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Home My WebLink AboutCO 205.r' Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. C~,, (~) ~-- 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: ROBIN~ Scanning Preparation BY; ROBIN ~ Production Scanning Stage I PAGE COUNT FROM SCANNED DOCUMENT: ~"( O PAGE COUNT MATCHES NUMBER iN SCANNING PREPARATION: _..YES NO Stage 2 IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: ~ YES ~ NO 'ROBIN" DATE: '~'~ /S/"~~ BY: ~) MARIA (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 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSIO~ 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Re.. THE APPLICATION OF CONOCO ) INC. requesting an order ) approving a waterflood ) project for the Milne Point ) Unit in the Kuparuk River ) Oil Pool and Field. ) Conservation Order No. 205 Kuparuk River Field Kuparuk River Oil Pool October 9, 1984 IT APPEARING THAT: · Conoco Inc., by letter and documents dated August 15, 1984, and September 18, 1984, requested the Alaska Oil and Gas Conservation Commission to approve the implemen- tation of a waterflood project for the Kuparuk River Oil Pool within the Milne Point Unit, a part of the Kuparuk River Field. · Notice of the application was published in the Anchorage Times on September 27, 1984. 3. There were no protests to the application. FINDINGS: 1. · · A waterflood project for the Kuparuk River Unit in the Kuparuk River Oil Pool and Field was approved on June 14, 1984. The Kuparuk River Oil Pool and Field has been defined to include the area of the Milne Point Unit. The application for additional recovery pertaining to the Milne Point Unit waterflood project filed by Conoco Inc. for the Kuparuk River Oil Pool contains all of the necessary data required by 20 AAC 25.400. · · Primary recovery from the Milne Point Unit portion of the Kuparuk River Oil Pool is estimated to be 10 percent of the original oil-in-place. Primary plus secondary oil recovery is expected to be 27 percent of the original oil-in-place or 53 million barrels of stock tank oil. Conservation Or~'~ ~ No. 205 Page 2 October 9, 1984 , · · · Rule 3 of Conservation Order No. 173 provides for one well per governmental quarter section. Increased well density may be required to recover the maximum amount of oil in areas of the Kuparuk River Oil Pool. Areas of the Kuparuk River Oil Pool may require a production/injection well density of one well per 40 acres to provide the flexibility needed for a effective waterflood project. Correlative rights will be protected and there will be no waste in a 40 acre spacing pattern for the Milne Point Unit. The Alaska Oil and Gas Conservation Commission should have administrative power to approve modifications to the Milne Point Unit waterflood project. CONCLUSION: The planned Milne Point Unit waterflood project will result in the recovery of significantly more oil, correlative rights will be protected and there will be no waste of hydrocar- bons. NOW, THEREFORE, IT IS ORDERED THAT the Milne Point Unit water- flood project is approved for the area described as follows: T13N, R10E, U.M. S~ Section 1, Sections 2, 3, 4, 9, 10, 11, 12, 13, 14, 15, N~, SEt and E~ SWt Section 23, Sections 24 and 25, and E~ NEt Section 26. T13N, RllE, U.M. S~ S~ Section 6, Section 7, SWt and S~ NWl Section 8, SWt, S~ SEt, SWt NWl, N~ NWl and NWl NEt Section 18, Section 19, and NWl NWl, S~ NWl, SWt, W~ SE¼ and SEt SEt Section 20. Rule 1. Well Spacing. Rule 3 of Conservation Order No. 173 is hereby amended by adding the following sentence: However, in the area described in Conservation Order No. 205, except for those governmental quarter sections adjacent to the Milne Point Unit boundary, four wells may be drilled per govern- mental quarter section. Conservation 0~"I r No. 205 Page 3 October 9, 1984 Rule 2. Administrative Action. The Alaska Oil and Gas Conservation Commission may, by administrative action, make changes and approve operations that will enhance the efficiency of the Milne Point Unit waterflood project. Rule 3. Milne Point Unit Waterflood Surveillance Program. The Unit Operator will submit an annual report to the Commission on the Milne Point Unit waterflood. The report will be submitted by April 1 of each year for the period ending December 31 and will contain the following information: (a) A tabulation of all pertinent reservoir pressure and injection pressure data on wells in the waterflood permits. (b) A tabulation of all production logs, injection well surveys, and injection well performance data. (c) Produced fluid volumes (oil, gas, and water) and water injection volumes reported by month and on a cumulative basis. Rule 4. Infectivity Profiles. An injection profile survey will be obtained on each injection well during the first nine months of sustained injec- tion using a quantitative method. Follow-up surveys will be performed on a rotating basis such that one-third of the total number of injection wells are surveyed during each calendar year. The completed injection surveys will be filed with the Commission within 90 days after performing the survey. DONE at Anchorage, Alaska and dated OcO;~ker 9, 1984. C ~ Ch~tte~ ,~ C~aifman Alaska Oil and Gas Conservation Co~ission Harry W. K~gler, 'CommiSsioner Alaska Oil' and Gas Co~fservation Commission Lo'finie C. Smith'% Commissioner Alaska Oil and Gas Conservation Commission H. D. Haley Manager of Alaskan Operations September 18, 1984 Mr. C. V. Chatterton, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 RE: Milne Point Unit - Kuparuk River Field Fullscale Waterflood Application Dear Mr. Chatterton: Conoco hereby requests a Conservation Order to allow the spacing within the boundary of the Milne Point Unit to be changed to 40 acres or four wells per governmental quarter section. This is requested in conjunc- tion with the approval of the Waterflood Application. It is believed that 40-acre spacing may be necessary to properly develop certain areas of the Milne Point Unit for maximum recovery of the hydrocarbon reserves. Should you have any questions regarding this matter, please contact Rogers Francis or Randy Darr of this office at 279-0611. Yours very truly, Manager of Alaskan Operations RLD/kr RECEIVED Alaska OJJ & Gas Cons. Cornmlss[orl Anchorage H. D. Haley Manager of Alaskan Operations August 15, 1984 Conoco Inc. 2525 C Street Suite 100 Anchorage, AK 99503 Mr. C. V. Chatterton, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 RE: Milne Point Unit - Kuparuk River Field Fullfield Waterflood P.rojec~t_.A~plication Dear Mr. Chatterton: Pursuant to the provisions of 20 AAC 25.400, Conoco Inc., on behalf of the Milne Point Unit Working Interest Owners, hereby applies for the approval of the Alaska Oil and Gas Conservation Commission to