The URL can be used to link to this page

Home My WebLink AboutCO 237Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. Conservation Order Category Identifier Organizing (done) RESCAN [] Color items: [] Grayscale items: [] Poor Quality Originals: [] Other: NOTES: DIGITAL DATA OVERSIZED (Scannable with large plotter/scanner) [] Diskettes, No. [~..'""~' MM~ps:..._ [] Other, No/Type [] Other items OVERSIZED (Not suitable for plotter/s~nner, may work with 'lo~t'h'ner) ~~Logs of various kinds [] Other '~ARIA Scanning Preparation TOTAL PAGES 7... Production Scanning Stage I PAGE COUNT FROM SCANNED DOCUMENT: d~ , 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, GR~YSCALE OR COLOR IMAGES) General Notes or Comments about this Document: 5/21/03 ConservOrdCvrPg.wpd • 5� 1. 2. 3. 4. 5. 6. 7. 8. INDEX CONSERVATION ORDER NO. 237 Beaver Creek Unit No. 14A Development Gas Well Beaver Creek Field Beaver Creek Unit Beluga Gas Pool June 22, 1988 Marathon's request for proposed field and pool regulations and classification July 7, 1988 Marathon's request for proposed field and pool regulations and classification July 11, 1988 Notice of Hearing and Affidavit of Publication August 3, 1988 Letter from BLM to AOGCC regarding comment December 16, 2013 Hilcorp's application for spacing exception to allow testing, completion and production of BCU #14RD (CO No. 237.001) January 3, 2014 Notice of Public Hearing, Affidavit of Publication, email distribution, mailings April 3, 2014 Hilcorp Alaska, LLC's (HAK) request for administrative approval to amend Rule 2 (Pool Definition) to adjust the vertical depths of the Sterling Gas and Beluga Gas Pools to include all sands associated with each geologic formation, (Figures Al and A2 indexed inside CO 234A), (confidential Exhibits A and B and Figures A3, A4, A5, and A6 held in secure storage) (CO No. 234.002) April 11, 2014 Notice of Public Hearing, Affidavit of Publication, email distribution, mailings INDEX CONSERVATION ORDER NO. 237 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Re: THE APPLICATION OF ) MARATHON OIL COMPANY ) to establish pool ) rules for the Beaver ) Creek Field. ) Conservation Order No. 237 Beaver Creek Field Sterling Gas Pool Beluga Gas Pool Beaver Creek Oil Pool August 5, 1988 IT APPEARING THAT: · Marathon Oil Company by correspondence dated July 7, 1988 requested field and pool rules be established for the Beaver Creek Field. 2. Notice of public hearing was published July 11, 1988. 3. No protest was filed with the Commission. FINDINGS: · Production of hydrocarbons from the Beaver Creek Field commenced in 1972. · The Sterling gas sands were deposited in meandering stream channels. The sands are separated by relatively thin shale and coal beds. The Sterling gas sands may be defined by the interval penetrated in the Beaver Creek Unit Well No. lA, and may be considered as a single gas pool for development purposes. · Four wells are currently producing gas from the Sterling gas sands. · Cumulative production from the Sterling gas sands as of May 1, 1988 was 67,310 million standard cubic feet (MMCF). · Reduced well spacing may be necessary for efficient develop- ment and recovery of gas reserves in the Sterling and Beluga gas sands. · The Beluga gas sands occur in thin, discontinuous sand lenses separated by shales and coal beds, and are considered a separate accumulation from the Sterling gas sands. Conservation Or, ~r No. 237 August 5, 1988 Page 2 · The Beluga gas sands may be defined by the interval pene- trated in the Beaver Creek Unit Well No. lA. and may be considered as a single gas pool for development purposes. · Productivity of the Beluga gas sands has been verified with drill stem tests. 10. Initial average reservoir pressure of the Beluga gas sands is estimated to be 3900 psi. 11. Development of the Tyonek G-zone and Hemlock will be optimized if they are considered as a single pool. 12. The productive limits of the Sterling, Beluga, and Beaver Creek Pools are all within the boundary of the Beaver Creek Unit which provides for the integration of various mineral ownerships within the Unit. 13. Cumulative G-zone production as of May 1, 1988 was 3577 thousand stock tank barrels of oil (MSTB) from the BCU #4 and 5RD. 14. Initial pressure of both zones was estimated to be 7500 psi. 15. Hemlock zone reserves in the BCU #4 are estimated to be 320 MSTB. 16. Reduced well spacing may be necessary to maximize oil recovery from the Tyonek G and Hemlock zones. CONCLUSIONS: · Oil and gas has been produced under the Beaver Creek name for over 15 years, and the field should be named the Beaver Creek Field. · For maximum recovery of hydrocarbons the Sterling gas sands should be developed as a single pool designated the Sterling Gas Pool; the Beluga gas sands should be developed as a single pool designated the Beluga Gas Pool; and the Tyonek G-zone and Hemlock formation should be developed as a single pool designated the Beaver Creek Oil Pool. · The vertical limits of the Sterling Gas Pool and Beluga Gas Pool may be defined by the interval penetrated by the Beaver Creek Unit Well No. lA which appears to be a typical and representatiave well. · The vertical limits of the Beaver Creek Oil Pool may be defined by the interval penetrated by the Beaver Creek Unit Well No. 4 which appears to be a typical and representative well. Conservation Ord~e . r No 237 August 5, 1988 Page 3 ~ , · · Well spacing of 160 acres for the Sterling and Beluga gas pools will improve ultimate hydrocarbon recovery. Well spacing of 40 acres for the Beaver Creek Oil Pool will improve ultimate hydrocarbon recovery. Development plans for the aforementioned gas and oil pools prevent waste, and correlative rights are protected with the Unit agreement. The areal extent of the Beaver Creek Field is approximately 4960 acres. State and federal regulations currently in effect govern field operations except as modified by this conservation order. NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth apply to the following described area referred to in this order as the affected area: Township 6 North, Range 10 West~ Seward Merdian Section 3: Section 4: Section 5: Section 8: Section 9: Section 10: NE¼, W~, W~SE¼ All E%NE¼, SE¼ NE¼ NE¼NE¼, W%NE%, NW¼ N%NW¼ Township 7 North, Range 10 West, Seward Meridian Section 26: Section 27: Section 28: Section 32: Section 33: Section 34: Section 35: SW¼NW%, W%SW¼, SE¼SW¼ All NE%NE%, S%NE¼, SE¼NW¼, SW¼, SEt Ail Ail NW¼, W%SW¼, NE¼SW¼ Rule 1 Field Name The Field is named the Beaver Creek Field. Rule 2 Pool Definition (a) The Sterling Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. lA between the measured depths of 5188 and 6370 feet. Conservation OrdEr No. 237 August 5, 1988 Page 4 (b) The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. lA between the measured depths of 7960 and 9650 feet. (c) The Beaver Creek Oil Pool is defined as the accumulation of oil that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. 4 between the measured depths of 14,518 and 15,874 feet. Rule 3 Well Spacing (a) Well spacing in the Sterling and Beluga Gas Pools shall be 160 acres. No wellbore may be opened nearer than 1320 feet from the nearest open wellbore in the same pool. No well- bores may be opened nearer than 1500 feet from the Unit boundary. (b) Well spacing in the Beaver Creek Oil Pool shall be 40 acres. No wellbore may be opened nearer than 660 feet from the nearest open wellbore in the same pool. No wellbore may be opened nearer than 500 feet from the Unit boundary. Rule 4 Administrative Action Upon written application, the Commission may administra- tively amend this order. The operator must demonstrate to the Commission that sound engineering practices are maintained and the amendment will prevent waste and protect correlative rights. DONE at Anchorage, Alaska, and dated August 5, 1988. Alaska Oil and Gas Conservation Commission L ~ ~mznn, ~ommxsszoner Alaska Oil and Gas Conservation Commission W W Barnwell, Commissioner Alaska Oil and Gas Conservation Commission • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, ) . Docket Number: CO- 13-28 LLC for spacing exception to allow ) Conservation Order No. 237.001 testing, completion and production of ) Beaver Creek Unit No. 14RD from the ) Beaver Creek Unit No. 14A Beaver Creek Field, Beluga Pool closer ) Development Gas Well than 1320' from another well that is, or ) Beaver Creek Field may be capable of, producing from the ) Beaver Creek Unit same pool. ) Beluga Gas Pool Kenai Peninsula Borough, Alaska March 25, 2014 IT APPEARING THAT: 1. By letter received December 16, 2013 and supplemented on December 23, 2013, Hilcorp Alaska, LLC (Hilcorp) requested the Alaska Oil and Gas Conservation Commission (AOGCC) issue an exception to Rule 3 of Conservation Order No. 237 authorizing Hilcorp to test, complete, and produce development gas well Beaver Creek Unit No. 14RD from the Beluga Gas Pool closer than 1320' from the nearest wellbore open to the same pool. 2. Pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for February 13, 2014. On January 3, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list. On January 6, 2014, the notice was published in the ANCHORAGE DAILY NEWS. 3. Pursuant to 20 AAC 25.055(d)(1), Hilcorp sent by certified mail notice of the application to all owners, landowners, and operators of all properties within a 3000-foot radius of the proposed Beaver Creek Unit No. 14RD well. Hilcorp provided the AOGCC with a copy of the notice, date of mailing, Certified Mail Receipts, and addresses to which the notice was sent. 4. No protest to the application or request for hearing was received. 5. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 6. On February 7, 2014, the tentatively scheduled public hearing was vacated. Conservation Order 237.001 • • March 25, 2014 Page 2 of 3 FINDINGS: 1. Hilcorp is the owner and operator of the Beaver Creek Field, the Beaver Creek Unit, and the proposed Beaver Creek Unit No. 14RD development gas well, which are located in the Kenai Peninsula Borough, Alaska. 2. Hilcorp requested that the name of the proposed well be changed from Beaver Creek Unit No. 14RD to Beaver Creek Unit No. 14A in the cover letter attached to Sundry Application No. 314-095 received by AOGCC on February 20, 2014. 3. Beaver Creek Unit No. 14A has a surface location 113' from the south line and 1388' from the east line of Section 33, T7N, R10W, Seward Meridian (S.M.) and a bottom -hole location 2150' from the south line and 5124' from the east line of Section 34, T7N, R10W, S.M. 4. Rule 3(a) of Conservation Order No. 237 (CO 237) governs spacing of development wells for the Beluga Gas Pool within the Beaver Creek Unit (Beaver Creek, Beluga Gas Pool). Rule 3(a) specifies that no wellbore may be opened less than 1320' from the nearest wellbore open to the same pool, and that no wellbores may be opened less than 1500' from the Unit boundary. 5. Beaver Creek Unit No. 14A will open the Beaver Creek, Beluga Gas Pool to production. The distance to the nearest well open to the same pool may be less than 1320', and the distance to the Unit boundary exceeds 4000'. 6. Beaver Creek Unit No. 14A will access gas reserves that are not accessible to other wells because Beluga sandstone reservoirs are discontinuous. 7. Beaver Creek Unit No. 14A is situated on Federal lease A-028083 within the Beaver Creek Unit. Adjacent Federal lease A-028118 lies more than 2000' from the planned productive interval in Beaver Creek Unit No. 14A. 8. Hilcorp is owner and operator of the Beaver Creek Unit. Landownership for lease A- 028083 and adjacent lease A-028118 is divided between the U. S. Government and Cook Inlet Region, Inc. 9. On December 16, 2013, Hilcorp sent the application for exception by certified mail to all affected owners, landowners, and operators—i.e., the U. S. Government, Bureau of Land Management and Cook Inlet Region, Inc. Hilcorp provided addresses and Certified Mail Receipts to the AOGCC as proof that the application was mailed to all affected owners, landowners, and operators. 