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Home My WebLink AboutDIO 027 Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. DT 0 ø '2 7 Order File Identifier Organizing (done) 0 Two-sided 1111111111111111111 ¿ Rescan Needed 1111111111111111111 RESCAN Ii Color Items: D Greyscale Items: DIGITAL DATA OVERSIZED (Scannable) D Maps: D Diskettes, No. D Other, NolType: D Other Items Scannable by a Large Scanner D Poor Quality Originals: NOTES: By:Ðren Helen Maria OVERSIZED (Non-Scannable) ~09S of various kinds: Na.Mtrðl1 \...oj 0 Other:: Date: Jo.q. otf 151 ~ 1111111111111111111 D Other: Project Proofing BY: ~ev\ Helen Maria Date: lo,q. at{ IS/~. Scanning Preparation BY: %¥PJt\ Helen Maria Ì'Ul \ X 30 = t<6C + ~ = TOTAL PAGES l~i (Count does not include cover Shf¡eIJ.e..t) Date: fO.Cj. D'f- 151 ~ Production Scanning 1111111111111111111 Stage 1 Page Count from Scanned File: I ~ 11 (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: / YES NO If NO in stage 1, page(s) discrepancies were found: I Date: [0,0[. Dt 151 ~ YES NO BY: ~et1 Stage 1 BY: Helen Maria Helen Maria Date: 151 111111111111111111 Scanning is complete at this point unless rescanning is required. ReScanned IIIIIIIIIIII~ 1I11I BY: Helen Maria Date: 151 Comments about this file: Quality Checked 1111111111111111111 8/24/2004 Orders File Cover Page.doc I ( INDEX Disposal Injection Order 27 Iliamna #1 1. December 8,2003 2. 3. December 9, 2004 4. December 11,2003 5. 6. 7. February 10, 2004 8. August 6, 2004 9. August 6, 2004 10. August 11, 2004 11. September 3, 2004 Pelican Hill's Application for Underground Disposal Order Memo to File (Tom Maunder) Letter from Kenai Borough Re: Application Notice of Hearing, Affidavit of publication, e-mail Distribution list, bulk mailing Backup for determination from Senior Staf Log Analysis from Steve Davies DENIAL LETTER to Pelican Oil e- mail Revised request from Pelican Hill Notice of Hearing, Affidavit of publication, e-mail Distribution list, bulk mailing Letter to CC's re: application Disposal Injection Order 27 ( STATE OF ALASKA ALASKA OIL AND GAS CONSERV A TION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF PELICAN HILL OIL AND GAS Inc. for disposal of Class II oil field wastes by underground injection in the Tyonek Formation in the Iliamna No.1 Well, Section 31, T9N, R14W, S.M. ) Disposal Injection Order No. 27 ) ) Tyonek Formation ) Iliamna No. 1 Well ) ) September 16, 2004 ) IT APPEARING THAT: 1. By correspondence dated August 6, 2004 and received by the Alaska Oil and Gas Conservation Commission ("AOGCC") that same day, Pelican Hill Oil and Gas Inc. ("Pelican Hill") requested the Commission issue an order authorizing underground injection of non-hazardous Class II oil field waste fluids into the Tyonek Formation within the Iliamna No.1 ("Iliamna 1") well bore. The Iliamna 1 well is located in Section 31, T9N, RI4W, Seward Meridian ("S.M."), on the west side of Cook Inlet, Alaska. ' 2. Notice of opportunity for public hearing was published in the Anchorage Daily News on August 11, 2004 in accordance with 20 AAC 25.540. 3. The Commission did not receive any public comments, protests or a request for a public hearing. 4. Pelican Hill submitted additional information to the Commission on September 3 and 10, 2004 in support of its application. Disposal Injection Order 2J Iliamna No.1 September 16, 2004 ( Page 2 of7 FINDINGS: 1. Location of adjacent wells (20 AAC 25.252 (c)(1) There are no wells with surface locations within a one-quarter mile radius of the Iliamna 1 well. The nearest wells are Cities Service's West Foreland State A No.1 ("WFS A-I") well, located about 1-114 miles to the south and Shell Oil Company's Kustatan Ridge State No.1 ("KRS I"), about 1-112 miles to the north-northeast. The nearest water well registered with the Alaska Department of Natural Resources is a 273-foot deep domestic water well located about 1-1/2 miles to the southeast at Unocal's Trading Bay Facility camp. 2. Notification of Operators/Surface Owners (20 AAC 25.252 (c)(2) and 20 AAC 25.252 (c)(3)) Pelican Hill is the operator of the Iliamna 1 well. There are no other operators within a one-quarter mile radius of the proposed disposal injection well. The sole surface owner within a one-quarter mile radius of the Iliamna 1 well is the Kenai Peninsula Borough. A letter of non-objection was received from the Borough on Dec. 9, 2003, in support of Pelican Hill's original application for disposal injection within the Iliamna 1 well. The original application was dated December 8,2003. 3. Geologic information on disposal and confining zones/ Potential impact on an adjacent producing well. (20 AAC 25.252 (c)(4)) Pelican Hill proposes to conduct disposal operations in the Iliamna 1 well in the Tyonek Formation interval between 3,166 and 3,181' measured depth. This interval consists of sandstone, and it readily correlates to a prominent sandstone layer between 3,514' and 3,535' feet in the KRS 1 well. This same sand layer is difficult to correlate directly in WFS A-I. The porosity of this target injection layer is estimated to be about 30 percent based on sonic logs from KRS 1 and WFS A-I, and the neutron-density logs recorded in WFS A-I. Openhole well logs from these two wells indicate formation waters below about 2,200' measured depth exceed 10,000 ppm total dissolved solids, based on calculations using US Environmental Protection Agency approved methods. Upper confinement will be provided by interlayered mudstone and siltstone occurring from 2,988' to 3,058' and from 2,940' to 2,978' measured depth. Lower confinement will be prevented by the mudstone and siltstone occurring from 3,182' to 3,234' and from 3,254' to 3,304' measured depth in the well. Disposal Injection Order 21 Iliamna No.1 September 16, 2004 ( Page 3 of7 4. Iliamna 1 Logs (20 AAC 25.252 (c)(5)) The logs of the Iliamna 1 well are on file at the AOGCC. 5. Casing Description Well Iliamna 1 (20 AAC 25.252 (c)(6)(A)) There are two strings of casing as follows: . Surface Casing: 9-5/8", 32 pound per foot, H-40 casing, Shoe Depth 560', cemented with 280 cubic feet of cement. . Production Casing: 5-1'2", 15-112 pound per foot, K-55 casing, shoe depth 3,517', cemented with 472 cubic feet of lead (13.1 ppg) and 287 cubic feet of tail (15.8 ppg). 6. Demonstration of Mechanical Integrity and Disposal Zone Isolation (20 AAC 25.252 (c )(6)) A cement quality log is available for Iliamna 1, and it demonstrates the existence of adequate bonding across the upper and lower confining intervals to ensure disposed fluids are appropriately isolated. Prior to initiating disposal operations, Pelican Hill will perform a pressure test of the tubing x casing annulus as required by 20 AAC 25.412(c). 7. Disposal Fluid Type, Source, Volume and Compatibility with Disposal Zone (20 AAC 25.252 (c)(7)) The wastes planned for disposal in this well consists of drilled cuttings and freshwater-based drilling mud generated during drilling of the Iliamna 1 well. Given the relatively limited amount of fluid and cuttings to be disposed, compatibility of the fluids and cuttings with the formation waters of the storage interval is not likely to affect the storage capacity of the injection zone. 8. Estimated Injection Pressure (20 AAC 25.252 (c)(8)) The estimated average injection pressure will be 800 psig, and the maximum injection pressure will be 1,000 psig. Injection rate expected to be 1 to 2 barrels per minute. Disposal Injection Order 2~ Iliamna No.1 September 16,2004 Page 4 of7 9. Evaluation of Confining Zones (20 AAC 25.252 (c)(9)) Disposed wastes will be prevented from upward migration by interlayered mudstone and siltstone occurring from 2,988' to 3,058' and from 2,940' to 2,978' measured depth in Iliamna 1. These two confining intervals total 108' gross thickness, of which 94' (87%) is mudstone or siltstone. Downward migration will be prevented by the mudstone and siltstone occurring from 3,182' to 3,234' and from 3,254' to 3,304' measured depth in the well. The gross thickness of these two underlying confining intervals totals 104', of which 84' (82%) is mudstone or siltstone. The thickness of these confining zones and their high mudstone and siltstone content will be sufficient to confine injected wastes to the proposed interval. Openhole well logs from KRS 1 and WFS A-lindicate formation waters below about 2,200' measured depth exceed 10,000 ppm total dissolved solids, about 950' above the target injection interval. The large vertical separation from overlying freshwater, combined with low injection pressures, low injection rates, and the limited amount of disposed fluids and cuttings ensure fractures will not propagate through the confining intervals. 10. Standard Laboratory Water Analysis of the Disposal Zone (20 AAC 25.252 (c)(10)) Iliamna 1 was drilled with casing. Consequently, open hole well logs are not available. Water samples were not obtained from the well. Total dissolved solids content of the formation water within this layer is calculated to be approximately 13,000 ppm, based on offset, open hole wells logs and the US Environmental Protection Agency's Rwa method of calculation. 11. Freshwater Exemption (20 AAC 25.252 (c)(II)) A freshwater aquifer exemption is not required because total dissolved solids of the formation water exceed 10,000 ppm in the target injection zone. 12. Mechanical Condition of Wells Penetrating the Disposal Zone within U Mile of Iliamna 1 (20 AAC 25.252 (c)(12) There are no wells within a one-quarter mile radius of the Iliamna 1 well. Disposal Injection Order 24 Iliamna No.1 September 16, 2004 ( Page 5 of7 CONCLUSIONS: 1. The application requirements of20 AAC 25.252(c) have been met. 2. A freshwater aquifer exemption is not required. 3. Waste fluids will be contained within appropriate receiving intervals by the confining lithologies in the Tyonek Formation, cement isolation of the well bore and operating conditions. 4. Disposal injection operations in the Iliamna 1 well will be conducted at rates and pressures below those that will fracture the confining zone. 5. Evaluation of surveillance and operational performance data will reasonably assure there is no fracturing of the confining zone. 6. Surveillance of disposal volumes, daily monitoring of operational parameters, and demonstration of mechanical integrity will reasonably ensure continued mechanical integrity of the well and that waste fluids are contained within the disposal interval. 7. Disposal injection of Class II wastes into well Iliamna 1 will not cause waste, jeopardize correlative rights, impair ultimate recovery, or contaminate freshwater. NOW, THEREFORE, IT IS ORDERED THAT: RULE 1: Authorized In.iection Strata for Disposal Injection of authorized fluids for purposes of underground disposal of oil field wastes is permitted, subject to these rules, into the Tyonek Formation between 3,166' and 3,181 'measured depth in the I1iamna 1 well. RULE 2: Authorized Fluids Fluids authorized for injection in the I1iamna 1 well are: 1. drilling and completion fluids 2. drilling mud 3. tank bottoms 4. rig wash 5. precipitation accumulating within containment areas 6. Other fluids suitable for disposal in a Class II well and approved by the Commission on a case-by-case basis. The total volume of disposed waste fluids and cuttings may not exceed 5,000 barrels without prior approval of the Commission. Disposal Injection Order 2l Iliamna No.1 September 16, 2004 ( Page 6 of7 RULE 3: Demonstration of Tubin2/Casin2 Annulus Mechanical Inte2ritv The mechanical integrity of the injection well must be demonstrated before injection begins, at least once every four years thereafter (except at least once every two years in the case of a slurry injection well), and before returning a well to service following a workover affecting mechanical integrity. Unless an alternate means is approved by the Commission, mechanical integrity must be demonstrated by a tubing/casing annulus pressure test using a surface pressure of 1500 psi or 0.25 psi/ft multiplied by the vertical depth of the packer, whichever is greater, that shows stabilizing pressure and does not change more than 10 percent during a 30 minute period. The Commission must be notified at least 24 hours in advance to enable a representative to witness mechanical integrity tests. RULE 4 Well Inte2ritv Failure and Confmement Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the operator shall immediately notify the Commission and submit a plan of corrective action on a Form 10-403 for Commission approval. The operator shall immediately shut in the well if continued operation would be unsafe or would threaten contamination of freshwater, or if so directed by the Commission. A monthly report of daily tubing and casing annuli pressures and injection rates must be provided to the Commission for the injection well indicating well integrity failure or lack of injection zone isolation. RULE 5: Surveillance Operating parameters including disposal rate, disposal pressure, annulus pressures, step rate test results and volume of fluids and solids pumped must be monitored and reported according to requirements of 20 AAC 25.432(1). The operator shall conduct a baseline step rate test prior to initial injection. An initial report of operations must be provided after one month of injection. The operator shall obtain a temperature log immediately after cessation of disposal injection activities. A final report of operations must be provided 30 days after completion of all disposal injection activities. RULE 6: Notification of Improper Class II Injection The operator shall immediately notify the Commission if it learns of any improper Class II injection. Additionally, notification requirements of any other State or Federal agency remain the operator's responsibility. RULE 7: Administrative Action Unless notice and public hearing is otherwise required, the Commission may administratively waive or amend any rule stated above as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in fluid movement outside of the authorized injection zone. ,¿r Disposal Injection Order 21 Iliamna No.1 September 16, 2004 (. Page 7 of7 RULE 8: Other Conditions Operations must be conducted in accordance with AS 31.05 and Title 20, Chapter 25 of the Alaska Administrative Code unless specifically superseded by Commission order. Failure to comply with an applicable provision of AS 31.05, Title 20, Chapter 25 of the Alaska Administrative Code, or a Commission order may result in the revocation or suspension of this authorization. DONE at =age, Alaska and dated 7/t 16, 200'4. "#"O~ (U-//tt~ - /' ,~".. -, ~ --- ¡; ~;-,ø:\ ~-Ò 0 K. ~n, Chal In:m 1"\.,,;,,~;;!{f\,',,rIJ,~\,\ l~/, I Q , Alaska Oil and Gas Conservation Commission I <I '.'\' f,)'¡:, ./' I "l ^ . ¡ ","", " n~\:I~,,-.....¿ \#' I t""f-:,:¡";h.,, ! ...\~~~-~ Original Signed By "'" ""'. ¡~,'"ì"'''<'~~'(;::''';'¡,,...r,.!'~,''.1,"',~' t!Mf,: '. ~~,. DAN SEAMOUNT J ( ~ PI .' ¡{'t',' ¡" H ,'n,"" fiiI' 0 ;1 !;¡ (f';,:" . t,,~ ì'Ì '~, ~ ~,,5,:~:!,'¡\.', \,',', ,I k,',:,_,',',i,:,i,.,',!,J\ i ,"-I, . . ~ f Daniel T. Seamount, Jr., Commissioner C)¡~ q.l~ '.~ \:{,p;1~t~~¡~¡; . ~61 Alaska Oil and Gas Conservation Commis~ionJ AS 31.05.08~4è.¡:~~fthin 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days, The Commission can refuse an application by not acting on it within the lO-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 ( IJ /0 z-; Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 Kelly Valadez Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 John Levorsen 200 North 3rd Street, #1202 Boise,lD 83702 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Schlumberger Drilling and Measurements 2525 Gambell Street #400 Anchorage, AK 99503 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 James Gibbs PO Box 1597 Soldotna, AK 99669 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 North Slope Borough PO Box 69 Barrow, AK 99723 JJ1ø/ ~ ci "/ 9A 1 )l/ DIO 27 Subject: DIO 27 From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Mon. 27 SeD 2004 12:10:22 -0800 10f2 9/28/2004 2:41 PM DIO 27 20f2 Content-Type: application/msword Content-Encoding: base64 9/28/2004 2:41 PM c:J ,- 4 [Fwd: Iliamna 1 Disposal Injection Order Amer111ent] Subject: [Fwd: Iliamna 1 Disposal Injection Order Amendment] From: John Norman <john_norman@admin.state.ak.us> Date: Thu, 23 Sep 2004 1 7:47: 10 -0800 cc: file -------- Original Message -------- Subject:I1iamna 1 Disposal Injection Order Amendment Date:Thu, 23 Sep 2004 17:04:45 -0800 From: Stephen Davies <steve davies@admin.state.ak.us> Organization:State of Alaska To:Arlen Ehm <arlen.ehm@alaska.net>, 'Jim Rose' <jimrose@ak.net> CC:John Norman <john norman@admin.state.ak.us>, Daniel Seamount <dan seamount@admin.state.ak.us>, Tom Maunder <tom maunder@admin.state.ak.us>, John Hartz ~lack hartz@admin.state.ak.us> Arlen and Jim, The AOGCC has received your correction, additional information, and requested amendment concerning Disposal Injection Order No. 27. Because the correction and amendment will not substantially change the findings, conclusions or rules of the order, you are authorized to continue operations under Disposal Injection Order No. 27 until the corrected and amended order is issued. I will be out of the office on September 24 and 27. If you have any questions, please contact the Commission at 793-1223. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Telephone: (907) 793-1224 Fax: (907) 276-7542 Commission John K. Norman <John Norman@admin.state.us> Commissioner Alaska Oil & Gas Conservation Commission SCANNED OCT 1 0 2004 1 of 1 9/24/20047:54 AM Re: Timing of Events ( (' ,. Subject:Re: Timing of Events From: ,Thomas Maunder <tom- maunder@admin.state.ak.us> Date:'Mon, 13 Sep2004 09:25:27 -0800 Hello Arlen, I do want to thank you for coming over Friday afternoon. We have searched further and have located the first copy of the logs. Apparently, they had been promptly filed. I still have not located the transmittal letter. As noted previously, the public comment period ends today. We will be working to reach a determination. Please call with any questions. Tom Maunder, PE AOGCC Arlen Ehm wrote: Tom: I will bring another copy of the September 3rd letter and a CBL bond by the AOGCC within minutes. Arlen From: Thomas Maunder [mailto:tom maunder@admin.state.ak.us] Sent: Friday, September 10, 20043:25 PM To: Arlen Ehm Subject: Re: Timing of Events Arlen, I have located the Memory Pulse Neutron Log and the Gas Detection Log. Interestingly, these are date stamped "August 5". Are these part of the documents you left on September 3?? I have not been able to locate your letter nor any bond logs.. I apologize. Is it possible for you to send an electronic copy or fax?? Please call and we can discuss. Tom Maunder, PE AOGCC Arlen Ehm wrote: Tom: Thank you for your response. However, there is a mistake in your letter. You state that the Commission has still not received three items related to previous deficiencies. Please be advised that I hand carried that material to the Commission on September 3 and turned it in at the front desk. Included in that envelope were CBL logs and a letter to Chairman Norton. The letter was both a cover letter and a discussion of the material being provided at that time. We urge you to research this matter as the material was delivered to the Commission offices and properly checked in. Please advise as to whether or not the missing material has been found. Arlen Ehm 10f2 9/13/20049:55 AM Re: Timing of Events From: Thomas Maunder [mailto:tom maunder@admin.state.ak.us] Sent: Friday, September 10, 2004 2:40 PM To: Arlen Ehm Cc: john norman@admin.state.ak.us; steve davies@admin.state.ak.us; 'Jim Rose'; AI Gross; Robert Mintz; JodyJ Colombie Subject: Re: Timing of Events Arlen, Commissioner Norman sends his regards. We have examined your questions and has asked me to send this response. 1. Applications such as yours for a Disposal Injection Order may be acted upon after the 30 day notice period, provided there is nothing received that would contradict moving forward. 