony under the contract amendment would consist substantially of newly written material, with the inclusion of previously prepared draft testimony only to the extent that it satisfied the purposes of your testimony under the contract amendment. However, one working interest owner has recently expressed concern that the contract amendment asks you "to take testimony [you] previously drafted on the subject of compulsory unitization, and to dress up that testimony to make it address instead the issue of the need for plans of development and operation, but without changing the subject matter of the testimony at all." Another working interest owner has inferred that the Commission "intends for Dr. Smith to provide the same basic testimony for which he was originally hired." To eliminate the possibility of such misinterpretations of the contract amendment, the Commission wishes to make clear that in assessing whether to include any previously prepared draft testimony in your testimony under the contract amendment, you should not include any previously prepared draft testimony that is not relevant to the current subject of your testimony as defined in the contract amendment. Also, your testimony should include previously prepared draft testimony, as distinguished from newly written testimony, only to the extent that the former satisfies the purposes of your testimony under the contract amendment. If in your professional judgment the purposes of your testimony under the contract amendment can be satisfied only by writing new testimony to the exclusion of any previously prepared draft testimony, that will comply with the provision of the contract amendment calling for use of previously practicable." David W. Johnston ~'~""'~ ~ cc. R. Mintz, DOL ~'~$EP 30 '96 0~:15PM COX SCHOOL OF' BUSIMES$ ~'~ ~O, 80'(~YB~4 amen~l ss ibllow~ 1. The ~1 o£th~ pexio~l ~p~e u specifietinAr~icle 3 of~e ¢on~ot, es ~, ~ e~end~ ~om Septc~e~ 30, 1996, to ~e~ ;~1, 199~. ~S L. ~ PH.D, Ja~s L. S~h~ ~pat , ALASKA orr, AHD GAS CONS~VA~IOH COMMI$SI~ COX SCHOOL Of BUSINESS ~'{~ ND, 80't~YBBU44 ~'.~2 ,. 1. The ~a of'&e ~d.od afp~fomm~e u ~hAN~le 3 oft~e cmm*a~ ~z a~, i~ ~eml~ fi*om ~'vtcmkr 30, 1996, to ~~ :~ 1, 1996. AT,,A~KA OIL ~ OA~ CO~SP~VATION COMMISSION _. ~ ~ , Date: JUL-OI-Wu N~U ll:dW fl~UH MbU Ubll FAX COVER SHEET ?,U2 Message to: No. of Pages:._ ~ ,(Including this cover sheet) ARMSTRONG OFFICE SUPPLIES FAX (7~) ~?-1800 PHONE (713) 46S-~:101 SPECIAl. INSTRUCTION8: JUL-~I-9~ WED 11:~9 ~qNOH ~qGO OGFI VF~X BiO, ",. " P, ff/31/96 WED 14:07 F.~ 7111 4~7 1060 if" 90/'2 f'98644 ?, 03 LC/UOZ The contract between the State of Alaaka, Alaska Oil and Gas Conservation Conm~i~sion and flames L Sx~ith ("Contrao~or"), dated May 22, 1996, is am~uttnl as follow~: 1. Tt~ ~d ofth~ pcr~od ofp~rfarmauc¢ as specified i~ Anidc 3 ofthc con~rac~ is extended tom J~ly 31, 1996, to S~pt~nbe~ 30, 1996. 2. The subject matt=r ofthc Contractor's testimony to bo provided under Ani~l~ 1 of Appendix C to the contract, spe6fyin~ the services to be pea{ormed by ~he Contrnctor, is cha~ged to t~ followk~.. TEe geaeral subject o£th¢ testimony shall be to assist tho Commissio~ in reachlng au ~d conclusion cm the question ofwhtlhcr it is alrpropriatc or desirable to rcquirc approval by tile Commission (as ~gutshed from mere mbmlssion to the Comm~ion for informational purposes) of plans of development and op~radon for the Pmdhoe Oil Pool tn order to prcvent waste, insure a greater ultimate ref~ovcry of oil and gs~. alld pr~t the co~relalive rigl~s ofpersons ow~. HE interests in the tracts ofhnd affecled. The icsti~.ony shall include informa6o~ and analy~ bearing on the extent, if any, to which l~amres of the property ami co~tramul arrangements in efl~c~ for the Pmdhoe Oil Pool or oth~' factOrS maybe e,~e~ed to at~et adversely tho operators' or o~am~rs' davelopn~ent or operational decisiona Among other p~-xtincat issues, the tc~'dmony shall address whether features of thc conUactuel ~nd propesty ~ran~ents fur thc Pmdhoc Oil Pool have rosult~ in any delay of of fagu~c ~o pur~ue any development project or 3. In trrepa~ing his writtm testimony, in orderto minimize the expense to tlle State, thc Cont~aotor shall u~e to the extent pmoticable my draR testimony pvzvio~sly prepared under the 4. The ma:~mttm mm that the State mm/pay ~c Contractor unde~ this oont~aot as dUL-51-~b NED ll'qU flNUH flUU UUH ~ ~X NO, SO ~Z (~81544 ?, 04 ~u~ ~e.~:~ed in Artiole 4.1 of tho con~sct is olumged from $20,000 ~o $25,000. JAlVlES L SMITH, PH.D. ALA~C,~ 0IL AND GAS CONS]~g,.VATION COM1VRSSION SMU ~-~'"'-"- ~ ~--RECEIVED. Department of Law AUG 05 1996 James L. Smith Cary M. Maguire Professor (~' Oil and Gas Management Edwin L. Cox School of Business Southern Methodist University PO Box 750333 Dallas TX 75275-0333 214-768-3158 Fax 214-768-4099 E-mail: jsmith@mail.cox.smu.edu AMENDMENT TO CONTRACT The contract between the State of Alaska, Alaska Oil and Gas Conservation Commission and James L. Smith ("Contractor"), dated May 22, 1996, is amended as follows: 1. The end ofthe period ofperformance as specified in Article 3 ofthe contract is extended from July 31, 1996, to September 30, 1996. 2. The subject matter of the Contractor's testimony to be provided under Article 1 of Appendix C to the contract, specifying the services to be performed by the Contractor, is changed to the following: The general subject of the testimony shall be to assist the Commission in reaching an informed conclusion on the question of whether it is appropriate or desirable to require approval by the Commission (as distinguished from mere submission to the Commission for informational purposes) of plans of development and operation for the Pmdhoe Oil Pool, in order to prevent waste, insure a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected. The testimony shall include information and analysis bearing on the extent, if any, to which features of the property and contractual arrangements in effect for the Pmdhoe Oil Pool or other factors may be expected to affect adversely the operators' or owners' development or operational decisions. Among other pertinent issues, the testimony shall address whether features of the contractual and property arrangements for the Pmdhoe Oil Pool have resulted in any delay of or failure to pursue any development project or impaired any operation. 3. In preparing his written testimony, in order to minimize the expense to the State, the Contractor shall use to the extent practicable any draft testimony previously prepared under the contract before its amendment. 4. The maximum sum that the State may pay the Contractor under this contract as specified in Article 4.1 of the contract is changed from $20,000 to $25,000. JAMES L. SMITH, PH.D. Date: ALASKA OIL AND GAS CONSERVATION COMMISSION Jack Hartz, Project Director Date: David W. Johnston, Chairman Date: JUL-31-96 WED 11:99 F~NCH F~GO OGM ~, ,, F~qX NO, 9072798644 P, 02 FAX COVER SHEET ;)ato 7- 5/'~/~ Mess;ago to: Rrm .. - "v No. of Pages:.~ ~ ,(Including this cover sheet) ARMSTRONG OFFICE SUPPLIES FAX {713) ~?.1880 PHONE (713) 46S.~301 SPECIAL INSTRUCTIONS: RECEIVED A!ask~. Oil & '~ Cc.r:s. F~× NO, 9077798644 ?, 03 ~JO02 The contxaot between thc State of Alaska. Alaska O~ and Gas Con--on Co._mml,sion and James L Smith ('~ontractor'~), dated Nfay 22, 1996, is amended as follows: 1. T~ ~nd of thc l~criod ofp~rfi~rmancc as specified in A~tidc ~3 ortho contract is ca,tended, ~om J~y 31, 1996, to September 30, 1996. 