implement a fullfield waterflood project for the Milne Point Unit in the Kuparuk River Oil Field. Copies of this application have been sent to ali. interested lease holders listed on Exhibit 1 by registered mail with return receipt requested. Copies of these receipts will be forwarded to the Commission when available. Five... copies of this application have been included for your use. , "'"'ii > i,, Representatives of Conoco and the other Working Interest Owners wi].], be available to discuss these matters or provide additional information at your convenience. Yours very truly, Manager of Alaskan Operations RD/km cc: MPU Working Interest Owners R. J. Francis R. L. Dart J. T. Dosch MILNE POINT UNIT Kuparuk River Field Waterflood Project Application For Additional Recovery Pursuant to 20 AAC 25.400, Conoco Inc., as Unit Operator, on behalf of the Milne Point Unit Working Interest Owners, hereinafter referred to as the MPU Owners, request approval to waterflood the Milne Point Unit of the Kuparuk River Oil Field. Waterflooding will increase the expected oil recovery from an estimated 10% OOIP to an expected primary plus secondary oil recovery of approximately 27% OOIP. Based on current reservoir interpretation, full scale waterflooding is expected to recover 53 MM STBO of primary plus secondary oil. Current development plans call for water injection to begin in early 1986 with Tertiary water sands being used to supply the source water. In addition to waterflood approval, the MPU Owners make the following special requests: 1. Waterflood Permit Area RECEIVED 1 6 lgB Alaska. Oit & Gas Cons. Commission Anchorage The MPU Owners request that the Alaska Oil and Gas Conservation Commission (AOGCC) allow the Waterflood Permit Area to be modified administratively upon application by the Unit Operator, so that its boundary can be extended to include any enlargement of the Participating Area. 2. Effective Date It is also requested that the effective date of this application be the date of approval by the AOGCC. This would enable the waterflood development plans to proceed as scheduled. 3. Well Spacing Efficient waterflooding may require well spacing different than 160 acres as set forth in Conservation Order No. 173. Therefore, the MPU Owners request that the AOGCC approve unrestricted we].], spacing within the limits of the approved Milne Point Unit Kuparuk Waterflood Permit Boundary. Waterflood project Description (20 AAC 25.400 b.1, 2, 3, 4) The names and addresses of all the Milne Point Unit working interest owners are listed in Exhibit 1 along with the names and addresses of all offset leaseholders. The Waterflood Permit Area is listed by government section in Exhibit 2 and is shown in Exhibit 3 along with the current Milne Point Unit (MPU) boundary. Offsetting leaseholders are also shown on Exhibit 3. As shown on Exhibit 4, the Waterflood Permit Boundary includes the current MPU Participating Area (PA), but the PA is subject to change as development of the Kuparuk reservoir continues. Exhibit 4 indicates location of existing wells as well as the drilling pads and the Central Facilities Pad (CFP). The CFP, in addition to housing operations personnel, will be the location of the injection and production facilities. The oil pool for the Kuparuk River Field is described as the accumulation of oil. that is common to and correlates with the accumulation found in the Atlantic Richfield Company West Sak River State No. 1 well between the depths of 6474 and 6880 feet. This interval corresponds to that interval of the Milne Point Unit We].]. No. C-1 between the depths 6950 and 7180 feet. The log of the subject well is shown on Exhibit 5 with the proposed waterflood intervals indicated. Water injection will be confined to the Middle Kuparuk and the Lower Kuparuk zones as designated on Exhibit 5. Well D~Ki.ptions (20 AAC 25.400 b.5) Of the current wells shown on Exhibit 4, only one will be converted to injection, Well No. C-4, located in the SE/4 of Section 3, T13N, R10E. The remainder of the water injection wells will be new wells which will be drilled during field development beginning with Phase I in 1985. A total of 22 injection wells will be utilized in the proposed full field waterflood. The number of injection wells and their locations may change in order to optimize the waterflood recovery. The current proposed locations are shown on Exhibit 6. Therefore, the MPU Owners are requesting unrestricted well spacing in order to have maximum flexibility to optimize waterflooding of the Kuparuk River Formation. In~ection Well Completions (20 AAC 25.400 b.6) The injection wells will be completed using three casing strings as shown on Exhibit 7. Injection will be through tubing and below a packer. During completion operations, the casing will be pressure tested to 3000 psi for 15 minutes using NaC1/NaBr brine water. This or a similar test will be performed on all future water injection wells. Pressures will be monitored daily on the production casing/tubing annulus and on the surface casing/production casing annulus to insure integrity. Initial completion plans are to perforate both the Middle Kuparuk and the Lower Kuparuk where both zones are productive, and to inject using a single completion. A completion schematic is shown on Exhibit 8. The injection profiles will be monitored closely, and if the need arises, a so-called "selective single" completion will be implemented using downhole flow regulators to control injection. All future injection wells will be cased, cemented, and monitored as per 20 AAC 25.410 and Field Rule No. 4. Injection Water (20 AAC 25.400 b.7) Injection water for the proposed waterflood will be sourced from the water bearing sands in the Tertiary Formation. The three source wells will be located, one each~, on CFP, B Pad, and A Pad (see Exhibit 4). Initial injection rates will average 39,000 BWPD (2,000 - 3,000 BWPD per injection well) and. increase to 45,000 BWPD as development continues. The volume of Tertiary water will gradually decline. As fill-up occurs, the volume of produced water will increase, and the source water will. be used to supplement the produced water injection volume. Produced water will be treated at the CFP prior to injection. Facilities will be capable of processing 45,000 BWPD. Injection pressures are estimated to be 1800 psig at the wellhead with the facility designed for a maximum pressure of 2500 psi. Plan of Development (20 AAC 25.400 b.9) The Milne Point Unit wi].], be initially developed in a minimum of two phases. Phase I production will begin in 1986 and will consist of 13 injection wells and 17 producing wells. This includes six existing wells and 24 wells to be drilled in 1985. Phase II production will begin in late 1987 or early 1988, and