10. The AOGCC received no comments, objections, or protests in response to the public notice regarding the proposed Beaver Creek Unit No. 14A well or to the notification sent by Hilcorp to all affected owners, landowners, and operators within 3000' of Beaver Creek Unit No. 14A. Conservation Order 237.001 0 • March 25, 2014 Page 3 of 3 CONCLUSIONS: 1. Beaver Creek Unit No. 14A will recover reserves that are not accessible to existing development gas wells. 2. An exception to the well spacing provisions of Rule 3(a) of CO 237 for the Beaver Creek Unit No. 14A development gas well is required as this well may open the Beaver Creek, Beluga Gas Pool to production within 1320' of the nearest well open to the same pool. 3. An exception to the well spacing provisions of Rule 3(a) of CO 237 for the Beaver Creek Unit No. 14A development gas well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. NOW THEREFORE IT IS ORDERED: Hilcorp's application for an order granting an exception to the well spacing provisions of Rule 3(a) of Conservation Order No. 237 to allow testing, completion, and production of the Beaver Creek Unit No. 14A development gas well within the Beaver Creek, Beluga Gas Pool is hereby approved as long as Hilcorp complies with the terms of all lease agreements, Alas] other legal requirements. DONE at Anchorage, Alaska and dated March 25, 2014. aby P rster Daniel T. Seamount, Jr. air, Commissioner Commissioner TION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Singh, Angela K (DOA) From: Colombie, Jody J (DOA) Sent: Tuesday, March 25, 20141:14 PM To: Singh, Angela K (DOA); Ballantine, Tab A (LAW); Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Johnson, Elaine M (DOA); Jones, Jeffery B (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Turkington, Jeff A (DOA); Wallace, Chris D (DOA); (michael j.nelson@conocophillips.com); AKDCWelllntegrityCoordinator, Alexander Bridge; Andrew Vandedack, Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock, Burdick, John D (DNR); Cliff Posey; Colleen Miller, Crandall, Krissell; D Lawrence; Dave Harbour, David Boelens; David Duffy David Goade; David House; David McCaleb; David Scott; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Donna Ambruz; Dowdy, Alicia G (DNR); Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; schultz, gary (DNR sponsored); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff, Jacki Rose; Jdarlington ljarlington@gmail.com); Jeanne McPherren; Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett, Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty, Keith Wiles; Kelly Sperback; Kiorpes, Steve T; Klippmann; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker, Louisiana Cutler, Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike@kbbi.org; Mikel Schultz; MJ Loveland; mjnelson; mkm7200, knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer, Sternicki, Oliver R; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton, Teresa Imm; Thor Cutler, Tim Mayers, Tina Grovier (tmgrovier@stoel.com); Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net, Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Perrin, Don J (DNR); Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel (hans.schlegel@ge.com); Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jilt.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Kenneth Luckey, King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Peter Contreras; Pollet, Jolie; Richard Garrard; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Woolf, Wendy C (DNR); William Hutto; William Van Dyke Subject: coR7.001 and co 688 • Attachments: co237.001.pdf; co688.pdf Attached are: CO 237-001 Hilcorp Alaska Beaver Creek 14A Spacing Exception CO 688 ENI US Operating Company Nikaitchug Field Spacing Exception Jody J. Colombie Special Staff Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, Alaska 99501 Jodu. Colombie('alaska. aov Office: (907) 793-1221 Fax: (907) 276-7542 David W. Duffy, Landman Hilcorp Alaska, LLC Post Office Box 244027 Anchorage, AK 99524-4027 ICIV�S-:�I& L PL,ar� -L-S , ��`� Penny Vadla George Vaught, Jr. 399 W. Riverview Ave. Post Office Box 13557 Soldotna, AK 99669-7714 Denver, CO 80201-3557 Bernie Karl CIRI M Recycling Inc. Land Department Post Office Box 58055 Post Office Box 93330 Fairbanks, AK 99711 Anchorage, AK 99503 Richard Wagner Gordon Severson Post Office Box 60868 3201 Westmar Cir. Fairbanks, AK 99706 Anchorage, AK 99508-4336 Darwin Waldsmith James Gibbs Post Office Box 39309 Post Office Box 1597 Ninilchik, AK 99639 Soldotna, AK 99669 Jerry Hodgden Hodgden Oil Company 408 le St. Golden, CO 80401-2433 North Slope Borough Planning Department Post Office Box 69 Barrow, AK 99723 Jack Hakkila Post Office Box 190083 Anchorage, AK 99519 • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, ) Docket Number: CO-14-008 LLC to vertically expand the Beluga Gas ) Conservation Order No. 237.002 Pool in the Beaver Creek Unit. ) Beaver Creek Field Beaver Creek Unit Beluga Gas Pool Kenai Peninsula Borough, Alaska April 22, 2014 IT APPEARING THAT: By letter dated and received April 3, 2014, Hilcorp Alaska, LLC (Hilcorp) requested the Alaska Oil and Gas Conservation Commission (AOGCC) amend Rule 2(b) of Conservation Order No. 237 (CO 237) to expand vertically the interval defined as the Beluga Gas Pool. FINDINGS: 1. Hilcorp is the owner and operator of the Beaver Creek Field, the Beaver Creek Unit, which are located in the Kenai Peninsula Borough, Alaska. 2. Rule 2(b) of CO 237 defines the Beluga Gas Pool as the interval that correlates to 7,960 feet to 9,650 feet in the Beaver Creek Unit well No. 1A. Hilcorp has requested that the poll definition be expanded vertically to encompass the interval that correlates to 6,370 feet to 9,650 feet in that same well. 3. The existing pool was defined in 1988 based on available geological and reservoir information. 4. The previous operator of the field, Marathon Oil Corporation, drilled ten additional wells in the Beaver Creek Unit after the pool rules were established and obtained a better understanding of reservoirs in the Beluga Formation (Beluga). 5. Hilcorp has further revised the geologic and reservoir description of the area and has identified productive and potentially productive sands that lie within the Beluga but between the Sterling Gas and Beluga Gas Pools as defined in CO 237. 6. Hilcorp requested that the Beluga Gas Pool be expanded vertically to the base of the Sterling Gas Pool so that Beluga reservoirs that currently lie between these pools can be developed in accordance with Beluga Gas Pool rules. Conservation Order 237.002 April 22, 2014 Page 2 of 2 CONCLUSIONS: 1. Information gathered since 1988 demonstrates that the existing definition of the Beluga Gas Pool interval does not conform to the current understanding of the geology in this area. 2. Rule 4 of CO 237 allows the AOGCC to administratively amend the order if that amendment is based on sound engineering principles, and it will prevent waste and protect correlative rights. 3. Hilcorp's plans for continued development of the Beaver Creek Unit are based on sound engineering and geological judgment and they will improve ultimate recovery. Hilcorp is the sole owner and operator in and adjacent to the Beaver Creek Unit and, as such, there are no correlative rights concerns with vertically expanding the existing Beluga Gas Pool interval to the base of the Sterling Gas Pool as proposed by Hilcorp. NOW THEREFORE IT IS ORDERED: Hilcorp's application for an amendment of Rule 2(b) of Conservation Order No. 237 to expand vertically the interval defined as Beluga Gas Pool is hereby approved. Rule 2(b) of Conservation Order No. 237 is amended to read as follows: Rule 2(b) Pool Definition The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. IA between the measured depths of 6,370 and 9,650 feet. OIL Oil, qN� DONE at Anchorage, Alaska and dated April 22, 2014. \ 6 Cathy . Foerster Daniel T. Seamount, Jr. nog Chair, Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 mm. on the next day that does not fall on a weekend or state holiday. Singh, Angela K (DOA) From: Carlisle, Samantha J (DOA) Sent: Wednesday, April 23, 2014 8:07 AM To: (michael j.nelson@conocophillips.com); AKDCWellIntegrityCoordinator; Alexander Bridge; Andrew VanderJack; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Cliff Posey, Colleen Miller, Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy, David Goade; David House; David McCaleb; David Scott; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer; Frank Molli; schultz, gary (DNR sponsored); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff; Jacki Rose; Jdarlington oarlington@gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett, Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty; Keith Wiles; Kelly Sperback; Klippmann; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker, Louisiana Cutler; Luke Keller; Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark P. Worcester, Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike@kbbi.org; Mikel Schultz; Mindy Lewis; M1 Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover; Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Sharon Yarawsky; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Steve Kiorpes; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer; Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler; Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Perrin, Don J (DNR); Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jill.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Kenneth Luckey, King, Kathleen 1 (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Bettis, Patricia K (DOA); Peter Contreras; Richard Garrard; Richard Nehring; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Woolf, Wendy C (DNR); William Hutto; William Van Dyke; Ballantine, Tab A (LAW); Bender, Makana K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Johnson, Elaine M (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K (DOA); Turkington, Jeff A (DOA); To: Wallace, Chris D (DOA) Subject: CO 237.002 Beaver Creek Field Attachments: co237-002.pdf Samantha Carlisle Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) CONFIDENTIALITY NOTICE. This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sale use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. if you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. L� L71 80�)� \- 2-2- t- Q--Q' I,- '-� David W. Duffy, Landman Hilcorp Alaska, LLC Post Office Box 244027 Anchorage, AK 99524-4027 Penny Vadla George Vaught, Jr. Jerry Hodgden 399 W. Riverview Ave. Post Office Box 13557 Hodgden Oil Company Soldotna, AK 99669-7714 Denver, CO 80201-3557 40818 St. Golden, CO 80401-2433 Bernie Karl CIRI North Slope Borough K&K Recycling Inc. Land Department Planning Department Post Office Box 58055 Post Office Box 93330 Post Office Box 69 Fairbanks, AK 99711 Anchorage, AK 99503 Barrow, AK 99723 Richard Wagner Gordon Severson Jack Hakkila Post Office Box 60868 3201 Westmar Cir. Post Office Box 190083 Fairbanks, AK 99706 Anchorage, AK 99508-4336 Anchorage, AK 99519 Darwin Waldsmith James Gibbs Post Office Box 39309 Post Office Box 1597 Ninilchik, AK 99639 Soldotna, AK 99669` #S Ah r -I STATE OF ALASKA ADVERTISING ORDER 1W NOTICE TO PUBLISHER lqv INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION (PART2 OF THIS FORM) WITH ATTACHED COPY OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE ADVERTISING ORDER NO. AID A SEE BOTTOM'F..OR INYOICB ADDRESS F R ° M AOGCC 333 W 7th Ave, Ste 100 Anchorage, AK 99501 AGENCY CONTACT Jody Colombie DATE OF A.O. April 11, 2014 PHONE 0 9 —1221 PCN DATES ADVERTISEMENT REQUIRED: April 14, 2014 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. o Anchorage Daily News PO Box 149001 Anchorage, AK 99514 g SPECIAL INSTRUCTIONS: Type of Advertisement Legal® ❑ Display Classified ❑Other (Specify) SEE ATTACHED CO 14-008 SENI?iNUQIGE IN TR1Pl.ICATi•; TO ,. AOGCC, 333 W. 7th Ave., Suite 100 Anchorage, AK 99501 PAGE I OF 2 PAGES TOTAL OF ALL PAGES $ REF TYPE NUMBER AMOUNT DATE COMMENTS 1 VEN 2 ARDI 02910 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST I LID 1 14 02140100 73451 2 REQUISITIONED B DIVISION APPROVAL: 02-902 (Rev. 3/94) I I Publisher/Original Copies: Department Fiscal, Department, Receiving AOTRM Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-14-008. The application of Hilcorp Alaska, LLC (Hilcorp) to amend Rule 3 of Conservation Order 237 (CO 237) to remove all restrictions as to gas well spacing except that no well shall be within 1500 feet of the exterior boundary of the Beaver Creek Unit where owners and landowners are not the same on both sides of the boundary. Hilcorp, by letter dated April 3, 2014, requests the AOGCC amend Rule 3(a) of CO 237 to eliminate the 160 acre well spacing and the requirement that no gas well can be open within 1,320 feet of another open gas well in the same pool. The AOGCC has tentatively scheduled a public hearing on this application for May 29, 2014 at 9:00 a.m. at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on May 2, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after May 13, 2014. In addition, written comments regarding this apylication may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7 Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on May 16, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the May 29, 2014 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than May20, 2014. Cathy . Foerster Chair, Commissioner 270227 . RECEIVED 0000996678 $ 209.16 APR 2 1 2014 AFFIDAVIT OF PUBLICATION AOGCC STATE OF ALASKA THIRD JUDICIAL DISTRICT Joleesa Stepetin being first duly sworn on oath deposes and says that he is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on April 14, 2014 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed Subscribed and sworn to before me this 14th day of A ril, 2014 ,VA Notary Pu is in and for The State of Alaska. Third Division Anchorage, Alaska MY COMMISSION EXPIRES O'�Ilh�l I`J Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-14-008. The application of Hilcorp Alaska, LLC (Hilcorp) to amend Rule 3 of Conservation Order 237 (CO 237) to remove all restrictions as to gas well spacing except that no well shall be within 1500 feet of the exterior boundary of the Beaver Creek Unit where owners and landowners are not the same on both sides of the boundary. Hilcorp, by letter dated April 3, 2014, requests the AOGCC amend Rule 3(a) of CO 237 to eliminate the 160 acre well spacing and the requirement that no gas well can be open within 1,320 feet of another open gas well in the same pool. The AOGCC has tentatively scheduled a public hearing on this application for May 29, 2014 at 9:00 a.m. at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on May 2, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after May 13, 2014. In addition, written comments regarding this application may be submitted to the Alaska oil and Gas Conservation Commission, at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on May 16, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the May 29, 2014 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than May20, 2014. AO-14-029 Published: April 14, 2014 Cathy P. Foerster Chair. Commissioner 0 STATE OF ALASKA ADVERTISING ORDER SEE BOTTOM FOR INVOICE ADDRESS F IAOGCC NOTICE TO PUBLISHER ADVERTISING ORDER NO. INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED Onn AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF AO-1 4-29 ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE R 333 West 7t' Avenue. Suite 100 o Anchorage. AK 99501 M o Anchorage Daily News PO Box 149001 Anchorage, AK 99514 United states of America State of AGENCY CONTACT I DATE OF A.O. PHONE PCN 907 793-1221 DATES ADVERTISEMENT REQUIRED: April 14, 2014 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Account # STOF0330 AFFIDAVIT OF PUBLICATION REMINDER ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. division. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared ATTACH PROOF OF PUBLICATION HER who, being first duly sworn, according to law, says that he/she is the of Published at in said division and state of and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2012, and thereafter for consecutive days, the last publication appearing on the day of , 2014, and that the rate charged thereon is not in excess of the rate charged private individuals Subscribed and sworn to before me This _ day of 2014, Notary public for state of My commission expires - Singh, Angela K (DOA) From: Colombie, Jody J (DOA) Sent: Friday, April 11, 201411:01 AM To: Ballantine, Tab A (LAW); Singh, Angela K (DOA); Ballantine, Tab A (LAW); Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Johnson, Elaine M (DOA); Jones, Jeffery B (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Turkington, Jeff A (DOA); Wallace, Chris D (DOA); (michael j.nelson@conocophillips.com); AKDCWellIntegrityCoordinator, Alexander Bridge; Andrew Vanderlack, Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock, Burdick, John D (DNR); Cliff Posey, Colleen Miller, Crandall, Krissell; D Lawrence; Dave Harbour, David Boelens; David Duffy; David Goade; David House; David McCaleb; David Scott; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Donna Ambruz; Dowdy, Alicia G (DNR); Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Schultz, gary (DNR sponsored); George Pollock, ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff; Jacki Rose; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett; Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty; Keith Wiles; Kelly Sperback; Kiorpes, Steve T, Klippmann; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker; Louisiana Cutler; Luke Keller; Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike@kbbi.org; Mikel Schultz; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Sharon Yarawsky; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer, Sternicki, Oliver R; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier (tmgrovier@stoel.com); Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater; Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Perrin, Don J (DNR); Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham 0 (PCO); Greg Mattson; Hans Schlegel (hans.schlegel@ge.com); Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jill.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Kenneth Luckey; King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Peter Contreras; Pollet, Jolie; Richard Garrard; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Woolf, Wendy C (DNR); William Hutto; William Van Dyke Subject: PulpHearing Notice (Amend CO 237) Attachments: Notice of Public Hearing CO-14-008.pdf Jody J. Colombie Special Staff Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, Alaska 99501 Jodg. Colombie(aalaska. qov Office: (907) 793-1221 Fax: (907) 276-7542 • David W. Duffy Landman Hilcorp Alaska, LLC Post Office Box 244027 Anchorage, AK 99524-4027 0 • Penny Vadla George Vaught, Jr. 399 W. Riverview Ave. Post Office Box 13557 Soldotna, AK 99669-7714 Denver, CO 80201-3557 Bernie Karl CIRI K&K Recycling Inc. Land Department Post Office Box 58055 Post Office Box 93330 Fairbanks, AK 99711 Anchorage, AK 99503 Richard Wagner Gordon Severson Post Office Box 60868 3201 Westmar Cir. Fairbanks, AK 99706 Anchorage, AK 99508-4336 Darwin Waldsmith James Gibbs Post Office Box 39309 Post Office Box 1597 Ninilchik, AK 99639 Soldotna, AK 99669 Jerry Hodgden Hodgden Oil Company 408 18" St. Golden, CO 80401-2433 North Slope Borough Planning Department Post Office Box 69 Barrow, AK 99723 Jack Hakkila Post Office Box 190083 Anchorage, AK 99519 VUCI.A-�(Z-L #7 �I Hilcorp Alaska, LLC April 3, 2014 Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone:907/777-8414 Fax:907/777-8301 Email; dduffy@h4C0r1Lc0rn Cathy Foerster, Chair RSI Y D Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 APR 0 3 2014 Anchorage, Alaska 99501 A0GV RE: Proposal to amend Conservation Order 237 to redefine the measured depths of the Beluga Pool and to eliminate gas well spacing restrictions within 1500' of the Beaver Creek Unit boundary. Dear Commissioner Foerster, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Beaver Creek Field, respectfully requests the Alaska Oil and Gas Conservation Commission ("AOGCC") take administrative action to amend Rule 2 (Pool Definition) to adjust the vertical depths of the Sterling Gas and Beluga Gas Pools to include all sands associated with each geologic formation.' The language proposed by Hilcorp states: Rule 2 Pool Definition (a) [no change] (b) The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit well No. 1A between the measured depths of 74W 6,370 and 9,650 feet. (c) [no change] In addition, Hilcorp request the AOGCC to take administrative action to repeal Rule 3(a) in its entirety and replace it with the following language: Rule 3 Well Spacing: a) There shall be no restrictions as to gas well spacing except that no pay shall be opened in a well within 1500 feet from the exterior 1 Conservation Order 237, Rule 4 states: "Upon written application, the Commission may administratively amend this order. The operator must demonstrate to the Commission that sound engineering practices are maintained and the amendment will prevent waste and protect correlative rights." Hilcorp Alaska, LLC Proposal to Amend Conservation Order 237 April 3, 2014 Page 2 of 12 boundary of the Beaver Creek Unit where owners and landowners are not the same on both sides of the line. b) [No change] DISCUSSION The Beaver Creek Field is located in the Kenai National Wildlife Refuge approximately 11 miles northeast of Kenai, Alaska. Following unit formation in 1967, initial development resulted in the production of gas from both the Sterling and upper Tyonek Formation and oil from the Lower Tyonek formation. In 1988, the AOGCC first established pool rules for Beaver Creek Unit. Since that time, Conservation Order 237 has not been updated or amended. Confidential geologic and engineering reports have been prepared to support Hilcorp's application for the proposed administrative action. See Exhibits A (Geologic Report) and Exhibit B (Engineering Report). Hilcorp's proposed rules are designed to prevent waste, protect correlative rights and improve the ultimate recovery of remaining hydrocarbons throughout the Beaver Creek field. They are also designed to reduce the administrative burdens on both Hilcorp and AOGCC staff. There are currently 16 wells in the Beaver Creek Unit, 6 of which are producing. During the month of January 2014, these wells collectively produced 4,732 barrels of oil and 175,195 MCF gas. By comparison, Beaver Creek Field production peaked in December 1985 (10,067 barrels of oil and 1,588,869 MCF gas) from only 6 wells. Hilcorp purchased these legacy assets with the intent to maximize the recovery of remaining hydrocarbons. This requires implementation of a comprehensive capital workover program designed to: • repair broken wells • return shut in production wells to service • optimize existing well completions • increase water injection and reservoir throughput, • pursue stimulation opportunities, and • identify, then execute new drilling projects During 2014, Hilcorp anticipates performing of approximately 4 rig workovers and 6 new drill/sidetrack projects within the Beaver Creek Field, each targeting increased oil and gas production. Going forward, Hilcorp's recompletion, workover and drilling Hilcorp Alaska, LLC Proposal to Amend Conservation Order 237 April 3, 2014 Page 3 of 12 program will be similar in 2014-2016. Within the next few years, Hilcorp estimates that it will undertake up to 6 workovers and 8 new drill/sidetrack projects within the Beaver Creek Unit. Hilcorp cannot efficiently produce remaining reserves under current well spacing rules. While existing rules and procedures may have adequately protected correlative rights and prevented waste during the field's initial development, they are not applicable to the enhanced recovery effort necessary to produce remaining hydrocarbon reserves at the Beaver Creek Unit. As discussed above, Hilcorp, as Operator, is the sole working interest owner of the Beaver Creek Field. There are four leases within the Beaver Creek Unit (total of 3680 acres), each of which is jointly owned by the Federal Government and Cook Inlet Region, Inc. The purpose of proposed vertical adjustment of existing Sterling and Beluga Pools is self-evident. The goal is simply to include all potentially gas -bearing sands required to extend this aging field's capacity to produce in a manner that is technically sound, yet administratively efficient In the absence of competing working interests, gas well spacing and density rules are no longer to necessary to prevent waste or protect correlative rights. Adjoining owners, operators and landowners will be adequately protected by the proposed 1500' buffer from the unit boundary boarder. In addition to reducing administrative burdens, the proposed order is designed to prevent economic and physical waste and improve the ultimate recovery of remaining hydrocarbons. By eliminating intra-pool gas well spacing rules, and including all sands associated with the Sterling and Beluga Gas Pools, Hilcorp will be able to target smaller, un-drained portions of isolated areas that cannot be reached by wells conforming to current spacing restrictions. Elimination of all spacing requirements will also help maximize recovery from bypassed pay while allowing for continued production from established development wells. Hilcorp would be pleased to schedule a technical meeting with AOGCC staff to provide additional information in support of this proposal. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at 777-8341. Hilcorp Alaska, LLC Proposal to Amend Conservation Order 237 April 3, 2014 Page 4 of 12 Sincerely, David W. Duffy, Landman Hilcorp Alaska, LLC Enclosures: CONFIDENTIAL • Exhibit A: Geologic Report in Support of Proposal to Amend Beaver Creek Field's Beluga Pool Definition • Exhibit B: Engineering Report in Support of Proposal to Eliminate Gas Well Spacing Restrictions at Beaver Creek Field cc: Bureau of Land Management, Cook Inlet Region, Inc. Confidential Exhibit A held in secure storage • • Confidential Exhibit B held in secure storage 0 0 Figures Al and A2 indexed inside CO 234A Confidential Figure A3 held in secure storage Confidential Figure A4 held in secure storage E • Confidential Figure A5 held in secure storage Confidential Figure A6 held in secure storage #6 Ah Ah 7STATE OF ALASKA MW NOTICE TO PUBLISHER W ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED A O_14020 A AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE $�3 III g w .�r�:::. . �! eA sel_.... _ ..., "-,'fit. i F AOGCC AGENCY CONTACT DATE OF A.O. January 3, 2014 R 333 W 7th Ave, Ste 100 Jody Colombie PHONE PCN D Anchorage, AK 99501 M 9 9 —1221 DATES ADVERTISEMENT REQUIRED: January 6, 2014 o Anchorage Daily News PO Box 149001 Anchorage, AK 99514 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS g , ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Type of Advertisement Legal® ❑ Display Classified ❑Other (Specify) SEE ATTACHED SENQ1 t AOGCC, 333 W. 7th Ave., Suite 100 PAGE 1 OF TOTAL OF ALL PAGES $ +3: Anchorage, AK 99501 2 PAGES REF TYPE NUMBER AMOUNT DATE COMMENTS 1 VEN 2 ARDI 02910 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST 55 1 2 REQUISI O ED (I.J) DIVISION APPROVAL: 02-902 (Revel/94) Publisher/Original Copies: Department Fiscal, Department, Receiving AOTRM Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-13-28. The application of Hilcorp Alaska, LLC (Hilcorp) for an exception to allow testing, completion and production of Beaver Creek Unit No. 14RD from the Beaver Creek Field, Beluga Pool. Hilcorp, by letter received December 17, 2013, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an exception to the spacing requirements of Conservation Order No. 237, Rule 3 (Well Spacing) to allow testing, completion, and production of planned gas development well Beaver Creek Unit No. 14RD closer than 1320' from another well that is, or may be capable of, producing from the same pool. Beaver Creek Unit No. 14RD Surface Location: 113' from the south line and 1388' from the east line of Section 33, T7N, R10W, Seward Meridian (S.M.) Estimated Top of Productive Horizon Location: 2022' from the south line and 5255' from the east line of Section 34, T7N, R10W, S.M. Estimated Bottom -hole Location: 2150' from the south line and 5124' from the east line of Section 34, T7N, R10W, S.M. The AOGCC has tentatively scheduled a public hearing on this application for February 13, 2014, at 9:00 a.m. at 333 W. 7`" Ave., Ste 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on January 22, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call 793-1221 after January 28, 2014. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 W. 7`h Ave., Ste 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on February 8, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the February 13, 2014 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at 793-1221, no later than February 11, 2014. ;)� <� l Foerster ,Pommissioner 270227 0000847380 • RECEIVED $ 258.98 JAN 0 9 2014 AFFIDAVIT OF PUBLICATION AOGCC STATE OF ALASKA THIRD JUDICIAL DISTRICT Joleesa Stepetin being first duly sworn on oath deposes and says that he is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on January 06, 2014 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed Subscribed and sworn to before me is 6th day of January, 2014 r r Notary Public in and for The State of Alaska. Third Division Anchorage, Alaska MY COMMISSION EXPIRES Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION oexcepnn to w testing application, p ComplOf etion production of� Beave for anexception allLLC ow i Creek Unit No. 14RD from the Beaver Creek Field, Beluga Pool. Hilcorp, by letter received December17, 2013, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an exception to the spacing requirements of Conservation order No. 237, Rule 3 (Well development nt to allow Beaver Creek Unit No. 14RD and duction of closer gas another well that is, or may be capable of, producing from the same pool. Beaver Creek Unit No. 14RD Surface Location: 113' from the south line and 1388' from the east line of Section 33, T7N, R10W, Seward Meridian (S.M.) Estimated Top of Productive Horizon Location:2022' from the south line and 5255' from the east line of Section 34, T7N, R10W, S.M. EstimatedBottom-hole Location: 2150' from the south line and 5124' from the east line of Section 34, T7N, R10W, S.M. The AOGCC has tentatively scheduled a public hearing on this application forFebruary 13, 2014, at 9:00a.m. at 333 W. 7th Ave., Ste scheduled hearing bAlaska eheld, a worequest rittenrequestmust be filedewith the AOGCC no later than 4:30 p.m. on January 22, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call 793-1221 after January 28, 2014. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 W. 7th Ave., Ste 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on February 8, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the February 13, 2014 hearing, f, because of a disability, special accommodations may be needed to 'omment or attend the hearing, contact the AOGCC's Special 4ssistant, Jody Colombie, at 793-1221, no later than February 11, 2014. 10-14-020 lublished: January 6, 2014 Cathy P. Foerster Chair, Commissioner • 0 STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED ORDER AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF AO-1 o 4-OnG ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE F I AOGCC R �333 West 7th Avenue, Suite 100 ° Anchorage_ AK 99501 M a Anchorage Daily News PO Box 149001 Anchorage, AK 99514 United states of America State of CONTACT Jody ColornbieJanuary 2014 PHONE PCN 07 -1221 DATES ADVERTISEMENT REQUIRED: January 6, 2014 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. Account # STOF0330 AFFIDAVIT OF PUBLICATION REMINDER SS INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. division. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared ATTACH PROOF OF PUBLICATION HERE. who, being first duly sworn, according to law, says that he/she is the of Published at in said division and state of and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2013, and thereafter for consecutive days, the last publication appearing on the day of , 2013, and that the rate charged thereon is not in excess of the rate charged private individuals Subscribed and sworn to before me This _ day of 2013, Notary public for state of My commission expires _ Singh, Angela K (DOA) From: Colombie, Jody J (DOA) Sent: Friday, January 03, 201412:37 PM To: Singh, Angela K (DOA); Ballantine, Tab A (LAW); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha 1 (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Hunt, Jennifer L (DOA); Johnson, Elaine M (DOA); Jones, Jeffery B (DOA); Eaton, Loraine E (DOA); Bender, Makana K (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Norman, John K (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Turkington, Jeff A (DOA); Wallace, Chris D (DOA); (michael j.nelson@conocophillips.com); AKDCWellIntegrityCoordinator, Alexander Bridge; Andrew Vanderlack; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Brian Havelock, Burdick, John D (DNR); Cliff Posey, Colleen Miller, Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy; David Goade; David House; David Scott; David Steingreaber; Davide Simeone; ddonkel@cfl.rr.com; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt, Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Schultz, gary (DNR sponsored); ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff, Jacki Rose, Jdarlington oarlington@gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jim White; Jim Winegarner; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett, Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty, Keith Wiles; Kelly Sperback; Kiorpes, Steve T; Klippmann; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker, Louisiana Cutler; Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark P. Worcester, Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike@kbbi.org; Mikel Schultz, Mindy Lewis; MJ Loveland; mjnelson; mkm7200, knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield@aoga.org; Tania Ramos, Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier (tmgrovier@stoel.com); Todd Durkee; Tony Hopfinger; trmjrl; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net, Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; David Tetta; Perrin, Don J (DNR); Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel (hans.schlegel@ge.com); Heusser, Heather A (DNR); Holly Pearen; James Rodgers, Jason Bergerson; Jennifer Starck; jilt.