2. The su'ojeot tanrer oft~c Contractor's tesiim~y to be l~rovided u~r Article 1 of Appendix C to the con~act, speciPjin8 the sezvicas to be preformed by the Contractor, is chan~ed to t~ The genersl subject ofthc tes6mony s~ta]l be to assist tho Cm:nmissio~ in rgachtn~ au ~med conclusion ~ ~e q~~ of~~ ~ ~ ~r~tc or do~ble to rc~o appr~al ~ ~c Co~~ (~ ~~d ~m ~e m~on to ~e Co~i~ for ~fi~ p~o~s) ~s of~clopm~t ~d ~on for ~e ~oe ~ pr~e~ ~e co~e~ ~s ofp~s o~ ~t~s ~ ~e ~s of~d ~~. T~ testimony ~all in~de in~rmetio~ ,nd analysis beaxing on the extent, if to which ~ea0~res of the property an4 co~xtraotual arrangements ~n effect for the Pm,~oe Oil. Pool or otb~r factors maybe expeoted to affect sdvors~ the operators' or development o~ operafioual deci~ons. Amon~ other pm~inc~t issues, the testin~ny shall address wl~ethor £eatures o£the contractual ~nd prope~y ~gements fi~r the Prudho~ Oil Pool have ~emflted ~n any delay o~ o~ ~¢ to pursue auy development project or imputed any 3. In prepm~ng his wsittc~ te~mony, in order to minimize tlte exp~nse to ttte State, the Contraotor shall use to the extent practicable any draft testimony pn~vionsly prepared under the contrzct be~m Rs smcudmont 4. The ma~imvm sum that the State nmypay tho Coattacte~ trade: thi~ oont~aot ss P, 04 4.1 ortho co~t~sct is olumBed ~'om ~lO,O00 t,~ $~,000. JAMP. S L SI~II'I'H, PH.D. ALASKA OIL AiND OAS CONSttKVATION COMMISI~][0N D~te:, JUL-25-96 THU 10:49 ~NOH flGO OGM NO, 9072798644 P, O1 STATE OF ALASKA DEPARTMENT OF LAW CIVIL DIVISION OFFICE OF THE ATTORNEY GENERAL OIL, GAS & MINING SECTION 1031 W. 4th Avenue, Suite 200 Anchorage, AK 99501-1 994 Phone: (907) 269-5255 Our Fax Number.; 1907} 279-8644 (If unavailable, t~ {9071 27B-7022 or (907) 276-3697! ~.. L ~.: ~''''' '. jill '~. $ 9~° Alask~ Oil & 6~s pons. Comn%sio9 Anc~.g8 I::ACSIMILE _TRANSMITTAL THE INFORMATION CONTAINED IN THIS FAX IS CONFIDENTIAL AND/OR PRMLEGED. THIS FAX I,~ INTENDED TO BE REVIEWED INITIALLY BY ONLY THE INDIVIDUAL NAMED BELOW, tF THE READER OF THIS TRANSMrl-rAL PAGE IS NOT THE INTENDED RECIPIENT OR A REPRESENTATIVE OF THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY REVIEW, DISSEMINATION OR COPYING OF THIS FAX OR THE INFORMATION CONTAINED HEREIN IS PROHIBITED. IF YOU HAVE RECEIVED THIS FAX IN ERROR, PLEASE IMMEDIATELY NOTIFY THE SENDER BY TELEPHONE AND RETURN THIS FAX TO THE SENDER ATTHE ABOVE ADDRESS, THANK YOU. PLEASE DELIVER THE FOLLOWING PAGES TO: N~M~: J ~ -7.. LOCATION:... FAX NUMBER; TOTAL NUMBER OF PAGES COMMENTS: ~ ~-?'~::' _( INCLUDING COVER LETTER). ...--- ./% v Oil, Gas & Mining Section Attorney General's Office, Anchorage RE: SUBJECT/FILE NUMBER: LF._YOU DO NOT RECEIVE. ALL TIlE PAGES. OR HAVE ANY PR_OBLEM~ WITH THE F^X,_pL_EASE CALL2 Melissa, Asha or Lory at (907) 269-5256 or 269-5254. JUL-25-96 THU 10:60 FflX NO. 9072798644 {' P, 02 AMENDMENT TO COI~'RACT The contract between the State of Alaska, Alaska Oil and Gas Conservation Commission and Jameq L. Smith ("Contractor"), dated May 22, 1996, is amended as follows: 1. The end of the period ofperfol~mance as specified in Article 3 of the contract is e~tended from July 31, 1996, to September 30, 1996. 2. The subject matter of the Contractor's testimony to be provided under Artielo 1 of Appendix C to the contract, specifying the services to be performed by the Contractor, is changed to the £ollowing: The general subject of the testimony shall be to assist the Commission in reaching an informed conclusion on the question of whether it is aj~ropriate or desirable to require ap~pr_oyal .by the Commission (as distinguished from mere submission to tile Commission fo~~Jll~n~lll~ses) ofp~ a'nd operation for .the Pmtlhoe O____jl Po,~ol, in order to prevent waste, insure a greater ultimate recovery of oil and gas, and protect the correlative ~ights of persons owning interests in the tracts of land affected. The testimony shall include information and analysis beating on the extent, if any, to which features of the property and contractual arrangements in effect for the Prudhoe Off Pool or other factors may be expected to affect adversely the operators' or owners' development or operational decisions. Among other pertinent issues, the testimony shall ad&ess whether features of the contractual and property arrangements for the Pmdhoe Oil Pool have resulted in any delay of or failure to pursue any development project or impaired any operation. 3. In preparing his written testimony, ia order to minimize the expense to tile State, the Comractor shall use to the extent practicable any &afl testimony previously prepared under the contract before its amendment. 4. The maximum sum that the State may pay the Contractor uade~ this contract as JUL 2 S 19~96 Alaska 0JJ 8, Gas Cons. Commission Anchorage JUL-25-96 THU 10:60 fiNOH flGO OG[i FaX NO, 9072798644 i" specified in Article 4,1 of the contract is changed fxom $20,000 to $25,000. P. 03 lAMES L. SMITH, PH.D. ;ames L. Smith, Principal Date: ALAS~ OIL AND OAS CONSEKVATION COMMISSION Jack Haltz. Project Dkector Date: David W. Johnston, Chairman Date: / ALASI~ OIL ~ GAS" CONSERVATION COMMISSION // TONY KNOWLE$, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 June 20, 1996 To: Ultimate Recovery Participants Re'. In the matters of: A Hearing to RevieW the Plan of Development and Operation and Other Agreements as They Affect Natural Gas Liquid (NGL) Throughput, Miscible Injectant (MT) Utilization and Ultimate Recovery From Prudhoe Bay; etc. Dear Participant: By correspondence dated May 22, 1996, the Alaska Oil and Gas Conservation Commission advised you of its intention to ask an independent expert, Professor James L. Smith of Southem Methodist University to present testimony before the Commission in the above-referenced matter on subjects that were addressed in the hearing that was recessed on April 24, 1996. The Commission has received a proposal from ARCO Alaska, on behalf of itself, Exxon, BP Exploration (Alaska) Inc., and Chevron, addressing a limited waiver of the terms of the Protective Order in the ANS Royalty litigation. A conference cai1 is scheduled at 4:00 PM (Alaska time) on Friday, June 21, 1996 to discuss the terms of the joint response. If you would like to participate in this phone meeting, the conference telephone mtmber is 1-800-315-6338 - Code 44. David . Johnston l Tuckerman BalScock ' Commissioner JUN-14-96 FRI 11:41 ~NCH ~GO OG~I F~X NO, 9072798644 P, O1 .. STATE OF ALAS~ DEPARTMENT OF LAW CIVIL DIVISION OFFICW. OF THE ATTORNEY GENERAL OIL, GAS & MINING SECTION 1031 W. 4th Avenue, Suite 200 Anchorage, AK 99501-1994 Phone: (907) 269-5100 Our Fax Nu~lber: (907) 279-8644 (If unavailable, try (907) 278-709.2 ~ACSZMZ'.E T~NSMITTAL JUN 1 n 1996 LOCATION: 3 INCLUDING COVER LETTER. · ' _ ~~ ~~-/7 ~ . ~., Oil, Gas & Mining Section Attorney General' s Office, Anchorage RE: SUBJECT/FILE NUMBER: ~_YOU DO NOT RECEIVE ALL TH~ PAOES, OR HAVE ANY PROBLEMS FAX. PLEASE CALL~ Melissa, Asha or Lory at (907) 269~52S6 or 269-5254. JUN- 14-96 FR I 1 l' 41 RNCH RGO OGM ~~_~/14/B,6 ]PR! 1~:~0 P~ 715 ~,~ lsd0 F~× NO, 9072798644 Ft~X N0. 90727986t~ P, 02 P, 02 STATE OF OIL AND GL~S CONSE.RYATION COMMISSION In the matters of: ) ) A Hearing TO Review the Plan of Development ) aRC[ Operation and Or[her Agreementa as They ) Affect N~duml Gas Uquid (N~t.) Throughput ) Miscrolu Injectant (Mil) Ut;llzatlon and Ullimate Rac;~very From Prudhoe ecg; } The Peri§on of ARCO Ale.ko, In~., for a Ruling ) on Maximization of NGL Blend[nO: and ) The Petition af BP Exploration (Alaska) Ina. ) Requesting Action or an Order Alter ee ) e,..o, : R E C E IV E D Dsvelopment and Operation and Other Agreements as They Affect NHL Throuohp~l, ) MI Utilization and Ultimate Reooveryfmm ) JUN 7 4 1996 Prucll~oe lilly ) __~ ........... __ _ ..... _ -_1 Alaska 0il & Gas Cons, Commission CONFIDENTIALITY AQREEMENT Anchorage CONCERNING INFORMATION PRODUCED RELA.TINQ TO HEARINGS COMMENCING APRIL 11, 111 accordance With the Commlsslon'e Mamh 21. t gg6 Pre-Hearin0 Order, 1I 6(b), BP F. xpiorafi~rl (Alaska) thO,, CUP Alaeka") submitted pre-flied testlmony~ Which klcluded one exhibit {f. xhlbtt AJMM-tT} that incorporated Certtldential infonaatlon, The Oommlsstan granted BP Alaska's request that eXhlbi[ AJMM-17 be ti'eared a~ el confidential exhibit. Irt order la obtain aGeess to Exhibit AJMM. i7, gild any' te.tlrnony conr, emlng that exhibit, the undersigned agrees 1o maintain the COIqfldentjal Inf;rmatlon (including Exhibit AJMM-I? end testimony ~onee~ng that exhibit) as contMential and. not to communicate, transfer, disdoae~ discuss, refer to or in any manner make any of the Confidential Information known to ~m¥ giber per,on, lncllvldual, company, or entRY. The undersigned shall not ma~e a copy o[ the Confidential InYormatlon, in whole or in part, and shall Ilot ¢istrlbute, ahem, or provlcle I~e Cool, dentin{ lnf~n, natkm to any other persan, individual, company, ar entity. The undersigned sh~tl only ue~ the Confidential Information in connam~on with thi~ Proceeding and shell flat use the Information for any other pu~ose, The undersigned shall limit dl$~butlan of, ar aoceae to, the Oantidential infetrrmtion to Its employees end a~rneys that need to knaw the Confldenlial InformAtion for purposes of this proceeding, NO. 9072798644 ., NO, 0072798~ P. I]3 P, 03 The undersigned shelt requlre each mm~, age~ or mp~ent~ Onclu~ng and Ihe Pmdh~ B~ Un~ Se~. ~e C~i~lon er a~ Wo~i~ In,mst ~ in the P~dh~ Bay UnE may enfomm ~e obllg~flo~ ~n~inmd In ~is ConfidenSal~ Agreement against ~e undersig~d. Ac;copied ar'id,Agreed to thi./.