2. Yes, you are correct that since the comment period formally expires on Saturday that it is extended to the next business day. As you noted in your application letter, there are still 3 outstanding technical items that Pelican Hill needs to submit in order to satisfy the deficiencies identified when this matter was originally considered early this year. To date, the Commission has not received the needed information. After receipt of the information, we will require 2 to 3 business days to review the information, make a decision and prepare the necessary document. Please call with any questions, Tom Maunder, PE AOGCC Arlen Ehm wrote: Gentlemen: I have some questions concerning the timing of AOGCC permit applications in general. The answers to these questions will be critical to our operations. It is my understanding that an application for permits that require posting, such as a grind and inject operation, can be approved after the application has been posted for 30 days, if there are no protests. Is this correct? When the posting period ends on a Saturday, is the effective date then the following Monday? While the answers to these general questions should be of importance to any operator, they become critical to Pelican Hill at this particular time. We are in the process of the scheduling of barges for the necessary equipment. I would appreciate your early consideration of these questions. Thanks Arlen Ehm 20f2 9/13/2004 9:55 AM ~ ~ :t:t: 907 - 277 -1401 , Telephone 907-277-1402, Fax ( ~ . '11\ PmCAN HITl, OIL & GAB iNG Pelican Hill Oil & Ga( .....c. 4141 B Street, Suite 205 Anchorage, AK 99503 September 3,2004 Mr. John Norman Chairman Alaska Oil and Gas Conservation Commission 333 W. 7th Ave. Suite 100 Anchorage, AK 99501 ' Re: Application for Injection Permit Pelican Hill Oil and Gas, Inc Iliamna No.1 PD 203-172, API 50-133-20527-00 RI!CE!IVED S~p 1°2004 Alaska on & Gas Cens. COmmission Anchorage Dear John: After this well was shut down last December, we applied to the AOGCC to make this well into a Class II injection well at depth. Thåt application was denied without prejudice as it was deficient in three areas. Application was made again on August 6, 2004. The information relative to those deficiencies was to be provided later when the well was reentered and the information became available. A request for a hearing must have been filed by August 30, 2004and written comments were to have been received by September 11,2004. If a hearing were to be held, it would be on September 28, 2004. Pelican Hill has reentered the well and is now in a position to provide data relative to these three deficiencies. These are: . A Cement Bond Log A copy of the cement bond log is being included with this transmittal. Provisional copies of other logs are being filed. The logs, as presented by Reeves, have errors in them. Most notably, the depth is shown as being 27' too deep on their "Nuclear Porosity" log. All depth measurements given below were taken from the other logs. Corrected logs will be provided when they become available. . Injection Zone 3126-34' 12' 3136-48' 14' 26' Lithology of the injection zone: Sandstone and silty sandstone. Mr. John Norman September 3, 2004 Page Two . Confining Zones Upper confining zone - The shaly interval from 2988'-3058 will be the primary upper zone with the shaly interval from 2940'-2978' will be the secondary upper confining zone. Lower confining zone - The shaly interval from 3182'-3234' will be the primary lower confining zone and the shaly interval from 3250'-3304' will be the secondary lower confining zone. ' LitholoQY of the confining zones: Intercalated mudstones, siltstones and minor sandstones with the mudstones being present as discrete and laterally continuous layers present throughout the immediate area of the well bore. Pelican Hill hereby requests an expedited decision on the refilling of our grind and inject application. ~~ "~e~/Vf!D SI!P 1'(1?rJv4 Alllka Oil & Ga, Con,. COI11miSSion Anchorage Arlen Ehm Vice President! Alaska Cc: Jim Rose, Pelican Hill Al Gross, Pelican Hill 0 ~ ::t:t:: STATE OF ALASKA ADVERTISING ORDER J NOTICE TO PUBLISHER (' ADVERTISING ORDER NO. IN~ - MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDE~NO., CERTIFIED AO 02514008 AFFIDAVIT OF PUBLICATION (PART2 OF THIS FORM) WITH ATTACHED COPY OF - ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE F AOGCC R 333 W 7th Ave, Ste 100 0 Anchorage, AK 99501 M AGENCY CONTACT DATE OF A.O. Jody Colombie PHONE August 9, 2004 PCN (907) 793 -1 ),),1 DATES ADVERTISEMENT REQUIRED: ¿ Anchorage Daily News PO Box 149001 Anchorage, AK 99514 August 11, 2004 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Type of Advertisement X Legal D Display Advertisement to be published was~-mailed D Classified DOther (Specify) SEE ATTACHED REF TYPE 1 VEN 2 ARD 3 NUMBER AOGCC, 333 W. 7th Ave., Suite 100 Anchorage,AJ( 99501 AMOUNT DATE I PAGE 1 OF I TOTAL OF I 2 PAGES ALL PAGES$ COMMENTS 02910 4 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST LlQ 1 2 05 02140100 73451 3 R:QUISI~(l /\/) - ¡J '(;-OOa-tI DIVISION APPROVAL: 02-902 (Rev. 3/94) Publisher/Original Copies: Department Fiscal, Department, Receiving AO.FRM ( Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Iliamna No. 1 Well Disposal Injection Order 1578' FNL and 2480' FEL, Sec. 31, T9N, RI4W, SM Pelican Hill Oil and Gas Inc. ("Pelican Hill") by letter dated August 6, 2004, has re-applied for a disposal injection order under 20 AAC 25.252. Pelican Hill is proposing to dispose of Class II fluids (drilling, completion and/or production wastes) developed from the Illiamna No.1 well. Injection will be via perforations at approximately 3,166- 3,181 feet measured depth in the Tyonek formation. No drinking water aquifers (USDWs) as defined by EP A are present at the proposed depth based on the salinity analysis provided in the application and information available to the Commission. The Commission has tentatively set a public hearing on this application for September 28,2004 at 9:00 am at the Alaska Oil and Gas Conservation Commission at 333 West ih Avenue, Suite 100, Anchorage, Alaska 99501. A person may request that the tentatively scheduled hearing be held by filing a written request with the Commission no later than 4:30 pm on August 30, 2004. If a request for a hearing is not timely filed, the Commission will consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call 793-1221. In addition, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West ih Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on September 11, 2004 except that if the Commission decides to hold a public hearing, written comments must be received no later than 9:00 am on September 28,2004. If you are a person with' a disabilit '10 may need special accommodations in order to comment or to attend, the ~, lic e~ please C7ntac Jody Colombie at 793- 1221. ( ~" hL4 ChaIT Published Date: August II, 2004 AO # 02514008 ( anchorage Daily News Affidavit of Publication 1001 Northway Drive, Anchorage, AK 99508 8/11/2004 PRICE OTHER OTHER OTHER OTHER OTHER GRAND AD# DATE PO ACCOUNT PER DAY CHARGES CHARGES #2 CHARGES #3 CHARGES #4 CHARGES #5 TOTAL 257993 08/11/2004 02514008 STOF0330 $163.52 $163.52 $0.00 $0.00 $0.00 $0.00 $0.00 $163.52 STATE OF ALASKA THIRD JUDICIAL DISTRICT Teresita Peralta, being first duly sworn on oath deposes and says that she is an advertising representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on the above dates and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed Ýy~¡I1~jt0 Subscribed and sworn to me before this date: 11fJ#Jf /g. MOV Notary Public in and for the State of Alaska. Third Division. Anchorage, Alaska MY COMMISSION EXPIRES: °r1~,~~w~~~///~ /) J~ /J // ~' (J . ~,~~'.', ..,.,.,~ "°" XLI/fYIbÞ /7 j{a~uJ!e 2:,?~O~!~: ": ~ , == ~ . ~C~ ::::: .-"';'" . t-...' - (,j" ,"""'", & :>;,... ,""' ::..:~ ' . r.'..::t "" -;. '" .\P';:::' ....- 4Y,~,' .,.' ,:1. . ..:'\, ~I i"1(,,~-~.;r~ ~ ""/f..l!¡)'''''., "" \ ;.¡ I' t "'''''''"}',,¡:¡" ":,i~' " '. " .. )./) J'ðl;I~:'i)} ì'l ). Notice ofÞubn¡::Hearii1g , ",' , ",STATE OFAI..ASK~ A'p~kþOi Iqnd Gp~.Conser'{atidn c:,ommi~$n:1n f .Re:lliqr:nnÇJNO.il:W~1J PisposqUnieètionOrder " ' 1578~,f'~~,and.248Q' F~I.., ~eê.31(qJ9N,R14W,'S/lJ\ ","'.PeI¡c~l1lii!IQi ,å"d "GqSIIiC,'<"J;>eHcgnH ill!'), by lette rdat~dAu'911~ f:6, 2,OO4'11.p$rEi!-,aþ~ Ii eØfQrq disposal injection Orderl1nder~OAAC25.252.Peli, can Ii ill'iliÞl'o~osi l1~to d'~POsE!PfCla~s,U.fl ui~s '( dri 1,1 in!;JicomPletiPna~d/orprQdu~tion.wastE!S}de- \(¡E!i'oPed,:,fr~r.:n,the IIHqmnP>,l'iIo.Tw~u; 'Iniectio~ 1I\íillbfi!ViaÞer;forC!ltiorl$ gtaþpro~irrQtelY ~,166 ,'" -ß,181feet,mè'as4reä'depth' in the TYOnE!kformation. Ngdrinkin9 watfi!r aql!ifers(LJS[)\lVS)ps,definedby Ep,A9re,pr'es~~taf theprÇ>l?oseø äf¡!,!)th based ,on iJflesgHnitvanèrlYliisprovidedin the application', ¡and infor~.qtionavailaþle.Jo theCommis$ipn. ,.t¡~'.Cql'l1Ó1l$s iÇ>nI),9$,.tE! QtaliÝ~tY'$~:t,apl! !:Illc , ,héarin90.Ì1,t"isa pþli ¿afii>itf,ôt,.S~~t~h'\,bf¡!r 28", 2p04' ot~:Oo,t:im<:lt JheAlqska,Q,iI qnd,(i,asConseryation èpmmi'$Si(Ul"at333'\Ne~t...7tl1,AY~~Pe:i Sl!ite'.'tog~, A~~, ~h()rage, {Alaska 99501. . Ai)er$onr.:nay rec¡ l!esttl1gt tl1e,',tentatiyely $cl'le~u!edh,eè:!r;il1~;þe::lie':d,bY.,.filin9 a "writterlre,ciuest With tile Commission nO¡,I,a,ter than 4;30 Þrn on A119USt.:30, ~004;. " , , . " IfClrec¡uestforaMdrin~is'nÓffimeIYlilêd, ,the , Comrris~iori will consider.thei$suanceofQnOrder iwitt¡Ol1ta'hearin9., To learn if,t,I1fi!CQl1;\rnili$ionWiU I;)OIØtl:1e/l?l1Þ'jc,I1,eari n9, plealie~a"79ßi.;1~21; , : ':p,dØØ¡tion, a 'person..rnaY,St!br1'1if 'wr,iJte"com- m~nts, re9arpi n!ith is' ,ap.ÞU,cqtiq,/1 tpJ"e .Ala$kaOJI , (ll1d'Ggsc:ønlièrVQtion,ÇOmrriM iO\1Ç1t: ~3$' West, 7th .AYE!nl!E!{~pite ,100rAnctj°rp e'AI(1.s,~c:t>99ß()r~ 'Vv'~it- 'iI'~nc:onìmebf~. must bÈ!reç ',1)94ø'~~Fth~14.:30 '.' ,e''t!.'$j!J')''.§~1!!!~mRe''lIt.~Q01 ,.',tt'~èI~:¡Iftl'Îe."çöm:" mlS's/ondecldesto hold a ,", IC heann9, wntten ;ÇO"1m~~ts:~~$tbeÌ"ec:e.iVE!df19,qtertha n9:00am !p~.Z~~t~,m~er.,~~' 20~4.,. .' ."j....'.'it'..,..) ii,' li(V!?,~:g re" ,a'J~rso n, ;it~' ,é;;'CÚ.S'91?!;ï:i~.wh.()¡ rngv rieedsP~cipia¡:èQm mpda~ i,bh$4.ri<order: tòcom~ r:nenl or to. (1ttel)ø,tl¡e PuM,C\hèarln9ì pJea$e.con" !,.tdi::tJOØ,y~()IOITIÞie' 'al793~1221,. j,øì1n K:NQttnall,Chqir RE: Legal Notice (' Subject:RE:' Legal Notice From: ,legalads <legalads@adn.com> Date: Tue, 10 Aug2004 16:03:08 -0800 Hi Jody: Following is the confirmation information on your legal notice. Please let me know if you have any questions or need additional information. Account Number: STOF 0330 Legal Ad Number: 257993 Publication Date(s): August 11,2004 Your Reference or PO#: 02514008 Cost of Legal Notice: $163.52 Additional Charges Web link: E-Mail Link: Bolding: Total Cost to Place Legal Notice: $163.52 Ad Win Appear on the web: www.adn.com: XXXX Ad Win Not Appear on the web: www.adn.com: Thank You, Kim Kirby Anchorage Daily News Legal Classified Representative E-Mail: legalads@adn.com Phone: (907) 257-4296 Fax: (907) 279-8170 ---------- From: Jody Colombie Sent: Tuesday, August 10, 2004 11 :57 AM To: legalads Subject: Legal Notice «File: Ad Order form.doc»«File: lliamna» Please publish 8/11/04 1 of 1 8/10/20044:11 PM STATE OF ALASKA ADVERTISING ORDER ( NOTICE TO PUBLISHER ADVERTISING ORDER NO. INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AO 02514008 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF . ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE F AOGCC R 333 West 7th Avenue, Suite 100 0 Anchorage, AK 99501 M 907-793-1221 AGENCY CONTACT Jody Colombie PHONE (907) 793 -1 ?'?,1 DATES ADVERTISEMENT REQUIRED: DATE OF A.O. Aupust 9, ?004 pcN"' ~ Anchorage Daily News PO Box 149001 Anchorage, AK 99514 August 11, 2004 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: United states of America AFFIDAVIT OF PUBLICATION REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. A CERTIFIED COpy OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. ATTACH PROOF OF PUBLICATION HERE. division. Before me, the undersigned, a notary public this day personally appeared 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 2004, and thereafter for - consecutive days, the last publication appearing on the day of ,2004, 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 2004, Notary public for state of My commission expires 02-901 (Rev. 3/94) Page 2 AO.FRM PUBLISHER Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Kelly Valadez Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 ( Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 John Levorsen 200 North 3rd Street, #1202 Boise, ID 83702 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA98119-3960 Schlumberger Drilling and Measurements 3940 Arctic Blvd., Ste 300 Anchorage, AK 99503 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 North Slope Borough PO Box 69 Barrow, AK 99723 ~Ø;;)1 Legal Notice ( Subject: Legal Notice From: Jpdy Colornbie<jody ~colombie@admin.state.ak. us> Date: Tue, 10Aug 200411:57:28 -0800 Please publish ~1.:t.,~I9.~q r-----"-"--"---"'---~-------"------'----:---------------'----'----"---------------.-----------.-----.----.----------..--.---.-----.----..-..- lAd Order form.doc ¡ Content-Type: applicationlmsword , , Content-Encoding: base64 -------_._~ .h no f........ .. -................ -'-'-~-"'-'--'-'--- ""---------------'."'---'-'------"-"'----'--"---....-----.-.....-------- !11I. Content-Type: applicationlmsword Content-Encoding: base64 1 of 1 8/10/2004 12:02 PM Notice Iliamna No 1 Well Subject: Notice Iliamna No 1 Well From: JodyColombie <jody _colombie@admin.state.ak.us> Date: Tue, lOAug 20041 1 :58:47 ..0800 10f2 8/10/2004 12:02 PM Notice I1iamna No 1 Well ( ,¡. -"-"--",.,i,""C~~;;~;=Type: applicationlmsword .".1 :: Iliamna': ,I! Content-Encoding: base64 '.!::::::::,:':=::::::::,~~':::~'::':~':L::::::::::::::::.::'=::::,~=~~'::~':~'::":::'::':'::::,=~':=:::::::::::::::',~'='::':::',~=~':::':~=:::':=':::,=~':~':':::::::':~'::,~":::::::::.::l 2 of2 8/10/2004 12:02 PM 0\ ::t:t: Pelican Hill Oil and Gal:.£nc 4141 B. Street, Suite 205 Anchorage, AI( 99503 ( , ~ 'fT. PmeAN Hii14 OIL & Gi\J me. 907 - 277 -1401, Telephone 907-277-1402, Fax Alaska Oil & Gas Conservation Commission 333 W. 7th Avenue, Suite 100 Anchorage, AK 99504 Re: Reapplication for Underground Disposal of Liquid Drilling Waste Pelican Hill Oil & Gas, Inc. Iliamna No.1 Permit No. 203-172 Gentlemen: Pelican Hill initially submitted an application for underground disposal of such wastes on December 8, 2003. The Alaska Oil and Gas Conservation Commission (Commission) published the disposal injection order application for public comment on December 11,2003. No comments were received. Pelican Hill suspended operations in early December 2003 because of inability to sustain supply operations due to the impending freezing of the Cook Inlet waters. The original application dated December 8, 2003 is being re-submitted in its entirety. Nothing has changed regarding the information originally submitted by Pelican Hill. On February 10,2004, the Commission denied Pelican Itill's request because of deficiencies in three of the seventeen types of information listed by the commission in its letter of denial. These three deficiencies are discussed below. Item No.1 Cement Bond Log As discussed in the original application, a CBL had been ordered and we were waiting for the arrival of the tools. We were then advised that the tools would not be sent to our location at all. We were forced to forgo the CBL at that time. Upcoming completion plans, which require drilling out 200+ feet of cement, will include running a CBL. The log will be submitted to the Commission as soon as it becomes available Item No.6 Confining Zones The original application identified a "Tyonek sandstone from 3,166-3,181 feet" as the zone chosen for injection. The zone of injection and confming zones will most likely change when additional data are acquired. Likewise, confining zones will be identified and this information will be submitted after further log data are acquired. After the 200::!: feet of cement has been drilled from the casing, a Pulse Neutron log will be run over the previously unlogged interval and, possibly, to the surface. If conditions warrant, an acoustic log may also be run over the entire hole. Item No.9 Nonmovement of Injected Fluids As stated above under Item No.1, a CBL will be acquired that will provide the needed information. Alaska Oil and Gas Conservation Commission August 6, 2004 Page Two ( On August 5, 2004, a copy of the original Pulse Neutron log and a copy of the Gas detection log were provided to the Commission. A log with the gamma ray curve only was provided to the Commission at the time of the filing of the original application. Any information filed with the application would become public. Since a State of Alaska Lease Sale scheduled for May 2004 included adjacent tracts. The information so filed was restricted. Pelican Hill is requesting public notice of this application be filed at once. As indicated above, all additional information will be filed as it becomes available. Sincerely, ¿~ ~ Arlen Ehm Vice Presidentl Alaska Pelican Hill Oil & Gas, Inc. Pelican Hill Oil and Gas Inc. 1401 N. EI Camino Real, Ste 207 San Clemente, CA 92672 December 8, 2003 Alaska Oil and Gas Conservation Commission 333 W. ih Ave, Ste 100 Anchorage, AK 99504 Re: Application for Underqround Disposal of Liquid Drillinq Waste Pelican Hill Oil and Gas Inc lliamna No.1 Permit No. 203-172 Dear Sir, Pelican Hill 0 & G Inc. respectfully submits this ¡etter of application requesting a Commission Order authorizing the underground disposal of drilling waste generated during the drilling of the captioned well. This request is made in accordance with 20 AAC 25.252 a) with the requirements thereof satisfied as follows: 20 MC 25.252 b). The captioned well has 5-1 /2" ,ça~ing set at 3~ 17.' ~D. The 5-1/2" casing was " cemented with 136 bbl of cement, which is equivalent to the theoretical . annular volume from the shoe (bit) to surface plus 100/0 excess in open hole. As this was a Udrilling with casing" well, no floats or landing (;ci:ars were used. Instead the cement was displaced with a wiper plug followed by water. The wiper plug was displaced to 3327' and the 5-1/2" casing was shut in with 950 psi to balance the uU-Tube". Full circuletion was observed throughout the job. Furthermore, the 950 psi of Ulift" (shut in casing pressure) indicates that cement was displaced from the shoe up to .:!: 300' RKB. As such, Pelican believes that cement channeling did not take place and that the cement across the proposed disposal zone is competent. Note that Pelican Hill ordered a memory CBL from Reeves Wireline but Reeves has thus far been unavailable. c) Attachments: 1. A plat showing the captioned well is attached however there are no wells within ~ mile of the captionêd well. 2. There are no operators within ~ mile of the captioned well. The surface owner within ~ mile of the captioned well is: Kenai Peninsula Burough. 3. The only pertinent surface owner has been provided a copy of this application as confirmed by the attached affidavit. 4. The formation chosen for wastA disposal in the captioned well is a Tyonek sandstQne from 3166' - 3181'. 5. A cased hole Gamma Ray log of the captioned well is attached. 6. A) The mechanical integrity of the casing-tubing annulus will be tested to 1500 psi in accordance with accepted practices.' A wellbore schematic is attached. B) The drilling waste will be injected at a pressure that is less than the expected frac gradient: 15.4 ppg EMW. As such, the maximum allowable injection pressure (assuming an average fluid density of 9.0 ppg) will be ~ 1025 psi. Frac Gradient chart attached. 7. The drilling waste to be disposed of is drilled cuttings and fresh-water based drilling mud as per the mud program included with the approved permit No. 203-172. There are approximately 3000 bbl of mud and cuttings currently on location requiring disposal. 8. The estimated average injection pressure is +/- 800 psi and the maximum expected injection pressure is +/- 1,000 psi. The appropriate frictional pressure losses must be added to the expected average pressure and to the expected maximum pressure. The frictional pressure loss is dependant upon the injection rate: 1 - 2 bpm. 9. The closest offset w~1I is: Shel! Oil Company's Kustatan Ridge State NO.1 located about 1.5 miles NNE from the captioned well. The offset well has an open-hole log suite: SP / Dual Induction Laterolog. The proposed disposal zone in lliamna #1 (3166' -3181 ') correlated to the Shell well (3515' - 3535'). The open hole logs from the Shell well indicate that the chlorides in the sand at 3515' are ~ 11,000 ppm using the Archie equation and "worst case" assumptions: (þ = 46%, Sw = 100%. Since Rt = 2 !2, solving the Archie equation (see attachment) for Rw = 0.42 n. An Rw = 0.42 n equates to 11,000 :,Jr)m at 95° F as measured in lIiamna #1. In reality, the porosity is more likely to be :t 300/0. If so, Rw = 0.18 n which equates to :t 28,000 ppm. Also in the Shell well, there are 2.0-2.5 n sands as high as 2705'. It is safe to conclude that, based on porous sand resistivity, shale resistivity and SP deflection, that there are no fresh water sands for at least 800' above the proposed disposal zone. Furthermore, it is not likely that the . proposed injection could possibly propagate a fracture height of 800'. 1°. A laboratory water analysis is not available, however, an analysis of logs from offset wells has been done by Baker-Inteq (attached). That study roughly agrees with the Archie equation analysis used above. 11. Not applicable 12. There are no wells within ~ mile of the lliamna No.1 location. ~~ Arlen Ehm for: Pelican Hill Oil & Gas Inc Attachments: 1. Iliamna No.1, Location Plat 2. tliamna No.1, Location Map 3. Affidavit of notification: Kenai Peninsula Burough 4. \Iiamna No.1 Current Wellbore Schematic 5. Procedure for disposal and plug back 6. Iliamna No.1, Proposed Wellbore Schematic (disposal) 7. lliamna No.1, Proposed Wellbore Schematic (plug back) 8. BJ Cementing Reports: 9-5/8" casing & 5-1/2" casing 9. MW & Frac Gradient chart 10. Cased Hole log of l\iåmna 'No. 1 11 . Archie equation calculations from nearest offset well 12. Baker-Inteq's Formation Water Salinity Study Alaska Oil and Gas Conservation Commission Application for Underground disposal of Drilling waste Pelican Hill Oil and Gas Iliamna No.1 Permit No. 203-172 ( AFFIDA VIT OF NOTIFICATION I, A-TGLE N EH M do hereby affirm that a full and complete copy of the captioned "Application for Underground disposal of Drilling Waste has been sent to the only surface owner within V4 mile: Mr. Paul Ostrander Kenai Peninsula Borough 144 N. Binkley Soldotna, Alaska 99669-7599 ~~~ Arlen Ehm NOTARY ACKNOWLEDGEMENT STA TE OF ALASKA ) )SS. THIRD JUDICIAL DISTRICT) The foregoing instrument was acknowledged before me this g day of December, 2003, by Arlen Ehm, Registered Agent for Pelican Hill Oil and Gas Inc., on behalf of the corporation. ~\\,,'m'lIllll/¡1. ~\\\, ~ L.. ~íÞ~ &<'1..""......".."".. ,~. ~o.~",. "., ':A.. ~ ~~ .'" NO "~~~ ~ ,~" '/"'~ ~'!.\~~ ::: ¡ ""~t- 'iú)t: ~ i ^ ""''''' r ;0=; - - Ç\J,t. ¡¡ -, §cn~ v/!JI../C ¡:;r:§i -~o;. .¡ .... ~~~ #' ~ ~ ~""" \\~.... § .~ o~''''''''''''\sØ~~~ ~. ,.. ALA :\\\ 111/fl1l111m,\'\\\ ~~~n~laSk~ My commission expires: "/C> 1.0 {'ok:, g;¡ ARLEN EHM Geological Consultant AAPG Certified Petroleum Geologist Certification #2503 2420 Foxhall Drive Anchorage, AK 99504 Phone: 907-333-8880 * Fax: 907-333-3454 E-mail: arlenehm(â).gci.net December 8, 2003 Mr. Paul Ostrander Land Management Officer Kenai Peninsula Borough 144 North Binkley Street Soldotna, AK 99669-7599 Re: Underground Disposal Dear Mr. Ostrander: Pelican Hill is presently holding KPB Land Use Permit 17.10.180 issued on October 9 and which expires on September 18, 2004. This permit was later .amended to include the temporary above ground storage over the winter. Pelican Hill is requesting a modification of this amendment as follows: MODIFICATION . Inject all drilling fluids immediately as per AOGÇC regulations and permit Grind and inject all cuttings immediately as per AOGCC regulations and pennit Vacate the tank farm area completely immediately following the injection . . RA TIONALE . Will eliminate the presence of any solid or liquid well wastes on KPB land surface now instead of next summer Will preclude Pelican Hill from returning to the site and initiating operations again. . METHODOLOGY . Pelican Hill's engineer is presently preparing a plan for underground disposal for liquids and solids, which should be filed today Pelican Hill will ship the necessary equipment to Kenai today for barge shipment to Trading Bay tomorrow The necessary personnel will travel to Trading Bay for the operation Pelican Hill personnel are still onsite and they will assist in the injection operation . . . . ( Mr. Paul Ostrander December 8, 2003 Page Two . Pelican Hill personnel will then vacate the rig location, the tank farm area and the roadside staging area The upper layer of matting boards presently under the rig will be removed at this time The lower layer of matting boards will be next spring after break-up and before vegetation begins to grow ' The locations will then be given a final clean up for anything that was left below present snow cover . . . DOWNSIDE . Keeping the rig at this location to accomplish the downhole injection will preclude our moving to the Beluga River area yet this winter Our drilling program will be delayed at a cost to Pelican Hill Attempts must be made to renegotiate drilling commitments for operations at the Beluga River site . . CONCLUSION . In spite of those downside items, Pelican Hill believes this to be a win-win situation both for the KPB and Pelican Hill Pelican Hill fully realizes that we are asking for expedited approval without any advance indication to the KPB. However, we became convinced over the weekend that this is the procedure that should be followed. Once again, your assistance in obtaining timely KPB approval will be greatly appreciated. Sincerely, ~~ Arlen Ehm Ene. Cc: Al Gross, Pelican Hill R R 15 14 W W \3 (J SCALE: 1" - 2000' 25 (: .29 1578' I IL\AMNA 1 J_-- . (SET 5/8" REBAR) 7)n \..