will consist of adding nine injection wells and six producing wells. Prudent future development will follow accordingly. Exhibits 9, 10, and 11 depict the area]. development extent of the above mentioned phases. Waterflood recovery is an important aspect of the Milne Point Unit as the secondary reserves are necessary to make the project economically sound. The water injection will maintain the reservoir pressure and minimize the solution gas production. This waterflood project has been designed using data currently available. It is necessary to maintain flexibility in the development plan and to adjust accordingly as new reservoir data and information requires. The predicted production and injection schedule is shown on Exhibit 12. Notification (20 AAC 25.400.c) A copy of this application has been mailed to all Milne Point Unit Working Interest Owners and to all offset operators referenced in Exhibit 1. Attached to the cover letter transmitting this application is an affidavit of mailing to the parties referenced in Exhibit 1. Records and Reports (20 AAC 25.430) The Unit Operator will keep adequate records of injected and produced fluid volumes, and reservoir and injection pressures, and will file reports as per 20 AAC 25.430. EXHIBIT 1 H. D. Haley Conoco Inc. (Operator) 2525 C Street, Suite 100 Anchorage, AK 99503 T. A. Edmondson Chevron, USA, Inc. P.O. Box 8200 Concord, CA 94524 G. A. Graham Union Oil Co. of California'~ P.O. Box 6247 Anchorage, AK 99502 C. E.' Seery, Jr. Reading & Bates Petroleum Co. 3200 Mid-Continent Tower Tulsa, OK 74103 Neil Buttram Cities Service Oil & Gas Corp. P.O. Box 939 Bakersfield, CA 93302 Dale W. Bossert Champlin Petroleum Co. 5800 South Quebec Avenue Denver, CO 80150 L. E. Tate ARCO Alaska, Inc. P.O. Box 100360 Anchorage, AK 99510 J. C. Bowen Exxon Company, USA P.O. Box 5025 Thousand Oaks, CA 91359 G. J. Abraham Sohio Petroleum Co. 50 Fremont St. San Francisco, CA 94105 Offset Lease Holders W. J. Clauser Mobil Oil Corporation P.O. Box 5444, Terminal Annex Denver, CO 80217 M. G. Knowles B.P. Alaska Exploration, Inc. One Maritime Plaza, Suite 500 San Francisco, CA 94111 E. P. Nelson Texaco, Inc. P.O. Box 4-1579 Anchorage, AK 99509 Exhibit 1 EXHIBIT 2 MILNE POI~ UNIT WATERFLOOD PERMIT AREA DESCRIPTION BY SECTION T-13N, R-10E Sections S/2 1; 2; 3; 4; 9; 10; 11; 12; 13; 14; 15; N/2 23; SE/4 23; E/2 of SW/4 23; 24; 25; E/2 of NE/4 26 .. · Sections S/2 SW/4 6; S/2 SE/4 6; 7; SW/4 7; S/2 NW/4 7; SW/4 18; S/2"SE/4 18; SW/4 NW/4 18; N/2 NW/4 18; ~/4 NE/4 18; 19; NW/4 NW/4 20; S/2 NW/4 20; SW/4 20; W/2 SE/4 20; SE/4 SE/4 20 Exhib it 2 . ~ ~o ' ':~':~': :~:~:~:~:~:;:~:~:~ :~:~i~ :::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::: :-: i (1'~' ....,.,.... ] .. ........... ,-..~ ....... L ............... l ........... II ii i i ~ J 2 H :~::: ~:~:~:~:~:~:~:;:~[~; ":: :: ~:: :':' : ::::~::::::: :;:~:~:~:~:;:;:;~:~:~:~:~:~:;: ~:~ :::~;~:~:~:~:~:~:~:~:~:~:~:~:~: :::::::::::::::::::::::::::::::::::: ~:~:~:~:~:;:~:~:~:;:~:~:~:~:~:~:~:~ :~:~:~:~ T I ~ ~ N i ~t'~ KEY o, I ~ ,. I. I ~o~-~,~ .- ~o~o~o.~,~o~ .~,~. .. ..~,. ~,~-~-,:~. ~,~-~,,~o~,,,-,~,o MILNE POINT UNIT C~EY- ~OB ·~EVRO~ - ~OBIL ............ 9-A-BPAE ~ SOHIO - AR~- BRITISH PETROLEUM ALASKA EXPLORATION LAND PLAT M L ",.. / .18'1 ...... 19' I, !¥ MILl IE POINT UNIT I ~ IIi Il I WA1 'ER FLOOD BOUltDARY------~ L 4 $ 0 0 Mille Point ~ /,'-"MILNE POINT UNIT BOUNDARY (UPARUK RIVER PARTICIPATING AREA BOUNDARY ~lllllllllllll · .. · · · D~t · · Point CFP TISN TI2N o I i ,, , , mi *r SCALE IN M I LES ! ~ ,, I I CONOCO M!LNE_ PO!NT_UNIT C-I TYPE- LOG 0.0 I00.0 sP . ±~._vl ..... -I00.0 0.0 0.2000 TENS(LB) ILD ~.OHMM) ILM (OHMM) 0.0 ZOO0. 0.2000 SFLU ~OHMM ! ZOO0. 2000. MIDDLE KUPARUK SANDS 6960 7094, LO':IER KUPARUK SAMDS 7200 6942 7104 7124 EXHIBIT 5 IO I ¥ P it · · 4 N ' L A ~ o POINT UNIT BOUNDARY · I( RIVER PARTI ;IPATIN$ BOUNDARY 0 TI4N · II ll Iii~ lB 14 - I1 · · . t · I ~ ii:::: I _ _ o¥ · · · · ti ommm. KEY o PHASE T PRODUCER PHASE ~, INJECTOR · PHASE Tr PRODUCER PHASE ]:Z. INJECTOR -""~'~-- FAULTS , Liiiiiii · I · Il Il I · 0 TI3N. T'I2N 4 MILNE POINT UNIT PR,OPOSED:. ELL LOCATIONS BEECHEY POINT MILNE POINT UNIT KUP~:~UK WELL CASING PROGRAM CEMENTING PROGRAM CONDUCTOR CASING: PERMAFROST CE]tENT TO THE SURFACE. SURFACE CASING: LI6~1' WE~lfr PERYAFRO3T LEAD SLURRY FOLLOIE. D BY ~'~ OF STAND~O PER~AFR~T SLUR~. PRODUCTION CASING: FIRST STAGE: LIGHT WEIGHT SLURRY FROM 500'! ABOVE UP'ER CRETACEOUS TO I000'! ABOVE MII)OLE KURtRUK WITH A STANDARD SLURRY TAIL TO COVER THE KUPARUK FORI~ATIONS. SECOND STAGE (DOIIINS~3UEEZE) STANDARD PERMAFROST SLURRY FROM THE CASIN$ SHOE TO THE BASE OF THE PERMAFROST AND UNWEIGHTED ~CTIC PAK FROM THE BASE OF THE PFJUIAFROST TO THE SURFACE. WELLBORE FLUID: 9.5 Plal N~Cl OR 10.2 PPG Neet Is%', _4a tb/ft, H-40 PELP .. 9~8~, 36 i1:~/~, K-55, BUTT~SS EST. TOO AT ,50(/ABOVE U.C.S. UPPER CRETACEOUS SARDS WIOOLE KUPARUK FORMATION EXTERNAL OA$1N$ P/ICI(ER LOWER KUPARUK FORMATION 26.0 lb/fi, L-BO, BUTTRESS E X HI BIT i MILNE POINT UNIT( KUPARUK RIVER FIELD INJECTION WELL COMPLETION ALTERNATIVES S INGLE S EL ECTI VE SINGLE SUBSURFACE SAFETY VALVE TUBIN$~ ~ GAS LI~FT MAt, IDREL PACKER INJECTI0~t MANDREL ~L~ST ~Ot,T ,#lO O L E · . INJECTION MANDREL PACKER EXHIBIT 8 I.,rl s / ~ p s o Milne Point ,,--'¥1LNE POINT UNIT BOUNDARY :'~ :::::::::::::::::::::: .]:~:[:?:'-::E:~ :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ¥?~ ............ .......... ......... . ........................................ .--.-.-.--..-.-.-.-. ........................ :.... ....... · ":?-~': ::~ :'; '(-;(j ' RIVER PARTICIPATING::~':-: , . ..,. , ~j~ · ~ BOUNDARY ........ , ': '" :: :.L': . ::':::: ;::: . M ,, ,, ,, i . ~-... - ~ .. ¢~:~ ~- -_--~ ........ ~ ....... , ..... -.[ .... ~ , ~.~ KEY ~ PHASE I YEAR END 19~ o I ~ 3 SCALE IN MILES CONOCO MILNE POINT i ii · i Point TI3N TI2N 4 UNIT PLAN OF DEVELOPMENT g N El"' 0 I 2 SCALE IN M i LES C, i I~llmllmll I ! KEY ~ PHASE I YEAR END 1986 PHASE TT YEAR END 1988 L A G 0 0 At .ll.e Poi.t ..~...MILNE ~OINT UN!T...B.O..UN.DARY :~::::::::::~:~:::~:::i::.::~:::::~:::::::::::~:::::::::::::::::~:::::~:~:::~::~:!:~;~:i:~!:~i:!:i:i:i~i:::~::~::::~::::.:;~::~:~:::::~ I · ' ..... Point ... ~ :.