~ day of ~, 1996: RECEIVED JUN 1 4 1996 Alaska Oil & Gas Cons. Commission AnctTorage JUN-14-96 FRI 9:28 P, 02 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION In the matters of: A Hearing To Review the Plan of Development and Operation and Other Agreements as They Affect Natural Gas Liquid (NGL) Throughput, Miscible Injectant (Mi) Utilization and Ultimate Recovery From Prudhoe Bay; The Petition of ARCO Alaska, inc., for a Ruling on Maximization of NGL Blending; and The Petition of BP Exploration (Alaska) Inc. Requesting Action or an Order After the Commission's Review of the Plan of Development and Operation and Other Agreements as They Affect NGL Throughput, Mi Utilization and Ultimate Recovery from Prudhoe Bay CONFIDENTIALITY AGREEMENT CONCERNING INFORMATION PRODUCED RELATING TO HEARINGS COMMENCING APRIL 11, 1996 In accordance with the Commission's March 21, 1996 Pm-Hearing Order, ¶ 5(b), BP Exploration (Alaska) Inc., ("BP Alaska") submitted pre-filed testimony, which included one exhibit (Exhibit AJMM-17) that incorporated Confidential information. The Commission granted BP Alaska's request that exhibit AJMM-17 be treated asa confidential exhibit. tn order to obtain access to Exhibit AJMM-17, and any testimony concerning that exhibit, the undersigned agrees to maintain the Confidential Information (including Exhibit AJMM-17 and testimony concerning that exhibit) as confidential and not to communicate, transfer, disclose, discuss, refer to or in any manner make any of the Confidential Information known to any other person, individual, company, or entity. The undersigned shall not make a copy of the Confidential Information, in whole or in part, and shall not distribute, share, or provide the Confidential Information to any other person, individual, company, or entity. , The undersigned shall only use the Confidential Information in connection with this Proceeding and shall not use the information for any other purpose. The undersigned shall limit distribution of, or access to, the Confidential Information to its employees and attorneys that need to know the Confidential Information for purposes of this proceeding. JUN-14-96 FR] 9:30 ~NO~ 10 OGH F~× NO, 9072~i"' ~44 P, 03 The undersigned shall require each employee, agent, or representative (including counsel) who reviews the Confidential information to execute duplicate originals of this Confidentiality Agreement and shall forward the Executed originals to the Commission and the Prudhoe Bay Unit Secretary. The Commission or any Working Interest Owner in the Prudhoe Bay Unit may enforce the obligations contained in this Confidentiality Agreement against the undersigned. Accepted and Agreed to this/.~ day or.. (~~., 1996: Signature: SOUTHERN METHODIST UNIVERSITY EDWIN L. COX SCHOOL OF BUSINESS CARY M. MAGUIRE PROFESSOR OF OIL AND GAS MANAGEMENT DALLAS, TEXAS 75275-0333 ~.,. /'qo_(. ALASKA OIL AND GAS CONSERVATION COMMISSION TONY KNOWLE$, (~OVEF~NOi~ 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-14.,'33 FAX: (907) 276-7542 June 14, 1996 Dr. James L. Smith 10537 Beinhom Houston, TX 77024 Dear Dr. Smith: The Commission has received your signed Confidentiality Agreement covering Exhibit AJMM- 17. Enclosed for your review is a copy of said exhibit which as you have agreed, must remain confidential. Sincerely, Jack D. Hartz Petroleum Reservoir Engineer TONY KIVOWLE$, GOVERNOR OIL 3~X~ May 22. 1996 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 Mr. Paul Truebenbach. Assistant General Counsel Law Department Chevron U.S.A. Inc. P O Box 7643 San Francisco, CA 94120-7643 FAX: 415-894-1092 In the matters of: A Hearing To Review the Plan of Development and Operation and Other Agreements as They Affect Natural Gas Liquid (NGL) Throughput, Miscible Injectant (MI) Utilization and Ultimate Recovery From Prudhoe Bay; etc. Dear Mr. Tmebenbach: The Alaska Oil and Gas Conservation Commission has decided to ask an independent expert, Professor James L. Smith of Southern Methodist University, to present testimony before the Commission in the above-referenced matter on subjects that were addressed in the hearing that was recessed on April 24, 1996. Professor Smith advises us that he could more completely and helpfully inform the Commission on the issues before it if he were able to rely on certain documents that were produced, and appear to be subject to the protective order, in the ANS Royal _ty Litigation, Case No. IJU-77-847 Civil. While the Commission has statutory, powers to subpoena documents for examination at a hearing or investigation conducted by it, we would appreciate your assistance in expediting and simplifying the proceedings by agreeing to waive the confidentiality restrictions in the protective order to the extent of allowing Professor Smith to use and disclose the documents in question, for the purpose of giving testimony before the Commission in the above-referenced matter. The Commission is not aware of the identity or contents of the documents in question. We are therefore asking Professor Smith by copy of this letter to contact you directly with a list of the documents he proposes to use that were produced by Chewon U.S.A. Inc.("Chevron"). If Chevron agrees to waive the confidentiality restrictions for these documents as described above, would you please so indicate by your signature and date below and return this letter to the Commission along with a copy of Professor Smith's list of covered documents? Daviit,,,W. Johnstoi~' '~ Chairm cc: Professor Smith Addressees on Attached Service List Commissioner Agreed: Date: Printed Name and Title: 25618 TONY KNOWLE$, GOVERNOR May 22, 1996 ANCHORAGE, ALASKA $9501-3192 PHONE: (907) 279-1433 ~;7) 275-7542 Mr. Randall M. Ebner, Counsel Exxon Company U.S.A. P O Box 2180 Houston, TX 77252-2180 FAX: 713-656-4653 Re: In the matters of: A Hearing To Review the Plan of Development and Operation and Other Agreements as The), Affect Natural Gas Liquid (NGL) Throughput, Miscible Injectant (MI) Utilization and Ultimate Recovers.' From Prudhoe Bay; etc. Dear Mr. Ebner: The Alaska Oil and Gas Conservation Commission has decided to ask an independent expert, Professor James L. Smith of Southern Methodist University, to present testimony before the Commission in the above-referenced matter on subjects that were addressed in the hearing that was recessed on April 24, 1996. Professor Smith advises us that he could more completely and helpfully inform the Commission on the issues before it if he were able to rely on certain documents that were produced, and appear to be subject to the protective order, in the ANS Royalty Litigation, Case No. IJ'U-77-847 Civil. While the Commission has statutory powers to subpoena documents for examination at a hearing or investigation conducted by it, we would appreciate your assistance in expediting and simplifying the proceedings by agreeing to waive the confidentiality restrictions in the protective order to the extent of allowing Professor Smith to use and disclose the documents in question, for the purpose of giving testimony before the Commission in the above-referenced matter. The Commission is not aware of the identity or contents of the documents in question. We are therefore asking Professor Smith by copy of this letter to contact you clirecfly with a list of the documents he proposes to use that were produced by Exxon Company U.S.A. ("E~xon"). If Exxon agrees to waive the confidentiality restrictions for these documents as described above, would you please so indicate by your signature and date below and return this letter to the Commission along with a copy of Professor Smith's list of covered documents? Chairman ~ ~ ~ cc: Professor Smith Addressees on Attached Service List Tuckerman Babcock Commissioner Agreed: Printed Name and Tire: Date: 25619 TONY KNOWLES, GOVERNOR ALASKA OIL AND ~ ONSER¥~TION COM~ISSION May 22, 1996 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 27S-la33 FAX: (907) 276-7542 Ms. Marcia Davis BP Exploration (Alaska) Inc. P O Box 196612 Anchorage, AK 99519-6612 FAX: 907-564-4031 In the matters of: A Hearing To Review the Plan of Development and Operation and Other Agreements as They Affect Natural Gas Liquid (NGL) Throughput, Miscible Injectant (MI) Utilization and Ultimate Recovery From Prudhoe Bay; etc. Dear Ms. Davis: The Alaska Oil and Gas Conservation Commission has decided to ask an independent expert, Professor James L. Smith of Southern Methodist University, to present testimony before the Commission in the above-referenced matter on subjects that were addressed in the hearing that was recessed on April 24, 1996. Professor Smith advises us that he could more completely and helpfully inform the Commission on the issues before it if he were able to rely on certain documents that were