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; Josh Kindred; King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Bettis, Patricia K (DOA); Peter Contreras; Pollet, Jolie; Richard Garrard; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, Woolf, Wendy C (DNR); William Hutto; William Van Dyke Subject: Pu'tlffc Hearing Notice Beaver Creek 14RD Spacir Exception Attachments: Notice of Public Hearing, CO-13-28.pdf A copy of the attached Public Hearing Notice was sent to the following Land Owners on January 3, 2014. Sharon Yarawsky BLM 222 West 7th Ave, #13 Anchorage, AK 99513 Ethan Schutt, Senior Vice President Land Energy CIRI 2525 C Street, Suite 500 Anchorage, AK 99503 • 0 David W. Duffy Landman Hilcorp Alaska, LLC Post office Box 244027 Anchorage, AK 99524-4027 David McCaleb Penny Vadla IHS Energy Group 399 W. Riverview Ave. GEPS Soldotna, AK 99669-7714 5333 Westheimer, Ste.100 Houston, TX 77056 Jerry Hodgden Richard Neahring Hodgden Oil Company NRG Associates 408 le St. President Golden, CO 80401-2433 Post Office Box 1655 Colorado Springs, CO 80901 Bernie Karl CIRI K&K Recycling Inc. Land Department Post Office Box 58055 Post Office Box 93330 Fairbanks, AK 99711 Anchorage, AK 99503 North Slope Borough Planning Department Richard Wagner Post Office Box 69 Post Office Box 60868 Fairbanks, AK 99706 Barrow, AK 99723 Jack Hakkila Darwin Waldsmith Post Office Box 190083 Post Office Box 39309 Anchorage, AK 99519 Ninilchik, AK 99639 George Vaught, Jr. Post Office Box 13557 Denver, CO 80201-3557 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Baker Oil Tools 795 E. 94' Ct. Anchorage, AK 99515-4295 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 James Gibbs Post Office Box 1597 Soldotna, AK 99669 #s • U December 16, 2013 Ifl Hilcorp Alaska, LLC Cathy Foerster, Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone:907/777-8300 Fax: 907/777-8301 RE: Application for spacing exception to allow testing, completion and production of BCU #14RD from the Beaver Creek Field, Beluga Pool. Dear Commissioner Foerster, As Operator of the Beaver Creek Field, Hilcorp Alaska, LLC ("Hilcorp") respectfully requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to issue an exception to Conservation Order No. 237, Rule 3 (Well Spacing), to allow testing, completion and production of BCU # 14RD from the Beluga Gas Pool closer than 1,320' feet from the nearest open wellbore in the same pool. The location of BCU #14RD and its relationship to adjoining properties and wells is depicted in Exhibit A • Surface: 113' FSL, 1,388' FEL, Section 33, T7N, R10W SM • Top of Productive Horizon: 2,022' FSL, 5,255' FEL, Section 34, T7N, R10W, SM • Total Depth: 2,150' FSL, 5,124' FEL, Section 34, T7N, RIOW, SM Avg! r C re C.k- Hilcorp owns a 100% working interest in the Re ,I<a r Field. No leases within the field are segregated with regard to depth. The nearest point where land ownership changes (unit boundary) exceeds 5,000 feet. The distance to the nearest well open to the same pool (Beluga) is approximately 1,320 feet (BCU 19).1 There are no other affected owners, landowners or operators. Based on confidential geological and engineering data available to Hilcorp, it is apparent that the Beluga sandstones particularly discontinuous and unpredictable, that they drain small areas, and that the proposed development of BCU # 14-RD is necessary to maximize recovery of gas from the Beaver Creek Field's Beluga Pool. At the date of this mailing, a copy of this proposed amendment was sent by certified mail to the potentially affected owners, landowners and operators (BLM and CIRI). Also 1 See Exhibit A (red circle = 1,320' well spacing radius circle illustrated on Exhibit A = 1,320 radius, measured from TPI). Beaver Creek Unit • 0 BCU# 14RD Spacing Exception December 16, 2013 Page 2 of 4 enclosed is an affidavit stating the undersigned is acquainted with the facts and verifying that all facts asserted herein are true. As demonstrated above, granting an exception to Rule 3 of Conservation Order No. 237 is proper as the proposed action will not impact the correlative rights of any third parties. If you have any questions regarding this request, please contact Mr. Kevin Eastham, Senior Geologist, at 777-8395, or you may contact the undersigned at 777-8414. Sincerely, David W. Duffy, Landman Hilcorp Alaska, LLC Enclosures: Exhibit A, Affidavit, Copy of Certified Mail Receipts CC: BLM, CIRI Beaver Creek Unit 0 0 BCU# 14RD Spacing Exception December 16, 2013 Page 3 of 4 EXHIBIT A BCU-14RD Spacing Exception Plot Legend T BCU 14-RD S,HL -ICU .12 erir X BCU 14-RD Top Beluga t3cu tM ilNL* BCU 14-RD BHL 0! ! Other Sufaoe We# Locations + � Other Batkwn Hde Locat orts ---- Well Paths r Oi and Gas Unit Bovdary Bou 13 BHL'^ WA) 19 BHL' ��±yy sou to BHL•' BCU S007NOl OW 3CU IL 9-41. �—� 14-RD BHL Ocu 16 BF• _ 1 .BCU BC.0 01ABHL® BEAVER EEK UNIT BCU 14-RD - - SHL ®LU 15 BHL , ° BCU-7 R0-G PT= GHLa Bcli Own S006N010W _ AC 118 BOU a? BHLMO" 0 :J C- 5F-- I a 1 aao :,M 11 Beaver Creek Unit Feet BCU 14-RD Alaska Stale, Plane Zone 4, NA027 Y I il„ p 1_1.1 Map Dale. 12+fi40'13 A • • Beaver Creek Unit BCU# MM Spacing Exception RECEIVED December 16, 2013 Page 4 of 4 2 3 2 013 ,AOGCC UPDATED VERIFIATION OF APPLICATION FOR SPACING EXCEPTION COOK INLET ALASKA BEAVER CREEK FIELD, BELUGA GAS POOL WELL BCU # 14RD I, DAVID W. DUFFY, Landman, Hilcorp Alaska, LLC, do hereby verify the following: I am acquainted with Hilcorp Alaska, LLC's Application for a Permit to Drill dated on or about December 16, 2013; correspondence with staff regarding spacing requirements related to said work, the Beaver Creek Unit/Field, and Conservation Order 237. I assert all facts outlined in the above -referenced application for a spacing exception are true. I have reviewed the plats attached herein as Exhibits A. This plat correctly portrays the pertinent and required data for the AOGCC to take action on this request. ,r4 DATED at Anchorage, Alaska this ui day of December 2013. David W. Duffy, Hilcorp Alaska, LLC STATE OF ALAKSA ) ) ss THIRD JUDICIAL DISTRICT ) SUBSCRIBED TO AND SWORN before me thiV th day of December, 2013 $ '1A'i�E OF Ax,MKA NOTARY PUBLIC Zelma M. Clarka r NO ARY PUBLIC IN AND FOR TM STATE OF ALSKA My Commission expires: /'l D/ • Beaver Creek Unit BCU# 14RD Spacing Exception December 16, 2013 Page 4 of 4 4') �'t � v- VERIFIATION OF APPLICATION FOR SPACING COOK INLET ALASKA BEAVER CREEK FIELD, BELUGA WELL BCU # 14RD I, DAVID W. DUFFY, Landman, Hilcorp Alaska, LA, do hereby verify the following: I am acquainted with Hilcorp ftdaska, C's Application For Sundry Approval submitted December 16, 2010 spondence with staff regarding spacing requirements related to said work, a Beaver Creek Unit/Field, and Conservation Order 237 I assert all facts outlined to the above -referenced application for a spacing exception are true. i have reviewed th plats attached herein as Exhibits A. This plat correctly portrays the perk nt and required data for the AOGCC to take action on this request. DATED at Anchorage, Alaska this lb day of December 2013. D vid W. Duffy, L dm n Hilcorp Alaska, LLC STATE OF ALAKSA ) ) ss THIRD JUDICIAL DISTRICT ) SUBSCRIBED TO AND SWORN before me this/d t' day of December, 2013 A,L84t)F ALA3KAAdsbk� . /f / NOTARY PUBLIC NO Y PUBLIC IN AND FOR 2eima M. Clarke !�l�Ceuna>�e1on flair 10. 2D16 T STATE OF ALSKA �---- d My Commission expires: tj jlr `71 rn rn 7:- Sharon YarawskY 77, Branch of Energy and Minerals rr, U- gement Bureau of Land Mana 222 West 7t' Avenue, #13 Anchorage, AK 99513 71� REC"T 01w, mo b1suralwo awww PmVidBsf% 0 Ir �y Gil 0 Sharon Yarawsky a- Branch of Energy and Minerals C3 0 Bureau of Land Management 222 West 7" Avenue, #13 Anchorage, AK 99513 c v 'o .y d L a � cO� v yn M 7-717 -. x -0 .!7 ,� _.. C.,f Ethan Schutt, Senior Vice President .------•---- E' Cr Land Energy .:�..:..� c r3 c3 cm , Cook Inlet Region, Inc. ' N 2525 C Street, Suite 500 Anchorage, AK 99503 w. . • R A J :c m CD .. Q m p m r d - Er O Ethan Schutt, Senior Vice President Er Land Energy o Cook Inlet Region, Inc. 2525 C Street, Suite 500 Anchorage, AK 99503 �. R• � fit •. 5 .. #4 Unitea States Department of th~ ,nterior BUREAU OF LAND MANAGEMENT Division of Mineral Resources 6881 Abbott Loop Road Anchorage, Alaska 99507-2599 August 3, 1988 Mr. Chat Chatterton State of Alaska Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 SR ENG SR ENG ENG SR GEOL '¢_-N G d Dear Mr. Chatterton: S'I'j~-~¥~.-~H--]--~ We ~a~e ~e~e~ea ~ou~ D,~a~t Co~se~a~$o~ O~de~ ~o, 237 establishing pool-~Ule's for the Beaver Creek Unit and we have only one comment. Since the Beaver Creek Unit is a federally administered unit for field operations, pages 5 and 9 should reflect federal regulations (43 CFR 3162.1) as well as statewide regulations governing field operations. Therefore, we suggest substituting " "statewide the phrase, state and federal regulations" for the phrase, regulations" in line 9 on page 5. Sincerely, Joseph A. Dygas Chief, Branch of Lease Operations Public Lands USA' Use, Share, Appreciate #3 Notice of Public Hearing STATE OF ALASKA 'Alaska Oil and Gas Conservation Commission Re: The application of Marathon Oil Company (Marathon) to establish pool rules for the Beaver Creek Oil and Gas Field. Marathon Oil Company, as operator for the Beaver Cr'eek Unit, by letter dated July 7, 1988, has requested the Alaska Oil and Gas Conservation Commission to issue pool rules covering the oil and gas pools in the Beaver Creek Field. A person who may be harmed if the requested order is issued may file a written protest prior to July 27, 1988 with the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501, and request a hearing on the matter. If the protest is timely filed, and raises a substantial and material issue crucial to the Commission's determination, a hearing on the matter will be held at the above address at 9:00 a.'m. on August 12, 1988 in conformance with 20 AAC 25.540. If a hearing is to be held, interested parties may confirm this by calling the Commission's office, (907) 279-1433, after July 27, 1988. If no proper .protest is filed, the Commission will consider the issuance ofthe order without a h.earing. C ommis s ioner Alaska Oil & Gas Conservation Commission Published July 11, 1988 #2 Production Manager Alaska Region Domestic Production Marathon Oil Company P.O. Box 190168 Anchorage, Alaska 99519 Telephone 907/561-5311 July 7, 1988 'L:i'gRARY COPY C. V. Chatterton, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage AK 99501-3192 Dear Mr. Chatterton: BEAVER CREEK AREA, STATE OF ALASKA PROPOSED FIELD AND POOL REGULATIONS AND CLASSIFICATION Marathon Oil Company, as Operator of the Beaver Creek Unit and on behalf of the working interest owners, in accordance with the provisions of 20 AAC 25.520 of the Alaska Administrative Code, requests the Commission issue orders for the following: The area for which this Conservation Order is applicable is described as- Township 6 North, Range 10 West, Seward Meridian Section 3- NE~, W½, W½SE¼ Section 4: All Section 5' E½NE¼, SE~ Section 8- NE~ Section 9- NE~NE¼, W½NE¼,NW~. Section 10- N½NW¼ Township 7 North, Range 10 West, Seward Meridian Section 26' SW~NW¼, W½SW¼, SE¼SW¼ Section 27: All Section 28- NE¼NE¼, S½NE¼, SE¼NW¼, sW¼,SE¼ Section 32' E½E½ Section 33: All Section 34: All -., u~u~ NE¼SW~ Section 35 NWl, Containing 4,960 acres more or less. Rule 1. Name of Field The name of the field shall be Beaver Creek Field. Cons. "'" -:- ',, Ar, ch.~rsge A subsidiary of USX Corporation C. V. Chatterton July 7, 1986 Page 2 Rule 2. Definitions of Pools (a) The Sterling Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Beaver Creek Unit Gas Well No. lA (SW¼SE¼, Section 33, T7N, RIOW, S.M.) between the measured depths of 5188 and 6370 feet. (b) The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Beaver Creek Unit Gas Well No. lA between the measured depths of 7960 and 9650 feet. (c) The B. eaver Creek Oil Pool is defined as the accumulation of oil that is common to and correlates with the accumulation found in the Beaver Creek Unit Oil Well No. 4 (SE¼NE¼, Section 33, T7N, RiOW, S.M.) between the measured depths of 14,518 and 15,874 feet. Rule 3. Well Spacing. The well spacing in each gas pool shall be 160 acres. The pattern of the spacing for each pool shall be the quarter section of each section lying within the area of this Conservation Order. No wellbores in any gas pool may be opened nearer than 1,320 feet from the nearest gas producer nor nearer than 1,500 feet to the unit boundary. Except as stated above, there will be no stand off from the spacing unit boundaries within the participating area. The well spacing in the oil pool shall.., be 40 acres. The pattern of the spacing for the pool shall be the quarter-quarter section within the area of this Conservation Order. No wellbores in any oil pool may be opened nearer than 660 feet from the nearest oil producer nor nearer than 500 feet to the unit boundary. Except as stated above, there will 'be no stand off from the spacing unit boundaries within the unit area. Rule 4. Amendment Approval. Upon request of the applicant and a showing that affected parties have been notified of such action, the Commission may amend the Conservation Order or drilling of any well at any location or any operation reasonably designated to prevent waste and protect Correlative rights. In support of this application, we enclose geologic and engineering exhibits. Doyle L. Jones DE6-42 Enclosures Copy: U.S. Bureau of Land Management (w/encs.) G. A. Graham, Unocal (w/encs.) CEF: 311.2 ,~LA,:,r,A Ol~ & GAS ,~i~,:>I~RV,qTiON CON,'i MISSION simultaneous depletion of the sand members is the most efficient and eco- nomical method of production. As mentioned above, multiple completions of the sand members are not currently required, but may be used at a future date if reservoir conditions dictate their use is required to maximize re- covery and prevent waste. BELUGA GAS POOL .G_eology/H~/drocarbon Occurrence The Beluga gas sands of the proposed Beluga Gas Pool have been interpreted to be braided to meandering stream systems. These sands generally occur in thin, discofitinuous lenses separated by shales and coal beds. The sands are gas-bearing, and are a separate accumulation from the Sterling Gas Pool. Pool Development To date, there has been no development of the Beluga Gas Pool. Drillstem test' (DST) data, however, prove the existence and productivity of the in- terval. At present, a workover is planned to complete an existing well in the Beluga Gas Pool. BCU No. lA will be completed as a dual Ster- ling/Beluga completion in mid-1988. Reservoir Properties DST data indicates the reservoir pressure of the Beluga Gas Pool is.approx- imately 3900 psi. The data have indicated good permeabilities can be en- countered, but as with the Sterling Gas Pool, the reservoir properties vary greatly laterally due to the depositional environment of the reservoir° Reservoir ManaQement Due to the lateral variability of the Beluga gas sands, simultaneous de- pletion of individual zones is anticipated. Lateral discontinuities are more pronounced in the Beluga gas sands, and very few of the individual members, if any, would be capable of supporting an individual completion. Therefore, all Beluga intervals determined to be gas productive will be produced in commingled Beluga completions, assuring maximum deliverability and recovery of reserves. BEAVER CREEK OIL POOL Geology/Hydrocarbon Occurrence The proposed Beaver Creek Oil Pool is to be comprised of the G-Zone and the Hemlock Formation. A detailed discussion of the geology, of the two zones is included in Exhibit A. Generally, the G-Zone and the Hemlock Formation of the proposed oil pool are relatively similar in geologic age and en- vironment of deposition, and are stratigraphically adjacent. Data obtained from DST's in BC No. 4 indicate both zones are oil bearing. -2- Pool Development Currently, two wells, BCU Nos. 4 and 5RD, are completed in the G-Zone of the Beaver Creek Oil Pool, and have a combined cumulative oil recovery of 3,577 MBBLS as of May 1, 1988. No wells are producing from the Hemlock Formation at present. The first workover to commingle production of the two zones of the Beaver Creek Oil Pool is scheduled for mid-1988 (BCU No. 4). Reservoir Properties Initial reservoir pressures of both zones of the proposed oil pool were determined to be quite similar based on DST's, with both zones at or near 7500 psi. Pressure transient analysis of the DST data indicated the Hemlock interval has an effective permeability of only 0.5 md, while the G-Zone has an effective permeability of about 75 md. Oil gravity is ap- proximately 34-35°API in the G-Zone, and viscosity is 0.70 cp. Reservoir Management Combined oil production through commingled completions has been determined to be the most efficient and economical method of producing the two in- tervals of the Beaver Creek Oil Pool. Commingled completions will maximize recovery and prevent waste by allowing the marginal Hemlock to be produced economically, thereby resulting in incremental recovery. The Hemlock zone reserves, estimated' to be 320,000 barrels in BCU No. 4 will not be devel- oped except by commingled production as the zone is of insufficient reser- voir quality to justify an individual completion, and the risks associated with dual completions as this depth outweigh any possible benefits. No impairment of existing G-Zone production is anticipated by commingling production, because the Hemlock is expected to produce dry oil of a similar gravity and composition to that found in the G-Zone, and the large difference in reservoir quality will not allow significant crossflow. An isolation packer between the two intervals can be used to minimize crossflow in the event of an extended shutdown. Allocation of production between the two zones for reservoir management purposes will be based primarily on annual surveys using commercial produc- tion logging tools and techniques. Further, individual zone tests will be conducted during completion operations and will be used to verify the log- ging results. Commingled production of the two zones will also allow easy access to ei- ther interval for reservoir monitoring and remedial activities. Anticipat- ed activities would include, but are not limited to, production logging, perforating, and coiled tubing activities. All of these activities have proven useful in maximizing reserve recovery. RE29/13 -3- . BEAVER CREEK FIELD, BEAVER CREEK UNIT KENAI PENINSULA, ALASKA EXHIBIT C ALASKA OIL & GAS t:'.t:~/¥.,?.-,.E.~Wi TfON COMMiSSiON LiBP, ARY COPY ENGINEERING REPORT IN SUPPORT OF POOL SPACING RULES Statewide spacing regulations are currently in effect for the Beaver Creek Unit. It is proposed that the following pool spacing rules be established for the Beaver Creek Field- Sterling Gas Pool It is proposed to establish 160-acre drilling units for the Sterling Gas Pool defined at the point of penetration of the B-3 sand, and that no re- striction be placed on the location of wells within these units other than no well is to be closer than 1320 feet from the nearest Sterling producer. Beluga Gas Pool It is proposed to establish 160-acre drilling units for the Beluga Gas Pool to be common with the Sterling drilling units, and that no restriction be placed on the location of wells within these units other than no well is to be closer than 1320 feet from the nearest Beluga producer. Beaver Creek Oil Pool It is proposed to establish 40-acre drilling units for the Beaver Creek Oil Pool defined at the point of penetration of the Main G-Zone sand, and that no restriction be placed on the location of wells within these units other than'no well is to be closer than 660 feet from the nearest Beaver Creek Oil Pool producer. Due to the nature of the deposition~l environments of the Sterling gas sands and the Beluga gas sands, various lateral discontinuities are possible which may effectively limi.t individual zone'recoveries should spacing be restricted to the current 3000 feet. These discontinuities include faults, shale-outs, and pinch-outs and are based on log analysis and geologic interpretation. In addi- tion, the Beluga interval is interpreted to be lenticular in nature. Establish- ing 160-acre drilling units for these two gas pools will allow for efficient development and recovery of reserves. An example where reserve recovery may be hindered by the current spacing regu- lations for these two pools is illustrated by the B-2 sand member of the Ster- ling Gas Pool. Referring to Cross-Section A-A, Attachment No. 6, note that BCU No. 6 is located approximately at the crest of the structure, but the B-2 sand is not present. Efficient recovery of B-2 reserves may require an offset well to BCU No. 6, positioned to take advantage of structure in the depletion of B-2 reserves, particularly if water encroachment limits B-2 recovery from down-structure wells. Should situations of this type arise, each individual sand member of the two pools will not be indiscriminately completed at every well location. The number -4- of completions within each sand will depend on the extent of the discontinu- ities, reserve volumes of each member, deliverability requirements, and prudent reservoir management practices. Further, establishing common drilling units-for the two pools will allow for multiple completions potentially resulting in the incremental recovery of marginal reserves. Regarding drilling units for the Beaver Creek Oil Pool, historical development drilling activity indicates reduced spacing from the current 1000 feet to 40-acre drilling units on 660 feet minimum spacing is necessary for similar rea- sons. Six wells have been drilled to date on quarter-sections to evaluate the G-Zone and Hemlock intervals of the Beaver Creek Oil Pool, and only two have yielded a completion. Both of these wells are G-Zone producers with shallow decline rates 'indicative of a potentially large reservoir. Apparent permeability barriers and other discontinuities exist which have limited successful development of the Beaver Creek Oil Pool reserves. The proposed 40-acre drilling units should allow for optimum and more efficient recovery of Beaver Creek Oil Pool reserves should further evaluation indicate such development activity is required. RE29/13 -5- ALA,~3KA OIL & GAS BEAVER CREEK FIELD, BEAVER CREEK UNIT OONS.~!.FWATION OOMMiS$tON KENAI PENINSULA, ALASKA EXHIBIT A Geologic Report in Support of Pool Rules Request The following Geologic Report is submitted to support an application for a Conservation Order that will establish pool rules for hydrocarbons production from the Sterling, the Beluga, and the Tyonek G-Zone and Hemlock (herein defined as the Beaver Creek Oil Pool) Formations , Kenai Group, Beaver Creek Unit, Kenai Peninsula, Alaska. Structural Setting.. The structure of the Beaver Creek Field is a simple domed-shaped, slightly asymmetric anticline, which is bounded down-dip to the east by a regional north-south trending fault. Please refer to structure maps, Attachment Nos. lA, lB, and 1C. The structure may have several approximately east-west trending, minor normal faults, such as those found at Swanson River Field to the north- east, but the few wellbores present, as well as the poor available seismic data are not sufficient to define any of these faults. One minor normal fault has been projected in the shallower Sterling Formation section, which probably extends to greater depths. Stratigraphy,. Introduction. The productive formations in the Beaver Creek Unit include the sterling, Beluga, and Tyonek G-Zone and Hemlock Formations (Beaver Creek Oil Pool) within the Pliocene through Oligocene Kenai Group (of formations). The general similarities found in these formations include the fact that they are all deposited subaereally. No marine rocks have been found to date within these formations. The depositional models generally include variable energy regimes of fluvial deposition. For reference, please refer to the generalized cross-section, Attachment No. 2, and the type logs, Attachment Nos. 3, 4, and 5 during the following discussions. Tsonek G-Zone/Hemlock. The G-Zone in the lower Tyonek Formation lies immediately above the Hemlock Formation in this vicinity, and it is likely that the oil found at this location is a common accumulation within both formations. While the Hemlock Formation is not of the same origin and composition as the overlying G-Zone rocks, the Hemlock Formation was deposited in a similar environment, that is, non-marine rivers and streams in a valley or floodplain setting, which exhibits low to moderate energies of deposition. The Hemlock Formation is generally more conglomeratic than is the G-Zone; however, nothing is found in the character of these two formations to warrant treating them as separate pools. The interval containing these formations to be included in the Beaver Creek Oil Pool is best described by the measured depths 14,518' to 15,874' (top of the West Foreland Formation) in the well BCU No. 4. Belug.a River Formation (Beluga Formation). The Beluga Formation lies immediately above the Tyonek Formation. While deposited in a similar environmental setting (fluvial flood plain, etc.), the character of the Beluga is apparently different when contrasted with either Tyonek Formation below or the Sterling Formation above. The sediments in the Beluga Formation exhibit BEAVER CREEK FIELD, BEAVER CREEK UNIT KENAI PENINSULA, ALASKA EXHIBIT B ENGINEERING REPORT IN SUPPORT OF PROPOSED POOL DEFINITIONS It is proposed that the following pools be established for the Beaver Creek