-/ '.J ,51 ---2~80'--- 32 Wen Name Northing EastlnR Elev IlIAMNA 1 2499737.76 1314210.55 203.83 R R 1.5 14 W 'IV T9N 'T8N 6 Units:U.S. Survey Feet Horizontal Datum:NAD 83 Coordinate System:State Plane; Zone 4 Vertical Datum:NAVD 88 Horizontal locations are based on the NGS published coordinates for KUST AT AN RESET of (N2459304.37, E1326298.47) Elevations were generated using RINEX data from CORS Stations TLKA (Talkeetna CORS ARP) and I<EN1(Nikl USCG B); ELEVATIONS ARE +/- 5' SECTION LINES ARE DRAvVN USING PROTRACTED COORDINATES. LOCA TION OF PELICAN HILL OIL & GAS INC, WELL LOCA TION FOR ILlAMNA 1 SEC. 31, T 9 N, R 14 W, S.M., AK PREP ARED FOR: PELICAN HILL OIL AND GAS INC, DRAWN BY: JZW CHECI<ED BY: CBS J08 NUMBER: 2003-510 1" ::: 2000' (NCINEERS "ND ll\ND SURVEYORS 801 WES T nn¡:W(ED lANE SUI IE 7.01 IINCHORACF., "tASK" 9950.1-1001 '- PHONE (907)-?74-5257 SCALE: ~ / '--- .j' J.m:., .~~~~: ~~m~: m~f :¡.:;.: °..'..'. .",.'¡o ...."..... .".". ,...,." :m~~ ¡¡¡¡I !~~ Pelican( -fll Oil & Gas Inc. lIiamna No.1 Permit No. 203-172 13-3/8" Casing at 80' Cemented with 25 sx of "G" mixed at 15.6 ppg and 1.16 cf/sx 9-5/8" Casing at, 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface 5-1/2" Casina Cemented: Mixed & pumped 258 sx (84 bbl) of lead slurry mixed at 13.5 ppg and 1.83 cf/sx followed by 248 sx (52 bbl) of tail slurry mixed at 15.8 ppg & 1.16 cf/sx. Displaced with water to 3327'. Cement volume pumped = 80/0 excess over theoretical annular volume from TO to surface. 5-1/2" Casing at 3517' Pelican Hill Oil and Gas Inc. 1401 N. EI Camino Real, Ste 207 San Clemente, CA 92672 ( December 8, 2003 Disposal, Plug Back and Completion Procedure: 1. Test the 5-1/2" casing to 1500 psi for 30 minutes on chart. 2. RIH with TCP gun on 2-7/8" tubing. Tag PBTD and space out the TCP gun. Perforate the disposal zone: 3166' - 3181'. Break down the perforations and establish injection at:5. 1000 psi + ~ Pr. POOH. 3. RIH with an EZSV on 2-7/8" tubing. Set the EZSV at::t 3130'. Release the running tool. Sting back into the EZSV and conduct an MIT on the annulus at 1500 psi for 30 minutes on chart. Notify the AOGCC field inspector at least 24 hours prior to conducting the MIT. 4. R/U SWACO's grind and inject equipment. Grind and pump the ::t 3000 bbl of liquid drilling waste and cuttings into the disposal perforations maintaining the surface pump pressure at :5. 1000 psi + ~ Pr. ' 5. After disposing of all approved drilling waste, R/U BJ Services. Mix and pump ::t 50 sx (10.,3 bbl) of class,uG" neat cement through the EZSV and into the disposal perforations. Displace the cement with::t 17.5 bbl of 30/0 KCI water. Pull out of the EZSV and dump the last ~ bbl,of ce,ment on top of the EZSV. Pull up hole ~ 100; and reverse circulGte the tubing clean. Test the casing and EZSV to 1500 psi for 30 minutes on chart. POOH. 6. RIH with TCP guns and production packer to perforate for production as directed by the geologist. Space out, set the packer. N/U and test the tree to 1500 psi. Optional: swab the tubing down 500' - 1000' for "under balanced perforating". When ready, drop the bar and fire the TCP gun(s). 7. Flow/test the well for commercial production. If the well does not flow, load the tubing and break down the perforations with 5-10 bbl of 30/0 KCI water. Swab back the load water and test the well. J I I I . l Pelican Hf Oil & Gas Inc. lIiamna No.1 Permit No. 203-172 9-5/8" Casing at 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface Disposal Plan: 1. Run cased hole memory logs: GR/Pulse Neutron 2. Perforate for disposal: 3166' - 3181' 6 spf 3. Run 2-7/8", ~3-.5# tubing and an EZSVto +/-3130' 4. Set the EZSV. Perform an MIT on the annulus 1500 psi. 5. Establish inj~ction pressures with water . Maximurn Break down TP = 1500 psi . A VG Injection Pres ~ 1000 psi 6. Dispose of +/- 3000 bbl of liquid drilling waste. . The liquid waste consists of fresh water based drilling mud (as per the APD), and fresh wash water., etc, incidental to drilling operations. 7. After disposing of the liquid drilling waste, mix & pump 50 sx of class G (10.5 bbl) into the disposal perforations. Pull out of the EZSV and dump the last % bbl of cement on top of the EZSV resulting in 25' of cement cap. 8. Test the EZSV, cement & casing to 1500 psi. EZSV set at +/- 3130' Perforate 3166' to 3181' (15') w/ TCP 5-1/2" Casing at 3517', PBTD = 3327' J l Pelican Ht' Oil & Gas Inc. lIiamna No.1 Permit No. 203-172 9-5/8" Casing at 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface 5-1/2" Casina Cemented: Mixed & pumped 258 sx (84 bbl) of lead slurry mixed at 13.5 ppg and 1.83 cf/sx followed by 248 sx (52 bbl) of tail slurry mixed at 15.8 ppg & 1 .16 cf/sx. Displaced with water. Cement volume pumped = 100/0 excess over theoretical annular volume from TO to surface. Disposal Perforations To Be Cemented:. Mix & pump 50 sx (10.3 bbl) class uG1! mixed at 15.8 ppg and 1.16 cf/sx. Squeeze 9.8 bbl below the EZSV and dump Y2 bbl on top. Then test the EZSV and plug to 1500 psi. EZSV set at 3130', TOC = 3105' Perforate 3166' to 3181' wI TCP 5-1/2" Casing at 3517' f£j ( ~"I:\" CUSTOMe~ Palic:m Hill Oil ~ G:I!':,irll;. LEA~e g. WeLL. NAME lliomnõ3 it 1 O!5TRICT KI:n;,¡i SIZE: & TYFE Or PLUGS Cp.mp.nt PI\lO. RlIbher, Bott('ltn 8.5/8 " Cement rlllg. Rubb6r. Top 9.5.'8 II) ( CEMENT JOB REPORT J ¡DATe 11.NOV.03 .1 - ~LQC~I\ON ~EC,. T9N-R14W DRILLING CONTRACTOR RIG # ¡F.R. # '276510175 SE~V. SUPV. Floyd PO;¡!I: JI - ...- --..--- ---.- COUNI'f.f' AR.\SH-1?LOC'l< , Ke,??i AJëfska .--- .. - - TYpe OF Joe -........-. ~III fë\(:c '..-. ...l.IST-CSG-HARDWA~E C(!rlt(al/2~r, "'11th ï=inc;, r:¡ S.'~j 'In -_..£'.':i-rSICAI.. SLURRY F-nOF"E:F{TIË~ .-.- .-- SL'ùR~Y SLURRY WJ\iEf\ PUMP BUI WGT YLO Gpg TIME SLURRY PPG FT'3 HFUv1IN SACK~ Of CE!MeNT Bbl MIX WATER I I ~.. . - . ...-. M,6, TERIAL~ FUf'NISliËD BY BJ 31.61 Lead C~rnel'\{ (Sur\õc'è) AvallAt'J11' MI1I W:'I\er .., 200 Sbl, 191 ~ð,.I ,~ 7 ()4'.22 50 t1,l¡BIIBI3I~ OI!\p\, F\lJi</. 300 Bhl. " ,,", At. 50 31.61 $17~ 12.25 . HOLE % E:~C:~$s'" -"'Ò'é!P1H- ,. ~l1î- ...---. W~1. 50 560 9,6:?5 :;::,3 ~\iQE TBG-CSG-D.P. TYPE CSG COLLAR DEPTHS FLOAT 3TAã~ De,?"fH 550 GRADE LASi CAS\N~ PKR.CMT REí-8R PL-UNE~ PERF, OEf'11-\ TO~ COT'tN SIZE. WGT 'I:'r.pe--~J:L~..__ëMNr::i 8. iŸ,;ë'-' '-'oePTH~:..T.OP_." BTM-';- . -SIZE .lJJ;.B.EêP 13.375 17 CSG 80 9.375 ' e RO DISPl. VOLUME VOLUME: UOM ........-..--...... 4 "J{ BBLS WELL FLUtO , "TYPË" .... .. WGT. WATER 9.2 8ASE:D MUD OISI'L FLUID ,~~~: :'SI CAL. ~AX PSI, OP. MAX TYPE wen. aUMF' FlLUG TO REV. SQ. ~sr MAX TBG PSI RA TED, OperCltor MAX CSG PSI RATEP Opel nlor !\nx WATe~ ---. ..-.-..... "'--.-. .--.--.., 129 1000 Hi1 ß rlq eXPI.ANATION: TROU8LE SETTING TOOL, RUNNING CSG, ETC:. PRIOR TO CEMENTING: .. ..-... .. .. RATS 6\11. FlUID 8~M PUMPeD ----.- J I I I ¡ I i . .--.. ... . ..... _0.... - .........- ---...---.. .. PRESSURE/RATE; OETAIl. fLUIO TYPE eXPL^NA TION $Af~T~-'M¡¡i£ÚNIl: 13" CREW -x. co. REP. x' .. .. ......0.. .....-- TE$T LINE$ :3000 PSI CIRCUl.ATING weL'L-."RiG-' --. x . 11-11-03 arrivp, hp.lipcrt ñrrive trading bayLsettlc in LQrI.~r:tahQn,' wi'lit on rig 11-12-03 WAIT ON ~IG / WF..ATHER , 1-13-õ3wÄiT'õÑ RIG ... , 1-14-03 Wait oñng . . 11-1 Š~03 wa/ròn rig I 1 ~ -1 0-03 ~let'f mP.F.:.~}I~ . w3ter ahcad test surl"äëë iö3åoo PSI . ~~~ qf H?O ¡.¡hat'id : 14.7 #/gal 1 Stmt Displacement , gtop mud to pits / divert to cel/~! R!:!st I'Jf Ld.i'S,glacel1,}ef!t GlOp I di;;P, don" , 5tOp ,'check floats.! Ih&y hold cm! w¿,s, ("ornpusl'd ur Iyp~ 1 ::p.ï.1F.!nt ,04% 8Ä.: 0"'0 S,,~ CD.~,"'O 1% 8Ä. 90.1gh<:- rP ôL TIME I HR:MIN. PR-ESSURE - PSI PIPE ANNULUS 09.00 O~.~ - -.. ---..-- .. " .. . :..,--j.... 17:40 I ¡ , ..I 18:09 . _I .._,. -1..-...--.... 18:11 I I 18:20' -r-' -'18:34- I i 18:48 - 320 ;... 18:53 600 113'54 10aQ 19:04 ... {ö60' 1 ~ O() 0 ¡ ! . ,'?Q9. ! 200 ' 360 . 0 0 ~'T 1552112/99) eJ --...-.. ... .... ... .. ... ... .1.; ? H2O 2i 4i ð. 0' 'l 5 ' H2å' 50 L ë-f\Ïf( '-'-'-'1~ H2Õ' . -'õ'~ .H'20 '¿'2 H2Q ""'-- .-... Pag", 1 ~ :!.:::).: l:} J C~ ( 'H' '. "', ,r " .1, SUPPLEMENTAL CEMENT JOB REPORT '.' Field Receipt # 7.(65.10175 CUSTOMER F'CJll:ëHI Hill Oil 8. Gaq!~:. -. 8' -. LEASE & WELL NAME. OCSG - .JI}~!T'n::, if' DISTRICT KenfJl 'DATE IF.R# \ '1~:tJ..QV.Q3._... : 2'~~_~~~.. , LOCATION .. ~.. ~":'.':,\\. AK ..--.. .... DRILLING CONTRACTOR RIG #- TIME HR:MIN PRESSURE/RATE DETAIL PRESSURE. PSI RATF PIPE ANNULUS BPM flUID TYPE Rh! :=UJID PUiv1~Eo J S~~\1. SUPV, FI~y'!~~ J! COUNTY.PARrSH.BlOC~ ~._~~i A!3!'.b . TYPE OF Joe g II ,(II!H~ EXPLANA TIQN BUMPED F'LUG PSI TO aUMP PLUG . '.".- --.-..---. reST BBL.CMT TOTAL PSI SPOT :J~D . rLOAT ReTU~NSI BBL LEFT ON TOP OUT EOUIP, REVERS!:O PUMPED :";SG CEM!;NT i r'./'A~' .~ 'f " '1.7. '''Ii 0 'í ~¿ .' .,:. . ~ . 2J " y N .'1 '1'..1:_'~ .; ~..ç~, Pagc_~or~ 'r1' :~: Wj (( ( ) CEMENT JOB REPORT . CUSTOMER Pelican Hill Oil & Gas,lnc. DATE 02-DEC-Q3 ¡F.R. # 1001146757 SERVo SUPV. David Wallingford LEASE & WELL NAME ILlAMNA 1 - API 50133205270000 DISTRICT Kenai SIZE & TYPE OF PLUGS Cement Plug, Rubber , Top 5-112 in LOCATION SACKS OF CEMENT COUNTY .PARISH-BLOCK Kenai Alaska TYPE OF JOB Long String PHYSICAL SLURRY PROPERTIES SLURRY SLURRY WATER PUMP WGT YLD GPS TIME PPG FT3 HR:MIN Bbl SLURRY Bbl MIX WATER DRILLING CONTRACTOR RIG # Pelican Hill LIST -CSG-HARDWARE MATERIALS FURNISHED BY BJ MCS-4D Spacer System Casing Drilled Section - Lead Cement Casing-Drilled Section Tail Cement 2 8BLS Cement + Drilling Mud 10.5 30 170 13.5 1.83 9.23 04:10 55,31 37.36 ---- 248 15.8 1,16 3.92 00:48 51.36 23.13 10 80.78 Available Mix Water 300 Bbl. Available Dlspl. Fluid 300 Bbl. TOTAL 217.45 60.49 "HOLE TBG-CSG-D.P. COLLAR DEPTHS SIZE % eXCESS DEPTH SIZE WGT. TYPE DEPTH GRADE SHOE FLOAT STAGE 7.875 3500 5.5 15.08 CSG 3500 SIZE 9.625 LAST CASING WGT TYPE 32.3 DEPTH 550 PKR-CMT RET -BR PL-UNER BRAND $ TYPE DEPTH PERF. DEPTH TOP BTM TOP CONN SIZE THREAD WELL FLUID TYPE WGT. WATER 10.5 BASED MUD DlSPL. VOLUME VOLUME UOM DlSPL. FLUID CAL. PSI CAL. MAX PSI OP. MAX TYPE WGT. BUMP PLU~ TO REV. SQ. PSI MAX TBG PSI RATED Operator MAX CSG PSI RATED Operator MIX WATER 80.8 8BLS 2 BBLS Ceme 10 900 Fresh i EXPLANATION: TROUBLE SETTING TOOL, RUNNING CSG,ETC, PRIOR TO CEMENTING: PRESSURE/RATE DETAIL TIME HR:MIN. PRESSURE - PSI PIPE ANNULUS RATE BPM Bbl. FLUID PUMPED FLUID TYPE EX PLANA TION SAFETY MEETING: BJ CREW ~ CO. REP. ~ TES'' LINES 2000 PSI CIRCULATING WEll - RIG ~ Arrived at airport 12-02 Arrive at camp Safety meeting 12-03 Fìlllines and test Top drive valve leaks Retest lines OK Pump sweep Mix and pump 258 sks lead Swap to tail Tail cement done Drop plug Displace plug. Did not bump. Washed up and moving equipment Back at camp 12-04 BJ u 14:00 15:00 16:30 17:40 2 WATER 18:00 18:18 18:47 19:27 19:45 19:55 20:50 23:30 01:00 30 SWEEP 84 LEAD 52 TAIL 1150 85 WATER PSI SPOT SERVo SUPV. BBL.CMT TOTAL LEFT ON TOP OUT GJ~ PSI TO TEST RETURNS/ BBL. CEM~-Cû~ \r. FLOAT PUMPED CSG BUMPED BUMP REVERSED PLUG EQUIP. 950 Y [!!J Jr8004 PLUG [-~ 253 - ~ Y Y Paoe 1 PT 1652 (12/98) '~# I 11337~r"'11, " 19.625" i'; . ~ .. 1000 - - - --=--- - .. ~ 1 -~ .¡¡ ~l NlUD WEIGHT, AND CASING PLAN -(' - ~ - a 2000 -, , , . : 'j. \ - - ~ ~ - ': ~ . - '~ . 1"-'r.."""" "'..\ 1~ -- '" .. ii - :: - If it ~ - 3000 ~- :.-- ':~ - '. ... CONGlJMERATE t 8811 ~ 88~8~8tŒ~~~ . Coal . \.,;oal . Coal . Coal Gassy Coal Gassy Coal . Coal G:e,:;y CUd . t8=~J8811 ~ I Gassy Coal i. ¡ SISsy Coal ù.. 4000 -- -- -=--.--:. --- '---- --....-- -- ----_.... --, - -_..-- I ÐI9 sy Coal I. Coal Q :: i sy Coel ç:: - - , sy Coe oð - - I Gassy Coal C : i : I. G.tsyCoal ~ :: r' @å~V C8I1 ~ -. GSlS5{ Cos ! 5000 ~ -. -- --. ---. G8I5S' C08' . \2.B7í u: : . Gess)oCoal. & CONGLOMERATE . -. Gassy>'GoaJ - - Gassy ';oal 5.5. - . I . Coal Gassy Coal 6000 " " " " " 7000 - Expected Frac Gradient 15.4 ppg EMW = 0.8 psi/ft Maximum Allowable Injection Pressure < 1000 psi 8000 - 9 ppg fluid = 0.47 psi/ft 3100' x (0.8 - 0.47) = 1023 psi (Does not account for L\ P f) 9000 8 L '1 1-- Structural Casing SuñaC9 Casing 'Production Casing Ii 'ProductlonTublng -PROPOSED MUD WEIGHT ILlAMNA 1 I 'ANTICIPATED PORE PRESSURE EXPECTED FRACTURE GRADIENT ".,..W Forelands State A No 1 "":"""~"'''''KUSTATAN No 1 MOKUAKIE No 1 .Â ANTICIPATED CONGLOMERATE .. ANTICIPATED Low Gas COAL BEOS III ANTICIPATED GASSY COAL BEDS ~ I I I I 10 11 12 13 15 ~ 19 -!" Mud Weight, Pore Pressure, Fraoture Gr;:~¡¡ent (PPG Equivalents) 14 17 20 9 ILIAMNA DRILLING PROCEDURE REV IOOCT.doc Pelic~m Hill Oil and Gas. Inc. P~ge 29 18 19 10(10(03 ( The Archie Equation as applied to the offset well: Shell Oil Company Kustatan Ridge State #1 Sec 19 T9N R14W Archie Equation: ,.-- -..... Sw = (þ2r1 x ~ 1/2 Rt '-- ---- Assumptions: . the sand at 3525' is 1000/0 water saturated: Sw = 1000/0 =1 . Rt (from the log) = 2 n . The maximum possible porosity in a well sorted & rounded sand is 460/0 Since Sw = 1, we can square both sides of the equation and get: 1 = (.462r1 x R.'t!: 2 Solving for Rw we get: Rw = 0.42 n The temperature at this depth in lliamna NO.1 is 95° F. Using tll¿ ~laridard chart, the salinity of the fonnation water is .!. 11,000 ppm. If we use a more realistic porosity such as 300/0, Rw is: ' 1 = (.302r1 x R.'t!: .' 2 Solving for Rw we get: Rw = 0.18 n Using the standard chart and 95°, the salinity of formation water with Rw = 0.18 n is:!: 28,000 ppm. In reverse, we can calculate the expected Rt if the salinity = 10,000 ppm, the temperature = 95° and the porosity = 340/0: Rw (from the chart) = 0.47 n 1 = (.342r1 x 0.47 Rt Solving for Rt we get: Rt = 4.0 Q There are no clean, porous sands beiow 2200' in the Shell well, and therefore, one can reasonably assume that the salinity below 2200' is > 10,000 ppm. (" (' .t TEQ Id ". .- .~. Salinity Determination of the Formation Waters of , Iliamna #1 J&íí8 BAKER , HUGHES INTEQ ¡ ¡ ¡ ¡ I I In making interpretations of logs our employees will give Customer the benefit of their best judgment, but since all interpretations are opinions based on inferences from electrical or other measurements, we cannot and we do not guarantee the. accuracy or correctness of any interpretation. We shall not be liable or responsible for any loss, damages or expenses whatsoever incurred or sustained by the customer resulting from any interpretation made by any of our employees. [ , ¡ [ ¡ ¡ ¡ ¡ [ Pelican Hill Oil & Gas Formation Water Salinity Determination Iliamna #1 IIiamna Field Baker INTEQ GeoScience lliamna #1 24-Nov-03 I ; [ [ [ I rHI [ ¡ I I I I r i r 1 f 1 I I Pelican Hill Oil & Gas lliamna #1 Objective: The purpose of this study is to determine the formation water salinity in the vicinity of the Iliamna #1 well in the Iliamna field, Cook Inlet, Alaska. Formation water salinity is required in order to determine the feasibility of cuttings disposal through re-injection back into Iliamna #1. Two separate intervals within Iliamna #1 are being considered for cuttings disposal. The first candidate is the open hole strata below the cemented 9 5/8" casing tail at 343' SSTVD (560' MD). Any clay-free water bearing strata below the casing tail and within 500 feet (343 - 843' SSTVD) will be examined for salinity analysis. The second candidate is the interval between roughly 2800 - 3300' SSTVD (3000 - 3500' MD). Likewise, any clay-free water bearing strata within this interval will be examined for salinity analysis. Method: At the time of this report, drilling operations are on-going at Iliamna #1. No formation evaluation data, either LWD or wireline has been acquired from this wellbore at this time. Therefore, salinity determination for this area will be done through the use of wire line data acquired at offset wclllocatiolls. Four different offset wells from the area will be used to detennine fonnation water salinity for the two intervals in question. The four offset wells were drilled between 1961 and 1968. Due to the age of these wells, wireline log data is limited to primarily Dual Induction (DIL) and Spontaneous Potential (SP). There is no Gamma Ray data available and porosity data is limited to one Sonic log over the deeper interval. Two techniques were used to determine the salinity of the fonnation water (Rw), SP interpretation and the R wa resistivity me.thod. Both of these techniques assume that the zone in question is 100% water bearing and clay free. It is reasonable to assume that the shallow zone (350-850' SSTVD) will be free of hydrocarbons (S~100%) due to it's shallow depth. The deeper interval, 2800 - 3300' SSTVD is assumed to be hydrocarbon free (Sw= 100%) through local knowledge of offset well infonnation. The lack of gamma ray data is not an issue in determining clay content for this study. The presence of radioactive volcanic minerals that are often found in the Cook Inlet render OR logs inaccurate for determining clay volume. A more common practice for determining clay volume in this area is to assume a constant Rw and associate any changes in the SP log are due to changes in the clay content. It then follows from this same reasoning, that to determine an accurate Rw from the SP, one needs to look for the maximum SP deflection within an interval in order to obtain the most clay free reading. Therefore, only those zones exhibiting maximum SP deflection were considered for Rw calculation. Baker INTEQ GeoScience 24-Nov-03 ¡ ¡ ¡ [ ! ! I I I T 1 I r i r L f 1 ¡ T ! I ( ( Pelican Hill Oil & Gas lliamna #1 The SP interpretation procedure is as follows: 1. Determine temperature at the zone of interest 2. Detennine Rmf at the zone of interest temperature 3. Using the maximum SP deflection from the shale baseline (SSP), find Rweq utilizing the following equation: SSP = - (60+0.133*1'emp) log (Rmfì'Rweq). See chart 3-2 in appendix. 4. Determine Rw from Rweq using chart 3-3 (see appendix). 5. Convert Rw to Equivalent NaCI salinity using chart 2-5 (see appendix). Due to the many variables that can effect SP response besides water salinity, the use of SP to determine Rw is generally considered to be the method of last resort. Using the R wa method with an Induction measurement would nonnally be considered a more accurate approach. However, in addition to water salinity, porosity effects the resistivity measurement and thus the calculated salinity. As was previously mentioned, little or no porosity data is available. However, local knowledge often predicts that shallow Cook Inlet reservoirs will have high porosities in the 18-23% range. One Sonic log is available 1Ìom the Middle River State #1 offset well with data over a prospective zone from 3300 - 3420' MD where maximum SP deflection occurs. This interval is 'Considered to be unconsolidated with the surrounding shale beds exhibiting slowness values of 132 us/ft. Utilizing the Wyllie Porosity equation with a compaction factor correction, this interval yields a porosity of30%. DT measured = 118 us/ft DT fluid = 210 us/ft D1' matrix = 58 us/ft DT shale = 132 us/ft Porosity = DT measured - DT matrix * 1 DT fluid - DT matrix (D1' shale / 100) With the uncertainties in porosity in mind, a range of porosities will be used in the Rwa calculations. Three different porosity scenarios will be examined, 18%, 23%, & 30%. It was felt that the Humble variation òf the Archie equation was the best choice for the actual Rwa calculation. Therefore the Archie saturation parameters will be set such that a = 0.62 and m = 2.15 . R wa = poi" * Rt a Baker INTEQ GeoScience 24-Nov-03 I i [ [ r [ r 1 'I r I I r L 1 I r ¡ [ ( t Pelican Hill Oil & Gas lliamna #1 Results: . Kustatan Ridge State #1 Shell Oil Co. SE/4 Sec. 19, Twp. 9N, Rge 14W Schlumberger Wireline Services- DIL / SP Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 30-Aug-67 1 1319' 1 7 Yí" Ligno Sulf. 4.38 @ 69 F 70F 13-Sep-67 2 6712' 9 7/8" Q-Broxin 1. 79 @ 65 F 130 F Geothermal gradient = 1.1 degF / 100' SP Results: Zone Depths Zone Rmf@ Measured Calculated Converted NaCI (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 475 - 495' 61 5.0 -32 1.70 1.8 3,200 2945 - 2975' 89 1.4 -52 0.26 0.28 22,500 3000 - 3015' 89 1.4 -52 0.26 0.28 22,500 ,3290 - 3330' 92 1.3 -68 0.15 0.16 42,000 Rwa Results: Zone Depths Zone Rw@ 18% Rw@23% Rw @ 30% N aCl Salinity (MD feet) Res. porosity porosity porosity Range (ohmm) (ohmm) (ohmm) (ohmm) (ppm) 475 - 495' 39 1.58 2.67 4.73 3,700 - 5,500 2945 - 2975' 3 0.12 0.21 0.36 17,000 - 60,000 3000 - 3015' 2.75 0.11 0.19 0.33 19,000 - 65,000 3290 - 3330' 2.5 0.10 0.17 0.30 21,000 - 70,000 - Baker INTEQ GeoScience 24-Nov-03 I ; [ ¡ r ¡ , ! ¡ ¡ I I 1 I I [ [ [ ( ( Pelican Hill Oil & Gas lliamna #1 . Middle River State #1 Shell Oil Co. 1980' N & 1980' E of SW corner Sec. 5, Twp. ION, Rge 13W Schlumberger Wireline Services- DIL / SP / Sonic Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 18-Feb-67 1 1267' 17 ~" Ligno Sulf. 1. 76 @ 60 F N/A 5-Mar-67 2 5279' 9 7/8" Ligno Sulf. 1.67 @ 71 F 148 F Assume temperature at 300' = 60 degF Geothermal gradient = 1.75 degF / 100' SP Results: Zone Depths Zone Rmf@ Measured Calculated Converted NaCI (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 638 - 663' 66 1.6 -10 1.15 1.25 4,600 3300 - 3420' 113 1.1 -33 0.40 0.45 13,500 Rwa Results: Zone Depths Zone Rw @ 18% Rw@23% Rw@30% N act Salinity (MD feet) Res. porosity porosity porosi ty Range (ohmm) (ohmm) (ohtnm) (ohmm) (ppm) 638 - 663' 12 0.49 0.82 1.45 4,000 - 12,000 3300 - 3420' 5 0.20 0.34 0.61 * 9,500 - 31,000 * This porosity value is a calculated value from the Sonic log Baker INTEQ GeoScience 24-Nov-03 ¡.,., J I ~. )' ¡ ) t{esistivity of Equivalent NaCI SOlutilns Temperature (OF) (°C) 500 - 260 .,. .r-24O Equivalent "'Q~I Concentration ~ - 220 - 400 -- 200 -:. 