produced, and appear to be subject to the protective order, in the ANS Royalty Litigation, Case No. IJ'U-77-847 CMl. While the Commission has statutory powers to subpoena documents for examination at a hearing or investigation conducted by it, we would appreciate your assistance in expediting and simplifying the proceedings by. agreeing to waive the confidentiality restrictions in the protective order to the extent of allowing Professor Smith to use and disclose the documents in question, for the purpose of giving testimony before the Commission in the above-referenced matter. The Commission is not aware of the identity or contents of the documents in question. We are therefore asking Professor Smith by copy of this letter to contact you directly with a list of the documents he proposes to use that were produced by BP Exploration (Alaska) Inc. ("BPXA'). If BPXA agrees to waive the confidentiality restrictions for these documents as described above, would you please so indicate by your signature and date below and return this letter to the Commission along with a copy of Professor Smith's list of covered documents? ,~D~~Thank ye ~. . cc: Professor Smith Addressees on Attached Service List Tuckerman Babcock Commissioner Agreed: Date: Printed Name and Tide: 25620 TONY KNOWLE$, GOVERNOR May 22, 1996 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 Mr. Colin C. Howard, Vice President and Chief Counsel ARCO Alaska, Inc. P O Box 100360 Anchorage, AK 99510-0360 FAX: 907-265-6998 Re: In the matters of: A Heating To Review thc Plan of Development and Operation and Other Agreements as The.,,' Affect Natural Gas Liquid (NGL) Throughput. Miscible Injectant (~MI) Utilization and Ultimate Recovery From Prudhoe Bay; etc. Dear M.r. Howard: The Alaska Oil and Gas Conservation Commission has decided to ask an independent expert, Professor James L. Smith of Southern Methodist University, to present testimony before the Commission in the above-referenced matter on subjects that were addressed in the hearing that was recessed on April 24, 1996. Professor Smith advises us that he could more completely and helpfully inform the Commission on the issues before it if he were able to rely on certain documents that were produced, and appear to be subject to the protective order, in the ANS Royally Litigation, Case No. IJU-77-847 Civil. While the Commission has statutory powers to subpoena documents for examination at a hearing or investigation conducted by it, we would appreciate your assistance in expediting and simplifying the proceedings by agreeing to waive the confidentialiw restrictions in the protective order to the extent of allowing Professor Smith to use and disclose the documents in question, for the purpose of giving testimony before the Commission in the above-referenced matter. The Commission is not aware of the identity or contents of the documents in question. We are therefore asking Professor Smith bv cop)' of this letter to contact you directly with a list of the documents he proposes to use that were produced bv ARCO Alaska, Inc. ("ARCO"). If ARCO agrees to waive the confidentiality restrictions for these documents as described above, would you please so indicate by your signature and date below and return this letter to the Commission along with a copy of Professor Smith's list of covered documents? Chairman cc: Professor Smith Addressees on Attached Service List Tuckerman Babcock Commissioner Agreed: Date: Printed Name and Title: 25621 TONY KNOWLES, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3!92 PHONE: (907) 279-1~33 FA,;<: (907) 276-7542 May 22, 1996 Re; In the matters of: A Hearing To Review the Plan of Development and Operation and Other Agreements as They Affect Natural Gas Liquid (NGL) Throughput, Miscible Injectant (MI) Utilization and Ultimate Recovery From Prudhoe Bay; etc. Dear Participant: The Alaska Oil and Gas Conservation Commission has decided to ask an independent expert, Professor James L. Smith of Southern Methodist University, to present testimony before the Commission in the above-referenced matter on subjects that were addressed in the hearing that was recessed on April 24, 1996. For this purpose, the Commission intends to reconvene the hearing shortly atSer Professor Smith's written testimony is available, unless all participants waive cross-examination. As with previous witnesses in this hearing, copies of the written testimony will be served on the participants and the participants will have the opportunity to cross-examine the witness. Participants will then have the opportunity to supplement their post-hearing briefs if desired. The date for reconvening the hearing will depend on how quickly Professor Smith is able to prepare his testimony. If possible, the Commission would like to hold the hearing by mid-June; however, this may prove to be overly optimistic. The purpose of this letter is to notify you of the Commission's intention to schedule the reconvening of the heating to take place as soon as practicable. Please' ~n~,rm the Commission of any unavoidable time conflicts or other factors that you wish to be considered in its scheduling decision. David W. J}~.sto Chairman ' Tuckerman Babcock Commissioner ti~Y-20-98 tiON 15:58 hNOI' 'SO OGN F~q× NO, @072~ S44 .P., O1 STATE OF ALASKA DEDARTMENT OF LAW CIVIL DIVISION OFFICE OF THE ATTORNEY GENERAL OIL, GAS & MINING SECTION 1031 W. 4th Avenue, Suite 200 Anchorage, AK 99B01~1994 Phone: (907) 269-5100 Our Fax Number: (907) 279-8644 (If unavailable, try (907) 278-7022 or (907) 276-3697) 1996 Depar~men~ of I.~w Office of Attorney Ge~re~ 3rd Judicial Distri~ Anchorage, Alaska FAeSrMILE _TRANSMITTAL PLEASE DELIVER THE FOLLOWING PAGES TO: LOCATION: FAX NUMBER: TOTAL NUMBER OF PAGES ~ INCLUDING COVEK LETTER. fi, >>> ' -~I ' Oil, Gas & Mining Seotion A~torney General' s Office, ~chorage RE: SUBJECT/PILE NUMBER: ~ ¥0~..D0 NOT.RECEIVE ALL_TKE..PAGES, OR F,A,~..ANY PROBLEMS WITH .THE FAX. PLEA~ GALL: Heli~a, Asha or Lory at (90?) 269-525g or 269-5254. :o STANDARD AGREEMENT FORM ~/a [ 021~1~ I 6. Alaska Business Llc~nse Numh~ Vendor 7. Depa~mant of ~ UivMon ' ~a~ O~ md Gas Comcrvadou Co.saLon, ad I ~a ,, ] heaafKer the Stoa. and B. Coniracto[ lames L. S~ ~raafter the Cont[aclor Mailing Address Street or P.O, Box 10537 B~n~ora Road, Houston, TX 77024 City State ZIP+4 ARTICLE I. ARTICLE 2, 2.1 2,2 2,3 . Appendices: Appendices rerar[ad iD in this contract and attached to it are considered pad uf il. Performance of Service: Appendix A (General Provisions), Articles 1 through 14, governs the performance of services under this contract. Appendix B sets forth the liability and insurance profisions of this contract. Appendix C sets fo~h the =erv]ce~ to be pedormad bv the contractor. ARTICLE 3, Period ~f Performance: ~e period et pe~nrmance fur this comracl bedim May. 18. t996 ., Bad ends ]~ly 31, 1996 ,, Considerations: ~ tull cuns{deTatiun o{ tim contractor's p~r[erman~e under ~is contrac% the State shall pay the contractor a sum not to exceed ~20,000,00 in eccordanc~ with lhe provisions of N)pendix D. When hill{ng the State, the contractor shall ~[~r to th~ Authority Number or the Agency Cunt[act Numar and send 1he hilling . Attention: D~vision of ~a ARTICLE 4. 4,1 4.2 10. Department of Alaska Oil and Gas Conservatiolt Commission Mailing Address 3001 Porcupine Drive, Anchorage, AK 99501-3120 Attention: David W. ~otmston, Chairman ................... 13. CERTIFLCATION: I certify that the facts herein and on suppDfling documents are correct, Name of Firm that thio voucher constitutes a leDel charge against funds and approprialTom cited, that Jara~s L. Snfilh, Ph.D. sufficient ~ds are emumbered to paV this ohligatio~ or that there is a sufficient balance I¥ re of Authorized Repr entail Date in the appropriation cited to cover this obligation. I am aware that to knowingly make Dr ~~ ~ altnw false entries or aReratTons Dna public record, or k~owinglV destroy, mutilate, . . .... suppress, conceal, remove Dr otherwise ~pair the variaiy, le~ihilit~ ~ availabiliLy ~f a ~ ..... public record constitutes tampering with public records punishable under AS 1 Typed or Printed Nme of Authorized RepresGnXative .820, O{l~er di~cipl~ary action may be taken up &o and including di~mi,sal, James L, . . Title Employer ID No, (EIN) or Priacip~ 35142-9235 .~. :.: :: ~..::. 8ignatu[a Df Head of Conlractin~ Agency Baa Uepmment/Division DaLe or designee ~l~s~ Oil and Gas Come.aden Co. salon Signatur, Df Project Dkec{or Typed or Printed Name David ~, ]o~ston m , m Typed or Printed Name of Projecl Director m . mm - - NOTICE: This contract has no effect until si! nad by the head of contracting agency or designee. 