-..... .... *~ ..... ,,~A,,.. l I · 1 5~ ~' TI3N TI2N CONOCO MILNE POINT UNIT i ~L I~ I? ! · mo o I 2 3 SCALE IN M I LES t ~ G 0 0 N ¥1)ne Point POINT UNIT BOUNDARY RIVER PARTIClPATINO AREA BOUNDARY · ;.:..,. Koyeorok Point ... B~ B4{. cFp ~l,ma em m ' ~ 4 KE.Y PHASE [ YEAR END 1986 PHASE TF YEAR ENO 1988 FUTURE DEVELOPMENT TI3N TI2N CONOCO MILNE POINT UNIT 5O 40 ~0 20 1986 1987 1988 1989 1990 1991 1992 199:) 1994 · 1995 1996 1997 · Y £ A R KEY 0il production rate Eater product/on rate Water /nject/on rate E X H IB IT 12 MILNE POINT UNIT APPLICATION FOR THE TENTH REVISION OF THE KUPARUK PARTICIPATING AREA AND DEFERRAL OF MILNE POINT UNIT CONTRACTION -~OMM COMM COMM RES ENG SR ENG NRO I SR GEOL GEOL ASi~T STAT STAT DECISION AND FINDINGS OF THE COMMISSIONER ALASKA DEPARTMENT OF NATURAL RESOURCES May 6, 1998 MILNE POINT UNIT TENTH REVISION OF THE KUPARUK PARTICIPATING AREA I. INTRODUCTION AND BACKGROUND BP Exploration (Alaska), Inc. (BP), as Milne Point Unit Operator, applied to expand the Milne Point Unit (MPU) Kuparuk Participating Area (KPA) and to defer contraction of MPU Tract 22 from the unit. The Tenth KPA revision proposes to add approximately 3,157 acres from ADLs 25509, 25514, and 388235 to the existing KPA. BP submitted geological, well, and production data that justifies the expansion of the KPA within this portion of the MPU. The data indicate that the Kuparuk River Formation is capable of producing or contributing to the production of hydrocarbons in paying quantities. The State of Alaska Department of Natural Resources, Division of Oil and Gas ("Division") approves BP's application to revise the KPA. The KPA revision encompasses an area that is "reasonably known to be underlain by hydrocarbons and known or reasonably estimated ...to be capable of producing or contributing to production of hydrocarbons in paying quantities." 11 AAC 83.351(a). The Division also approves the Exhibit C to the MPU Agreement (Tract Allocation Schedule), dated April 14, 1998 (Attachment 2 to this Decision and Findings). The effective date of the Tenth KPA revision and the Exhibit C is June 1, 1997. Finally, the Division approves BP's request to defer contraction of Tract 22 from the MPU until December 31, 1999. BP's plans to further delineate and produce Tract 22 warrant the continuation of the tract in the MPU. II. APPLICATION FOR THE TENTH REVISION OF THE KUPARUK PARTICIPATING AREA BP applied to expand the existing KPA on November 24, 1997. BP submitted the application under 11 AAC 83.351 and Articles 11 and 12 of the MPU Agreement. BP applied to add portions of ADL 25509 (Tract 10), ADL 25514 (Tract 11), and ADL 388235 (Tract 22), totaling approximately 3157 acres, to the KPA. The proposed KPA expansion acreage encompasses the Kuparuk Reservoir within the Kuparuk River Formation. The portions of leases proposed for inclusion in the Tenth KPA Revision and the proposed tract allocation schedule for all the leases in the KPA (Exhibit C to the MPU Agreement) are listed in Attachment 1 and 2 respectively to this Decision and Findings. Geologic evidence supports expansion of the KPA to develop the Kuparuk River Formation reservoirs within the MPU under a unified plan of development. All of the expansion acreage is capable of production, or contributing to production in paying quantities. BP conducted Tract Operations on Tracts 11 and 22 to evaluate the extent of the Kupamk River Formation. BP drilled eight Kuparuk development wells in Tract 11 (four producers and one injector) and Tract 22 (two producers and one injector). Production from the expansion area began in June 1997 with MPF-05. Production from the expansion area currently averages over 800 BOPD. BP also applied to defer contraction of MPU Tract 22 from the MPU until December 31, 1999. Most other MPU leases will contract out of the unit on that date if they are not part of a participating area. MPU Tract 22 was included in the MPU on November 18, 1996 subject to the condition that the portions of Tract 22 that are not within an approved participating area by December 31, 1997 will automatically contract out of the MPU. None of Tract 22 is in a participating area, but portions of MPU Tract 22 are included in the Tenth KPA expansion request. There is insufficient evidence to justify including the rest of Tract 22 in the KPA. During the first quarter of 1998, MPL-40, a Kupamk producer, was drilled in the southern portion of the tract. BP is currently drilling a horizontal Kuparuk injection well, MPL-28i, in the northwestern portion of the tract. Additional wells are planned later in 1998 after evaluation of an "infill" 3-D seismic survey. BP will be able to assess the productive potential of this area by the end of 1999. BP requested that the Tenth Revision to the KPA be effective on either the first day of the month in which production commenced from the Tenth KPA expansion areas (June 1, 1997) or the first day of the month after the filing of the expansion application (December 1, 1997). BP also requested that the extension of the Tract 22 deferral date to December 31,1999, be approved before the December 31, 1997, contraction date. By letters dated December 30, 1997 and March 25, 1998, the Division extended the contraction date of Tract 22 to May 15, 1998. III. DISCUSSION OF THE PARTICIPATING AREA DECISION CRITERIA The commissioner may approve expansion of a participating area (PA) if it is determined that expansion is "necessary or advisable to protect the public interest." AS 38.05.180(p) and 11 AAC 83.303(c). Approval of BP's application must be based on the criteria in 11 AAC 83.303(a) and the factors enumerated in 11 AAC 83.303(b). The commissioner will approve a proposed expansion of a PA or a proposed production or cost allocation formula if the commissioner finds that each requested approval is necessary or advisable to protect the public interest. AS 38.05.180(p). To find that any or all of the requested approvals are necessary or advisable to protect the public interest, the commissioner must find that the requested approvals will: (1) promote the conservation of all natural resources; (2) promote the prevention of economic and physical waste; and (3) provide for the protection of all parties of interest, including the state. 11 AAC 83.303(a). The commissioner must consider: (1) the environmental costs and benefits; (2) the geological and engineering characteristics of the potential hydrocarbon accumulation or reservoir(s) proposed for inclusion in the participating area; (3) prior exploration activities in the proposed participating area; (4) the applicant's plans for exploration or development of the proposed participating area; (5) the economic costs and benefits to the state; and (6) any other relevant factors (including mitigation measures) the commissioner determines necessary or advisable to protect the public interest. 11 AAC 83.303(b). A PA may include only land reasonably known to be underlain by hydrocarbons and known or reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities. 11 AAC 83.351 (a). "Paying quantities" means: quantities sufficient to yield a return in excess of operating costs, even if drilling and equipment costs may never be repaid and the undertaking as a whole may ultimately result in a loss; quantities are insufficient to yield a return in excess of operating costs unless those quantities, not considering the costs of transportation and marketing, will produce sufficient revenue to induce a prudent operator to produce those quantities. 