180 ~ ~( gr/gaJ ) kppm @ 24°C or 75°F 0.2,-- '"'- 0.3-- 0 4 .::- 20 '-c 0.6 =: 30 0.8 ~ 40 1 ~ 50 ~ -=-160 300 -:- :- 140 - "\.. 250 "'=100 2~ ..r -80 3 -::. 200 4~ '::'300 6 :5: 400 8:: 500 10~ . -70 150 '-'- -60 J" -- 50 - := 1000 20- -40 100- -- 90- ..,-30 80- 30 -: - 2000 40- ::- 3000 60 -:.... 4000 ~5000 100 70- - 20 60- 50 -- 10 English: Salinity (ppm at 75°F) = lOx Rw2 = Rwt ( T t + 6.77 ) ; of T2 + 6.77 X~ 3.562 - log <Rw7s - 0.0123) 0.955 Metric: - ( T 1 + 21.5 ); °C Rw2 - Rwl T2 + 21.5 Rw ~ 0.0123 + 75 3647.5 [NaCI(ppm) ]°.955 Example Given: Temperature = 250°F and NaCI concentration = 100,000 ppm. Determine: Resistivity R:::: 0.024 Om 2-5 Rev. 1 12-95 .., ........ R (Qm) -:-20 = - -10 -=-8 -=-6 -=-5 -4 -=-3 -=2 = -1 ='0.8 = 0.6 -0.5 -::-0.4 -=- 0.3 -=°.2 = - -0.1 : 0,08 .::.. 0.06 -0.05 -:- 0.04 =-°.02 = -0.01 1 i ( Rweq from the SSP ( ... WII8TJu.-r.. [ ¡ : ¡ , ¡ '[ . ¡ t [ - 200 -~--':--!...:..._..,....-'--,-_:..-:,,,,,::_,-,-----:- ---- _.._~-- ------- .-.- -------.. j 500°F ..' l 2500e /,,.' , )"/ 400 - OF .( -,: 20QOC I ~- ðq, - ,I 300°F # :- /" 1500e ,- .. -~~ ''/~ - =--' - '. ,,-7 r -: 100"C ------ ,- , ' ?,' -. .",V, ..' 200°F --- - !I J/ / #- " Jï.l / ..,$ - 500e ~o(" / /Y / -,-..' I.t' 11,- I' / ", //,' ?,;~ 100°F ~ '~/, ,/ .. J ," '/,' ~~ ~~F~- _6' I I " , .1" ~- ' .r:a-:fy,r :"" I' .(/;: /." , -' r' . /. - ,-:- ~ I. I ,.,1"" :""1 t ' .j,- /' ¡j'" '' « ",;' / ,f~>f/ ',~' r"~. 4' ,I.I.~~£? ,; . . .iF; .. (j¡ " ' " , _e'.:":~ /, -. f~~r..;,r' I w; .~~ Ir~~' .. .' -... ---.--"-- -175 - --.--,-- -~-.. ..."-. ----'- -------. --- - 150 -- ---'1-- ---- --- -----_._- -- -_..- - 125 -- - - -...JI ---_. -- $' -100 ~ g - a. ~ -"1--' .- --.-...,---- --'-" T 1 ~ ë Q) Õ a. () ::J ~ &i ... c: 8- (f) (.;) if û5 -50- -75 1 I I I [ [ [ [ -25 --..-- --"'-- .,---. --- ..,/ .", 'C-: I , '1.0 3.0 ~,JRWeq 5.0 10.0 30.0 Using T f in of; SSP exp ... 6O+0.J33Tf Example Given: SSP = - 71 mV¡ Tf = 14()OF¡ Rw = 0.55Q. m RWeq ... Rmf * Wexp OF = 1.8 (OC) + 32 Detennine: Rweq since RmrlRweq = 8.0 n = 0.55/8.0 = 0.069 g.m "'weq ". 3-2 Rev. 1 12-95 . 1',' ¡ [ ¡ ¡ ¡ r I r 1 1 I I I I r 1 r 1 1 ì i T 1 ( Pelican Hill Oil & Gas lliamna #1 . Middle River State #2 The Cherryville Corp. 1507' N & 1604' W ofSE comer Sec. 10, Twp. 9N, Rge 14W Schlumberger Wireline Services- D IL / SP Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 17-Aug-68 1 2098 ' 17" 10-Sep-68 2 8268 ' 9 7/8" Ligno SuIt: 0.78 @ 62 F 148 F GEL 0.69 @ 67 F 85 F Geothermal gradient = 1.0 degF / 100' SP Results: Zone Depths Zone Rmf@ Measured Ca1cu~ated Converted NaCI (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 630 - 645' 70 0.67 -28 0.26 0.28 22,500 700 - 730' 71 0.67 -30 0.25 0.27 23,500 3205 - 3240' 97 0.48 -38 0.15 0.16 42,000 -_.- 3350 - 3365' 98 0.48 -45 0.12 0.13 55,000 Rwa Results: Zone Depths Zone Rw @ 180/0 Rw @ 230/0 Rw @ 30% NaCl Salinity (MD feet) Res. porosity porosity porosity Range (ohmm) (ohmm) (ohmm) (ohmm) (ppm) 630 - 645' 19 0.77 1.3 2.30 2,400 -7,400 700 - 730' 18 0.73 1.23 2.18 2,600 -7,700 3205 - 3240' 2.5 0.10 0.17 .30 20,500 - 70,000 3350 - 3365' 2 0.08 0.14 0.24 26,500 - 90,000 Baker INTEQ GeoScience 24-Nov-03 [ [ ! ¡ '[ I r (, Pelican Hill Oil & Gas lliamna #1 . West Foreland #1 Pan American Petroleum Corp. Sec. 21, Twp. 18N, Rge 14W Schlumberger WireIine Services- IEL / SP Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 3-Nov-61 1 1940' 12 Y4" 16-Nov-61 2 7355' 12 Y4" GEL N/A 74F GEL N/A 118 F Geothenna1 gradient = 0.8 degF / 100' Rmffor Run 1 taken ftom chart 2-2 (see appendix) to be 4.2 ohmm @ 65 degF Rmf for Run 2 taken ftom chart 2-2 (see appendix) to be 4.5 ohmm @ 96 degF I SP Results: I Zone Depths Zone Rmf@ Measured Calculated Converted NaCl (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity ! (degF) (ohmm) (mY) (ohmm) (ohmm) (ppm) .- 430 - 435' 62 4.4 -45 0.96 1.05 5,600 --- I 490 - 500' 63 4.3 -37 1.24 1.3 4,400 655 - 670' 64 4.2 -38 1.17 1.2 4,800 [ 2965 - 2995' 83 5.3 -41 1.40 1.5 3,900 3105-3115' 84 5.2 -40 1.43 1.55 3,800 [ 3330 - 3390' 86 5.0 -46 1.14 1.2 4,700 Due to the age of this well, no Dual Induction resistivity is available as an Induction Electric log was run. Due to the inaccuracies of Induction Electric log interpretation, no R wa calculations were perfònned. Baker INTEQ GeoScience 24-Nov-03 ¡ [ [ [ [ ¡ ¡ r I 1 'I I ¡ ¡ "I :r .I J J 1I ( ( Pelican Hill Oil & Gas lliamna #1 Conclusion: For the interval from 343 - 843' SSTVD, the formation salinity results are as follows (Nact equivalent): Well Kustatan Ridge # 1 Middle River St. #1 SP Salinity (ppm) 3,200 4,600 22,500 - 23,500 4,400 - 5,600 Rwa Salinity (ppm) 3,700 - 5,500 4,000 - 12,000 2,400 -7,700 N/A Middle River St. #2 West Foreland #1 , The formation salinities from this group of data are all consistent with the exception of the Middle River State #2 SP derived results. TIle most notable difference from Middle River State #2 and the other offset wells was that this well utilized a relatively salty GEL mud system. The other wells were either Ligno Sulfate or very fresh GEL mud systems. The relatively more saline, mud along with the large 17 ~" borehole may have combined to adversely effect the SP readings in the Middle River State #2 well. It is also worth noting that the more robust R wa technique yielded consistent results with no anomalies. These results suggest a formation salinity range of 4,000 - 6,000 ppm NaCl equivalent for the upper interval of 343 - 843' SSTVD ,,:itbin the area around Iliamna #1. For the interval from roughly 2800 - 3300' SSTVD, the formation salinity results are as follows (NaCI equivalent): Well Kustatan Ridge #1 Middle River St. #1' SP Salinity (ppm) 22,500 - 42,000 13,500 42,000 - 55,000 3,900- 4,700 Rwa Salinity (ppm) 17,000 -70,000 9,500 - 31,000 20,500 - 90,000 N/A Middle River S1. #2 West Foreland #1 Baker INTEQ GeoScience 24-Nov-03 . ¡ : ¡ : ¡ , ¡ :¡ 'I :r . r .j, 1 1 '! :r ] :r - r J , r J ¡ T J u ( Pelican Hill Oil & Gas lliamna #1 The formation salinities from this group of data have a larger range than those £Tom the shallower interval but they are still fairly consistent with the exception of the West Foreland #1 Well SP derived result. The log header for this well reports an unusually fresh mud system for the run in question. It is the high Rmf values that drive the low salinity results from this well. With the infi ' . tion available, it is impossible to say if an error exists on the West Foreland log. tlowever, the result is clearly spurious and does not fit within the remaining data cluster. It should also be noted that the very high salinity values (> 70,000 ppm) derived from the Rwa technique result from the low porosity scenario (18%). The one hard piece of porosity evidence we have from this interval (Sonic log) suggests the porosity is high and in the 23-30% range. These results suggest a formation salinity range of 10,000 - 45,000 ppm NaCl equivalent for the lower interval of 2800 - 3300' SSTVD within the area around Iliamna #1. If one is willing to accept the assertion that the porosity within this interval is consistently --300/0, then the salinity range may be further refined to 10,000 - 25,000 ppm NaCI. y{111á Biography: The Author, Glen Horel, has been a Log Analyst with Baker Geoscience since 1995. He has worked both in Alaska and in Western Canada. He has co-authored several papers on the use of Wireline Acoustics for Seismic and Petrophysical applications. Currently he is assigned to Baker INTEQ Geoscience in Anchorage Alaska as L WD Data Analysis Manager (907-267-6612). ' Baker INTEQ GeoScience 24-Nov-Q3 or- :t:t: co c E .£Ç! C? 0 I > 0 Z I ~ N -- ~ .,.. ~ = ~ ~ ~ < ~-- a.> en 0 CO c:: (!) a.> 'ü oð (f) 0 ð a.> (!) 0 :c w t- C ~ co '- .2 a.> ~ Q) m a.. m ,0---...0. - - ~ ~ - """-1_,--,\ ~ ~ - - " 1 l Estimation of Roo and Rmc ( R.W ~ . , [ [ [ ¡ ¡ 1 I I 10 - 1200 Amf or Rrne (Q'm) -5 - 4 - 3 - 2 Rm (Q'm) -6 -5 -1 -4 -3 -2 -0.5 -1 -0.:'; - 0.2 ) /' -0.1 -0.1 ./ -0.05 - -0.05 Mud Weight (Ib/gal) (kg/m~ 16.18 - 1920-2160 15 = 1680 14 - 13 - 1560 12 1440 11 - 1320 Mud Weight Ib/gal kg/m3 C 10 1200 0.847 11 1320 0.708 12 1440 0.584 13 1560 0.488 14 1680 0.412 16 1920 0.380 18 2160 0.350 -0.01 - 0.02 I j, ~f = CCRrn)l.07 ¡ L R.rc = 0.69 ~ ( :: r65 -0.01 Example ! f , Given: Rm = 0.7.Q. m at 200°F mud Mud weight = 12.0 lb/gal Note: This chart may be used when the, (\ measured values of ~ and ~ are not" available, but does not apply to ligno.sulfonate muds. I I Detennine: Rmf and Rmc Rmf = 0.4.Q. mat 2000P Rmc == 1.2 .Q . m at 2000P (from equation) ./ 2-2 Rev. 1 12-95 I,,) ¡ Ê Qi - ar I Ê a: ... 0 ar ~ a: l.-) .o) Rev. 1 12-95 RJ . om Rweq as a Function of 1èmperatL e eF) 8.1 ..... 2 ~l< / ~~/ ,'\.~ ./ 75°F /' /' 100°F '" ",,' /' / 150°F ~ r,." /' /' ./ /. / ~ ' 200°F " '/ ../ ~ ~ /£'-r/' /,/."'" "" ~ 300°F ///- -",-- Y. - ~;:"'~ / ::::.- -- -- - 400°F ,. r« ~~::?,./ -' -::::,... --- - ,., 500° F r/ '-" '-"--- ,¡:::- ,..-,/' , 1 ' . If! . . - ~:~ ~nr.oon f(!hï! /;-, hÞ'-'r !I; .~r/ /. "'- ° t- ~ l//' 150'r ..- 0.002 r ,L ,?QCOF, :: / - ::\OQo:: ~l ,.-4.ìO°F 0.001 =Þ-"" 500°: 000' I) I 1111 . 5 0.01 00 J . 2 0.03 0,05 - - En ~lish 0.5 0.2 = - - 0.1 .. 0.05 J.- 0.02 - - 0.01 - 0.005 1111 III L 0.1 0.2 0.3 0.5 2 Rw or Rm" (Q . m) English: Rw + 0.131 x lO[l/logffr/19.9)] - 2 eq - 0.5 Rw + 1O[O.0426/1og(fr/50.8)] eq Rw = Example Given: Rw = 0.069 Q. mt Tr = 1400P eq Detennine: ~; Rw = 0.073 Q' m at 140oP. For mostly NaCl formation waters, use the solid lines. Use the dashed lines for fresh formation waters that are being influenced by salts other than NaClt and for gypsum-based muds. 3-3 r--:---- ¡-, r- ~ ~ ,............. ~ ...........- -.....- - - - ~ - .m l_.Z DI"'o ~~ 0 cz ~ II ~ ~ -.- -....- - - -- Alaska Oil and Gas Conservation Commission Application for Underground disposal of Drilling waste Pelican Hill Oil and Gas Iliamna No. 1 Permit No. 203-172 AFFIDA VIT OF NOTIFICATION I, ,!) K.LE IV E H /J1 do hereby affirm that a full and complete copy of the captioned "Application for Underground disposal of DriJling Waste has been sent to the only surface owner within !j,¡ mile: Mr. Paul Ostrander Kenai Peninsula Borough 144 N. Binkley Soldotna. Alaska 99669-7599 ~~~ Arlen Ehm NOTARY ACKNOWLEDGEMENT STATE OF ALASKA ) )SS, THIRD JUDICIAL DISTRICT) The foregoing instrument was acknowledged before me this £ day of December, 2003, by Arlen Ehm, Registered Agent for Pelican Hill Oil and Gas Inc.. on behalf of the corporation. \\' \ ,"III/IIlP.l ~~~~~J~N L:' ~'III .::0 0o .",.,"',,,,., ..... A ;.-"." .,'" \\\' t'I, Tff, .'l ,,":;f ~'>ò /' JI/a "'..'~~. § /' . ì: ">.~~, :; f " 4-9;.. \~.:? ~(l~~ '~út:J.' ~~§, ::~:,. -1.../", §<::. ~~\"""" ~\\,\"../ ~~ '..f>, 0 c:- ""uuu'\"'J ~ ~ "/-:'1:, A LA $" ,,~~ '. /r!;11I!!I~n\\\\ :?~~n~JaSka My commission expires: ¿,~ t- /0..6 00 ::t:t: Re: [Fwd: Re: Illiamna #1] Subject: Re: [Fwd: Re: Illiamna #1] From: Thomas Maunder <tom - maunder@admin.state.ak.us> Date: Fri, 06 Aug 2004 10: 10:33 -0800 To: Rob Mintz <robert_mintz@law.state.ak.us> CC: Steve Davies <steve_davies@admin.state.ak.us>, Jim Regg <jim_regg@admin.state.ak.us> Thanks Rob. The new application will be substantially the same as before, with the recognition that they need to supply the missing information. They would like to begin the process in hopes of reducing "lost time" on the back end. Torn Rob Mintz wrote: OK. If the application is meaningful even if there is not currently sufficient information to support its approval, I don't see why you can't issue notice at this point. »> Thomas Maunder <tom maunder@admin.state.ak.us> 8/6/2004 9:16:06 AM »> They plan to begin well operations in 2 weeks, not injeciton operations. Rob Mintz wrote: > How could they begin injection opereations in two weeks? > > »> Thomas Maunder <tom maunder@admin.state.ak.us> 8/6/2004 8:38:38 AM »> > I hit the wrong but'Eon--:'-"----"''' ---------------------"-"""'-'-------""''''''''''---''----''''''''-''..-......---..-""""...... > > -------- Original Message -------- > Subject: Re: Illiarnna #1 > Date: Fri, 06 Aug 2004 08:35:16 -0800 > From: Thomas Maunder <tom maunder@admin.state.ak.us> > Organization: State of Alaska > To: Thomas Maunder <tom ma.under@admin.state.ak.us> > CC: Steve Davies <steve davies@admin.state.ak.us> > Re f e renc e s : < S 1 0 a'6's'c'ër:"'õ'9:i@!;'ff1ti:;"ã:-:'--J:"ã'w<-st:"ã:'t:"ë--. ak . us> > <410AE254.5050309@admín.state.ak.us> > > > > Rob, > Steve and I met with Pelican Hills reps yesterday. They are planning to > resume operations at Illiarnna #1 in about 2 weeks (if all goes well) . > They are intending, as noted previously, to possibly obtain a disposal > injection order. They are concerned regarding the required notice > time. As noted, they complied with most of the required needs in their > original submission, however it was finally determined incomplete and > the application was denied without prejudice. They intend to acquire > the missing information. > On receipt of a request, is it possible to begin the notice period for > the disposal injeciton order with the recognition that Pelican Hill does > not have the missing information at this time but will likely have the > information prior to the public notice period ending?? It would be > hoped that some time advantage can be gained by beginning the notice in > advance of actually getting the operations underway. If delays were > encountered getting underway, it should be possible to "continue" the > hearing process pending obtaining the needed information. > > We would appreciate your thoughts on this. Thanks, > Torn > > Thomas Maunder wrote: > > > I would agree Rob. In this case, I don't think the applicant was going > > to be able to supply the needed information since it did not exist. 10f2 8/6/2004 2:51 PM Re: [Fwd: Re: Illiamna #1] > > Since this well was drilled with casing (a different technique) > > compromises in data gathering were requested and granted. Originally > > PH had plans other than injection for their drilling waste. The need > > for injection (whether annular or Class II) arose later. They should > > have the opportunity to get some additional information when they > > start up, however it is in their plans to get into the disposal mode > > early in the game (potentially in early September) . > > According to the spreadsheet that was attached to the letter, they had > > complied with a number of the requirements but there were > > deficiencies. Maybe the fact that we didn't get any comments or > > request for a hearing can apply. The public was given the opportunity > > to comment and didn't. We did not provide any information that the > > application was not complete. We have however denied it and I think > > what you said earlier applies, the original matter is closed. > > Tom > > > > Rob Mintz wrote: > > »> Tom, an observation on this matter: I am sure that there are > » situations where the Commission has felt more information is needed > » before making a decision on an application and where the applicant > » has been asked to provide more information and been given an > » opportunity to do so, after which the Commission has proceeded to > » make a decision on the application. In this case I would guess (or > » maybe I am faintly remembering) that the Commission ran out of > » patience with the applicant's failure(s) to do what was required and > » for that reason determined to outright deny the applilcation rather > » than keep the matter alive while awaiting further information. If it > » had chosen the latter course there wouldn't necessarily have to be a > » new application and new notice period, etc. But it is hard to > » imagine that the Commission would have been willing to wait six > » months for the application to be completed as part of the original > » proceeding. > > > > > > > 2 of2 8/6/2004 2:51 PM r--... :f:I:: " <' (, FRANK H. MURKOWSKI, GOVERNOR A.I~A.SKA. OIL AND GAS CONSERVAnONCO~SSION 333 W. ]TH AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 February 10, 2004 Mr. Al Gross Pelican Hill Oil and Gas Inc. 1401 N. El Camino Real, Suite 207 San Clemente, CA 92672 Dear Mr. Gross: By letter dated December 8, 2003, Pelican Hill Oil and Gas Inc. ("Pelican Hill") requested authorization to allow the underground injection of non-hazardous oil field waste fluids within the Iliamna No.1 wellbore. Iliamna No.lis located in Section 31, T9N, RI4W, Seward Meridian, Alaska. The proposed injection interval is located within the Tyonek Formation. The waste stream consists of freshwater-based drilling mud and drilled cuttings generated in connection with the drilling of I1iamna No.1. Pelican Hill estimates that 3,000 barrels of waste would be disposed into the well. The Alaska Oil and Gas Conservation Commission ("Commission") published the disposal injection order application for public comment on December 11, 2003. No comments were received. Iliamna No.1 is being drilled as an exploratory gas well. It is our understanding that Pelican Hill suspended drilling operations in late November 2003 because of concerns about the suitability of the rig to operate in the winter conditions at the drill site. To date, the Commission has not received any notification from your company concerning the temporary shutdown of drilling operations as required by regulation 20 AAC 25.072. Pelican Hill's application to temporarily convert the well to a UIC Class II disposal well is because of limited waste handling options. After injection is completed, the zone would be isolated, and the well plugged back and completed to the shallower objective(s) to test for commercial quantities of gas. There is insufficient information available for the Commission to grant the injection order. Regulation 20 AAC 25.252 lists 17 required types of information to be included in a disposal injection order application. To date, Pelican Hill has provided no information or limited information concerning several of those required items. The attached chart compares the requirements of regulation 20 AAC 25.252 and the information submitted by Pelican Hill. Most concerning to the Commission is the lack evidence that the fluids injected will be confined to the intended injection interval. Pelican Hill has not provided critical information concerning the integrity of production casing cement or the lithology, thickness and lateral extent of overlying and underlying confining zones. (, (.. The request to inject drilling waste into I1iamna No.1, as provided in Pelican Hill's application dated December 8, 2003, is denied without prejudice to the right to re-apply for authorization upon meeting all requirements of20 AAC 25.252. Attachment cc: Arlen Ehm 2420 Foxhall Drive Anchorage,AK 99504 Mark Myers, Director Division of Oil and Gas 550 West 7th Avenue, Suite 800 Anchorage,AK 99501 Sincerely, Daniel T. Seamount, Jr. Commissioner REQUIREMENTS CHECKLIST: APPLICATION FOR UNDERGROUND DISPOSAL OF LIQUID WASTE ILIAMNA #1 20 AAC 25.252 UNDERGROUND DISPOSAL OF OIL FIELD WASTES AND UNDERGROUND STORAGE OF HYDROCARBONS (b) The operator has the burden of demonstrating that the proposed disposal or storage operation will not allow the movement of oil field wastes or hydrocarbons into sources of freshwater. DONE ITEM Partial 1. REQUIREMENT (b) Disposal or storage wells must be cased and the casing cemented in a manner that will isolate the disposal or storage zone and protect oil, gas, and freshwater sources. (c) An application for underground disposal or storage must include: DONE ITEM Yes 2. Yes 3. Yes 4. Yes 5. REQUIREMENT (c)( 1) plat showing the location of all proposed disposal and storage wells, abandoned or other unused wells, production wells, dry holes, and any other wells within one-quarter mile of each proposed disposal or storage well; (c)(2) list of all operators and surface owners within a one- quarter mile radius of each proposed disposal or storage well; (c )(3) affidavit showing that the operators and surface owners within a one-quarter mile radius have been provided a copy of the application for disposal or storage; (c)( 4) name, description, depth, and thickness of the formation into which fluids' are to be disposed or stored and appropriate geological data on the disposal or storage zone including lithologic descriptions and geologic names; SUBMITTED Dec. 8, 2003 submittal: page 1, part (b) provides a description of casing and cementing procedure, and a statement that operator believes cement is competent and believes that channeling did not take place. Cementing job reports are attached to submittal. Cement quality log (CBL) has not been run. (CRITICAL ITEM) '---" 'II SUBMITTED Included in Dec. 8, 2003 submittal Included in submittal: no other operators, surface owner is Kenai Peninsula Borough. Letter of non- objection received from borough on Dec. 9,2003. Included in submittal ..-.,,, " Included in submittal: Tyonek sandstone from 3166' to 3181 '; 30% porosity estimated from offset well 1.5 mi NNE. REQUIREMENTS CHECKLIST: APPLICATION FOR UNDERGROUND DISPOSAL OF LIQUID WASTE ILIAMNA #1 DONE ITEM REQUIREMENT SUBMITTED No 6. (c)( 4) name, description, depth, and thickness of the No information provided. confining zones, including lithologic descriptions and geologic names; (CRITICAL ITEM) Yes 7. (c)(5) logs of the disposal or storage wells, if not Included in submittal: cased hole GR-CCL only. already on file, or other similar information; Operator has cased hole GR-Neutron and electronic drilling data (acquired in lieu of a standard mud log), but expressed reservations about maintaining ~, confidentiality and has not yet submitted them. '*' Note: Because this involves existence, absence or levels of contaminants in freshwater, under 20 AAC 25.537(e)(1)(B), logs down through the injection interval cannot be kept confidential. Yes 8. (c)( 6) description of the proposed method for Included in submittal; statement that the mechanical demonstrating the mechanical integrity of the casing integrity of casing-tubing will be tested to 1,500 psi, and tubing under 20 AAC 25.412; and wellbore schematic No 9. (c)( 6) description of the proposed method for No information provided. CBL; temp surveys demonstrating that fluids will not move behind casing (baseline, subsequent to injection); water flow log beyond the approved disposal or storage zone; may be acceptable demonstration of confinement Yes 10. (c)(6)(A) & (6)(B) description of the casing of the Included in submittal: page 1, part (b) disposal or storage wells, if the wells are existing; or -. description of the proposed casing program, if the " disposal or storage wells are new; No 11. (c )(7) statement as to the type of oil field wastes to be Submittal: 3,000 barrels of drilled cuttings and disposed or hydrocarbons stored, their composition, freshwater-based drilling mud; injection rate of 1 to their source, the estimated maximum amounts to be 2-bpm expected. Understanding confinement is disposed or stored daily; necessary before accepting the small volume and injection rate as satisfying this requirement. REQUIREMENTS CHECKLIST: APPLICATION FOR UNDERGROUND DISPOSAL OF LIQUID WASTE ILIAMNA #1 DONE ITEM REQUIREMENT SUBMITTED Acceptable 12. (c )(7) statement as to compatibility of fluids to be No statement of compatibility but fluid will consist disposed or stored with the disposal or storage zone; of cuttings and fresh-water based mud; Commission believes compatibility is not a concern. Yes 13. (c)(8) estimated average 'and maximum injection Included in submittal: Estimated average injection pressure; pressure is about 800 psi, and maximum expected injection is about 1000 psi; maximum allowable pressure is 1025 psi (assuming fluid density is 9.0 ppg); expected frac gradient is 15.4 ppg EMW. .