02-093 (03/94] 8AF.FRM MAY-20-96 NON A~cle 1, 1.1 15:59 '30 OGM FAX NO, 9072{' 344 P, 03 Lletlmt~ol~ In Ibis contract and appendices. "Project IgirecLor" or "Agency Head" or "Procurement Officer" me~ns tho parson who signs this contract on behalf of lbo Requesti~ AgD~cy and includes 8 stlcc~.~sor al guiSe[izod representative. !.2'State Comacfing Agea:y' or"depBdment" mean~ the agaru:y for which this COnlract L~ Lo 1~ par!armed and for which the Chagrin,n, Con~issioner or A, uthm'izad Designee aclad in a si!~inD 1his cord[att. Inspection and The. dep~rtm~nt may i~pecl, in the m~ner and at reasonablo times it COL-41derJ ~propriate, ali the contractor's facilities and activities under Lhis contract. The Cenl. racLQr shall rnal~e progress a~d othor reports Sn the manner en~l at the ~es the department reasonably [equires. ]9]sputes. Notwith=t~ding that th~$ contract is net subject Lo the grate procurement code., any di.~put= corter~ng a question ali fat arising under this contract which, is not disposed gE by mutual qraemeTrl shall b~ dacicled in accordance with ~,S :~lL36.b'20-6'32. Equal Employm.,t Opportunity. The contractor may not discriminate against any employee or applicant for employ~nL because al' ~ace, religion, color, natim~al origin, or because of a~e, physical h=dicap, sex, rnariLal s~atus, char]~es in mari~el ~tatos, preDnancy or parenLhood wren the reasonable demands of the p~L[oels) do net reqL]ire ~stinCtiOn on the basis of qe, physical hen~cap, ut, maTital status, chan~tes in marital status, pregnancy, or peren'~hoad. The contract[x shalL Lake affirmative sction to insure ~at the ~plicams ara considered for employment and that eml~lOy~es we I. realad during empley~nt without unlawful reoard Lo t'rmlr race, calm, lent]ion, nalional origin, ancestry, physical hand[Gap, a~, sex, changes in marital status, changes in marital status, pregnam:y or parenthood. This acticm must in=luria, bLAt need not be timiLed to, the f~llowin9: omployment, u~grading. damn:ion, trim~lar, recrui~ent a' racruitmem m;Ivert;sin9, layoff or &erm[L~ation, rate~ of pa,/or other forms of compensation, and ~,4acfian far uaining ir~luding apprenticeship. The contra:tm shall post in e~,~picuous places, available to employees and applicants for employment, n~ticas sertinlt out the previsions of this pa[agra,. 4.2The ~'-ontractor ~hall stale, in all soIMlation~ or advertbemenLs [or employees to work on State of AJaska contract jobs, the1 it is an equal o~erlunity employu and that al~ q,alified applkants will receive Co~sideration for emj~loyment wlthout regard to !ace. religion, color, national Cfi§in. ada, physical ~ndiCop, SOX, ma[itel statUS, changes in marital status, p'egnancy or parenthood. A.3The contractor ~hatl send to each labor union or representative o! workers with which the contractor has a collective b~rgaininll agreement or other contract or undersLandi,g a notice advising the labo[ union or workers' compensaLion representative O! the contractor's commitmenLs urtde[ thi:~ article and post copie~ al~ the no,ice in conspicuous places evaila'ole to all em]~loyees and applicants for employmmU. 4.4The contractor ~h¢l include Ihe provlsiet~s or this article in every contract, and s~all require the inclu*ion of the~e p[ovisiens in ev~ry contract entered ifllo by ~ny of its subcontractor.% so that those provisions will be b~nding upon each subco~tractor. For the purpose of including ~ho~e p~ovi~ions in any color,act or .~ubcontracL. as contract. "contractor" 8nd "subcentracLor" may be chengect to reflect appropriately the narna or designation ¢ the pa[ties of the contract or subcontract. 4,f, The contractor shall cooperate fully with SLate effor~ which seek Lo deal with the prebiem of unlawful discrimination, and with all other Stale efforts tO guarantee employmenL ,eraotices under this contract, an~ promptly comply wlth all requests and directions from the State Commission for Human Rights or an,/Df its officers or rela~ing to prevention of discrirninatory employment pr~ctioes. 4,8 Fu{l cooperation in paragraph 4.5 i~cludas, but is not limitod to. being a wilness in any proceeding involving questions of unlawful disc[imination if that is requested by any of!iciM or a~ency of the SLate of Alaska', pa[milLing employaos of the contractor to bo witnesses or COmplainants in any proceeding involving questions o! unlawfut requoslod hy any official or agency of the State o! Aleslta; participating in meetings; submitting puiodic reports on the on. Ual employment aspects of present and futura employment; asslstir~g inspepLiQn e( the eonlractor's facilities; and promptly curnplyi~g with all State directives considere~ essential by any el'lice Dr agency Of the StaLe of Alaska to insure compliance with all federal and State laws, regulador~s, and policies pertaining3 to Lhe prevention o! discriminatory employment practices. 4,7 Failure to perform under thi~ article constitutes a m~ta~ial breach of the contract. Article ~. Terminatien. The P[~jept Director, by wri'dBn notice, may. terminate this contract i, whMa or in part, wh~[~ It is in the best interest of the State, The State is liable only fo~ payment ir~ accordance with tho paymunt provisions of this contract for ~erv~c,~.~ rendered before the at!active date of terminatior~ Article 8. Ne AlsiDnment Dt Delegation. The contracLor m~y not assign or ~elegate this cant[ecl, or any pert of iL, or 8ny right to any of the money to be paid un,er it, except witt~ the written con~eJ~l ef the Project Oirecior ~nd the Agency Eaad. Article 7.. :2.1 '2.2 ArtMa 3. 3,1 Article ~. 4.1 Article 7. No Ada[tionalWork or Material. No claim for ~dditional ~ervices, not apecificaily provided in this contract, performed or furnished by the cent[ac tar, wilL be allowed, nor may the contractor do ~ny work er F~rnf~h any malarial not cove[ad by' the contract ~fllo~s the work at material is ordered in writing by the Project Director an~ approved by the Agency Head. A~tic[e a. IndependrntCantra~er, The contraCtor ~nd any a~ents an~ employees of the contractor 8c[ in an independent capacity and are not Of[iCefS er employees or Dgent~ Of the SLate in the performance of Lhi~ contract, Adicle 9. Pa~entolfBxe4. As a cen~idDn of peris[manta of this control, the contractor sh~ll pay all federal, State, and local laxes incurred by ~o comracLor an~ shall require ~e~r payment by a~y Subcontractor or any p~rsons in ~e gerformance of this co,lract. Salisfactory performance of thi~ paragraph b a condition ~recadaflt to payment by the State undo[ this conLract ArticlelO. Ownership of Doeument~. ~ll design~, drawings, specifications, o¢tas, artwork, and other work developed in ~he performance of thi~ egremmant arb poduce6 for hire and remain the sole property of the Stale of Alaska and · ay be used by tl~e SXate for any o~her purpose without additi,nal compensation ]0 the contractor. The contractor agrees net Io assert ~ny riDh~ and not LO establish any claim under the des!on patenL or c~pyfiahl law~. the contra~to~, for a period of three years afLer final p~men[ under this cenbacL aD[aaA to furnish and prevido acces~ to all ret~i~ed materials aL the request el Pro[ecl Di[ector. Unless otherwise directed by the Project Director, the contractor may [etain copies of all tho materials. A~ticle11. governln9 Law. Thi~ contract is Dove[ned by the laws of the State of Alaska. All actim~s concornln9 this contract shell be brought iH the Superior Court of t~e State of Alaska. A~tlete12. Co~flletlng Provisions, Unles~ sracirically gmen~d ~nd approved by the daparlmenL of L~w the General Provisions of Ibis contract supersede a~y previ~ions in other appendices, A~tclel~. DHMals NottQ Bang!lC Contractor must comply with ail applicable federal or Stele l~ws ragu[eking ethical conduct of public officers and Arti~lela. Cavenant Against Co~LtlnDent Fee4. The contractor warrant~ 1hat no person or aD~ncy has been employed or retained to solicit er secure ~his contraCt UpQn an agreement ~r undorstandin9 for a conxf~isslon, percentage, contiegent fee. or brokerage except om¢ofees or age,cies mainleined by ~he cAIitractDr for the purpose oi securing business. For ~e bleach or ~iolmio~ of thi~ wara~y, the State ~ay terminat~ this c~ntract without liabilily or in its discretion deduct [rom the conlract price or consideration the full amount ef ibc co~ission, percentage, brokerage, er contingent SAF.FRM BACK 02.093 M Y-20-gB MON 6:00 00GM Fi X NO, @072¥ 344 P, 04 APPENDIX INDEMNITY AN D INSUI~ANCE A¢llcle 1. [ndemnillcallon The contractor sl3ztl lnclemnJ/y, save he. rmless and defend Ihs Slale~ Its olficers, agents sncl employees Ircm all liability, in- clucllng cos~,s &ncI expenses, for ~11 Dc[ions or claims resulting trom Injuries or damages sustained by any person or ~)roperty mg dlrsctly or Indirectly aS a result Of ar',y error, omission or negligent s~! of the contractor, sul~contractor or anyone ~tr~¢tiy or ii, directly employed by them in the DerformAn0e ot this co~tract. All actlon~ or claims including costs ,,nd e. xpanse_s resulting fro~ ttlj~Jrie~ er damages 8~lStai~ad by any person or prOl3arty aris- lng rqreclly Ot Indirectly from ~he cor~tFaclor'~ peHormanoe o[ tills ¢ontrael. which are caused by the J(31n[ nggliggnce of the ~n(~ the contractor shall be apportioned orr a r.