11 AAC 83.395(4). (A) Promote the Conservation of Natural Resources The formation of oil and gas units and PAs within unit areas to develop hydrocarbon-bearing reservoirs generally conserves hydrocarbons. The expansion of the existing KPA to encompass the new acreage will provide for more efficient, integrated development of the entire Kuparuk Reservoir within the MPU. A comprehensive operating agreement and plan of development governing the expanded area will help avoid duplicative development efforts on and beneath the surface. Furthermore, producing hydrocarbon liquids from the expansion area through the existing production and processing facilities will reduce the incremental environmental impact of the additional production. The oil and gas resources of the expansion area can be accessed by wells from existing drill pads and processed through existing facilities. Expanding the KPA will maximize oil and gas recovery, while minimizing negative impacts on other resources within the area. (B) Prevention of Economic and Physical Waste Generally, the formation and expansion of a PA facilitates the equitable division of costs and allocation of hydrocarbon shares, and provides for a diligent development plan which maximizes physical and economic benefit from a reservoir's production. Further, the formation and subsequent expansion of a PA incorporating facility sharing opportunities and adopting a unified reservoir management strategy may allow economically marginal hydrocarbon accumulations to be developed that otherwise might not be. Expanding the KPA and providing for PA operations of the leases improves the likelihood of more complete development of a reservoir with variable productivity across adjoining leases. Using the existing KPA infrastructure and facilities eliminates the need to construct stand-alone facilities to process the additional volume of recoverable hydrocarbons from the expansion area. The Division encourages the shared use of major processing facilities to minimize any additional surface impacts and costs. The Division allows commingled production through the existing MPU facilities and approved a well test-based production allocation methodology for current and future reservoirs sharing those facilities. The methodology is subject to periodic review and reconsideration to assure that the state's royalty and tax interests are protected. Further, facility consolidation saves capital and promotes better reservoir management through pressure maintenance and enhanced recovery procedures. In combination, these factors allow the Kuparuk Reservoir to be developed and produced in the interest of all parties, including the State. Expanding the KPA to include the leases that contain productive Kuparuk Formation reservoirs allows areas to access existing drill pads and unit facilities and prevents economic and physical waste. (C) Protection of All Parties The proposed expansion of the KPA protects the economic interests of all working interest owners of the reservoirs in the PA, and the royalty owner. Combining interests and operating under the terms of the MPU Agreement and MPU Operating Agreement assures each individual working interest owner an equitable allocation of costs and revenues commensurate with the value of their lease(s). Because hydrocarbon recovery will be maximized and additional production-based revenue will be derived from the additional KPA production, the state's economic interest is promoted. The royalty share from the MPU KPA is free and clear of all lease and unit expenses. Diligent exploration under a single approved unit plan without the complications of competing leasehold interests promotes the state's interest. The expansion of the KPA promotes efficient evaluation and development of the state's resources, yet minimizes impacts to the area's cultural, biological, and environmental resources. Operating under the MPU Agreement provides for accurate reporting and record keeping, royalty settlement, in kind taking, and emergency storage of oil. These all protect the state's interest. Finally, deferral of contraction for Tract 22 to allow continued development within the MPU will protect the lessees of the tract and the state. The continuation of the present MPU boundaries will promote the orderly assessment and development of the tract's resources. The tract's further delineation and development will continue to be part of a unified reservoir plan of development. The tract will continue to share MPU infrastructure that should permit economically marginal hydrocarbon resources to be developed. In reviewing the above criteria, the following factors were considered: 1) The Environmental Costs and Benefits As discussed above in section III (A), the sharing of the existing facilities eliminates duplication and minimizes the surface area affected by additional development. All of the wells in the Tenth KPA expansion area will be developed from existing drill pads and MPU infrastructure. No significant additional impacts to nearshore and onshore habitat or biological resources are anticipated because of the additional Kuparuk production from the expanded KPA. (2) The Geological and Engineering Characteristics, and Previous Exploration of the Proposed Expansion Area The MPU lies adjacent to the northeast side of the Kuparuk River Unit. The MPU produces oil from three geological formations: 1) the Upper Triassic Sag River Formation; 2) the Lower Cretaceous Kuparuk River Formation; and 3) the Upper Cretaceous Schrader Bluff Formation. The Tenth KPA expansion involves reservoirs contained within the Kuparuk River Formation. Within the MPU, the Kuparuk River Formation is cut by two major bisecting fault systems; one strikes northwest-to-southeast; the other strikes north-northeast to south-southwest. Fault throw is variable; major faults have throws in the range of 150 to 350 feet. There are numerous smaller faults in the area with throws on the order of 10 to 100 feet. The major fault blocks contain separate oil/water contacts. The Kuparuk River Formation is subdivided into four major informal members that are designated with letters A through D. The 'A' member is the oldest and the 'D' member is the youngest. Each member is further subdivided into submembers that are designated with numbers, such as C-1 and B-7 (with one being the oldest sub unit). The 'C' and 'B' members are separated by a major unconformity, the Lower Cretaceous unconformity (LCU). The primary reservoir pay in the Tenth KPA expansion area comes from the 'A' sandstone submembers. Although it is not a primary