-", Injection rate expected to be 1 to 2 bpm. W Acceptable 14. (c )(9) evidence to support a commission finding that the Statement included in submittal: "It is not likely proposed disposal or storage operation will not initiate that the proposed injection could possibly propagate or propagate fractures through the confining zones that a fracture height of800'." (operator's estimated might enable the oil field wastes or stored hydrocarbons minimum upward distance to the deepest freshwater to enter freshwater strata; sand). Yes 15. (c)(lO) standard laboratory water analysis, or the results Water sample not available. Included with of another method acceptable to the commission, to submittal is an analysis of offset well logs by determine the quality of the water within the formation operator and by Baker-Hughes/INTEQ. Both into which disposal or storage is proposed; indicate water quality in the disposal interval exceeds 10,000 ppm TDS. Yes 16. (c)(II) reference to any applicable freshwater Not applicable based on item 15. exemption issued in accordance with 20 AAC 25.440; and ~ Yes 17. (c)(12) report on the mechanical condition of each well There are no wells within U mile of the well. " that has penetrated the disposal or storage zone within a Nearest wells are 1-1/4 to 1-1/2 mile away. one-quarter mile radius of a disposal or storage well. \0 ::t:t:: N \ Ç} . Wells Utilized in Baker-Hughes alinity Analysis <> Bð.CHATNA C f\'1< U 1 10N 14VW ,~ .. _,e -,.. . ,'- I 13'ifV I t .ç, MIDDLE 0 5T U I idd e River State t 1 (2 m'les nor:h of map limit' , -Q-Bð.CHATNA Cf\' ( U J 9N 'D",._".-- '-:-:-~f' ---- <U~A~ N f\'JDCE 1 9 ILip.tJNA 2 ~w Faelond U S \:>ow Faeond U ~ ÎI 'c.., ee,.,- .e- ~ï<(-StAIAh '~h¡'ro~"~__'_H- .' - -<>1< JsrAT.lt.~ f\'NER : {>ow FœELAN J' <>-B4CH~TNA CR.( STt .'e~ {>o Y;::U 4 -:-:"Y.-~- UI {>o~ 00L£ f\' Sf 1 (J$CO) Q-tJIOOLE f\' Sf 2 +VFU 3 -. Feet , " ~ 30.000 I 40,000 - . , \ 0 ~ , -- - .WFC6E..PNO 1 .- I\e,_- 10.000 20,000 1730100 SFD picked data WEST FORELAND A-1 Resistivity Calculator T1 T2 R1 63 28.3 3.3 63 72.3 3.3 Parameters: Surface Run Top Run Bot Shallow T Max Temp Gradient* Oft 82 ft 7355 ft 56.643 F 118 F 0.0096 deg/ft EPA RESISTIVITY METHOD** a = 0.62 m = 2.15 n=2 R2 6.6 2.9 Rm Rm Temp Rmf Rmf Temp KB GL Run 1 3.66 75 F 4.38 69 F 58 Ft Ft P ma = 2.65 P fl = 1.0 P sh = 2.50 Top Depth Base Depth Ave. Depth TVD SSD Thick Temp Fm 507 558 533 533 443 51 61.8 568 620 594 0 0 52 62.3 658 711 685 0 0 53 63.2 862 894 878 874 784 32 65.1 926 950 938 945 855 24 65.6 Run 2 2726 2743 2735 2419 2329 17 82.9 2853 2868 2861 2510 2420 15 84.1 3346 3362 3354 2863 2773 16 88.8 Conductivity/Resistivity Converter C R 125 8.0 160 6.3 Run 2 2.05 65 1.79 65 -" Dt ma = 58 GR sd = Dt fl = 210 GR sh = Dt sh = 132 Hunt-Raymer Wylie Rt Dt avg. Phi** Phi F Rw Rw75 Salinity 19.00 160.00 0.330 0.508 6.72 2.83 2.37 2200 19.00 0.330 6.72 2.83 2.39 2200 19.00 0.330 6.72 2.83 2.42 2100 11.00 0.330 6.72 1.64 1.44 3700 11.00 0.330 6.72 1.64 1.45 3700 2.50 123.00 0.327 0.324 6.86 0.36 0.40 14500 2.20 124.00 0.329 0.329 6.77 0.33 0.36 16200 '-0 0.90 118.00 0.315 0.299 7.42 0.12 0.14 45600 Shallow «1000') porosity estimated; sonic logged from 1946 -7351'. * Temperature gradient calculated based on temperature points from log heading. ** Hunt Raymer works universally and does away with compaction corrections, field observation curves plotted on Schlumberger charts are similar to Hunt Raymer equation. Wylie method requires a compaction correction. AOGCC 1/12/2004 11:08AM (' 1730100 WEST FORELAND A-1 Salinity Determination using EPA SP Method Resistivity Calculator Input: R1= T1= T2= 0.4 ohm-m 81.8 F 75 F R2= 0.433 ohm-m calculate Salinity at 75 F Input: R75: 0.433 ohm-m Salinity= 13283 PPM Calculate Resistivity of Solution at 75 F from Salinity Rw75= 0.737 ohm-m Salinity= 7518 PPM Input: Avg. MD Avg. TVDss Fm Temp Rw Rw @ 75 533 476 61.8 1.44 1.21 594 537 62.3 1.48 1.25 685 628 63.2 1.37 1.17 878 821 65.1 1.06 0.93 938 881 65.6 0.95 0.84 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! Calc NaCI Salinity 4,400 4,300 4,600 5,900 6,500 #DIV/O! #DIV/O! ( Pan Americê Chartbook (Using "Average Freshwater Curves) Rw Salinity 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2735 2678 82.9 0.67 0.73 7,600 0 0 2861 2804 84.1 0.49 0.55 10,300 0 0 3354 3297 88.8 0.48 0.56 10 1 00 0 0 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! 0 0 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! 0 0 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! 0 0 AOGCC 1/12/2004 10:54 AM 1610490 SFD picked data Parameters: Surface Run Top Run Bot Shallow T Max Temp Gradient* EPA RESISTIVITY METHOD** WEST FORELAND 1 Resistivity Calculator T1 T2 R1 63 28.3 3.3 63 72.3 3.3 Oft 82 ft 7355 ft 56.643 F 118 F 0.0096 deg/ft Top Depth Base Depth Ave. Depth TVD 507 558 533 533 568 620 594 0 658 711 685 0 862 894 878 874 926 950 938 945 Run 2 2726 2853 3346 2743 2868 3362 a = 0.62 m = 2.15 n=2 SSD Thick 443 0 0 784 855 2735 2419 2329 2861 2510 2420 3354 2863 2773 Rm Rm Temp Rmf Rmf Temp KB GL P ma = 2.65 P fl = 1.0 P sh = 2.50 R2 6.6 2.9 Run 1 3.66 75 F 4.38 69 F 58 Ft Ft Temp Fm 51 61.8 52 62.3 53 63.2 32 65.1 24 65.6 17 15 16 Conductivity/Resistivity Converter C R 125 8.0 160 6.3 Run 2 2.05 65 1.79 65 82.9 84.1 88.8 Dt ma = 58 GR sd = Dtfl = 210 GR sh = Dt sh = 132 Hunt-Raymer Wylie Rt Dt avg. Phi** Phi F Rw Rw75 Salinity 27.50 0.330 6.72 4.09 3.43 1500 27.50 0.330 6.72 4.09 3.46 1500 27.50 0.330 6.72 4.09 3.50 1500 26.00 0.330 6.72 3.87 3.40 1500 28.00 0.330 6.72 4.16 3.69 1400 19.00 123.00 0.327 0.324 6.86 2.77 3.04 1700 16.00 124.00 0.329 0.329 6.77 2.36 2.63 2000 ~, 9.50 118.00 0.315 0.299 7.42 1.28 1.50 3500 Shallow «1000') porosity estimated; sonic logged from 1946 -7351'. * Temperature gradient calculated based on temperature points from log heading. ** Hunt Raymer works universally and does away with compaction corrections, field observation curves plotted on Schlumberger charts are similar to Hunt Raymer equation. Wylie method requires a compaction correction. AOGCC 1/12/2004 10:56 AM ( 1610490 WEST FORELAND 1 Pan Americê Salinity Determination using EPA SP Method Resistivity Calculator Input: R1 = T1= T2= 0.4 ohm-m 81.8 F 75 F R2= 0.4330hm-m I Calculate Salinity at 75 F Input: R75: 0.433 ohm-m Salinity= 13283 PPM Calculate Resistivity of Solution at 75 F from Salinity Rw75= 0.737 ohm-m Salinity= 7518 PPM Input: Avg. MD Avg. TVDss Fm Temp Rw Rw @ 75 433 343 56.1 0.84 0.65 495 405 56.7 1.21 0.94 663 573 58.4 1.04 0.83 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! Calc NaCI Salinity 8,600 5,800 6,700 #DIV/O! #DIV/O! #DIV/O! #DIV/O! Chartbook (Using IIAverage Freshwater Curves) Rw Salinity 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2980 2890 81.3 0.71 0.77 7,200 0 0 3110 3020 82.6 0.84 0.92 6,000 0 0 3360 3270 85.1 0.69 0.77 7,100 0 0 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! 0 0 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV 10! #DIV/O! 0 0 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! 0 0 AOGCC 1/12/2004 10:55 AM 1640020 Kustatan River 1 Salinity Determination using EPA SP Method Resistivity Calculator Input: R1= T1= T2= 0.4 ohm-m 81.8 F 75 F R2= 0.433 ohm-m calculate Salinity at 75 F Input: R75: 0.433 ohm-m Salinity= 13283 PPM Calculate Resistivity of Solution at 75 F from Salinity Rw75= 0.737 ohm-m Salinity= 7518 PPM Input: Avg. MD Avg. TVDss Fm Temp Rw Rw @ 75 638 593 59.3 2.10 1.70 699 654 60.2 2,01 1.65 955 922 63.9 2.05 1.77. 1132 1109 66.3 1.09 0.97 1595 1577 72.7 0.44 0.43 1748 1767 74.8 0,60 0.60 1995 2053 78.1 0.41 0.42 2278 2313 81,9 0,31 0.34 3139 3043 92.8 0.32 0.39 3562 3391 98.0 0.28 0.36 AOGCC Calc NaCI Salinity 3101 3210 2973 5599 13434 9367 13656 17239 14896 16200, ( Chartbook (Using "Average Freshwater Curves) Rw Salinity 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Shell Operator's Reported Values Salinity Water Sample Analysis TDS 1/12/2004 11:10 AM 1670390 SFD picked data Parameters: Surface Run Top Run Bot Shallow T Max Temp Gradient* EPA RESISTIVITY METHOD** KUSTATAN RIDGE 1 Resistivity Calculator T1 T2 R1 63 28.3 3.3 63 72.3 3.3 Oft 201 ft 6712 ft 55.32 F 130 F 0.0111 deg/ft a = 0.62 m == 2.15 n=2 Rm Rm Temp Rmf RmfTemp KB GL P ma = 2.65 P fl = 1.0 P sh = 2.50 Top Depth Base Depth Ave. Depth TVD SSD Thick 475 495 485 485 404 812 843 828 826 745 954 972 963 968 887 Run 2 2945 3000 3290 2975 3015 3330 2960 2576 2495 3008 2615 2534 3310 2832 2751 R2 6.6 2.9 Run 1 3.66 75 F 4.38 69 F 81 Ft 69 Ft Temp Fm 20 60.7 31 64.5 18 66.0 30 15 40 Conductivity/Resistivity Converter C R 125 8.0 160 6.3 Run 2 2.05 65 1.79 65 88.2 88.7 92.1 Dt ma = 58 GR sd = Dt fl = 210 GR sh = Dt sh = 132 Hunt-Raymer Wylie Rt Dt avg. Phi** Phi F Rw Rw75 Salinity 41.00 0.300 8.25 4.97 4.10 1200 16.00 0.300 8.25 1.94 1.69 3100 11.00 0.300 8.25 1.33 1.19 4500 2.90 117.50 0.314 0.297 7.48 0.39 0.45 12700 3.00 117.00 0.313 0.294 7.54 0.40 0.46 12300 2.20 113.00 0.303 0.274 8.10 0.27 0.33 17900 ~ Shallow « 1 000') porosity estimated; sonic logged from 1313 - 6707'. * Temperature gradient calculated based on temperature points from log heading. ** Hunt Raymer works universally and does away with compaction corrections, field observation curves plotted on Schlumberger charts are similar to Hunt Raymer equation. Wylie method requires a compaction correction. AOGCC 1/12/2004 10:58 AM ( 1670390 Kustatan Ridge State #1 Salinity Determination using EPA SP Method Resistivity Calculator Input: R1= T1= T2= 0.4 ohm-m 81.8 F 75 F R2= 0.4330hm-m calculate Salinity at 75 F Input: R75: 0.433 ohm-m Salínity= 13283 PPM Calculate Resistivity of Solution at 75 F from Salinity Rw75= 0.737 ohm-m Salìnìty= 7518 PPM Input: Avg. MD Avg. TVDss Fm Temp Rw Rw @ 75 485 404 60.7 1.67 1.37 828 747 64,5 1.76 1.53 963 882 66,0 1.41 1.26 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! 2960 2879 88.2 0.24 0.28 3008 2927 88.7 0.23 0.26 3310 3229 92.1 0.10 0.12 #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! AOGCC ( Shell Chartbook (Using "Average Freshwater Curves) Rw Salinity 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1/12/2004 10:46 AM lI) =+t:: ATTACHMENT I ILIAMNA NO.1, ANNULAR DISPOSAL APPLICATION RECOMMENDATION Pelican Hill Oil and Gas Inc.'s request for conditional approval of proposed options for disposal of drilling waste in Iliamna No.1 cannot be approved. Option 1, Annular Disposal, cannot be granted due to lack of sufficient information. Option 2, Non-Annular Disposal, cannot be approved under 20 AAC 25.080. Separate application for this option must be made under 20 AAC 25.252 and 25.412. DISCUSSION On November 24, 2003, the Alaska Oil and Gas Conservation Commission ("Commission") received an incomplete application from Pelican Hill Oil and Gas Inc. ("Pelican Hill") regarding for annular disposal of drilling waste through the annular space of the I1iamna No.1 well. Pelican Hill presented two separate options for disposal of drilling waste within Iliamna No.1, and requested conditional approval of one or both of the options pending submission of the final data. Pelican Hill requests to dispose of freshwater-based drilling mud and drill cuttings wash water from the Iliamna No.1 well either within the open annulus of the well between 560' and approximately 1000' measured depth ("MD"), or through proposed perforations at least 150' MD below the last known hydrocarbon zone (disposal occurring at about 3300' MD). These requests are discussed separately, below. Annular Disposal Regulation 20 AAC 25.080, which governs annular disposal of drilling waste, presents a listing of 17 items of information that must be supplied to the Commission by the operator in support of an application for annular disposal. This information is key to the Commission's finding that wastes can be safely disposed within the target zone, and will not migrate to the surface or into freshwater or hydrocarbon-bearing zones. To date, Pelican Hill has supplied only 10 of the 17 information items needed to complete their application for annular disposal in the Iliamna No.1 well. Submitted Information: 1. Pelican Hill requests to dispose of drilling mud waste from Iliamna No.1 within the open annulus of the well. Although not explicitly stated, the intended disposal interval appears t 0 b e between 560' and approximately 10 00' measured de pth ("MD"), an interval that is much shallower than annular disposal depths previously approved by the Commission. ATTACHMENT I ILIAMNA NO.1, ANNULAR DISPOSAL APPLICATION RECOMMENDATION Page 2 of 4 2. Pelican Hill submitted a salinity determination for the formation waters within the I1iamna No.1 well based on data from offset wells. This analysis demonstrates that the formation water within proposed 560' to 1000' MD disposal interval is between 3,000 and 10,000 mg/l total dissolved solids, the range acceptable for disposal of drilling waste (20 AAC 25.080(e)(I)(b)). Commission review of this report and other, nearby offset wells, is continuing, but indications to date are that the conclusions in the report are accurate. 3. There are no publicly recorded wells within U mile or water wells within 1 mile of Iliamna No.1. A Commission check of public records indicate the nearest water well is 9,000' southeast and is 116' deep. The only other water well within the area is 4-1/2 miles southeast and is 205' deep. 4. Waste types will be freshwater-based GEL drilling mud and drill cuttings wash water with a slurry density of about 9.0 ppg and an estimated volume of 15,000 barrels. 5. The 9- 5/8", 32.3 p pf, H -40 casing ha s been set at 560 ' M D and cemented to surface. Per item #2, above, this casing point is set in formation water that exceeds 3,000 mg/l TDS. 6. Corrected cementing records were submitted to the Commission. 7. No disposal to date has occurred in the Iliamna No.1 well. 8. Drilling waste disposed will be limited to that generated during drilling of Iliamna No.1. 9. A statement as to why the operator proposes not to comply with 20 AAC 25.080(d) is not applicable. 10. A statement concerning additional data required by the Commission to confirm containment is not applicable. Information not submitted: 1. Statements concerning the required stratigraphic description of the interval exposed to the open annulus or required to demonstrate the waste will be confined and will not come to the surface or, except to the extent allowed under (e)(1) of this section, contaminate freshwater 2. No information has been submitted concerning the required estimate of the maximum anticipated pressure at the outer casing during disposal operations. 3. A cement quality log or formation integrity test records have not been submitted. ATTACHMENT I ILIAMNA NO.1, ANNULAR DISPOSAL APPLICATION RECO:M11ENDATION Page 3 of 4 4. No information has been submitted showing that the inner and outer casing strings have sufficient collapse and burst strength for the anticipated disposal operations. 5. No information has been submitted showing the downhole pressure obtained during a formation integrity test conducted below the outer casing shoe. 6. No information has been submitted concerning identification of the hydrocarbon zones, if any, above the depth to which the inner casing is cemented. 7. No information has been submitted detailing the duration of the disposal operations. Until this information is provided to the Commission, annular disposal operations cannot be approved. Demonstration of Confmement is Crucial for Approval One of the fundamental responsibilities of the Commission is protection of underground sources of freshwater. The proposed very shallow disposal depth means that a complete demonstration of confinement and well integrity is crucial for Commission approval for annular disposal of drilling wastes. The Commission granted seven separate waivers to our regulations allowing Pelican Hill to try new or non-standard techniques and methods while drilling the I1iamna No.1 and 2 wells. Two important waivers granted were Pelican Hill's requests to 1) not record open hole well logs and 2) not to employ a manned mud logging unit. An unfortunate result of Pelican Hill's waivers is a lack of information critical for approval of annular disposal operations. No Open Hole Well Logs The Commission has required recording of open hole logs in the surface hole of nearly every exploration well within the State of Alaska. However, because Pelican Hill is using a new, drilling-with-casing technique that does not permit tripping of pipe, it is not possible for Pelican Hill to record conventional open hole logs in the Iliamna wells. Pelican Hill proposed instead to record a cased hole log to identify gas-bearing intervals. Because there was no practical alternative, the Commission granted a waiver to our standard well logging requirements. As a consequence of Pelican Hill's request for this waiver, they will not be able to provide information critical to understanding the nature and thickness of the zone(s) that would receive drilling waste and, more importantly, the nature and thickness of the zone( s) that would confine the waste and prevent its migration into freshwater aquifers (see 20 AAC 25.080 (b )(3)). No Manned Mudlogging Unit The Commission typically requires a mud log be recorded on exploratory wells. Pelican Hill requested and received a waiver from mud logging and cuttings samples ATTACHMENT I ILIAMNA NO.1, ANNULAR DISPOSAL APPLICATION RECOMMENDATION Page 4 of 4 requirements, proposing instead to provide use an electronic monitoring system to gather and report drilling information. Pelican Hill's onsite geologist is not maintaining a sample description (lithology) log. As a consequence of Pelican Hill's request for waiver and 0 perating procedures, t hey do no t ha ve typical m udlog 0 r sample inf ormation to provide an accurate description of the nature or thickness of the receiving or confining zones within Iliamna No.1. Conclusion Regulations allow the Commission to grant approval for annular disposal operations. However, over the years the Commission has established strict guidelines that must be followed. Approval for Pelican Hill's request for annular disposal cannot be granted until the Commission has all information required under 20AAC 25.080, and, crucially, until the Commission has sufficient information concerning well integrity and the extent and nature of the confining zone, to ensure drilling waste will be confined and will not migrate to the surface or contaminate freshwater. Non-Annular Disposal Pelican Hill proposes a second option for disposal of drilling waste in Iliamna No.1, disposal through perforations at least 150' MD below the lowest hydrocarbon zone encountered in the well (expected perforation depth is about 3300' MD). They correctly argue the intent of 20 AAC 25.080 is to provide an economic environmentally sound option for disposal of drilling waste. However, the second option they propose ("Non- Annular Disposal") involves disposal through perforations. Clearly, this operation does not involve disposal through an annular space, and 20 AAC 25.080(c)(3) prohibits using annular disposal regulations to circumvent 20 AAC 25.252 (underground disposal of oil field wastes) 0 r 20 AAC 25. 412 ( casing, cementing and tubing for dis posal inj ection wells). Conclusion Any disposal operations not involving disposal through an annulus must conform to 20 AAC 25.252 and 20 AAC 25.412. Pelican Hill must make a separate application under ~ ;;¿::~~~ "! ..". Steve Davies Petroleum Geologist /2. . 2,. -°3 N \ CJ . Wells Utilized in BakerwHughes alinity Analysis -$-ß6.CHATNACfll<l.j 1 ~_':'Ä:~n'fOOnftf'. ~ r -~ /.: 13W ,-<rMIDDLE ~sr U 1 I iddle River,State #1 (2 m'les nor.h of m¡¡p limif, 10N \......M.m--::':IIJ.)1!JL't:!. ----'--"t" q.~ODI..E fl 'sr 1 (I$CO) , "\ ~....J..J~1::«~:':'::j(YY'~~~? 1 :t'iT" .... ¡ i -, / -.Uj , OJ, -" 4B4~C~" '; '/~goI.EP~~2 ,.- ,f ).-, '-'-~ '/""",i ¡ :', """nn, I e-'R5í,,2 /' , 1<>1i!I""..... 0 ~;: ',' .,.,', , +¥I"'O J ¡1D~1 ,'" '\ù>,' .~, """ U . ".", ~, .~, ~N,_, I!" '\¡.', '.,w, ""'., '""F"'"ae,, ','" t. qrid" .'~'," ",,' ' ", ~"AA 2, ,'0 .' U tI\ Q.~- , 'w FaeonØ,,- _,1, F--,.- r "" , ,*~U4 " T' , '.\1 I 8tUWNA~ "~' " "re""""" r-.. - J" ~fôj"~l "...., 'd' ; ~,~ 1 1d. iX_Tn ,J'!.." K,l" .,tj" I A'. '" i, '" ArJ. ,J, ""',, " '",,' " ' ',"" ' " " - ",' ',' " Al" : '.', ',' ' '" '", '"" '" ,'." "," ; ""'; ) {).W FQlEl..ON '.,' d" " M'\ ; " ",' "~Ji.~RI'9:ER .. \, " t;r~,2A j ,{).)(.J~ t" '. ~y/?~ ! " , . 9N , :of. .. T... - "T"ff - -~ 10,000 20.000 ,I/( A¡ ~ Feet 30,000 ì 40.000 . J, I ~O 'WF~~.~ 1 : ~,,\,,' ' - <?t Ø<~CHÞ.TN~Cfl~SI1 ..r -.. , ,,- . ..lItn-'¡:.---\. r.. ~ ~-"...... :. "OI,/.LWiW-'.X.IX\\'tIII,'f'. ' . ,. ~~'1 ..-.. . ' .