~lTIDer~tive fault EaSlS, Any such Joint n~<jligence on the p3rt ~f the ,,tale must be a direct ~e,~ult of acllve Invotvement by the M~¥-20-96 MON 16:00 P~NO!" 20 OGM FAX NO, 90721 S44 P, 05 Services to lie Performed by the Contractor Article I, The Contractor, i~, t~e person of James L. Smith. shall serve as a wimess and provide testimony, usit~g his independent professional judgment a~d expertise, in pToceedi~gs before the Alaska Oil and Gas Conseawation Commission ('~2ommission") concenfiag the Pmdhoe Oil Pool. The Contractor shall submit va'k-ten testimony and shall appear at a Commission heating to su.~marize the testimony and to xes'pond to cross-ex~mluation by paxticipants ia the proceeding and to questions from the Commission. In preparing his testimony the Contractor shall review pertinent testimony= exla'bits, memoranda and other documents fxom the record of the Comm{~sion proceedings. ]tte general subject matte~ of the testi.m..o~,y shall be ~o assist the Comm~sion in reaching an informed conclusion on the £ollowhg questions; in ~qo doing the Contractor will evaluate and comment on pertkmt elements of the working interest owners~ testimony and contentions regarding the.ac qaestions: Are the existing prope~y and contractual arnngements in effect fox the Pmdhoe Oil Pool impeding fl~e greater ultimate ~ecovery of oil and gas, contn~buting to waste, or impairing correlative rights? Is more complete integration of interests ia the tkxt&oe Oil Pool -~ such as combining the interests ia the Oil Rim Paxtlc~pating Area and the Gas Cap Pm'ficJpating. Area to pray/de for unitary eqaity participation in the pool -- necessary or appropriate to px'event waste, ensure the ga'eater ultime recovery oll and gas, m protect correlative In the absence ofvolunt~3' action to integrate the interests ia the lhxt~oe Oil Pool more completely, should the Commission order eompxflsory ardtizafion unde~ AS 31.05.1107 Specific ~smes wklfin these subjects to be addressed by the Contractor ~elude: 1. Explain the concepta and pml>oses oftmitizafion mxd unit as they apply to oil and gas properties or rese~voks. 2. Does the existence of sepame participating areas for the oil tim and gas cap with different equity participations, or do other features of the existing contractual and property a~x~gement~, mean that the Pmdhoe 0~1 Pool ia not xmifized, or is not completely or not perfectly urfitized? 3. To what degree do the e~sting property and contxactual arrangements for MAY-20-gB MON 1B:O1 ANO!' SO OOM FAX NO, g072~' ~44 P, 06 thc Pmdhoc Oil Pool ~ the purposes of unitization? 4. How si~ificant would be the costs, uncertainty, '~malincentives,' and other problems that working interest ox~ters claim ~vould result from compulsory unitization proceedings? 5. Are there si~ificant development or operational decisions still to occur in the future that could be adversely affected by features of'the existing contractual and property mxangements for the lhudhoe Ch] Pool? 6. Has the two participating-area structure resulted in benefits for developing the Prudhoe Oil Pool that would not have occurred otherwise? 7. To what degree would changes in the contractual and propexxy arfangeme~at s for the Pntdhoe Oil Poo! such as con~bining the two participating areas reduce or eliminate the incentives for conxpetitive, as distinguished fxom cooperatkve, behax4or on the part ofthe worldng interest owners or othm~vise reduce or elirai~ate disputes among them? ~. Are there altm~aatives to con~pulsory unitization that could be employed to reduce or eliminate incentives fo~ compet~th~e behavior on the pax~ of the working interest ov~xers or othexwise reduce or eliminate disputes among them? 9. Has the two-pa~tkipating axes structure or other features of the contractual mad property m:rangements for the Ihaadhoe Oil Pool resulted in any delay of or failure to ptu'sue any development project or impaked any operation? The Commission may request that the Contractor address additional questions. Article 2. Tire Contractor agrees to closely monitor costs inct~ed and fees to be charged for services provided under this agreement and to almt the project director before such costs and fees exceed the authorized contract amotmt. In the event the Contractor fails to notify the project director prior to inca~g a cost ovemm, the Contractor shall assume liability for. any excess costs or fees incuxxed. Article 3, Work may begin on the date sho~xa in Article 3 ofthe Standard Agreement Form ('3?efiod of Performance"), and that date may precede the date of execution of this agreement because immediate peffonuance is requked to serve the best interests ofthe state. ~IAY-20-96 ~ION 16:01 ~FIO~" JO OG~I FAX F~O, 9072~ 344 P, 07 APPENDLX D Consideration Article 1. Fees and Costs. Article 1.1. In dill confideration of the Contractor's perfomaaace under this contract, the department shall pay the Contractor at the rate of $250 per hour for the services o£lames L. Smith. The Contractor shall not bill for travel time except for time actually spent performing services as descn~bed ia Appen~x C wkile i~ travel status. Article 1.2. The depaxtment shall reimbm'se the Contractor on a monthly or other periodic basis for actual md reasonable out of-pocket expenses inctttxed trader this agreement by the Contractor as follows: Servie.e or Exp ett~ .Charge/Rat~ Reproduction $0.10 per page or at cost as invoiced by 3rd-pray service Overnight deliveries (e.g,, FedEx, DHL) At cost as J~voieed Postage At cost Telephone At cost as invoiced FAX $0.10 per page to send plus telephone toll charge, or at cost as i~voieed by 3rd- pa~ service Tzavel and Lodging Hotel Ak Fare Cab Fare Meab Not to exceed $150.00/aight vdthout Project Director's authorization Not to exceed coach class At cos~t as invoiced Not to exceed $42.00/day Reimbmsemeat for any ofthe above shall be limited to actual costs. No rekabursement shall be made for any administrative sarcharge, or other overhead recovea3r fee. Article 1.3, The total sum expended under this agreement shall not exceed $20,000.00, j~eluding out-of-pocket expenses. MC, Y-20-96 MON 116:02 PiNO.~" 30 OGM Article 2, ~i)!!mg t'rocc,mr,~s F~× NO, 9072( ]44 P, 08 Axtiele 2,1. The Coxxt~actor shallbill the department on at least a monthly basis and shall submit allb~llings within 30 days ofthe end ofthe monthly bi!ling period, Article 2.2. The Contraoto 's billing statements shall be iten~.ed to show the time spent, a task description, ,'md the date that tasks were performed. Billing aatements shall also include an itemization of costs and copies of invoices for travel and other sigaificant om-of-pocket expenses, (~002 Msirmg Atl~ts Street er P,O. aox AlU'iCl,; I. ~-1 ?.;,3' AilTleLE ~, tn MI cnnsltlefllt~ el the cflntmetar's purloin under ~ cgnlll~ the Stata shaft pay the canf~Gtm* l aura stet tn greed t20,QOO,OQ. _k leem'detwe with ~s pmlstons of AFI)et~(D- When 1~l~ng thg StYe, tb co~trm~r ~sll ~eler to the A~MI~Iy Number n~ I!1e ~ Cgnuact Nue~er mi ~eml tl~ billing 13. hemiftsr the Ctat~actor ZIP+4 e2~93 (o3194) , ,~ and rr~edtla~e TiTle NOTJCl~ Tltll pntract has no dlfft tllTt~ slpad bT dsc Iwld of ioetr.ting ugeileY er bdgm. Article Article Article Article APPENDIX A {, GENERAL PROVISIONS 1. Definitions. 1.1 In this contract and appendices, "Project Director" or "Agency Head" or "Procurement Officer" means the person who signs this contract on behalf of the Requesting Agency and includes a successo~ or authorized representative. 1.2 "State Contracting Agency" or "department" means the agency for which this contract is to be performed and for which the Chairman, Commissioner or Authorized Designee acted in a signing this contract. 2. Inspection and Reports. 2.1 Tim department may inspect, in the manner and at reasonable times it considers appropriate, all the contractor's facilities and activities under this contract. 