Field: the Sterling Gas Pool, the Beluga Gas Pool, and the Beaver Creek Oil Pool. Each of the proposed pools can be established without adversely impacting correlative rights and equities, while furthering the optimization of recovery and the prevention of waste. For each pool, the topics of pool development, pool reservoir properties, and reservoir management practices are addressed. A brief statement of the geology of each pool is also included in this exhibit to provide background to the engineering discussions. A detailed review of each pool's geology is included as Exhibit A. STERLING GAS POOL Geology/Hydrocarbon Occurrence The Sterling Gas Pool of the Beaver Creek Unit is comprised of the Sterling gas sands. These sands are a sequence of fluvial, meandering stream chan- nels and associated features, separated by relatively thin shales and coal beds. Sand quality and occurrence varies greatly laterally due to the nature of the environment of deposition. The Sterling sands are gas-bearing, depending on structural position. Pool Development The sands of the Sterling Gas. Pool have historically been produced as one unit, through common wellbores. Generally, zones deemed productive are all produced simultaneously, except where water encroachment or other factors have required zone elimination. Currently, no multiple completions within the Sterling sands exist or are planned, but are not ruled out. Four wells, BCU Nos. lA, 3, 6, and 7, are currently producing from the Sterling Gas Pool with a combined cumulative production of 67,310 MMCF as of May 1, 1988. One off-structure well, BCU No. 2, is used for water disposal. Reservoir Properties The gas composition of the Sterling Gas Pool is over 99 percent methane. Reservoir pressures currently range from approximately 1300 psi to 3700 psi, depending on stage of depletion. As noted above, porosities and permeabilities vary greatly due to the nature of the depositional environment. Reservoir Management Waste is prevented in the Sterling Gas Pool by simultaneous depletion of the zones, where possible. Maximum recovery of each zone is achieved as , -, civil &i-illrl °? · I tEC-4-74 ~ ~l, nAT.O'N AK-, ./ { /",~£~!:,/.~ O!L & .... ~" COM,,',.,I C VATION ~ ' ~,,:''-'' .i_ F~/-\RY COPY BEAVER GREEK UNIT BOUNDARY · PARTICIF .6000 · Tie I · .50~ I ·I . % I I I + " LEGEND .. IOOO' ~¢^~.~ · ~ c,., I · TYONEK 'G' ZONE OIL PROD. AEANDONED TYONEK OIL PRO0. STERLING GAS PRO0. [] PRODUCTION P&O ABANDONED GAS WELL till / AA-131?? T 7 N c,., T~N · ' ;' BC-2-74E U. Attachment No. lA MARATHON OIL COMPANY ALAIKAN BEAVER CREEK FIELD TOP B-3 STRUCTURE c.I. - NL # i· Dill: I~, II. iil. i11~ ~ tBC-4-74 ~ . ! 20 *% 4'~ e)'Ir· - · ! BEAVER CREEK UNIT BOUNDARY & GAS PARTICIPATING AREA .% ./ i. I . · Tu· !l . oil · TUm ~m · 7 ---810C · T 7 N c,., TAN · : lC'l-?41 · -,,, l.Ollh! ClIII LEGEND ioo0' iooo. · TYONEK 'O' ZONE OIL PROD. ABANDONED TYONEK OIL PROD. ETEFILINCI GAl PROD, -~oo. [] .OD.CT,ON ,AD 21 ABANDONED GAl WELL DRY HOLE I ~U, MA'r HON - Attachment No. lB ~ARAT~O~ OIL CO~AN¥ ALABKAN DISTRICT BEAVER CREEK FIELD TOP B - C SANDS LOWER BELUGA FM. SOMel 1'- iooo' DIIK qOV..tlll BF. AVE~ CI~EK FIELD ~ , TTN - RIOW --F I I I, --t- I i_ + B. C, U. BDR'~ T6N - RIOW LIBRARY COPY Attachment No. lC TOP MAIN LOWER '~ ZONE SAND B NORTHWEST S~ SOUTHEAST .. MC-4 lC- ! ~C- IA BC-Z QUATERNARY FLUVO-GLACIAL DEPOSITS STERLING FORMATION BEAVER CREEK GAS SANDS ZONE OF BELUGA OAS SANDS BELUGA FORMATION · -' ¢~c.~) Ti 'r~lI Iiir TYONEK FORMATION 'G' OIL SANDS :-- o RMATION ~ wEST FORELAND FORMATION ~~.~ SEDIMENTS MESOZOIC MARINE Attachment No. 2 MARATHON OIL COMPANY BEAVER CREEK FIELD GEOLOGIC CROSS SECTION LOCATION MAP I I I II II #1 Ma~thon Oil Company AFT Doylet. ~ones Production Manager Alaska Region Domestic Production R O. Box 190168 Anchorage, Alaska 99519 Telephone 907/561-5311 June 22, 1988 C. V. Chatterton, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage AK 99501-3192 Dear Mr. Chatterton: BEAVER CREEK AREA, STATE OF ALASKA PROPOSED FIELD AND POOL REGULATIONS AND CLASSIFICATION Marathon Oil Company, as Operator of the Beaver Creek Unit and on behalf of the working interest owners, in accordance with the provisions of 20 AAC 25.520 of the Alaska Administrative Code, requests the Commission issue orders for the following: The area for which this Conservation Order is applicable is described as: Township 6 North, Range 10 West, Seward Meridian Section 3' NE¼, W½, W½SE¼ Section 4: All Section 5' E½NE¼, SE¼ Section 8- NE¼ Section 9- NE¼NE¼, W½NE~,NW¼ Section 10' N½NW¼ Township 7 Nor.th, Range 10 West, Seward Meridian · z z SE¼SW¼ Section 26 SW¼NW¼, W2SW,, Section 27: All Section 28' NE¼NE¼, S½NE¼, NE¼NW¼, SW¼,SE¼ Section 32' E½E½ Section 33: All Section 34: All · ' ' NE¼SW¼ Section 35 NWl, W~SWz, Containing 4,960 acres more or less. Rule 1. Name of Field RECEIVED JUN 2 1988 Alaska 011 & Gas Cons. Comml~iOn 't ~nchorag~ ''~ The name of the field shall be Beaver Creek Field. A subsidiary of USX Corporation C. V. Chatterton June 22, 1986 Page 2 Rule 2. Definitions of Pools (a) The Sterling Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Beaver Creek Unit Gas Well No. lA (SW¼SE~, Section 33, T7N, RIOW, S.M.) between the measured depths of 5188 and 6370 feet. (b) The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Beaver Creek Unit Gas Well No. lA between the measured depths of 7960 and 9650 feet. (c) The Beaver Creek Oil Pool is defined as the accumulation of oil that is common to and correlates with the accumulation found in the Beaver Creek Unit Oil Well No. 4 (SE4NE, Section 33 T7N RIOW S M ) between the measured depths of 14,518 and 15,874 feet. Rule 3. Well Spacin9. The well spacing in each gas pool shall be 160 acres. The pattern of the spacing for each pool shall be the quarter section of each section lying within the area of this Conservation Order. No wellbores in any gas pool may be opened nearer than 1,320 feet from the nearest gas producer nor nearer than 1,500 feet to the unit boundary. Except as stated above, there will be no stand off from the spacing unit boundaries within the participating area. The well spacing in the oil pool shall be 40 acres. The pattern of the spacing for the pool shall be the quarter-quarter section within the area of this Conservation Order. No wellbores in any oil pool may be opened nearer than 660 feet from the nearest oil producer nor nearer than 500 feet to the unit boundary. Except as stated above, there will be no stand off from the spacing unit boundaries within the unit area. Rule 4. Amendment Approval. Upon request of the applicant and a showing that affected parties have been notified of such action, the Commission may amend the Conservation Order or drilling of any well at any location or any operation reasonably designated to prevent waste and protect correlative rights. In support of this application, we enclose geologic and engineering exhibits. Sincerely, Doyle L. Jones DE6-42 Enclosures Copy: U.S. Bureau of Land Management (w/encs.) G. A. Graham, Unocal (w/encs.) CEF: 311.2 BEAVER CREEK FIELD, BEAVER CREEK UNIT KENAI PENINSULA, ALASKA EXHIBIT A Geologic Report in Support of Pool Rules Request The following Geologic Report is submitted to support an application for a Conservation Order that will establish pool rules for hydrocarbons production from the Sterling, the Beluga, and the Tyonek G-Zone and Hemlock (herein defined as the Beaver Creek Oil Pool) Formations , Kenai Group, Beaver Creek Unit, Kenai Peninsula, Alaska. Structural Setting. The structure of the Beaver Creek Field ii a simple domed-shaped, slightly asymmetric anticline, which is bounded down-dip to the east by a regional north-south trending fault (Attachment No. I structure map). The structure may have several approximately east-west trending, minor normal faults, such as those found at Swanson River Field to the northeast, but the few wellbores present, as well as the poor available seismic data are not sufficient to define any of these faults. One minor normal fault has been projected in the shallower Sterling Formation section, which probably extends to greater depths. Stratigraphy. Introduction. The productive formations in the Beaver Creek Unit include the Sterling, Beluga, and Tyonek G-Zone and Hemlock Formations (Beaver Creek Oil Pool) within the Pliocene through Oligocene Kenai Group (of formations). The general similarities found in these formations include the fact that they are all deposited subaereally. No marine rocks have been found to date within these formations. The depositional models generally include variable energy regimes of fluvial deposition. For reference, please refer to the generalized cross-section, Attachment No. 2, and the type logs, Attachment Nos. 3, 4, and 5 during the following discussions. Tyonek G-Zone/~Hemlock. The G-Zone in the lower Tyonek Formation lies immediately above the Hemlock Formation in this vicinity, and it is likely that the oil found at this location is a common accumulation within both formations. While the Hemlock Formation is not of the same origin and composition as the overlying G-Zone rocks, the Hemlock Formation was deposited in a similar environment, that is, non-marine rivers and streams in a valley or floodplain setting, which exhibits low to moderate energies of deposition. The Hemlock Formation is generally more conglomeratic than is the G-Zone; however, nothing is found in the character of these two formations to warrant treating them as separate pools. The interval containing these formations to be included in the Beaver Creek Oil Pool is best described by the measured depths 14,518' to 15,874' (top of the West Foreland Formation) in the well BCU No. 4. .Beluga River Formation (Beluga Formation). The Beluga Formation lies immediately above the Tyonek Formation. While deposited in a similar environmental setting (fluvial flood plain, etc.), the character of the Beluga is apparently different when contrasted with either Tyonek Formation below or the Sterling Formation above. The sediments in the Beluga Formation exhibit Exhibit A, Geologic Report Beaver Creek Field Pool Rules DRAFT compositional as well as color differences, becoming more greenish, with a greater abundance of metamorphic rock fragments, suggesting a different sediment source. The Beluga is likely to have been sourced by the Chugach terrain from the east, while the other Kenai Group sediments are likely to have been derived from Alaska Range volcanic and plutonic rocks from the west and north. The result of this compositional difference is shown in the character of the sediments within the Beluga Formation. While sand and coal sequences similar to other Kenai sediments occur within the Beluga, the sands are somewhat thinner and more lenticular, as well as lesser in lateral extent. The portion of the Beluga Formation to be included within the Beluga Gas Pool is shown between the measured depths 7960 and 9650 feet in the Well BCU No. IA. Sterlin~I Formation. The Sterling Formation lies immediately above the Beluga Formation and the portion to be included within the Sterling Gas Pool can be found between the measured depths 5188 and 6370 feet in the Well BCU No. lA. The sand bodies found in the Sterling Formation are typical of fluvial channel systems within alluvial fans or valley fill complexes. The fans are comprised of moderate to low energy regime, meandering to braided channels with associated overbank, channel splay, and abandoned channel fill deposits. The general pattern of deposition causes the channel systems to vary widely in amount of lateral extent. The gas sands within the Sterling interval are found to be fairly continuous within this area, while such is not necessarily the case in the Beluga Formation. In summary, all three prospective pools, the Sterling Gas Pool, Beluga Gas Pool, and the Beaver Creek Oil Pool, are of Tertiary age and consist largely of non-marine fluvial deposits. The simple dome-shaped anticline wi.thout significant structural complexities encourages this pooling for efficient reservoir management. DE6-36 -2- BEAVER