-;Ir.... II" ~. l,Y {~L '~~"f--~' ..1 ..,-,.., .... "'..' "Ì I ( 20 AAC 25.080 ANNULAR DISPOSAL OF DRILLING WASTE. (a) A person may not dispose of drilling waste through the annular space of a well unless authorized by the commission under this section. The operator of a well permitted under AS 31.05.090 may request authorization for the disposal of drilling waste through the well's annular space by filing with the commission an Application for Sundry Approvals (Form 10-403) supplemented with additional information as required under this section. DONE (b) A request for authorization under this section must include the following information or refer to that information if that information is already on file with the commISSIon: (1) DONE the annulus to be used for disposal; (2) No permafrost; see Baker-Hughes salinity study. the depth to the base of freshwater aquifers and permafrost, if present; (3) NOTHING SUBMITTED a stratigraphic description of the interval exposed to the open annulus and other information sufficient to support a commission finding that the waste will be confined and will not come to the surface or, except to the extent allowed under (e)(I) of this section, contaminate freshwater; (4) NONE a list of all publicly recorded wells within one-quarter mile, and all publicly recorded water wells within one mile, of the well that will receive drilling waste; (5) Freshwater-based drilling mud and drill cuttings wash water. the types and maximum volume of waste to be disposed of and the estimated density of the waste slurry; (6) NOTHING SUBMITTED a description of any waste sought to be determined as drilling waste under (h)(3) of this section; (7) NOTHING SUBMITTED an estimate of the maximum anticipated pressure at the outer casing shoe during disposal operations and calculations showing how this value was determined; (8) No permafrost; see Baker-Hughes salinity study. details that show that the shoe of the outer casing is set below the base of permafrost, if present, and any freshwater aquifer, other than freshwater excepted under (e)(I)ofthis section, and is adequately cemented to provide zone isolation; the information relied upon and submitted must include (A) (SubIl1itted information not correct requested new info) cementing records; and (B) NOTHING SUBMITTED a cement quality log or formation integrity test records (9) NOTHING SUBMITTED details that show that the inner and outer casing strings have sufficient strength in collapse and burst to withstand the anticipated pressure of disposal operations; (10) NOTHING SUBMITTED the downhole pressure obtained during a formation integrity test conducted below the outer casing shoe; (11) NOTHING SUBMITTED identification of the hydrocarbon zones, if any, above the depth to which the inner casing is cemented; (12) NOTHING SUBMITTED the duration of the disposal operation, not to exceed 90 days; ( (13) No disposal to date has occurred in the well whether drilling waste has previously been disposed of in the annular space of the well and, if so, a summary of the dates of the disposal operations, the volumes of waste disposed of, and the wells where the drilling waste was generated; (14) Waste generated by drilling I1iamna No.1 only the well where the drilling waste to be disposed of was or will be generated; (15) N/ A if the operator proposes not to comply with a limitation established in (d) of this section, an explanation of why compliance would be imprudent; (16) N/ A any additional data required by the commission to confirm containment of drilling waste. ( c) The commission will authorize an annular disposal operation described in the Application for Sundry Approvals, as that application has been supplemented under this section, and subject to any modifications prescribed by the commission, if the commission determines that the (1) waste will be adequately confined; (2) disposal will not (A) contaminate freshwater, except to the extent allowed under (e)(1) of this section; (B) cause drilling waste to surface; (C) impair the mechanical integrity of any well; or (D) damage a producing or potentially producing formation or impair the recovery of oil or gas from a pool; and (3) disposal will not circumvent 20 AAC 25.252 or 20 AAC 25.412. (d) Unless the operator demonstrates that compliance with a limitation established in (1) - (4) of this subsection is imprudent, the commission will not authorize disposal of drilling waste (1) in a volume greater than 35,000 barrels through the annular space of a single well; (2) for a period longer than one year through the annular space of a single well; (3) into a hydrocarbon-bearing stratum; or (4) through the annular space of a well not located on the same drill pad or platform as the drilling operation generating the drilling waste. ( e) On a case-by-case basis, and as the commission considers necessary to ensure that the standards in ( c) of this section are met, the commission will impose conditions upon an authorization to dispose of drilling waste under this section. In addition, an authorization to dispose of drilling waste under this section is subject to the following conditions: (1) drilling waste may not be disposed of into freshwater, unless the (A) freshwater is identified in the Application for Sundry Approvals; and (B) commission finds that the freshwater has a total dissolved solids content of more than 3,000 mg/l, and is not reasonably expected to supply a public water system; the commission will, in its discretion, provide 15 days notice and the opportunity for a public hearing in accordance with 20 AAC 25.540 before making that finding; (2) the downhole disposal pressure may not exceed the downhole pressure obtained during the formation integrity test conducted below the outer casing shoe, or a ( higher pressure specified in the authorization upon the commission's finding that the higher pressure will not cause drilling waste to migrate above the confining zone; (3) if drilling waste appears above the confining zone, the operator shall immediately cease disposal, notify the commission, and take appropriate remedial action; (4) if the commission notifies the operator that disposal operations pose a threat to well integrity, safety, oil or gas recovery, or freshwater, except to the extent allowed under (1) of this subsection, the operator shall immediately cease disposal and take appropriate remedial action as approved or required by the commission. (f) For each annular disposal operation authorized under this section, the operator shall report the following information to the commission on a Report of Annular Disposal (Form 10-423) not later than 30 days after the end of the period authorized for the disposal operation: (1) the dates when disposal began and ended; (2) the volume of drilling waste disposed of in each of the following categories: (A) the aggregate of drilling wastes described in (h)(I) of this section; (B) the aggregate of drilling wastes described in (h)(2) of this section; and (C) each substance determined to be a drilling waste under (h)(3) of this section. (g) The provisions of 20 AAC 25.252 and 20 AAC 25.402 - 20 AAC 25.460 do not apply to the disposal of drilling waste authorized under this section. (h) In this section, "drilling waste" means the following substances, unless identified as a hazardous waste in 40 C.F .R. 261: (1) drilling mud, drilling cuttings, reserve pit fluids, cement-contaminated drilling mud, completion fluids, formation fluids associated with the act of drilling a well permitted under 20 AAC 25.005, and any added water needed to facilitate pumping of drilling mud or drilling cuttings; (2) drill rig wash fluids and drill rig domestic waste water; and (3) other substances that the commission determines upon application are wastes associated with the act of drilling a well permitted under 20 AAC 25.005. (i) For purposes of this section, in AS 31.05.030(e)(2), "oil or gas well" means a well permitted under AS 31.05.090 other than a water well associated with oil or gas exploration and production. History - Eff. 9/22/96, Register 139; am 11/7/99, Register 152 Authority - AS 31.05.030 Disposal Application (" Arlen, This message acknowledges receipt of the disposal application for your Illiamna operation. The document is presently being reviewed. I did contact Jim Rose yesterday regarding the correct cementing information. The original application had the 13-3/8" job record and not the 9-5/8" record. He has corrected that. In the application 2 options are proposed. The first is "standard" annular disposal as described in 20 AAC 25.080. The second option is a "deep similar to annular disposal". The application states that this second option meets the "intent" of the regulations as interpreted by Pelican Hill. Option 2 cannot be considered annular disposal given the mechanical configuration of the well. The underground injection control (UIC) regulations are very specific with regard to the mechanical configuration of a well. If Pelican Hill would plan to dispose of drilling waste via the perforations as proposed, it is recommended that an application meeting the requirements of 20 AAC 25.252 be submitted as soon as possible. Submitting the "252" application is suggested in order to make use of all the available time while the well is being drilled. On the basis of the salinity report, it would appear that an aquifer exemption may not be needed however the provided information will be verified by our geologists. At this time, we do not know if the standard annular disposal option can be approved. We are not aware of the Commission ever having approved annular disposal with the surface casing shoe at such a shallow depth. The salinity values provided in the BHI report would seem to indicate that values are potentially greater than 3000 ppm although the values are close. Our geologists are examining and verifying the information provided in that report. At a minimum, public notice of disposal into fresh water will have to be made. Please contact me at 793-1250 or Jim Regg at 793-1226. Tom Maunder, PE AOGCC 1 of 1 11/26/2003 12:37 PM %'~ ~ ~ V) <:: N ..-4 ('r¡ 0 0 N -..... \0 N -..... - ..-4 Q) r:/) ..-4 0 4... ~ 0 S ..-4 ;..=; /Æ/ November 24, 2003 Mr. Tom Maunder Petroleum Engineer AOGCC 333 W. 7th Ave. Suite 100 Anchorage, AK 99501 Tom: ( ARLEN EHM Geological Consultant AAPG Certified Petroleum Geologist Certification #2503 2420 Foxhall Drive Anchorage, AI( 99504 Phone: 907-333-8880 * Fax: 907-333-3454 E-mail: arlenehm(~~gci.net Please be advised that Jim Rose has total authority to act in the behalf of Pelican Hill with respect to Pelican Hill's application for annular disposal for the Iliamna No.1 well. Sincerely, Arlen Ehm Cc: Al Gross ,""'" 3TATE OF ALASKA, ALAJ. ,OIL AND GAS CONSERVATION COMN( ION ANNULAR DISPOSAL APPLICATION 20 MC 25.080 3. Permit to Drill No: 1. Operator Name: Pelican Hill Oil and Gas Inc. 2. Address: 1401 N. EL Camino Real, Ste 207 San Clemente, 92672 7. Publicly recorded wells a) All wells within one- quarter mile: None b) water wells within one mile: None 9. Depth to base of permafrost: 203-172 ( ,1(1 ., , \ D ;tratigraphic description: ~ \ ~ \ } '\ a) Interval exposed to TBD (\. \ Ij open annulus: \.J' V- b) Waste receiving TBIt '" (ì °' '~' l" zone: I \~ . c) Confinement: / T~ 0 10. HYdrocarbo~z no~ above waste re Ivin¡ 'TBD zone: \ 12. Estimated slurry density: ÿ>( ~,.. 13. Maximum anticipated pressure at shoe: r C~~ 9.0 ppg \I' \. ð' TBD 4. API Number: 50- 133-20527-00 5, Well Name: lliamna NO.1 6. Field: lIiamna No known permafrost in the area. 11. Previous volume disposed in annulus and date: None 14. Estimated volume to be disposed with this request: 15,000 bbls 16. Estimated start date: 10-Dec-03 17. Attachments: Well Schematic (Include MD and TVD) Surf. Casing Cementing Data 15. Fluids to be disposed: Fresh Water Based Drilling Mud and drill cuttings wash water Cement Bond Log (if required) D FIT Records wI LOT Graph D Groundwater Salinity Study, Drilling Waste Disposal Study, Proposed well Other D Sketches, 18.1 hereby certify that the foregoing is true qti'd correct to the best of my knowledge. Signature: ¡ \_~ Printed Name: _J í'lv\ Conditions of approval: Approved by: Form 10-403AD Rev.9/2003 Title: f..1J &R- Cú,vS- V ~-'V¡- Phone Number: S "\ 0 - II 1 - '-{ ç \ ( Commission Use Only LOT review and approval: Date: l}'(-NO 11- 07 Approval number: c30_3 ,- -3/-1¿r COMMISSIONER BY ORDER OF THE COMMISSION Date: ,f~ ORIGINAL INSTRUCTIONS ON REVERSE Submit in Duplicate Prepared By: Prepared For: ( Pelican Hill Oil and Gas Inc. Iliamna No.1 Drilling Waste Disposal Study 11/24/03 Jim Rose Pelican Hill Oil and Gas Inc. ( ( Introduction Pelican Rill Oil and Gas is seeking Commission approval for disposal of drilling waste generated while drilling the I1iamna No 1, This well is being drilled using a "casing drilling" technique that will potentially reduce future drilling costs and may subsequently open up exploration opportunities to previously marginal prospects, Although the efficient and cost effective disposal of drilling waste is of significant importance to all exploration drilling, the remote location of the Iliamna No 1 makes the transportation and disposal of drilling waste cost prohibitive. The following report outlines 2 options for disposal of drilling waste in the subject well. It should be noted that only the waste generated while drilling the Iliamna No 1 is intended for disposal in the I1iamna No 1. Option 1: Annular Disposal of Drilling Waste Discussion I1iamna No 1 GL Elev: 204' RF: 13' The I1iamna No 1, which is currently under construction, was drilled to 560' MD (343' SSTVD) where 9 5/8'" 32.3 ppf, H-40 casing was cemented to surface, OR logs are not practical while utilizing casing drilling techniques so none were taken. After installing BOPE, testing, and drilling out, a LOT will be performed. A 7 7/8" hole will subsequently be drilled to a MD of approximately 3,500' (3,283 SSTVD). 5 1/2", 15.5 ppf, J-55 will be run and cemented with a planned TOC of +/- 1,000' MD (783' SSTVD). A graphical representation of the well is attached for reference. A well thus configured has an open annulus between the 9 5/8" and 5 1'2" casings. This would be the intended disposal annulus in the subject well. Pursuant to 20 AAC 25.080, Pelican Hill Oil and Gas is required to identify fresh water aquifers that may be impacted by drilling waste disposal. A study of offset logs was iniated to determine groundwater salinities in the area, Four wells, as listed below, provided good quality log data, Name Operator Location Approximate Distance and Direction from Iliamna No 1 1 1'2 miles N 5 miles NE 12 miles NNE 6 miles SE Kustatan Ridge 1 Shell Middle River St U-2 Cherryville Middle River St 1 Shell West Foreland 1 Pan Am Sec 19, T9N, R14W Sec 10, T9N, R14W Sec 5, TI0N, R13W Sec 21, T8N, R14W ( The complete Salînity Determination of the Formation Waters of Iliamna # 1, authored by Mr. Glen Horel of Baker Atlas, is attached for review. In summary, Mr. Horel's calculations show that the native groundwater, between the depths of +1- 560 MD (+/- 343' SSTVD) and +/- 1,000' MD (+/- 843' SSTVD) in this area has a calculated TDS (expressed as NaCl salinity) of approximately 4,000 to 6,000 ppm (mg/l). Considering the remote location and the abundance of fresh water in the area, it is unlikely that the water resources in these strata will ever be utilized to supply a public water source. Pelican Hill Oil an Gas seeks the Commission's conditional approval to dispose of drilling waste generated on lliamna No 1 into the above identified strata as outlined in 20 AAC 25.080 (e)(1-4) Pelican Hill Oil and Gas requests that the Commission accelerate the notice and public hearing requirements (20 AAC 25.080 (e)(1)(B)) to the extent possible. If the Commission finds that they will not be able to provide conditional approval (pending the submission of additional data and meeting the other requirements of section 20 AAC 25.080) by Dee 1,2003, Pelican Hill Oil and Gas requests the Commission provide conditional and timely approval as requested under the Option 2: Non-Annular Disposal of Drilling Waste section of this report. Option 2: Non-Annular Disposal of Drilling Waste Pelican Hill Oil and Gas interprets the intent of20 AAC 25.080 is to provide operators with an economic, environmentally sound, option for the disposal of drilling waste associated with the drilling of the same or a very nearby well. Although the most common avenue for waste disposal under this section is through an annulus, it seems irrelevant that an annulus be involved provided that the other conditions concerning the protection of fresh water aquifers and hydrocarbon bearing zones are met. Therefore, Pelican Hill Oil and Gas requests a variance of 20 AAC 25.080 (providing that the other conditions of this section are met) to allow disposal of qualified drilling wastes from the subject well through perforations or other avenues that are not considered an annuluso Discussion Mr. Horel's above mentioned study also included evaluating the salinities of the native formation waters in the depth range of 3,017' MD (2,800' SSTVD) to 3,517' MD (3,300' SSTVD). The same offset wells were chosen as representative of the area. Mr. Horel's analysis of the log data yields a conservative estimate ofTDS (expressed as NaCl salinity) of 10,000 to 25,000 ppm (mg/l) for these strata. ( (' Based on these findings, Pelican Hill Oil and Gas seeks the Commission's conditional approval (pending the submission of the required data and meeting other requirements of 20 AAC 25.080) to dispose of the lliamna No 1 's drilling waste into these strata. Due to the configuration of the well, no annulus is present at this depth. Pelican Hill Oil and Gas proposes to dispose of the drilling waste through perforations in the 5 12 casing. The proposed perforations will be at least 150' below the last known, commercially viable, hydrocarbon bearing zone (if present). Upon the completion of the disposal, the perforations would be abandoned by squeeze cementing through a cement retainero The following information, as required under 20 AAC 25.080 (b) is either attached, included, or will be submitted to the commission upon its availability. (1) The intended annulus and lor depths targeted for disposal of drilling waste generated while drilling the I1iamna No 1 will be provided in a subsequent filing. (2) A report titled Salinity Determination of the Formation Waters of Iliamna # 1 is attached. (3) A stratigraphic description of the intervals exposed to the injection of drilling waste will be provided in a subsequent filing. ( 4) N/ A. There are no recorded wells or water wells within 1¡4 mile of the Iliamna No 1. (5) The waste to be disposed of is fresh water based GEL drilling mud and wash water from the cuttings washing. The approximate volume is expected to be less than 15,000 bbls total. (6) N/ A (7) Pertinent LOT information and pressure calculations will be included in a subsequent filing. (8) Salinity Determination of the F ormation Waters of Iliamna # 1 is attached. There is no known permafrost in the area. Surface casing (9 5/8) cementing records are attached. 5 1'2 casing cementing records will be submitted in a subsequent filing. (9) Tubular strength calculations will be included in a subsequent filing. (10) LOT data will be included in a subsequent filing. (11) The identification of hydrocarbon bearing zones will be included in a subsequent filing. (12) The duration of the disposal can be determined after an injection rate is determined from LOT and other data. This information will be included in a subsequent filing. (13) There has been no disposal of drilling waste in this well to date. (14) The drilling waste intended for disposal in the Iliamna No 1 was generated by drilling the Iliamna No 1. No other waste is intended to be disposed of in the I1iamna No 1. (15) N/A (16) N/A SAT 13:13 FAX 907 776 5606 BJ SERVICES /^ ( t.:}j ( (,.. p.', ,.., '''.',., ""P,,, , . ~ CEMENT JOB REPORT \ \O"i' \'1\",.", .. "-- I ." , '-0- lDAie 11-NOV-Q3 I t.ëA$e & WeLL. NAME . :l~AT\QN - . lliomn;.) # I ~~ç.. T9N--R 14W D!STRICT DRILLING CONT~AC'tD¡;¡ RIG # Kc;n'¡'lj - - . sIZe & TYPE O~ PLUGS L.IST-CSO-HA~OWARE I Cement PIlla, Rub~er. Bottom 9--5;8'1 C~;:,-tr~izE!r, with ï=in!"l. ~ 5}~ '1(1 Cement r¡lIg, Rubb6r. Top 9.5.'81/1 MATE~IALS FU~NjStiê.D Bye.; CUSTOMER Pelican Hill Oil & CM,lru;, Le-ad Ce!\'i'\~t"It (Sl.lrIC1lc?-) -. . - . ..-. Avallaolfl MIl( W(\\er.. ,_.2QO Bbt AVBtlable, O'!l~t.~\",i<1 SlZE 12.25 HOLE % E)(CIË$s''' -" 'èEfiiH-~- ... !.,,.¡ - ""-..n.... WG~. 50 560 9.625 32,3 I4J 004/005 ., ."~,,J .' . ) ¡".R. # 276510175 I se~v. SUPV. Floyd P();a¡¡I: Jr - .-- ---- --. ---... --....--. COUNTY.PARtSH-ßl()CK , KeI?!d AJø::;ka .--- .. - - TYPE OF JOB .!'JllJr~l:C --..f.'!:iYSICAI" SL.URRY p~Ope~TIË~.__- .-=-.. SL'u~~y SLURRY WJ\'TEI\ PUMP Bbl Bbl we::! YLO Gpg TIME SLURRy MIX " PPG FT'3 HR:MIN WATER [ SACK::. Of CEMe:NT 19' 14.f 14e 7 ()4~22 õO 31.61 300 Bbt TOTAl. ....- 50 COLLAR DEPTHS FLOAT STAGr- TBG-c5G-O.P. 'TYPE CSG 31.61 t)E?'TH 550 GRADE .~H.OE LAST CASING PKR..CMT ReT-BR PL-UNER PERF. CEP1'H TOP CONN SIZE, \VCT ~!'''''~,,:'',,---ÌMND & TYP'È - , . "bE.TI<-.:..... J.PP". ' . ¡'i'¡r n. , - $IZ. ~ 13,375 17 eSG BO 9,375 . g RD CISPJ.. VOLUME VOLUMe UOM WELL FLUIO . "rŸ'Pë'o "0. .. WCT. WATER 9.2 BASeD MUD 'j'{ BBlS DISPL FLuID ~~~: ,P~I. . ~Al. ~AX PSI, OP, Mt\X ~AX T.~G ~Sl TYPE WGT. SUMP PLUG TO REV. SQ. PSI MnD, Operator MIX WATER .......-.....---. . 129 -----. ....-..... MAX CSG PSI RATED Opel i.'flor 151 ß _0___._. 1000 ..--- . --.... PRESSURE/RA TIi; DeTAIl, EXPI.ANATION: TROUBLE SEirlNG 'TOOL, IWNNING eSG, ETC. PRIOR TO CEMENTI"¡G: ilg . .... ..... .. - ".--...- ....-..... ----.. .. TIME I H~:M/N. . ---.. '" PRESSURE. PS{ PIPE ANNUI.I,JS .. ----0... RATe 8PM 6b(. FI..UIO PUMPeD 09.00 Q9'~O - .-... --_to.- .. -......-... .... '.' .. I.. .. , ~... --.-..--j..... I I . -I I , "-" --,.""'''''''''''' --r-"'" I J : I 320; 2DO: --'""6i5i)"'" . - ..--., . 1000 '" . 1'öõí, 0 17:40 18:09 . ..Î 18:11 I _.1a:~9- 1B:34 18:48 1S:53 109'54 1S:04 1 9 Of) ..0 -... .. , '" ,1 :' :;7 H2O 2, 41 4, 0' :? 5' H2O' 50 " ëÑl,:( '."-"'18"7 H2Õ' . -.. õ~¡ Fi2Õ. '22 H2O 200' 360 ' 0 0 PT 1552 11 219B) Pag'Õ! 1 fLUID TYPE ----.- 0, J ¡ i I I I EXPLI\NATION &AfI;;TŸ'M5irl!'I~; SJ CREW 'x. co. REP. X' .. .. .-..""" ......-.- TEST LINEiS 3000 PSI CIRCUl.ATING wei.."L-.R;G"""" x , 11.11-03 arrive heliport arrive trading baYLsettlc in !...9..!:1.~~tatlon/ wñit on rig 11-12-03 WAIT ON ~'G / WF.;ATHER 11-13-õj,\iVÄir'ON RIG "'. ,11-1+':~~oñng' . 71-15-03 walt on rig '1 1-10-03 ~ety m~~~}9 , w(iter ahead test surlãc; tõ' 3åoo PSI . :J:g~~ qf H70 i\lhe¡::¡d : 14.7 #/gQI , Start Disp1acernent , !!itop m(Id tc;¡ pits ¡ divert to celler I;!.~st I)f QJ~Q!ace.æe~t ' .. Gtop I (JSp.dú~~ $tap , c:hE'ck floats.! tl1tiy hOld cmr ~"¡I.í:lo c'O!np()~l'd (J( lV¡';~.\ 1 Ger.¡enr f 0 4% 8l1,.. Î 0+0 ~/Jt C D-3 1 '"'0 2% Bð,- ~1!J.1gh~ t-P ôL ¡ I j I j 5J . . -.... ._~.