2.2 The contractor shall make progress and other reports in the manner and at the times the department reasonably requires. 3. Disputes. 3.1 Notwithstanding that this contract is not subject to the state procurement code, any dispute concerning a question of fact arising under this contract which is not disposed of by mutual agreement shall he decided in accordance with AS 36.30.62Q-632. 4. Equal Employment Opportunity. 4.1 The contractor may not discriminate against any employee or applicant for employment because of race, religion, color, national origin, or because of age, physical handicap, sex, marital status, changes in marital status, pregnancy or parenthood when the reasonable demands of the position(s) do not require distinction on the basis of age, physical handicap, sex, marital status, changes in marital status, pregnancy, or parenthood. The contractor shall take affirmative action to insure that the applicants are considered for employment and that employees are treated during employment without unlawful regard to their race, color, religion, national origin, ancestry, physical handicap, age, sex, marital status, changes in marital status, changes in marital status, pregnancy or parenthood. This action must include, but need not be limited to, the following: employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training including apprenticeship. The contractor shall post in conspicuous places, available to employees and applicants for employment, notices setting out the provisions of this paragraph. 4.2 The contractor shall state, in all solicitations or advertisements for employees to work on State of Alaska contract jobs, that it is an equal opportunity employer and that all qualified applicants will receive consideration for employment without regard to race, religion, color, national origin, age, physical handicap, sex, marital status, changes in marital status, pregnancy or parenthood. 4.3 The contractor shall send to each labor union or representative of workers with which the contractor has a collective bargaining agreement or other contract or understanding a notice advising the labor union or workers' compensation representative of the contractor's commitments under this article and post copies of the notice in conspicuous places available to all employees and applicants for employment. 4.4 The contractor shall include the provisions of this article in every contract, and shall require the inclusion of these provisions in every contract entered into by any of its subcontractors, so that those provisions will be binding upon each subcontractor. For the purpose of including those provisions in any contract or subcontract, as required by this contract, "contractor" and "subcontractor" may be changed to reflect appropriately the name or designation of the parties of the contract or subcontract. 4.5 The contractor shall cooperate fully with State efforts which seek to deal with the problem of unlawful discrimination, and with all other State efforts to guarantee fair employment practices under this contract, and promptly comply with all requests and directions from the State Commission for Human Rights or any of its officers or agents relating to prevention of discriminatory employment practices. 4.6 Full cooperation in paragraph 4.5 includes, but is not limited to, being a witness in any proceeding involving questions of unlawful discrimination if that is requested by any official or agency of the State of Alaska; permitting employees of the contractor to be witnesses or complainants in any proceeding involving questions of unlawful discrimination, if that is requested by any official or agency of the State of Alaska; participating in meetings; submitting periodic reports on the equal employment aspects of present and future employment; assisting inspection of the contractor's facilities; and promptly complying with all State directives considered essential by any office or agency of the State of Alaska to insure compliance with all federal and State laws, regulations, and policies pertaining to the prevention of discriminatory employment practices. 4.7 Failure to perform under this article constitutes a material breach of the contract. Article 5. Termination. The Project Director, by written notice, may terminate this contract, in whole or in part, when it is in the best interest of the State. The State is liable only for payment in accordance with the payment provisions of this contract for services rendered before the effective date of termination. Article 6. No Assignment or Delegation. The contractor may not assign or delegate this contract, or any part of it, or any right to any of the money to be paid under it, except with the written consent of the Project Director and the Agency Head. Article 7. No Additional Work or Material. No claim for additional services, not specifically provided in this contract, performed or furnished by the contractor, will be allowed, nor may the contractor do any work or furnish any material not covered by the contract unless the work or material is ordered in writing by the Project Director and approved by the Agency Head. Article 8. Independent Contractor. The contractor and any agents and employees of the contractor act in an independent capacity and are not officers or employees or agents of the State in the performance of this contract. Article 9. Payment ef Taxes. As a condition of performance of this contract, the contractor shall pay all federal, State, and local taxes incurred by the contractor and shall require their payment by any Subcontractor or any other persons in the performance of this contract. Satisfactory performance of this paragraph is a condition precedent to payment by the State under this contract. Article 10. Ownership of Documents. All designs, drawings, specifications, notes, artwork, and other work developed in the performance of this agreement are produced for hire and remain the sole property of the State of Alaska and may be used by the State for any other purpose without additional compensation to the contractor. The contractor agrees not to assert any rights and not to establish any claim under the design patent or copyright laws. The contractor, for a period of three years after final payment under this contract, agrees to furnish and provide access to all retained materials at the request of the Project Director. Unless otherwise directed by the Project Director, the contractor may retain copies of all the materials. Article 11. Governing Law. This contract is governed by the laws of the State of Alaska. All actions concerning this contract shall be brought in the Superior Court of the State of Alaska. Article 12. Conflicting Provisiens, Unless specifically amended and approved by the department of Law the General Provisions of this contract supersede any provisions in other appendices. Article 13. Officials Not to Benefit. Contractor must comply with all applicable federal or State laws regulating ethical conduct of public officers and employees. Article 14. Covenant Against Contingent Fees. The contractor warrants that no person or agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, contingent fee, or brokerage except employees or agencies maintained by the contractor for the purpose of securing business. For the breach or violation of this warranty, the State maT/terminate this contract without liability or in its discretion deduct from the contract price or consideration the full amount of the commission, percentage, brokerage, or contingent fee. SAF.FRM BACK 02-093 (03~94) APPENDIX B' INDEMNITY AND INSURANCE Arllcle 1. Indemniflcalion The contractor shall Inclemnlfy, salve harmless and defend the state, its officers, agents and employees from all liability, in- cluding costs and expenses, for all actions or claims resulting from Injuries or damages sustained by any person or I~roperty aris- ing directly or m~irectly as a result of any error, omission or negligent act of the contractor, subcontractor or anyone clirectiy or indirectly eml3toyed by them in the performance gl this contract. All actions or claims including costs and expenses resulting from Injuries or damages sustained by any pemon or property aris- ing directly or indirectly from the contractor's performanoe o! this contraot which ara caused by the Joint negligence of the state ancl the contractor ~hall be -pportioned on a comparative fault basis. Any such joint negligence on the part of the =tate must be a direct result of active Involvement by the state. APPENDIX C Services to Be