CREEK FIELD, BEAVER CREEK UNIT KENAI PENINSULA, ALASKA EXHIBIT B ENGINEERING REPORT IN SUPPORT OF PROPOSED POOL DEFINITIONS It is proposed that the following pools be established for the Beaver Creek Field: the Sterling Gas Pool, the Beluga Gas Pool, and the Beaver Creek Oil Pool. Each of the proposed pools can be established without adversely impacting correlative rights and equities, while furthering the optimization of recovery and the prevention of waste. For each pool, the topics of pool development, pool reservoir properties, and reservoir management practices are addressed. A brief statement of the geology of each pool is also included in this exhibit to provid~ background to the engineering discussions. A detailed review of each pool's geology is included as Exhibit A. STERLING GAS POOL Geol ogy/Hs.drocarbon Occurrence The Sterling Gas Pool of the Beaver Creek Unit is comprised of the Sterling gas sands. These sands are a sequence of fluvial, meandering stream chan- nels and associated features, separated by relatively thin shales and coal beds. Sand quality and occurrence varies greatly laterally due to the nature of the environment of deposition. The Sterling sands are gas-bearing, depending on structural position. Pool Development The sands of the Sterling Gas Pool have historically been produced as one unit, through common wellbores. Generally, zones deemed productive are all produced simultaneously, except where water encroachment or other factors have required zone elimination. Currently, no multiple completions within the Sterling sands exist or are planned, but are not ruled out. Four wells, BCU Nos. lA, 3, 6, and 7, are currently producing from the Sterling Gas Pool with a combined cumulative production of 67,310 MMCF as of May 1, 1988. One off-structure well, BCU No. 2, is used for water disposal. Reservoir Properties The gas composition of the Sterling Gas Pool is over 99 percent methane. Reservoir pressures currently range from approximately 1300 psi to 3700 psi, depending on stage of depletion. As noted above, porosities and. permeabilities vary greatly due to the nature of the depositional environment. Reservoir Management Waste is prevented in the Sterling Gas Pool by simultaneous depletion of the zones, where possible. Maximum recovery of each zone is achieved as simultaneous depletion of the sand members is the most efficient and eco- nomical method of production. As mentioned above, multiple completions of the sand members are not currently required, but may be used at a future date if reservoir conditions dictate their use is required to maximize re- covery and prevent waste. BELUGA GAS POOL Geology/Hydrocarbon Occurrence The Beluga gas sands of the proposed Beluga Gas Pool have been interpreted to be braided to meandering stream systems. These sands generally occur in thin, discontinuous lenses separated by shales and coal beds. The sands are gas-bearing, and are a separate accumulation from the Sterling Gas Pool. Pool Development To date, there has been no development of the Beluga Gas Pool. Drillstem test (DST) data, however, prove the existence and productivity of the in- terval. At present, a workover is planned to complete an existing well in the Beluga Gas Pool. BCU No. lA will be completed as a dual Ster- ling/Beluga completion in mid-1988. Reservoir Properties DST data indicates the reservoir pressure of the Beluga Gas'Pool is approx- imately 3900 psi. The data have indicated good permeabilities can be en- countered, but as with the Sterling Gas Pool, the reservoir properties vary greatly laterally due to the depositional environment of the reservoir. Reservoir Management Due to the lateral variability of the Beluga gas sands, simultaneous de- pletion of individual zones is anticipated. Lateral discontinuities are more pronounced in the Beluga gas sands, and very few of the individual members, if any, would be capable of supporting an individual completion. Therefore, all Beluga intervals determined to be gas productive will be produced in commingled Beluga completions, assuring maximun~d~l~v~bli~ilt~ and recovery of reserves. BEAVER CREEK OIL POOL JUN 2 1988 Geology/Hydrocarbon Occurrence Al~kaOil& GasCons. Commlssion Anchor~e The proposed Beaver Creek Oil Pool is to be comprised of the G-Zone and the Hemlock Formation. A detailed discussion of the geology of the two zones is included in Exhibit A. Generally, the G-Zone and the Hemlock Formation of the proposed oil pool are relatively similar in geologic age and en- vironment of deposition, and are stratigraphically adjacent. Data obtained from DST's in BC No. 4 indicate both zones are oil bearing. -2- Pool Development Currently, two wells, BCU Nos. 4 and 5RD, are completed in the G-Zone of the Beaver Creek Oil Pool, and have a combined cumulative oil recovery of 3,577 MBBLS as of May 1, 1988. No wells are producing from the Hemlock Formation at present. The first workover to commingle production of the two zones of the Beaver Creek Oil Pool is scheduled for mid-1988 (BCD No. 4). Reservoir Properties Initial reservoir pressures of both zones of the proposed oil pool were determined to be quite similar based on DST's, with both zones at or near 7500 psi. Pressure transient analysis of the DST data indicated the Hemlock interval has an effective permeability of only 0.5 md, while the G-Zone has an effective permeability of about 75 md. Oil gravity is ap- proximately 34-35°API in the G-Zone, and viscosity is 0.70 cp. Reservoir Management Combined oil production through commingled completions has been determined to be the most efficient and economical method of producing the two in- tervals of the Beaver Creek Oil Pool. Commingled completions will maximize recovery and prevent waste by allowing the marginal Hemlock to be produced economically, thereby resulting in incremental recovery. The Hemlock zone reserves, estimated to be 320,000 barrels in BCU No. 4 will not be devel- oped except by commingled production as the zone is of insufficient reser- voir quality to justify an individual completion, and the risks associated with dual completions as this depth outweigh any possible benefits. No impairment of existing G-Zone production is anticipated by commingling production, because the Hemlock is expected to produce dry oil of a similar gravity and composition to that found in the G-Zone, and the large difference in reservoir quality will not allow significant crossflow. An isOlation packer between the two intervals can be used to minimize crossflow in the event of an extended shutdown. Allocation of production between the two zones for reservoir management purposes will be based primarily on annual surveys using commercial produc- tion logging tools and techniques. Further, individual zone tests will be conducted during completion operations and will be used to verify the log- ging results. Commingled production of the two zones will also allow easy access to ei- ther interval for reservoir monitoring and remedial activities. Anticipat- ed activities would include, but are not limited to, production logging, perforating, and. coiled tubing activities. All of these activities have proven useful in maximizing reserve recovery. -3- BEAVER CREEK FIELD, BEAVER CREEK UNIT KENAI PENINSULA, ALASKA EXHIBIT C ENGINEERING REPORT IN SUPPORT OF POOL SPACING RULES Statewide spacing regulations are currently in effect for the Beaver Creek Unit. It is proposed that the following pool spacing rules be established for the Beaver Creek Field' Sterling Gas Pool It is proposed to establish 160-acre drilling units for the Sterling Gas Pool defined at the point of penetration of the B-3 sand, and that no re- striction be placed on the location of wells within these units other than no well is to be closer than 1320 feet from the nearest Sterling producer. - Beluga Gas Pool It is proposed to establish 160-acre drilling units for the Beluga Gas Pool to be common with the Sterling drilling units, and that no restriction be placed on the location of wells within these units other than no well is to be closer than 1320 feet from the nearest Beluga producer. Beaver Creek Oil Pool It is proposed to establish 40-acre drilling units for the Beaver Creek Oil Pool defined at the point of penetration of the Main G-Zone sand, and that no restriction be placed on the location of wells within these u'ni'ts~ other than no well is to be closer than 660 feet from the nearest Beaver Creek Oil Pool producer. Due to the nature of the depositional environments of the Sterling gas ~s'an'dsi~and the Beluga gas sands, various lateral discontinuities are possible which may effectively limit individual zone recoveries should spacing be restricted to the current 3000 feet. These discontinuities include faults, shale-outs, and pinch-outs and are based on log analysis and geologic interpretation. In addi- tion, the Beluga interval is interpreted to be lenticular in nature. Establish- ing 160-acre drilling units for these two gas pools will allow for efficient development and recovery of reserves. An example where reserve recovery may be hindered by the current spacing regu- lations for these two pools is illustrated by the B-2 sand member of the Ster- ling Gas Pool. Referring to Cross-Section A-A, Attachment No. 6, note that BCU No. 6 is located approximately at the crest of the structure, but the B-2 sand is not present. Efficient recovery of B-2 reserves may require an offset well to BCU No. 6, positioned to take advantage of structure in the depletion of B-2' reserves, particularly if water encroachment limits B-2 recovery from down-structure wells.. Should situations of this type arise, each individual sand member of the two pools will not be indiscriminately completed at every well location. The number -4- DRAFT of completions within each sand will depend on the extent of the discontinu- ities, reserve volumes of each member, deliverability requirements, and prudent reservoir management practices. Further, establishing common drilling units for the two pools will allow for multiple completions potentially resulting in the incremental recovery of marginal reserves. Regarding drilling units for the Beaver Creek Oil Pool, historical development drilling activity indicates reduced spacing from the current 1000 feet to 40-acre drilling units on 660 feet minimum spacing is necessary for similar rea- sons. Six wells have been drilled to date on quarter-sections to evaluate the G-Zone and Hemlock intervals of the Beaver Creek Oil Pool, and only two have yielded a completion. Both of these wells are G-Zone producers with shallow decline rates indicative of a potentially large reservoir. Apparent permeability barriers and other discontinuities exist which have limited successful development of the Beaver Creek Oil Pool reserves. The proposed 40-acre drilling units should allow for optimum and more efficient recovery of Beaver Creek Oil Pool reserves should further evaluation indicate such development activity is required. -5- II~NATNON-UNIO. I tIIC-4-74 : MAn^T'O#--UNION AK - I ¢IRI MAR&TH~N-U#I0# AA-1~275 · % BEAVER CREEK UNIT BOUNDARY · . Tvo ATING TM0 TVO 1-A TliD to,Jee MARATH(~I- UNIO" ~ · '% I .$0 7° · T 11,4:i. · ' · ' · ,.' -% ~ · · '~1 .. '~ .600. · ~ · · USA MARATHON-UNION T 7 N c,., T6N · 8C-2-74B 1ooo' ,ooo. ICALE LEGEND TYONEK 'G' ZONE OIL PROD. ABANDONED TYONEK OIL PflOO. STERLING GAS PROD. ao~.o' 2, [] PRODUCTION PAD ABANDONED GAS WELl + DRY HOLEI Attachment No. 1 M~RATHON OIL CO~N¥ BEAVER CREEK FIELD TOP B-3 STRUCTURE c.I. · Auth~H~. "' DEIUMHILLIER s~: 1' = lOOO, Dire: N~)v.l$10. Rev. ~/17 t=lie no: II III B NORTHWEST a~ SOUTHEAST B'C-4 BC- ! BC- !A BC-2 QUATERNARY FLUVO-GLACIAL DEPOSITS STERLING FORMATION BEAVER CREEK GAS SANDS ZONE OF BELUGA GAS SANDS BELUGA FORMATION (ic. .r,o TYONEK FORMATION 'G' OIL SANDS HEML. O~,r~ ,,0. ...... . ,o ,,.,,?. FORMATION .. · _. · __ . -eooo' -?ooo' -eooo' -11.ooo' - - 1'*.ooo' -16.ooo' MESOZOIC MARINE SEDIMENTS -le,ooo' wEST FORELANO FORMATION ----- .... Attachm®nt Ho. ~ ~.~ , ..: ..... MARATHON OIL COMPANY d' GEOLOGIC CROSS SECTION LOCATION MAP