objective, there is some upside potential in a few of the wells in the area for Kuparuk 'C'production. The Tenth KPA expansion area includes ADL 388235, ADL 25514, and one forty-acre tract in ADL 25509. There are twelve well penetrations within the proposed KPA expansion area. In support of its application and upon request by the division, BP submitted the following data: 1) 20 annotated tvdss well logs; 2) a top Kuparuk A structure map with an outline of the Tenth expansion areas; and 3) individual tract recoverable reserve estimates and tract allocations. The size of the proposed KPA expansion is consistent with the Top 'A' Sand Structure Map and the oil/water contacts observed in the wells within and surrounding the expansion acreage. The information provided to the division demonstrate that the proposed Tenth KPA expansion area is known to be underlain by hydrocarbons and is reasonably estimated to be capable of contributing to hydrocarbon production in paying quantities from the Kuparuk A sandstones. A few wells also contain pay within the 'C' sandstone interval. (3) The Applicant's Plan for Exploration or Development of the Expanded Participating Area Plans for the development of the expansion area and areas adjacent to the expansion area include the continued use of F-Pad and L-Pad. So far in 1998, one Kuparuk producer, MPL-40, was drilled in the southern portion of Tract 22. A Kuparuk injection well, MPL-28i, is being drilled into the northwest portion of the tract. Additional development wells are scheduled to be drilled into these areas in 1998 after the "infill" 3-D seismic data on Tract 22 is interpreted. (4) The Economic Costs and Benefits to the State BP submitted with the application an allocation of production and cost for the leases in the proposed KPA expansion area (Attachment 2 of the Application and Exhibit C to the MPU Agreement) under 11 AAC 83.371. The proposed tract allocation schedule distributes working interest equity among the leases according to original recoverable reserves. The basis of the tract allocation schedule, recoverable reserves, is consistent with previous revisions of the KPA. Division staff agrees with BP's estimate of recoverable reserves from the expansion area tracts, and the Division finds BP's tract allocation methodology acceptable for allocating production and costs among the leases in the expanded KPA. BP requested that Tract 22 remain in the MPU until December 31, 1999. BP plans to drill additional wells into Tract 22 in 1998. The information necessary to determine if the non-KPA portions of Tract 22 are appropriate for inclusion into the KPA will not be available until late in 1998, therefore deferring the contraction of Tract 22 from the MPU until December 31, 1999 is appropriate. There are no economic costs to the state to delay the contraction of Tract 22 from the MPU. The continuation of the tract in the MPU may result in earlier development. - IV. FINDINGS AND DECISION Based on the facts discussed in this document and the administrative record, I make findings and impose conditions as follows: The well(s) in the Kuparuk River Formation reservoirs within the area proposed for the Tenth KPA Revision are certified as meeting the paying quantities test. The acreage is underlain by hydrocarbons and known and reasonably estimated to be capable of production or contributing to production in sufficient quantities to justify the expansion of the KPA within the MPU. , The geological and engineering data justify the inclusion of the proposed tracts within the KPA. Under the terms of the applicable regulations governing formation and operation of oil and gas units (11 AAC 83.301 - 11 AAC 83.395) and the terms and conditions under which these lands were leased from the state, the following lands are to be included in the KPA (also see Attachment 1): T.13.N.,R. 10.E.,U.M., Sec. 7:SW/4 NW/4; (ADL 25509 (Tract 10)); T.13.N.,R.9.E.,U.M., Sec. 13: all; Sec. 14: W/2, SE/4, W/2NE/4, SE/4NE/4; Sec. 23: all; Sec. 24: W/2, W/2 NE/4, NE/4 NE/4, W/2SE/4 (ADL 25514 (Tract 11)); T. 13.N.,R.9.E.,U.M., Sec. 1: N/2, SE/4, NW/4NE/4, NE/4 NW/4; Sec. 12:NE/4NE/4 (ADL 388235 (Tract 22)). E/2SW/4, NW/4SW/4; Sec. 2: E/2NE/4, 3. The KPA expansion provides for the equitable division of costs and an equitable allocation of produced hydrocarbons, and set forth a development plan designed to maximize physical and economic recovery from the reservoirs within the expanded and approved participating areas. The allocations of production and costs for the tracts within the KPA (Exhibit C), Attachment 2 to this Decision and Findings, are approved. , The MPU Agreement and the Alaska statutes and regulations governing oil and gas units provide for further expansions and contractions of the KPA in the future as warranted by additional information and findings. Therefore, the public interest and the correlative rights of all parties, including the state, are protected. o The production of KPA hydrocarbon liquids through the existing production and processing facilities within the MPU reduces the environmental impact of the additional production. Utilization of existing facilities will avoid unnecessary duplication of development efforts on and beneath the surface. 6. The MPU Owners plan diligent exploration and delineation of the reservoirs underlying the MPU under approved plans of development and operation. 7. The Division approved deferral of the contraction of Tract 22 from the MPU until December 31, 1999. 8. Approval of the expansion of the KPA, and the revised Exhibit C to the MPU Agreement (Attachment 2 to this Decision and Findings) are effective retroactive to June 1, 1997. For these reasons and subject to the conditions and limitations noted, I hereby approve the Tenth Revision of the Kupamk Participating Area within the Milne Point Unit. eth A. Boyd, Dire~ tor Division of Oil and Ga~ Date~) For: John Shively, Commissioner Alaska Department of Natural Resources Attachments: Attachment 1: Tenth Revision KPA Tracts and MPU Tract 22 Deferral Acreage Attachment 2: Exhibit C to MPU Agreement (Tract Allocation Schedule) MPU. 10thKPA.Rev.doc Tract # 10 11 ADL Lease # 25509 2551'4 MILNE POINT UNIT 10TH KUpARUK PA REVISION KPA Expansion Land and Lease Description Umiat Meridian Sections T13N-R10E Sec. 7:SW/4 NW/4 T13N-R9E Sec. 13: All Sec. 14: W/2, SE/4, W/2 NE/4, SE/4 NE/4 Sec. 23: All Sec. 24: W/2, W/2 NE/4, NE/4 NE/4, W/2 SE/4 Acres 37 64O 600 64O 52O Total Acres 37 2,400 22 388235 T13N-R9E Sec. 1: N/2, SE/4, E/2 SW/4, NW/4 SW/4 Sec. 2:E/2 NE/4, NW/4 NE/4, NE/4 NW/4 Sec. 12:NE/4 NE/4 6OO 8O 4O Total Additions 720 3,157 Deferral of Milne Point Unit Contraction MPU Tract 22, ADL 388235 Tract 22 Lands not included in KPA Expansion: T13N-R9E, UM Sec. 1' SW/4 SW/4 Sec. 2: S/2, W/2 NW/4, SE/4 NW/4, SW/4 NE/4 Sec. 11: All Sec. 12: W/2, W/2 NE/4, SE/4 NE/4, SE/4 MILNE POINT UNIT AGREEMENT KUPARUK PARTICIPATING AREA MPU Tract # ADL Lease # Umi~t Meridii~n 2 47433 T13N-R10E 3 47434 T13N-R10E 4 25516 T13N-R10E 4A 315848 T13N-R10E 5 47437 T13N-R10E 6 47438 T13N-R11E 8 28231 T13N-R11E 9 25518. T13N-R10E 10 25509 T13N-R10E Acre~ 2,240 2,560 640 1,280 2,480 1,424 2,277 8OO 2,299 11 25514 T13-R9E 2,400 12 25515 T13N-R10E 14 25906 T13N-R10E 15 355017 T14N-R10E 1,320 6O0 3,400 PROPOSED EXHIBIT (~ TRACT PARTICIPATION FACTORS Sections Sec. 1: S/2; Secs. 2, 11, 12 Secs. 3, 4, 9, 10 Se¢.15 Secs. 16, 21 Secs. 13, 14, 24 Sec. 23:. N/2, SE/4, E/. 