Performed by the Contractor Article 1, The Contractor, in the person of James L. Smith, shall serve as a witness and provide testimony, using his independent professional judgment and expertise, in proceedings before the Alaska Oil and Gas Conservation Commi.qsion ('~2ommi.qsion") concerning the Pludhoe Oil Pool The Contractor shall submit written testimony and shall appear at a Commi.qsion hearing to summarize the testimony and to respond to cross-examination by participants in the proceeding and to questions from the Commi.qsion. In preparing his testimony the Contractor shall review pertinent testimony, exhibits, memoranda and other documents from the record of the Commission proceedings. The general subject matter of the testimony shall be to assist the Commission in reaching an informed conclusion on the following questions; in so doing the Contractor will evaluate and comment on pertinent elements of the working interest owners' testimony and contentions regarding these questions: Are the existing property and contractual arrangements in effect for the Pmdhoe Oil Pool impeding the greater ultimate recovery of oil and gas, contributing to waste, or impairing correlative rights? Is more complete integration of interests in the Pmdhoe Oil Pool -- such as combining the interests in the Oil Rim Participating Area and the Gas Cap Participating Area to provide for unitary equity participation in the pool -- necessary or appropriate to prevent waste, ensure the greater ultimate recovery oil and gas, or protect correlative rights? In the absence of voluntary action to integrate the interests in the Pmdhoe Oil Pool more completely, should the Commission order compulsory unitization under AS 31.05.1107 Specific issues within these subjects to be addressed by the Contractor include: 1. Explain the concepts and purposes ofunitization and unit as they apply to oil and gas properties or reservoirs. 2. Does the existence of separate participating areas for the oil rim and gas cap with different equity participations, or do other features of the existing contractual and property arrangements, mean that the Pmdhoe Oil Pool is not unitized, or is not completely or not perfectly unitized? 3. To what degree do the existing property and contractual arrangements for the Pmdhoe Oil Pool fulfill the purposes of unitization? 4. How si~ificant would be the costs, uncertainty, 'h~alincentives," and other problems that working interest owners claim would result from compulsory unitization proceedings7 5. Are there si,~tmificant development or operational decisions still to occur in the future that could be adversely affected by features of the existing contractual and property arrangements for the Pmdhoe Oil Pool? 6. Has the two participating-area structure resulted in benefits for developing the Pmdhoe Oil Pool that would not have occurred othexwise? 7. To what degree would changes in the contractual and property arrangements for the Pmdhoe Oil Pool such as combining the two participating areas reduce or eliminate the incentives for competitive, as distinguished from cooperative, behavior on the part of the working interest owners or otherwise reduce or eliminate disputes among them7 8. Are there alternatives to compulsory unitization that could be employed to reduce or eliminate incentives for competitive behavior on the part of the working interest owners or otherwise reduce or eliminate disputes among them? 9. Has the two-participating area structure or other features of the contractual and property arrangements for the Pmdhoe Oil Pool resulted in any delay of or failure to pursue any development project or impaired any operation? The Commission may request that the Contractor address additional questions. Article 2. The Contractor agrees to closely monitor costs incurred and fees to be charged for services provided under this agreement and to alert the project director before such costs and fees exceed the authorized contract amount. In the event the Contractor fails to notify the project director prior to incurring a cost ovemm, the Contractor shall assume liability for any excess costs or fees incurred. Article 3. Work may begin on the date shown in Article 3 of the Standard Agreement Form ("Period of Performonce"), and that date may precede the date of execution of this agreement because immediate performance is required to serve the best interests of the state. APPENDIX D Consideration Article 1. Fees and Costs. Article 1.1. In full consideration of the Contractor' s performance under this contract, the department shall pay the Contractor at the rate of $250 per hour for the services of James L. Smith. The Contractor shall not bill for travel time except for time actually spent performing services as described in Appendix C while in travel stares. Article 1.2. The department shall reimburse the Contractor on a monthly or other periodic basis for actual and reasonable out of-pocket expenses incurred under this agreement by the Contractor as follows: $~rvice or Ex-pen$O Charge/Rate Reproduction $0.10 per page or at cost as invoiced by 3rd-Party service Ovemiglit deliveries (e.g., FedEx, DHL) At cost as invoiced Postage At cost Telephone At cost as invoiced FAX $0.10 per page to send plus telephone toll charge, or at cost as invoiced by 3rd- party service Travel and Lodging Hotel Air Fare Cab Fare Meals Not to exceed $150.00/night without Project Director's authorization Not to exceed coach class At cost as invoiced Not to exceed $42.00/day Reimbursement for any of the above shall be limited to actual costs. No reimbursement shall be made for any administrative surcharge, or other overhead recovery fee. Article 1.3. The total sum expended under this agreement shall not exceed $20,000.00, including out-of-pocket expenses. Article 2. Billine Procedures Article 2.1. The Contractor shall bill the department on at least a monthly basis and shall submit all billings within 30 days ofthe end of the monthly billing period. Article 2.2. The Contractor's billing statements shall be iterni?ed to show the _time spent, a task description, and the date that tasks were performed. Billing statements shall also include an itemi?ation of costs and copies of invoices for travel and other si,%ynificant out-of-pocket expenses. TONY KNOWLE$, GOVERNOR ALSS~& OIL ~~ CONSERVATION 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 May 22, 1996 Dr. James L. Smith 10537 Beinhorn Rd. Houston, Texas 77024 Dear Dr. Smith: This letter provides supplementary instructions concerning the services to be performed under your contract with the Alaska Oil and Gas Conservation Commission. First, please include in your written testimony a statement of your pertinent professional qualifications. Second, to the extent your review of documents includes Conservation Order 360 (whether in its original or revised form), you should use Conservation Order 360 only for general background purposes and should not rely on it as establishing particular facts or conclusions, in order to ensure that your analysis and judgment remain independent of the Commission's. Chairmah...~~ / Tuckerman Babcock Commissioner ~Y-20-98 MON 15:58 '/13 46~ J. 8ou ,'~,L~.51.NU.N~ {,'""~ A~O 0~1t F~ NO, STANDARD AGREEMENT FORM "44 P. O2 i iii 10537 ~e~ Ro~, ~ston, ~ ~ AIiTIGtE I. Appa~dTces: Appe,dlcu lefannd to h, this contract aM altached to It ~e cm~id,,md pad Q( il, ZIP+4 AIlTI~LE i, 2.1 l-2 ~3 ARTICLE l"~od Al Perfeiman~ The period of peffemnce br this Cml lmg'm. Ma..v 18_ 1 ~)6 en~,,.lulv 3 t, _1~96 ,~ , AnTICLE 4.1 02-093 (D3)94] 8AF.FRlVL // 3?_ /$'--1 z~ - SOUTHERN METH O D I ST UNIVERSITY James L. S~nith RECEIVED 1 G 1996 ~ 0ii & Ga~ Con~. Com~ssiofl Anchorage Cary M. Maguire Professor of Oil and Gas Management May 9, 1996 David W. Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 Dear Mr. Johnston: COMM .~ ,COMM RES ENG ~ ~ SR ENG NRO iS ( EOL _ GEOLAS~T" 8tA'T' TECH TECH It was a pleasure to meet with you and Mr. Norton during my recent visit in Anchorage. I hope that our discussions of the Prudhoe Bay Unit were helpful. The problems raised by the existence of dual Participating areas are notable for their potential economic si~ificance as well as for their difficulty. The situation can only benefit from the type of careful review that you have been conducting. An updated copy of my resume is enclosed. If you should want further assistance in this matter, please contact me. Sincerely, James L Smith encl. cc: J. David Norton Edwin L. Cox School of Business PO Box 750333 Dallas TX 75275-0333 214-768-3158 Fax 214-768-4:099 E-mail: .jsmithm'nail.cox.smu.edu