- " J~I;.':~: ,t FAX 907 776 5606 BJ SERVICES 141 003/005 ( ( CEMENT JOB REPORT ) CUSTOMER Pelican Hill Oil & Ga5.lnc. ¡,F.R. #' 315210072 SERVo SUPV. D8vld W~II'n9f()rd COUNTY-PARISH.BLOCK Kenai Alo¡sJ(a TYPE OF J08 CondUOlor PHYSICAL SLURRY PROPERTIES SLURRY SLURRY 1- \ÑATER PÛMP" BbJ I Bbl WGT YLD QPS TIME SLURRY MIX PPG 1 FT3 HR:MIN ; WATER I' I 1.16 ¡ ... . 4.99'-'ÓS:OÕ":-S,1a J I DRILLING CONTRACTOR RIG # ,. - LIST -CSG-HARDWARE No Shoe ¡-.--. I MATERIALS FURNISHED BY BJ DATI: 07-NOV-03 LOCATION LEASE & WELL NAME IUAMNA ! - ~I S01~205~70DOD DISTRICT Kenai SIZE &. rvp! OF piUG.S Cement Plug, Rubber, Top 13-318 in Class G + 2% CaCI2 Available MIx Water 200 Bbl. Available Olspl. Fluid SI~Jii 14.75 HOLE % excr:Ss DI:P.TH SI"F 60 I 13.375 .- .- -- - -.. - LAST CAS/NQ -waT I TYPE D¡;;Pil1 I PEN HC' i I DISPL,- VÖI.UME ---- . VOLUME UOM -- ...... SACKS I OF CI!M!NT I 251 , 97 .. 15.8 20:çt '..Mibl:-' --. -.. ... ~ WGT. 54.5 TBO-CSG-D.P. TVPF CSG I TOTAL. .... -~. ~.~ -- 3.97 ¡COLlAR DEPTHS DFPTH ,- .GRAD!:. . S110~ ¡ FLÕÀ'r '1 STAG I: eo K-55 J I I TOP CONN WSLL FLUID S17~ ' THRJiiÄC" .-.. TYPE"----'- WGT. .. 2 1502 WATER 8.9 BASED MUD SI7F PKR-CMT RET-BR PL-LlNER ~M~.D_&_'t'(e.r;__Q.r;.e.tH PERF. DEPTH TQP ¡¡tM 12.4 BBlS I CAL PSI CAL MAX PSI RUMP PI.UG TO REV. I 25 . l' . MAX TaG PSI MAX CSG PSI RÄiEŠé I Operator RATED Operator I Fr~h DISPL. FLUID TYPE WGT. OP.MAX SQ.psr MIX WATER '. -.--.... eXPLANA'T10N: iROUBLE SETTING TOOL, RUNNINQ CSG, ETC. PRIOR TO CEMeNTING: 1 .. . EXPLANATioN FLUID SAFETY MEET1.N~:. ,~J CRew I x ¡ Co. ReP. I x I TYPE ~ TEST L.INES 200 PSI CIRC~L.ATI.N~_~~Lï:.-- RIG I X I ÐJ ,~~_. Arrived at Airport Arrived at Cåmp Rig up Unit and StanC:-bY Baok in Equipment and rig up . -Prime Ut:l .. . Satety meeting .5 WATER Water ahead ..- 5.2 . CEMEÑY- Mix and DUm) 25 sks cement Remove sweci9ëãñd install -- 14.25 'W'Å TER - Olsplace cem~lJ..t.. Cement in place "lash u~~ rls dowl't 00 MoVe equipment and help suck oUt oellar . .. - Add 50 Ib R.3 to cellar . TIME I HR:MIN. l PRESSURE/RATE DETAIL PRESSURE - PSI I RATE Bbl. FLUID PIPij- '-"I"¡~NULU$. .~~.oo.--,.. ~UMPED ../ ,._oo_--.u . ¡ ! . 10:00 11 :30 -12:30. . 22;00 22:30 oo_~3:45 . - .-...-----... ..... . - ....- -.--- .. .;l~;~._.. . ...-.-..-.. '."""'''00''', 00:00 00:10 00:25 -00:30-'-' 2 -.-.__.._1,_- ..-. -. ...--. . :'-'PSI TO BUMPiD BUMP Plue PLUG -.- Ÿ -. -1.~{l' 25-"--- . -----_\ 1--.-.. PT HI1I2 (121gB) ....---- ... ---.. 1 TiST I BBL.CMT TOTAL PSI I spot, FLOAT I RETURNSI BBL. LefT ON TOP OUT I ' EQUIP. ~eVeR$Eb ~~MPED CSG.. CEMeNT \ r v niJll ! 25 125 Y M: '..__....J.........J.I . . - t ~-- ¡ Pa~e 1 SERVo SUPV. ,)rðOC!4 ( Pelican Hill Oil and Gas Inc. lliamna No 1 lliamna Field, Alaska Rig: Water Resources Inti. Inc S: 31 I T: T9N I R: 14W GL: 204' AMSL I RF: 13' Planned Wellbore Sketch (disposal option 1) 143/4" Hole 133/8", 54.40ppf, R-3, BTC @ 80' 12-1/4" Hole 9-518", 32.30ppf, H-40, BTC @ 560' MD (343'SSTVD) Cmtd to surface Est TOC +1- 1000' MD (783' SSTVD) 77/8" Hole 5 1/2", 15.5 ppf, J-55 Proposed TD +1- 3,500' MD (3,283' SSTVD) .. ( Pelican Hill Oil and Gas Inc. lliamna No 1 lliamna Field, Alaska Rig: Water Resources Inti, Inc S: 31 I T: T9N I R: 14W GL: 204' AMSl I RF: 13' Planned Wellbore Sketch (disposal option 2) 143/4" Hole 133/8", 54.40ppf, R-3, BTC @ 80' 12-1/4" Hole 9-518", 32.30ppf, H-40, BTC @ 560' MD (343'SSTVD) Cmtd to surface Est TOC +1- 100O' MD (783' SSTVD) Proposed Perforations @ +1- 330O' MD (3,083' SSTVD) (at least 15O' below the last known hydrocarbon zone) 7 7/8" Hole 51/2",15.5 ppf, J-55 Proposed TD +1- 3,500' MD (3,283' SSTVD) f ( Pelican Hill Oil and Gas Inc. 1401 N. El Camino Real, Ste. 207 San Clemente, CA 92672 November 24, 2003 Alaska Oil and Gas Conservation Commission 333 W, 7th Ave., Ste, 100 Anchorage, Alaska 99501 Attn: Mr, Tom Maunder Re: I1iamna No, 1, API 50-133-20527-00, AOGCC Drlg Permit 203-172 Mr. Maunder, Pelican Hill Oil and Gas Inc. respectfully submits an incomplete Application for Sundry Approval for annular disposal of drilling waste. Pelican Hill Oil and Gas is currently drilling the subject well and has not yet obtained sufficient data to finalize this application as required under 20 AAC 25.080. The incomplete filing is intended to iniate the Commission's review of the existing data in an effort to reduce the required approval time. The remainder of the required data will be submitted as soon as it becomes available. Pelican Hill Oil and Gas submits, for your review, a report outlining 2 separate options for disposal of drilling waste in the subject well. Pelican Hill Oil and Gas seeks the Commission's conditional approval of one or both of the options pending the submission of the final data, Please review the attached report and feel free to contact Jim Rose at 570-713-4511 with any questions, Best Regards, Jim Rose cc: Attachments: Arlen Ehm L Iliamna No.1 Drilling Waste Disposal Study, 11/24/03 by J. Rose 2, Form 10-403AD 3. Available attachments pursuant to 20 AAC 25.080 (b) (1-16) 4, Well sketches (2ea) of the I1iamna No 1 5, Salinity Determination of the Formation Waters of I1iamna # 1, 11124/03 by Mr. Glen Horel ~ :t:t: ( ( Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Iliamna No.1 Disposal Inj ection Order 1578' FNL and 2480' FEL, Sec. 31, T9N, RI4W, SM Pelican Hill Oil and Gas Inc. by letter dated December 8, 2003, has applied for an disposal injection order under 20 AAC 25.252. The Commission has tentatively set a public hearing on this application for January 13, 2004 at 9:00 am at the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. A person may request that the tentatively scheduled hearing be held by filing a written request with the Commission no later than 4:30 pm on December 29, 2003. If a request for a hearing is not timely filed, the Commission will consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call 793-1221. In addition, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West ih Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on January 11, 2004 except that if the Commission decides to hold a public hearing, written comments must be received no later than 9:00 am on January 13, 2004. If you are a person with a disability who may need a special modification in order to comment or to attend the public hearing, please contact Jody Colombie at 793-1221 before January 5,2004., , ry(J ., (-~~' Sarah Palin, Chair Published Date: December 11, 2003 Notice ( ( lof2 12/10/20032:56 PM Notice (' ( Iii, Content-Type: application/msword 1IIIiamna#l.docl' Ii ii"~ Content-Encoding:base64 U---- I ' 20f2 12/10/2003 2:56 PM Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Kelly Valadez Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 David Cusato 600 West 76th Ave., #508 Anchorage, AK 99518 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Cliff Burglin PO Box 131 Fairbanks, AK 99707 North Slope Borough PO Box 69 Barrow, AK 99723 ('! Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 ( David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 Boise,ID 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 Schlumberger Drilling and Measurements 3940 Arctic Blvd., Ste 300 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 ("f') ::J:t: DEC-09-2003 rUE 11:26 AM KPB PLANNING FAX NO. 9072628618 P. C2 KENAI PENINSULA BOROUGH '44 N. BINKLEV . SOlDOTNA. ALASKA" 99669-7599 BUStNESS (907) 262-4441 FAX (907)262-1892 DALE BAGLEY MAYOR December 9,2003 Arlen Ehrl1 Gco1ogic~1 Consultant 2420 Foxhall Drive Anchorage, AK 99504 SUBJECT: Pelican Hill Oil and Gas Inc, proposal for \mùcrground disposal of soHd and liquid drming wastes Dour Arlen; The Kenai Pelliusula, Borough has no objection to ihe 1t1iection of solid and liquid dril1ing wast~s by Pcl1can RiB Oil and Gas Inc. into their Jliamlla No.1 wen 10catcd on our 1 and within section 31, Township 9 north, Range 14 west, Seward Meridian. A11 grind and inject operations s11al1 be (;OtHluctedpursuarlt to AOGCC rcg111ations and pem1íts. This 1$ a modification to your original proposal ~nd win rcqujre an anlel1dment to your Kenai IcniJl$ula, Borough L(111d Use Permit. We will compile the amended Land Use Permit and sel'\d you 1m electronic vcrsioI~ to print and sign as soon as possible. However, grind aad l11jcct operat.ions ß,ay c()tnmencc prior to con1pJetiOll of the amended Land Use Permit pursuant to this l~1tcr. The Kenai Peninsu]a Borough wjlll'cservc the right 1.0 conduct a site i.nspection upon completiol1 of the grind and inject operations. Sincerely, ~{!~.. Paul C. OSlrander I.and Mana.gement Officer RECE'\ÆD DEC 9 2003 ,_....-~ -- . C'1 ::f:t:: Re: Update on 2P..432 operations ( ( Tom Maunder <tom maunder@admin.state.ak.us> Sr. Petroleum Engineer Alaska Oil and Gas Conservation Commission þQ h CÛ-~ ~'\ \ \ ~~ So ~--..J bt-v\\ \-k~ Q d ç;:-~ CÅW\ kJ~Ö\ -b ~~<?rSQ Û-\- -\Nt'\ \-~ \ \} <Iì-(} ~~~ ~\ k'( ~O-~ pre'-.)~~-f~'<'CD~e~ ^G\R(j\'è \ki~Q~ Q '>ÛJ~<V~~'~~- ~\<t;\, Þ'í~ \è ~J- \~l~ 4ö ~<z: \'N:t\ \ bee,.+- ~~. ~k0G: ~0fd '{O0 (~êJLQ+~ Cð~~~0~\e- Sp<êo-\cs o~( S~~~ ~<èC9-sltö~~ ~o-s CdQ; ~c-~~ ~ ~ ~ S() \0 4-~ ~a~J ~~~~ ~0-0<è ~'t~\ðCh\~~ ~ ' ~~ sA-a~ óV\Ç~+- C9~ + 300 ( " VQ~ bG 0 '" A- ~e: ~((~~~toÇ- œø--zeA-~ . ~ +-~ vo \~ Kt. ~ ~s $ -- ~\e ~C9S S\(~',\\l",. .~~~'~~",~Q~~~.10~ ~~þfè<À1ï~ ~ ~-j<? ~~lke~f£) \f\~ ~<?~ s.\J~- Ccc eeL ~ t f".S ~ {~C'- ("" (~\ ~ l ( \'--'0 \~ ":> ,vd 'I ' I ~Q~~, ~'':;, ~.~ ~~~,\ú:\ ~ ~ ~<;B\b, \Cè ~~/~ ~\ NQ~ ~:ÞaD ~ 'D \ '> \-0 ~\'>~~, ~~S I!-A<\'-{ .Ç\~ ~ \.~ ztJt() þ\:> \ ~ ~ I' 0- - (' .,,' '0-, ~, \~ 1 of 2 1-\ \J f 0 I t b t'tJ\ '~/ ...-..\ C) ,""öv"'- Ö"'\ t t:--~ cc::n'-J1 ~3/2003 11 :22 AM ( . 20 AAC 25.250 DISPOSAL OF SALT WATER AND OTHER WASTES Repealed or Renumbered Repealed 4/2/86. . 20 AAC 25.252 UNDERGROUND DISPOSAL OF OIL FIELD WASTES AND UNDERGROUND STORAGE OF HYDROCARBONS. (a) The underground disposal of oil field wastes and the underground storage of hydrocarbons are prohibited except as ordered by the commission under this section. In response to a letter of application for injection filed by an operator, the commission will issue an order authorizing the underground disposal of oil field wastes that the commission determines are suitable for disposal in a Class II well, as defined in 40 C.F .R. 144.6(b) as revised as of July 1, 1998, which is adopted by reference, or the underground storage of hydrocarbons. An order authorizing disposal or storage wells remains valid unless revoked by the commission. (b) The operator has the burden of demonstrating that the proposed' disposal or storage operation will not allow the movement of oil field wastes or hydrocarbons into sources of freshwater. Disposal or storage wells must be cased and the casing cemented in a manner that will isolate the disposal or storage zone and protect oil, gas, and freshwater sources. ( c) An application for underground disposal or storage must include V (1) a plat showing the location of all proposed disposal and storage wells, abandoned or other unused wells, production wells, dry holes, and any other wells within one-quarter mile of each proposed disposal or storage well; V (2) a list of all operators and surface owners within a one-quarter mile radius of each proposed disposal or storage well; ../ (3) an affidavit showing that the operators and surface owners within a one- quarter mile radius have been provided a copy of the application for disposal or storage; ~ \ bb - ~ \ ~\ .~( 4) the name, description, depth, and thickness of the formation into which fluids are to be disposed or stored and appropriate geological data on the disposal or storage zone and confining zones, including lithologic descriptions and geologic names; ~,' ~c \,,\~~ c ~ c.o",..ç\" \ ~~ . . (?) logs ?f the disposal or, stoRge wells, if ~ot already on file, or other sImIlar Informabon;c.Q.S è.ð ~ \<è c:, \Z.. (6) a description of the proposed method for demonstrating the mechanical integrity ofthe_£"~sing and tubing under 20,AAC 25.412 and for demonstrating that fluids will not move behind casing beyond tJ;1e approved disposal or storage zone, and a description of s~~" y (A) the casing of the disposal or storage wells, if the wells are existing; or . 55 ( ( (B) the proposed casing program, if the disposal or storage wells are new; ./ (7) a statement as to the type of oil field wastes to be disposed or hydrocarbons stored, their composition, their source, the estimated maximum amounts to be disposed or stored daily, and the compatibility of fluids to be disposed or stored with the disposal or storage zone; './ (8) the estimated average and maximum injection pressure; (9) evidence to support a commission finding that the proposed disposal or storage operation will not initiate or propagate fractures through the confining zones that might enable the oil field wastes or stored hydrocarbons to enter freshwater strata; 'i"-Q "Ð ~S'\ ~ 9'-1«' ~ V (10) a standard laboratory water analysis, or the results of another method acceptable to the cOQImission, to determine the quality of the water within the formation into which disposal or storage is proposed; / (11) a reference to any applicable freshwater exemption issued in accor9ance with 20 AAC 25.440; and J (12) a report on the mechanical condition of each well that has penetrated the disposal or storage zone within a one-quarter mile radius of a disposal or storage well. (d) The mechanical integrity of a disposal or storage well must be demonstrated under 20 AAC 25.412 before disposal or storage operations are begun, after a well workover affecting mechanical integrity is conducted, and at least once every four years. To confirm continued mechanical integrity, the operator shall monitor the injection pressure and rate' and the pressure in the casing-tubing annulus during actual disposal or storage operations. The monitored data must be reported monthly on the Monthly Injection Report (Form 10-406). , ( e) If an injection rate, operating pressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer, the operator shall notify the commission by the next working day and shall implement corrective action or increased surveillance as the commission requires to ensure protection of freshwater. (t) The commission will require additional mechanical integrity tests if the commission considers them prudent for conservation purposes or protecti?n of freshwater. (g) Modifications of existing or pending disposal or storage operations will be approved by the commission, in its discretion, under 20 AAC 25.507, upon application containing sufficient detail to evaluate the proposed modification. No modification will be approved unless the applicant proves to the commission that the modification will not allow the movement of fluids into sources of freshwater. (h) If wells, including freshwater wells or other borings, are located within a one- quarter mile radius of the disposal or storage well, are a possible means for oil field wastes or hydrocarbons to move into sources of freshwater, and are under the control of 56 . . . ( (' . (1) the operator, the operator shall ensure that the wells are properly repaired, plugged, or otherwise modified to prevent the movement of oil field wastes or hydrocarbons into sources of freshwater; or (2) a person other than the operator, the commission will not issue an order under (a) of this section to the operator until the operator presents evidence to the commission's satisfaction that the person who controls the wells has properly repaired, plugged, or otherwise modified the wells to prevent the movement of oil ...fieJd wastes or hydroc::.rbons into sources of freshwater. '-"-- G/ ' ,~ (i) The commission will publish notice of the disposal or storage application and j will provide opportunity for a hearing in accordance with 20 AAC 25.540. ~ U) If dIsposal or storage operations are not begun within 24 months after the approval date, the injection approval will expire unless an application for extension is approved by the commission. (k) The annular disposal of drilling wastes approved under 20 AAC 25.080 is an operation incidental to drilling a well and is not a disposal operation subject to this section. (1) This section does not apply to underground disposal that is regulated under 40 C.F.R. 147.101 by the United States Environmental Protection Agency. History: Eff.4/2/86, Register 97; am 11/7/99, Register 152 . Authority: AS 31.05.030 20 AAC 25.255 EQUITABLE DISTRIBUTION OF PRODUCTION Repealed or Renumbered Repealed 4/2/86. 20 AAC 25.260 ILLEGAL PRODUCTION. No person may produce or transport crude oil or natural gas from a well or pool in Alaska when in violation of the regulations and orders ,of the commission. History: Eff. 4/13/80, Register 74; am 4/2/86, Register 97 Authority: AS 31.05.030 20 AAC 25.265 AUTOMATIC SHUT-IN EQUIPMENT. (a) A completed well with an offshore surface location and that is capable of unassisted flow of hydrocarbons to the surface, must be equipped with a' commission- approved . 57 ,...-.4 =it: ( 1491 N. EI Camino Real, Ste 207 San Clemente, CA 92672 ( December 8, 2003 Alaska Oil and Gas Conservation COlnlllission 333 W. ¡th Ave, Ste 100 Anchorage, AK 99504 Re: Application for Underground Disposal of Liquid Drillinq Waste Pelican Hill Oil and Gas Inc lIiamna NO.1 Permit No. 203-172 Dear Sir, Pelican Hill 0 & G Inc. respectfully submits this letter of application requesting a Commission Order authorizing the underground disposal of drilling waste generated during the drilling of the captioned well. This request is màde in accordance with 20 AAC 25.252 a) with the requirernents thereof satisfied as follows: 20 MC 25.252 b). The captioned well has 5-1/2" .f~a~ing set åt 3? 1 ¡.' ~D. The 5-1/2" casing was .' cemented with 136 bbl of cement, which is equivalent to the theoretical . annular volume from the shoe (bit) to surface plus 10% excess in open hole. As this was a "drilling with casing" well, no floats or landing coUars were Used. Instead the cement was displaced with a wiper plug followed by water. The wiper plug was displaced to 3327' and the 5-1/2" casing was shut In with 950 psi to balance the "U- Tube". Full circulation was observed throughout the job. Furthermore, the 950 psi of "lift" (shut in casing pressure) indicates that cement was displaced from the shoe Up to .!. 300' RKB. As such, Pelican believes that cement channeling did not take place and that thè cement across the proposed disposal zone is competent. Note that Pelican Hill ordered a memory CBL from Reeves Wirelíne but Reeves has thus léti Jeen unavailable. c) Attachments: 1. A plat showing the captioned well is attached however there are no wells within 1;.:; mile of the captionéd well. 2. There are no operators within ~~ mile of the captioned well. The surface owner within 1;.:; mile of the captioned well is: Kenai Peninsula Burough. 3. The only pertinent surtace owner has been provided a copy of this application as confinned by the attached affidavit. 4. The fornlation chosen for waste disposal in the captioned well is a Tyonek sandstQne froln 3166' - 3181'. ,', 5. ' A cased ( .e Gamma Ray log of the captione(' ell is attached. 6. A) The mechanical integrity of the casing"-tubing annulus wiil be tested to 1500 psi in accordance with accepted practices. A wellbore schematic is attached. ' B) The drilling waste will be injected at a pressure that is less than the expected frac gradient: 15.4 ppg EMW. As v...I\.:h, the maximum allowable injection pressure (assuming an average fluid density of 9.0 ppg) will be ~ 1025 psi. Frac Gradient chart attached. 7. The drilling waste to be disposed of is drilled cuttings and fresh-water based drilling mud as per the mud program included with the approved permit No. 203-172. There are approximately 3000 bbl of nlud and cuttings currently on location requiring disposal. 8. The estimated average injection pressure, is +/- 800 psi and the nlaximum expected injection pressure is +/- 1000 psi. The appropriate frictional pressure losses must be added to the expected average pressure and to the expected maximum pressure.' The frictional pressure loss is dependant upon the injection rate: 1 - 2 bpm. g. The closest offset well is: Shell Oil Company's Kustatan Ridge State No.1 located about 1.5 miles NNEfrom the captioned well. The offset well has an open-hole log suite: SP / Dual Induction Laterolog. The proposed disposal zone in lliamna #1 (3166' - 3181 ') correlated to the Shell well (3515' - 3535'). The open hole logs from the Shell well indicate that the chlorides in the sand at 3515' are?: 11,000 ppm using the Archie equation and "worst case" assumptions: <Þ = 460/0, Sw = 1000/0. Since Rt = 2 0, solving the Archie equation (see' attachment) for Rw =,0.42 O. An Rw = 0.42 n equates to 11,000 ppm at 95° F as nleasured in lIiamna #1. In reality, the porosity is mòre likely to be !. 300/0. If so, Rw == 0.18 n which equates to :t 28,000 ppm. Also in the Shell well, there are 2.0-2.5 n sands as high as 2705'. It is safe to conclude that, based on porous sand resistivity, shale resistivity and SP deflection, that there are no fresh water sands for at",least 800' above . ~."'.-. the proposed disposal zone. Furthermore, it is 'not likely .that, the , proposed injection could possibly propagate a fracture height of 800'. 10. A laboratory water analysis is not available, however, an analysis of logs from offset wells has been done by Baker-lnteq (attached). That study roughly agrees with the Archie equation analysis used above. 11. Not applicable 12. There are no wells within ~ mile of the lliamna No.1 location. ~~ Arlen Ehm for: Pelican Hill Oil & Gas Inc Attachments: (" (' 1. lliamna No.1, Location Plat 2. lIiamna No.1, Location Map 3. Affidavit of notification: Kenai Peninsula Burough 4. IIiamna NO.1 Current Wellbore Schematic 5. Procedure for disposal and plug back 6. lliamna No.1, Proposed Wellþore Schematic (disposal) 7. IIiamna No.1, Proposed Wellbore Schematic (plug back) 8. BJ Cementing Reports: 9-5/8" casing & 5-1/2" casing 9. MW & Frac Gradient chart 10. Cased Hole log of IIiàmna 'No. 1 11. Archie equation calculations from nearest offset we;; 12. Baker-Inteq's Formation Water Salinity Study Alaska Oil and Gas Conserl':on Commission Application for UndergroUl\. .lÌsposal of Drilling waste Pelican Hill Oil and Gas Iliamna No. ] Permit No. 203- t 72 ( AFFIDA VIT OF NOTIFICATION I, ¡J R-LE ;t/ E. H /Î1 do hereby affìrm that a full and complete copy of the captioned "Application for Underground disposal of Drilling Waste has been sent to the only surface owner within 'Ä III i Ie: Mr. Paul Ostrander Kenai Peninsula Borough 144 N. Binkley Soldotna, Alaska 99669-7599 ~// ~ ~~ Arlen Ehm NOTARY ACKNOWLEDGEMENT ) )SS. THIRD JUDICIAL DISTRICT) STATE OF ALASKA The foregoing instrument was acknowledged before me this If day of December, 2003, by Arlen Ehm, Registered Agent for Pelican Hill Oil and Gas Inc., on behalf of the corporation. ~,,"UI"I1IIII"l ~\\\þ. þ.N L112Í"~ ~ð.,,\1' ''''''''''':'' ~ o§O''''''''''' "'" ~ ~ ~~ /' /l¡O~ """~~ ~ ,t;" 'IAlL'<. \~~ ~ ¡ "'Yy. 1:(1)= ::; : Þ ., =0=: ~<!