2. S_.W_/,4 SeS. 19 Sec. 18:W/2 W/2, NE/4 NW/4, NW/4 NE/4, E/2 SW/4, S/2 SE/4 Sec. 20: SW/4, W/2 NW/4, SE/4 NW/4, W/2 SE/4, SE/4 SE/4 Secs. 29, 30 Sec. 31: NE/4, N/2 SE/4, NW4 Sec. 32: E/2, NW/4, E/2 SW/4, NW/4 SW/4 Sec. 25 Sec. 26:E/2 NE/4 Sec. 36:E/2 NE/4 Secs. 5, 6, 8 Sec. 7: NE/4, E/2 SE/4, NW/4 Sec. 13, 23 Sec. 14: W/2, SE/4, W/2 NE/4, SE/4 NE/4 Sec. 24: W/2, W/2 NE/4, NE/4 NE/4, W/2 SE/4 Secs. 17, 20 Sec. 18:NE/4 NE/4 Sec. 27:W/2 NW/4, NW/4 SW/4 Sec. 28: N/2, N/2 SW/4, N/2 SE/4 .. Sees. 29, 32, 33, 34 Se~. 27:S/2 SW/4 Sec. 28: SW/4, W/2 NW/4, SE/4 NW/4, W/2 SE/4, SE/4 SE/4 Sec. 35: SW/4, S/2 NW/4, W/2 SE/4, SE/4 SE/4 Tract Participation % 1.98182% 8.86340% 0.57071% 2.24040% 6.31566% · 1.76608% 3.44109% 0.43430% 5.08324% 14.25385% 1.79048% 2.05760% 9.85951% BPAE/BPOE .Royalty 20.0 20.0 12.5 12.5 20.0 20.0 12.5 12.5 12.5 12.5 12.5 12.5 12.5 OxY Royalty. % 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 Net Profit Share % 40 Revised April 14, 1998 Page 1 MILNE POINT UNIT AGREEMENT KUPARUK PARTICIPATING AREA MPU Tract # 16 ADL L'ease # Umiat Meddi~rl 355018 T14N-R9E 18 355O21 T14N-R10E T14N-R9E 19 355016 T14N-R10E 22 388235 T13N-R93 23 380109 T12N-R10E 24 380110 T12N-R11E 25 375133 T12N-R11E 26 375132 T12N-R11E 27 28232 T13N-R11E Acres 4,403 1,080 640 72O 480 122 1,120 1,000 8OO 34,085 PROPOSED EXHIBIT (~ TRACT PARTICIPATION FACTORS Sections Secs. 25, 26, 35, 36 Sec. 27: E/2, E/2 SW/4, SE/4 NW/4 Sec. 34:N/2 NE/4, SE/4 NE/4, NE/4 SE/4 Secs. 30; 31 Sec. 22:SE/4 SE/4 Sec. 23: SE/4, S/2 SW/4, NE/4 SW/4, S/2 NE/4, NE/4 NE/4 Sec. 24 Sec. 19:S/2 Sec. 20:S/2 Sec. Sec. Sec. 1: N/2, SE/4, E/2 SW/4, NW/4 SW/4 2:E/2 NE/4, NW/4 NE/4, NE/4 NW/4 12:NE/4 NE/4 Sec. 1: E/2; Sec. 12:NE/4 Sec. 6:W/2 NW/4, W/2 SW/4 Sec. 7:NW/4 NW/4 Sec. 3: All Sec. 4:E/2 Sec. 10:N/2 NW/4, N/2 NE/4 Sec. 1:W/2 NW/4, W/2 SW/4 Sec. 2: All Sec. 11:N/2 NW/4, N/2 NE/4 Sec. 12:NW/4 NW/4 Sec. 27: None Sec. 28:S/2 S/4 Sec. 33: W/2, SE/4, S/2 NE/4, NE/4 NE/4 Sec. 34:W/2 NW/4, NW/4 $W/4 Tract Partici_oation % 24.54478% 2.57928% 3.94672% 6.13370% 0.27457% 0.O3703% 1.35034% 1.62174% 0.85370% 100.00000% BPAE/BPOE Royalty. % 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 OxY Royalty. 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5 Net Profit Share % 30 30 40 30 Revised April 14, 1998 Page 2 PU6Lt C A .T I Oi'~ THE' ANC~C~RAGE TIi!,i· '~ 4O 99510-00~0 ALASKA OIh ~, GAS 3001 POF, CIJPIN~: DAIVE ANCN[}RAGE, Al<, 99501 LANNA SIMMONS . ~3EIi"JG OULY SWORN, ACCORDIi~,~G TO LAm DE',CLARES: THAT SNE IS THE [,EGAL C'[~E:RK OF THE ANCHORAGE TIMES, A DAILY NE~SPAPER PUBLISHED IN THE TOWN OF A,~CH, ORAGM IN THF. THIRD OUOICiAL DIVISION, STATE OF AL,ASKA, AND THAT THE N~JTICE l]F .......................... A COPY' OF WHICM IS ~ERETO ATTACHED, WAS PUBbISHED I~ ................... OF T~IE ,ANCH[IRAG~ M~iGI N'N'I NG ON ....................... EMDING ON ...... . ........ .,... ...... AO-O~ 554~ ISSUES 09/~7/84 09/~7/84 THE: SIZE OF THiS AD ;~AS ........... . 57 LINES SiC; !qE, D ......... ' NOTICE OF pUB,L'IC ' ,, Al~i~Oil ~a~ ~ , :~onservati~'n Comml~si0n, Re~ ': The' ap~licati°n of ,, ~ CONOCO, ',1N C,' fo~, COns~rva- : ',tion ~,qorder ~ermitting ~ulls- cale(w~erfl00O In the ~llne p~n~ 'Unlt area, of, the rukRIvef,Fiel~. {' , , ,' ',NOtice is, hereby ~ve~ :that Con0co;'. I nc., has re~uest~ the "Al~ska, ~11 and Gas,,,,canserva- ,orde~, permittin9 t~T:sCam : A~ea:,,,,:of :the ,,,~uparok,,,," Rl~er s rl~$ed I~ me referenced order msoeo ~r~ntino the. refer- enced request ~re Gllowefl doyslfrom the dote of thig publi- cotion in which to file c ~rotes$, In writing, slctin~ in detcll the n~ture of their o~eievement und. their request for o heurin~. · he 91~e'of filing. Is the 011 G~d Gus Conservation Com- mission, 3001 Porcupine .Drive, Anchoro~e,' Aloska· 99~01. If ~CB~o pco.test Is timery.flled, a fi~rmu 'on the ~t~'~lll' held ut the' Gbove ~fldress ]9~Q0. A~ on October 9, .1~84 which time ~rotest~n'ts und' oth'- erg 'm~y .be heord. If :nfl such 4~rote. st Is.timely filed, the Com- mission will consider the Is- suunce of the 0r~er' without hearing. .:..'" ""';'-A ~". a ,., ~. w:' ~ 6 '~ i:~. ~',.'~..- ' '. ' 'C°mmissi°~er ..... ~ .:, ' ' . .'."'~ Ala~kaOII &'Gbs" '~V:.. · . .Conservation Com~'lssloh , ,~:,,, THE PRICE OF T, iiiS A,D IS ............. $ 1,7.10 THE AD NUMBER iS .......... ... ....... 1895661, SUBSCRIBED A,~,~D SWORN TI) B~,iFORE ~E THIS. ....... . ........ .. NOTARY PUBLIC 0F THE STATE OF ALASKA 2 7 0 A Y 0 F S g P, 19 '8 4"<?:~':C,: · ,~ .,,,m. ~ Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of CONOCO, INC. for a conservation order permitting fullscale waterflood in the Milne Point Unit area of the Kuparuk River Field. Notice is hereby given that Conoco, Inc. has requested the Alaska Oil and Gas Conservation Commission to issue an order permitting fullscale waterflood of the Milne Point Unit Area of the Kuparuk River Field. Waterflood will greatly increase the oil recovery in the area and certain portions will require 40 acre spacing to achieve maximum recovery. Parties who may be aggrieved if the referenced order is issued granting the referenced request are allowed 10 days from the date of this publication in which to file a protest, in writing, stating in detail the nature of their aggrievement and their request for a hearing. The place of filing is the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501. If such a protest is timely filed, a hearing on the matter will be held at the above address at 9:00 AM on October 9, 1984 at which time protestants and others may be heard. If no such protest is timely filed, the Commission will consider the issuance of the order without a hearing. Harry W. Kugler z Commissioner Alaska Oil & Gas Conservation Commission TONY KNOWLES, GOVERNOR ALAS~ OIL AND GAS CONSERVATION COMMISSION June 16. 1999 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 ADMINISTRATI~'E APPROVAL 205.01 Re: The application of BP Exploration (Alaska), Inc. to change injection well survey requirements of Rule 4. Conservation Order 205. Bill Hill Kuparuk Production Optimization Team Leader BP Exploration (Alaska), Inc. P.O. Box 19612 Anchorage, AK 99519-6612 Dear Mr. Hill: We received your application May 6, 1999, requesting relief from the requirement to run injection well surveys in single zone injectors and to change the filing requirements from quarterly to annual in the Kupamk Pool, Milne Pt. Unit. Early development of the Kuparuk Pool in Milne Pt. was in areas where multiple zones were developed within individual, wellbores. Subsequent extension and development has gone into areas where only a single zone may be present. When flood conformance is demonstrated by pressure response and by material balance, injection surveys in single zone injectors provide no useful information for reservoir management of the waterflood. Injection profile surveys in multiple zone injectors of differing characteristics will continue to be important in determining the volume split between the zones so realistic reservoir voidage calculations can be made. The Commission has reviewed the data and concludes that for multiple zone injectors, initial and periodic follow-up injection profile surveys will continue to be required for waterflood surveillance associated with reservoir management, however, they will not be required in single zone injection wells. The Commission may order surveys if required and the operator may use their own discretion to obtain additional surveys when and where required. In addition, reporting surveillance results annually will not harm the Commission's OVersight of the waterflood operation. Changing the injection well SUlwey and reporting requirements will not create waste, harm correlative rights or cause decreased ultimate recovery.. Therefore. Conservation Order 205 Rule 4 is restated as follows: A quantitative injection profile survey will be obtained on each multiple zone injector within 9 months of sustained injection. Follow-up surveys will be performed on a rotating basis on one- third of the multiple zone injectors each calendar year. Single zone injectors may be surveyed at the operators discretion if anomalous injection performance is evident or mechanical damage is suspected or if required to obtain data for waterflood management. Completed injection well sun'evs will be filed with Commission as part of the Annual Waterflood Surveillance Report. ge, Alaska and dated June 16. 1999~ Robert N. Clmstenson, P.E. Camill60echsli Chairman Commissioner ~oa~dmissi°~~ AA205-01. DOC Hill, Charles W From: Sent: To: Subject: Sorrentino, Angela M Friday, June 04, 1999 9:57 AM Hill, Charles W Waterflood Rule suggestion Bill - let me know what you think of this. Jack, As discussed in our phone conversation 6~3~99, I have drafted a suggestion for the rewording of rule 4 of conservation order 205. I also incorporated what I believe to be a suggestion from Mike Williams regarding the reporting of injection surveys. Our suggestion would be that rather than submitting injection surveys within 90 days after the survey is performed, the surveys be submitted annually with the waterflood report. Current wording: Rule 4. Conservation Order 205 Iniectivity Profiles Pertains to Waterflood Surveillance An injection profile survey will be obtained on each injection well during the first nine months of sustained injection using a quantitative method. Follow-up surveys will be performed on a rotating basis such that one-third of the total number of injection wells are surveyed during each calendar year. The completed injection surveys will be filed with the Commission within 90 days after performing the survey. It is suq.qested that rule 4 of Conservation Order 205 be repealed and re-enacted to read: An injection profile survey will be obtained on each multiple sand injection well during the first nine months of sustained injection using a quantitative method. Follow-up surveys will be performed on a rotating basis such that one-third of the total number of multiple sand injection wells are surveyed during each calendar year. Initial and follow-up surveys on are not required as a rule for single sand injection wells. Surveys may be obtained at the discretion of the operator if variation in injectivity is suspected within the single zone or as required to obtain data for efficient waterflood management. The completed injection surveys will be filed with the Commission with the Annual Waterflood Report. Angela Sorrentino Surveillance Engineer Western North Slope, Milne Point BP Exploration (Alaska)Inc. '~ wk (907) 564-5943 F~sorrenam@bp.com Page 1 April 30, 1999 Mr. Robert Christiansen Chairman State of Alaska Alaska Oil and Gas Conservation Commission 3001 Porcupine Drl. ve Anchorage, Alaska 99501 Dear Mr. Christiansen, This letter is to request that a 'relief' be granted from injection profiles for single sand injectors as required by Rule 4 of Conservation Order 205. Multiple zone injectors will still be surveyed during the first nine months of sustained injection and on a rotating basis such that one-third of the total number of multiple zone injection wells are surveyed. For single sand injection wells, the original cement bond log will be run to confirm cement inte~ity and follow up logging will be done if cement inte~ity is in question. It is suggested that further surveys for single sand injectors be left to the discretion of the operator as required to obtain data for efficient waterflood management. A detailed summary of current procedures for obtaining injection profile surveys can be found in the 1998 Waterflood Report. The major purpose of obtaining injection profile surveys is to obtain information about the split of injection between zones. This information allows for allocation of injection volumes and calculation of recovery by zone. In the Milne Point Kuparuk Pool, there are three distinct sands, the C sand, B sand and A sand. While the A sand consists of A 1, A2, and A3 sands, injecting water above frac pressures will connect these three sands during injection at which point they can be treated as a single unit. For allocation purposes, there is no utility in obtaining an injection profile survey on a well injecting into a single sand, either C, B or A sand. Recovery estimates for single zone injectors can be made based on volumes injected alone. An inverted water flow log (WFL) may be run on a new injector where there is uncertainty in the cement job in order to confirm that injection ;.s contained w;.thin tl-,e' apprep6.ate formation. Add~.tionally, water flow logs (WFL) may be run on wells with straddle completions to confirm a plug is maintaining injection into the desired zone. The operator will be responsible for determining when it is necessary and prudent to obtain such injection surveys. Sincerely, Bill Hill Kuparuk Production Optimization Team Lead' ~',JasKa Oil & Gas Cons. ,~nchoraqe