\\ ÜSl.tc J~e .... ~;::: ~1X':. ~~ ~. ~ 1""""'" ~\1<'h. ~ .~ O~"'"'';I\'''\sn~~i-.''' ~~. r A LA :\,,"\ 1/1.'lf1/ I/lIIn"\ --71~ ~ N~ry Public in and for Alaska My commission expires: ¿;70 .... (ok:, flY ARLEN EIIl\1 Geological Consultant AAPG Certified Pefmlell1lt Geologist Cel1ificatio" #2503 2420 Foxhall Drive Anchornge, AK 99504 Photic: 907-333-R880 * fax: 907-333-3454 E-nuiil: arlenehmía>,gci.net ( December 8, 2003 Mr. Paul Ostrander Land Ì\1anagement Officer Kenai Peninsula Borough t 44 North Binkley Street Soldotna, AK 99669-7599 Re: Underground Disposal Dear Mr. Ostrander: Pelican Hill is presently holding KPB Land Use Pern1it 17.10.180 issued on October 9:and which expires on September 18, 2004. This permit was later .amended to include the temporary above ground storage over the winter. Pelican Hill is requesting a modification of this amendment as follows: MODIFICATION . h\ject all drilling Duids immediately as per AOGCC regulations and permit Grind and il\iect all cuttings immediately as per AOGCC regulations and permit Vacate the tank farm area completely immediately following the injection . . RA TIONALE . Will eliminate the presence of any solid or liquid well wastes on KPB land surface now instead of next summer Will preclude Pelican Hill from returiling to the site and initiating operations again. . METHODOLOGY . Pelican !-Ell' s engineer is presently preparing a plan for underground disposal for liquids and solids, which should be filed today Pelican Hill will ship the necessary equipment to Kenai today for barge shipment to Trading Bay tomorrow The necessary personnel will travel to Trading Bay for the operation PelicanHill personnel me still onsite and they will assist in theit~ection operation . . . . Mr. Paul Ostrander December 8, 2003 Page Two (' . Pelican Hill personnel will then vacate the rig location, the tank farm area and the roadside staging area The upper layer of malting boards presently under the rig will be re!ll°ved at this time The lower layer of malting boards will be next spring after break-up and before vegetation begins to grow ' The locations will then be given a final clean up for anything that. was left below present snow cover . . . DOWNSIDE . Keeping the rig at this location to accomplish the downhole injection will preclude our moving to the Beluga River area yet this winter Our drilling program will be delayed at a cost to Pelican Hill Attempts must be made to renegotiate drilling commitments for operations at the Beluga River site . . CONCLUSION . In spite of those downside items, Pelican I-lill believes this to be a win-win situation both for the KPB and Pelican Hill I Pelican Hill fully realize6 that we are asking for expedited approval without any advance indication to the KPB. However, we became convinced over the weekend that this is the procedure that should be followed. Once again, your assistance in obtaining timely KPB approval will be greatly appreciated. Sincerely, ~.~ Arlen Ehm Enc, Cc: AI Gross, Pelican Hill ~ R R 15 14 W W :_3 C) SC^LE: 1" ~ 2000' 25 ------ 1571:3' I ILIAMNAl _L.- . (SEI 5/8" RE8AR) ,) (S - -'----- 2 -180' ----..-, <) 1 -----1-- ~ell Ñ~n.l~ Northl!.!R g:~~!i!.'Jl ~Iev ILlAMNA 1 2499737.76 1314210.55 203,83 R R 1.5 14 W W ( ,29 -7 2' ~.- T,9 N 'T8N 6 Units:U.S. Survey Feet Horizontal Datum:NAD 83 Comdinate System:State Plane; Zone 4 Vertical Dalum:NAVD 88 Hmlz.onlallocaUons are based on the NGS published coordinates for KUSTATAN RESET of (N2~ 59304,37, E 1326298.47) Elevations were generated using RINEX dala from CORS Stations TU<A (Talkeetna CORS ARP) and I<EN1 (Nlkl USCG B); ELEVATIONS ARE +/- ,5' SECTION LINES ARE DRAVVN USING PROTRACTED COORDINATES. rr. R,' o.~q'~!1rl',---... .. l ~ :~"~ -,r-- ',i - G / "" ,0/ f ~~ ~ß_- (~ ~ aJ~~rnœo (NGINEERS MID LM~D SURVEYORS LOeA TION OF PELICAN HILL OIL & GAS H~C. WELL LOCA lION FOR ìUAMNA 1 SEC. 31, T 9 N, R 14 W, S,M"AI< pnEPARED FOR: PELICAN HILL OIL AND GAS INC. .- DRAWN 8Y: jZW CHECKED 8Y: CBS . . --- ,J08 NUMBER: 2003- 510 1" == 2000' . . ." 801 WES I flflEW(£O LANE 5U!1[ 201 ^NCtIOR^Gf.. ^L^SI<^ 99~OJ-IOOI C'C^' L' ~HONE (907)_71"5:¡~7 .:> Lf_, f" '\ / ( '-- ,/' III ~~~,. ;:¡:-;. ~~~:; ~~;:i; ~$Š~Š' ~( mIl ¡ ~: I ! 5. ¡¡¡I! Pelican Hill Oil & Gas Inc. U( mna No.1 Permit No. 203-172 13-3/8" Casing at 80' Cemented with 25 sx of "8" mixed at 15.6 ppg and 1.16 cf/s.x 9-5/8" Casing at.588' FIT = 14 ppg EMW Cemented with 1 9 1 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface 5~1/2': Casing Ce'm~nted: Mixed & pumped 258 sx (84 bbl) of lead slurry rnixed at 13.5 ppg and 1.83 cf/sx followed by 248 sx (52 bbl) of tail slurry mixed at 15.8 ppg & 1.16 cf/sx. Displaced with water to 3327'. Cement voluflle pumped::: 80/0 excess over theoretical annular volume from TO to surface. 5-1/2" Casing at 3517' ( Pelican Hill O.iI and Gas Inc. (,,',,' 1401 N. EI Camino Rear, Ste 207 San Clemente, CA 92672 December 8, 2003 Disposal, Plug Back and Completion Procedure: 1. Test the 5-1/2" casing to 1500 psi for 30 minutes on chart. 2. RIH with TCP gun on 2-7/8" tubing. Tag PSTO and space uut the TCP gun. Perforate the disposal zone: 3166' - 3181'. Break down the perforations and establish injection at.:s 1000 psi + ð Pro POOH. 3. RIH with an EZSV on 2-7/8" tubing. Set the EZSV at 2: 3130'. Re;ease the running toof. Sting back into the EZSV and conduct ah MIT on the annulus at 1500 psi for 30 minutes on chart. Notify the AOGCC field inspector at least 24 hours prior to conducting the MIT. 4. R/U SWACQ's grind and inject equipment. Grind and pump the i: 3000 bbJ of liquid drilling waste and cuttings into the disposal perforations maintaining the surface pump pressure at ~ 1000 psi + ð Pr. 5. After disposing of all approved drilling waste, R/U BJ Services. Mix and pump .:t 50 sx (10..3 bbl) of class "G" neat cernent through the EZSV and into the disposal perforations. Displace the cement with 2:. 17.5 bblof 30/0 KCf water. Pull out of the EZSV and dump the last ~ bbl.of ce,ment on top òf the EZSV. Pull up hole ~100; and reverse circulate the tubing clean. Test the casing and EZSV to 1500 psi for 30 minutes on chart. POOH. 6. RIH with TCP guns and production packer to perforate for production as directed by the geologist. Space out, set the packer. N/U and test the tree to 1500 psi. Optional: swab the tubing down 500' - 1000' for "under balanced perforating". When ready, drop the bar and fire the TCP gun(s). 7. Flow/test the well for comrnercial production. If the well does not flow, load the tubing and break down the perforations with 5-10 bbl of 30/0 KCI water. Swab back the load water and test the well. J l Pelican HiJl Oi/& Gas Inc. llia^ .ila No.1 Permit No. 203-172 9-5/8" Casing ~t 588' FIT::: 14 ppg EM\'V Cemented with 191 sx of Type 1 rnixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface Disposal Plan:- 1. Run cased hole memory logs: GR/Pulse Neutron 2. Perforate for disposal: 3166' - 3181' 6 spf 3. Run 2-7/8", ~3-.5# tubing and an EZSVto +/-3130' , 4. Set the EZSV. Perform an MIT on the annulus 1500 psi. 5. Establish injection pressures with water Maximum Break down TP = 1500 psi A VG Injection Pres ~ 1000 psi 6. Dispose of +/- 3000 bbl of liquid drilling waste. . The liquid waste ccJnsists of fresh Water based drilling mud (as per the APD), and fresh wash water., etc, incidental to drilling operations. . 7. After disposing of the liquid drilling waste, mix & pump 50 sx of class G (10.5 bbl) into the disposat perforations. Pull out of the EZSV and dump the last ~ bbl of cement on top of the EZSV resulting in 25' of cement cap. 8. Test the EZSV, cement & casing to 1500 psi. EZSV set at +/- 3130' Perforate 3166' to 3181' (15') wiTCP 5-1/2" Casing at 3517', PBTD = 3327' J l( Pelican Hjll 0;1& Gas ihc. lIia~. ,oa No.1 Permit No. 203-172 9-5/8" Casing at 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface 5-1/2'.' Casing Cemented: Mixed & pumped 258 sx (84 bbl) of lead slurry mixed at 13.5 ppg and 1.83 cf/sx followed by 248 sx (52 bbl) of tail slurry mi.xed at 15.8 pþ~ & 1 .16 cf/sx. Displaced with water. Cemeht volume pumped::: 100/0 excess over theoretical annular volume from TO to 'surface. Disposal Peñorat~ons To Be Cemented: ' Mix & pump 50 sx (10.3 bbl) Class IIG" mixed at 15.8 ppg and 1.16 cf/sx. Squeeze 9.8 bbl below the EZSV and dump % bbl on top. Then test the EZSV and plug to 1500 psi. EZSV set at 3130', TOC = 3105' Perforåte 3166' to 3181' wI TCP 5-112" Casing at 3517' l£,~ J ( ( ~"!i!" ""'!'.t~"'''''\''''''\Ì' (' -'_.""1/.1, I 1.1 't' 1"'~ I .. ...- J CEMENT JOB REPO~T I ... ' '...- . CUSTOM!:~ Pelican Hill Oil ! G~I~,1r1l:. D!STRICT Kf)n.;¡ LEMe 80 WelL NI'\N\E fIi:Jn1n" 111 I DATE: 11.NQV -03 .1 --- ~l()CI\1'ON Cr:C" T9N-R14W DR.fLlING CONmI\CYO~ RIG 1# SIZE 8. TYFE or- PLUGS --"- _. ...... .LlST-CSG-H^~OWM~E Cp.mp.nl PI\I(1, Rubber. Boltt11n 9.5,8 ì C(1nt(a"2~r, "'lIlh ;:ino;, :-' S!~; 'In Cement rlllQ, R\lbbsr, Top 9-5:8 III M^. TE~IAL~ I"Uf'\Nr~lte:D E3V BJ Lead Cp-m~1'\I (S\Jf\ðc.~) AVilIIAt1'" 'Mï" W:'\\E:f ,., 2.00 -abl.' ø.\I\\\I\\)\~ Ol~~\, !"\ui<l $J~ F. 12,25' . HOLE o/~I!:$$'" --- -- '~H- 50 560 ,~17i- ....--.-, W,,!, 9.625 .J~,3 iJ'.R. # 276510175 SEFW.SUPV. Floyd PO:2!!I! J, -...- ----.- ---... &_.......... COUNT'(.P Af\lSH-ßlOCK 'Kery!" AI¡¡~ka .--- .. - - TYPE OF JOe ~III f~~:c -_..!.'!:lys,èÃ~ SLURRY PAOPEATre~ .-.- .-=- 5L'ùRRY SUJR'f'('( WI\'TEJ\ PUMP BUI wen YLO GPJI TIME SlUFH~Y PPO PT') HR:Iv'IIN SACK~ OF CE!MENT i 9~ , 4. i' ,~ 7 04'.12 300 8bl. TBG-<::SG-D.p. 'TYPE CSG Yi,1.A1.. '" - J ~o COLLAR DEPTHS FLOAT Di;£:1H 55() GRADE SHQS LI\S1' CMING PKR.CMT RE.1-8R ~L-L\NER PERf', DEf'1H , 'TOV> cot-m SIZr: ,WGT ~Y.PÊ._._J;?.ro:.TJ:._~.._._ß.BAND8.TY';~'-' . -'Dr::F1n'¡_~_TOP_. I 'sTir-,-"-SIZE .l..:n:1ß.E..9P 13,375 17 ,CSG 80 9.375 I e RD .~.....- ..-- ..*. ~ .~. . .' " DSPI~, VOLUME VOLUME: UOM . .....-,' --.. WELL FLUIO , ,. TYPË" ..., .. WQT. WATER Q.2 BASED MUD DISI'L FLUID ~~~: :~I. . ~AL. ~AX PSI, OP - MAX TYPE WGT. SUMP I"LUG TO Rev. SQ.I'SI .-- .---. 129 MAX TBG PSI RA TeD, OperÐtor MAX CSG P$I RATEP °p~'tllor 'j'{ BBLS ---. .-.-.... -'--"-' . .. --'- - ..\ . EXPLANATION: TROUBLE SETTING TOOL, ~UNNING eSG, ETe, PRIOR TO CEMENf/NG: 1 fil ß 1000 TIME I HR:MIN, 17:40 18:09 18:11 - .1 a:~9- 18:31 18:48 ;8:53 1 '3'54 19:04 HJ 0(1 "'T 1552 f' 21"91 PRE.531JRE. PSI . .,. _h.. - ...-~- --......---- . . .--.. ... . -.-... PIPE! 09.00 QÇ¡'?O - -.. ---10-_- PR!;SSUR¡;'~/lTE; DETAIl. ANNUL.US Rt\TG 813M So\. FI,.,U\O PUMF'tD ---.-.. ... .., :.., _____i... I I , .-1- , -I ..--, ---1..-----_....,.!... I , I 1 ---- 320 -~... 600 1000 1'()Õif 0 I 1 , , ;/ H2O c-r-- , .,: "I 4¡ ð, 0' 2 5 . H2å' 50 c ê1vfr- '-"----~'ã-~ r12Õ' . .--, õ',' .H2O' o¿2 H2Q ¡ ! _:~~! 20V' 360 ' Q 0 EXPLI\NA TlON ~H\feT;;'MeË1ING~ Q.J CREW 'x. co. ReI'. x' TEST l'NÉ~ ........ "3000 !ISI CIRCULATINC WElL-.mõ.' --. X , 11-11-03 arrfvE! hp.npQrt ' ~rrive trflding ~aYL~eltJqJn l..Q!t.~~lalton,' w,, on rIg 11-12-03 WAIT ON ~IG I WF.ATHER 11-13-Q3WÄiT'õÑ RIG ... . 11-1 +'03 Wai! oñrlg . 11-15-03 walt on rIg 1 1 '-1Q-a3,~~ mee.\~~g , W:3ter ahead I test surtác-ë ïÓ3000 PSI , rest oi i-l70 Hh~Ñrf . ~1;¡:-7' #!g;¡¡1 I S}OI1 Displacemen~ , ~Ior mud to pits / dive,1 to ce!'I!,f R.~st f)f ~Rlac~m~t f:;túp I dlGP' d(ln~ , 1>top ,'chE'ok floats.! thsy hOld çml \Yð~ C'ornpusl'd ur Iyl-'~ , (:~r.II~nt ,04% eð.. :0"0 S% CD-3""O 2~ BI\. ~J(J"'1 tlh!':. t- P ôL fLUID TYPE eJ .......- .-... Pag".1 ßbl MIX WAìER 50 31,61 ~1.61 STA5e- l'I,ix WATeR rt9 -'--'-1 I I \ !..'.~:n.~ l:}J c~'" Field Receipt # _2L~QJ 0175 CUSTOMER ÞCIlI.:¡1I1 Hill Oil ~~,I~~ -- -. -- LEASE a. WEll N.lIME - OC.sG - _!I~~!T'n~1 H1 DISTRICT Kl?nrJI ( SUPPLEMENTAL CEMENT JOB REPORT ...) I,) t'; ;..,,'. ,t.!, . . \ ':. . r.' ¡DATe ! "! :~.Q.~l..., -. '" , LOCATION ,- ~,. ~~1.':'''. p,'(, DRILLING CONTRACTOR. RIG # I F.R.# : ~"G510175 -.....----. . seRVo SUPv, F'~Y!f:'oaA! J! COUNT)' ~PARISH-BlOCI'< , K'ðI'\'i\III.!:-mm ~'TŸPË or- Joe g"'(IIUI~ T1ME HR:MIN PRE8:::;URE - PSI PRESSUREIRA TE OE:TtHL FLUID TYPE PIPE ANNULUS RATF 8PM EXPLANA. T\QN Ah! ;=UJI() PUMPED BUMPED PLUG PSI TO eUMP PLUG rl;5T 881.CMT TOTAL PSI SPOT ;r~,=R4yc. rLOAT ReTU~NSI BBL LEFT ON Tal' OUT EOlJIP. REVERSeD PUMPED iiSG CEMENT ,( " n ~ï 0 'r u ---" ""I',-------~ y N " f '¡r.1:..~ .: ~:Ç~I .Pagc- ~or-1. "r: n~: , t:j l.~--.(.~,_..~N~~~_~~ORT ( ) CUSTOMER Pelican Hill Oil & Gas,Inc LEASE & WELL NAME ILlAMNA 1 - API 50133205270000 --.-------- .-------- .------- DISTRICT DRILLING CONTRACTOR RIG # -.t<enai ---,------- -1'efican Hill --.--- SIZE & TYPE OF PLY~_,__--_____~I~:Ç_~g-=Ij~~Q~'-~R~_____- - Cement Plug, Rubber, Top 5-1/2 in SACKS OF CEMENT ~A TE å2-DEC-O~__--_t~~~~-~~ 146757 LOCATION SERV, SUPV. David Wallingford COUNTY -PARISH-BLOCK Kenai Alaska TYPE OF JOB Long String PHYSICAL SLURRY PROPERTIES SLURRY SLURRY WATER PUMP WGT YLD GPS TIME PPG FT3 'HR:MIN Bbl SLURRY Bbl MIX WATER MATERIALS FURNISHED BY BJ MCS-4D Spacer System Casing Drilled Section - Lead Cement Casing-Drifled Section Tail Cement 2 BBLS Cement + Drilling Mud 10.5 30 -, 13.5 1.83 9.23 04:10 55.31 37.36 15.8 1.16 3.92 00:48 51.36 23.13 -- 10 80.78 170 248 ----.--.----------------.--------------...-------....---.---.-- 300 Bbl. Available Dlspl. Fluid 300 . Bbl. Available Mix Water $JZ;J; 5,5 TBG-GSG-D.P. WGT. ---'---JYPE 15,08 CSG D~PTti - GRAp~ 3500 --$rlOE TOTAL 217.45 COLLAR DEPTHS fLQAT 60.49 -ÆlE 7,875 - , 'HOLE % EXCESS ------ Df;PTH-- 3500 ." -...--...-------- .._- STAGE LAST C^SING PKR-CMT RET-BR PL-UNER PERF. DEPTU -~ !Z:.E_-=- __-'b'91_=~:~~LYEI:=-~~:~~m;PT tC -_____ßB~N_R:i~TY-'~_J;~==~~='_~Qf~EJ.H_=--- TOP _BTM 9.625 32,3 550 TOP CONN SJZ.r: THREAD WELL FLUID TYPE WßT. WATER 10.5 BASED MUD . -...- DISPL. VOLUME VOLUME UOM -. ~ -. -- - - ,.. -. DISPL. FLUID CAL. PSI CAL. MAX PSI OP. MAX ---. '.----.--""-.'-----'----------------- TYPE WGT. BUMP PLUG TO REV. SQ. PSI r.'fAX TBG PSI RA TED Operator MAX CSG PSI RATED Operator MIX ,WATER 80,8 BBLS 2 BBLS Cerne 10 900 Fresh EXPLANATION: TROUBLE SETT'ÑG TOOL, RUNNING Ó~G ETC. PRioR TO CEMENTING: . - - . PRESSURE/RATE DETAIL EXPLANATION --"TIME --'------PRESŠURE -- PSI-'----- -----'MTE------'BbI.FLÜiõ'- "FLÛ'D -- SAFETY MEETING: BJ CREW l20 CO. REP. l!J HR:MIN. ---PiPE ------- ANNÜiJjs- aPM PUMPED TYPE TEST LINES 2000 PS,-- -- ------'_._-----------~::==~~--= ~~=:~-'_.__._--~- ~=~=~=~: - CIRCULATING WELL - RIG ~ Arrived at airport 12-02 Arrive at camp 'Safety meeting 12-03 Fill lines and test Top drive valve leaks Retest lines OK 30 SWEEP Pump sweep '-a¡---LEÃO-- Mix and pump 258 sks lead -- --------, Swap to tail 52 TAIL Tail cement done Drop plug 8~. WATER Q~lace plug. Did not bump. Washed up and moving eguipment -----_,~~ck at camp 12-04 - BJ u 14:00 15:00 16:30 17:40 ----'- 2 WATER .-.,----- 18:00 18:18 18:47 19:27 19:45 19:55 20:50 ----- 23:30 01 :00 1150 ---- ---- BUMPED PLUG Y~ PSt TO BUMP PLUG TEST FLOAT EQUIP. Y ¡WI PSI SPOT aaLeMT TOTAL LEFT ON TOP OUT .. ~. RETURNS' aaL eSG <:!'.MENT .- ~ ~ (þ. W, REVERSED PUMPEO__~_y [!!J ~ U~ . - 253 950 Paoe 1 SERVo SUPV. PT1652 (12190) Jr8004 (" MUD WEIGHT, AND CASING PLAN ( I 113.,37~r'~~'~; ., 19.625" . ' ;;:. ~ 1000 ----~ ~ ~ =\ -\ :l 1 4000 -- -'- --- ..--.. -------. lL ~ oð C ~ ~ ...- ! 5000 -.. - -- -,----. ----- .. 12.87S~ U: : (5.5"1 : ~, :: 2000 3000--- 6000 7000 - 6000 - 9000 6 ~ ..~~~ .. : ~,1 : - ---~~,t-: - Ii - 't - '."i..y--~:._~''''\ - .. \' \. '~ " \ \ : } '¡'t: f- ;: ( .. ! , -- .. . ... r ,--~ :1 i~ --' Expected Frac Gradient 15.4 ppg EMW = 0.8 psi/ft Maximum Allowable Injection Pressure < 1000 psi 9 ppg fluid = 0.47 psi/ft 3100' x (0.8- 0.47) = 1023 psi (Does not a~count for A P f) I r---" I '1_'''''1 9 10 13 14 ~ Mud Weight, Pore Pressur., Fraoture Gradient (PPG Equivalents) 15 16 17 18 20 11 12 ILIAMNA DRILLfNG PROCEDURE REV IOOCTdoc Pelicnn Hill Oil and Gas. Inc. Pnge 29 .& COHGl)MERATl * 8811 ~ 88~9~8MgnMf .. COlli G8I9SY Cool .+ t;oal GIlfSSY Coal J.'" Coal .. Coal Gassy Coal Hln~.E81 G9I!ISY Coal Goosy Coal GIIJSSY Coal .. COB I - ---(:}~reuaf- S~ C OBI S C08 Gj,.;¡s Coa G y Cosl @¡¡§ V (hill GIIS Coa Gæs C08 Gas, Coal Gassy oal Gassy 001 .. CONGL)MERATË structural Casing Surface Casing Production Casing iii Productlonrublng -.. 'PROPOSED MUD WEIGHT ILlAMNA t "ANTICIPATED PORE PRESSURE ,EXPËCTED FRACTURE GRADIENT . "..,..w Forelands State A No 1 "¡:",,,,","""'KUSTATAN No 1 , MOKUAKIE No 1 À ANTIC/PATED CONGLOMERATE . ANTICIPATED low Gas COAL BEOS . ANTICIPATED GASSY COAL BEDS J- I 1 I I ., 19 10/10/03 The Archie Equation ( '3pplied to the offset well: Shell Oil Company Kustatan Ridge State #1 Sec 19 T9N R14W ( Archie Equation: Sw:= (þ2r1 x R~--- 1/2 Rt '-- --- Assumptions: . the sand at 3525' is 1000/0 water saturated: Sw = 1000/0 =1 . Rt (from the log) = 2 n . The maximum possible porosity in a well sorted & rounded sand is 460/0 Since Sw := 1, we can square both sides of the equation and get: 1:= (.462r1 x R~ 2 Solving for Rw we get: Rw = 0.42 n The ternperature at this depth in lliamna No.1 is 95° F. Usingtll~ standard chart, the salinity of the formation water is .i 11,000 ppm. If we use a more realistic porosity such as 30°/0, Rw is: r 1= (.302r1 x R~ " 2 Solving for Rw we get: Rw:= O. 18 í2 Using the standard chart and 95°, the salinity of formation water with Rw = 0.18 n is .i 28,000 ppm. In reverse, we can calcul..1te the expected Rt if the salinity := 10,000 ppm, the temperature:= 95° and the porosity = 340/0: Rw (from the chart) := 0.47 n 1 = (.342r1 x 0.47 Rt Solving for Rt we get: Rt = 4.0 n There are no clean, porous sands below 2200' in the Shell wen, and therefore, one can reasonably assume that the salinity below 2200' is > 10,000 ppm. ~ c.-'c... = c = rIj 0 .. .. QJ .......... ~ =.~ .,.. ~.~ a = = .. = = aJ.. d .... .. aJ =~= ~a= ~-~ : 0 =~ .. ~aJ ~.: 00- ... .. .. ., '-' . U) ... l_.Z ....8 ~::t 0 ~Z ~ ~ ~ \ l r I I ¡ I ¡ [ I [ ¡ ! I ( ( In making interpretations of logs our employees will give CUstomer the benefit of their best judgment, but since all interpretations are opinions based on inferences from electrical or other measurements, we cannot and we do not guarantee the accuracy or correctness of any interpretation. We shall not be liable or responsible for any, loss, damages or expenses whatsoever incurred or sustained by the cUstomer resulting from any interpretation made by any of our employees. [I ( ¡ [I . II [ I [[ [I [[ [I [I l1 [J [ . ¡ / [ / ¡ / ¡ [ ¡ [ ¡ : ! . r ~ i ,! J . I :¡ I J .! f J r J 1 .J J Pelican Hill Oil & Gas ( f Formatioll Water Salinity Determination IIiamna #1 Iliamna Field ~ . . ~ . - - . . Baker INTEQ GeoScience lliamna #1 24-Nov-03 I I r [ [ ¡ [ J Pelican Hill Oil & Gas ( (' iìiamria #1 , Objective: The purpose of this study is to detennine the fonnatioh w~ter salinity In the vicinity of the Iliatnna #1 well in the Iliamna field, Cook Inlet, Aiaska. Fonnation water salinity is required in order to detennine the feasibility of cuttings disposal through re-injection back into Iliamna #1. Two separate intervals within Iliamna #1 are being considered for cuttings disposal. The first candidate is the open hole strata below the cemente~ 9 5/8" casing fait at 343' SSTVD (560' MD). Any clay-free water bearing strata beÌow the casing tail and within 500 feet (343 - 843' SSTVD) will be examined for saiinity ariaìysis. The second candidate is the interval between'roughÎy 2800 - 3300' SStVD (3000 - 3500' MD). Likewise, any clay-free water beáring strata within this intêrvat wiÍl be exatnined for salinity analysis. Method: At the time of this report, drilling operations ate on-going at IHâtiiliâ, #t .No formation evaluation data, either L WD or wireiilie has been äcqü!ted froth this wellbore at this time. Therefore, salinity defenninaH6h for this àtea wilt be done through the use of wire1ine data acquired at offset wcil tocaHoits. , Four different offset wells froln the area will be used to cldetminè foili1ât1on wátet salinity forthe two intervals in question. The four offset weItswefèdriHedbetWeen 1961 and 1968. Due to the age of these wells, wireline iog data is 1iiriHed fo primarily Dual Induction (DIL) and Spontaneous Potential (SP). There is no dainh1a Ray data available and porosity data is Íimited to one Sonic log over the dútiper inierval. Two techniques were used to detennine the salinity of the formation water (Rw), SP interpretation and the R wa resistivity method. Both of these techniques assume that the zone in question is 100% water bearing and clay free. It is reasoriabíe to aSsume that the shallow zone (350-850' SSTVD) wiIì be free of hydrocarbons (Sw=i 00%) due to it's shallow depth. The deeper interval, 2800 - 3300' .SSTVD is asstiined to be hydrocarbon fTee (Sw=100%) through local knowledge of offset weil infoimation. The lack'of gamma ray data is not an issue in detennining clay content for tí1is study. The presence of radioactive volcanic nlinerals thai are often fourid in the cook Inlet render OR logs inaccurate for determining clay voluine. A more common þrâctice for detennining clay volume in this area is to aSSUlne a COl1stánt Rw tilid assoctate âny changes in the SP log are due to changes in the clay content. It then foiìows from this same reasoning, that to detennine an accurate R w from the SP, one heeds to look for the maxitnUlTI SP deflection within an interval in order to obtain the most day tree reading. Therefore, only those zones exhibiting maximum SP deflection' were considered- for Rw calculation. . .' Baker INTEQ GeoScience 24~Nov-03 \ I [ . ¡ [1 [ I [ [ [ ¡ [ ¡ [ ! [ ¡ n l1 [ ¡ 1I 1I [! 1I u u u Pelican Hill Oil & Gas ( ( lliamna #1 The SP interpretation procedure is as follows: 1. Detennine teolperature at the zone of interest 2. Detennine Rtnf at the zone of interest temperature 3. Using the JnaXi01tlm SP deflection ftom the shal~ baseline (SSP), find Rweq utilizing the following equation: SSP = - (60+0.133 *'Tetnp) log (RtnflRweq). See chati 3-2 in appendix. 4. Detennine Rw from Rweq using ~hart 3-3 (see appendix). 5. Convert Rw to Equivalent NaCI salinity using chart 2-5 (see appendix). Due to the many variables that can effect SP response besides waier salinity, the use of SP to detennine Rw is generally considered to be the method of last resort. Using the R wa nlethod with an Induction measuretnent would nonnaiiy be considered a lllore accurate approach. However, in addition to water salinity, porosity effects the resistivity measureJnent and thus the calculated salinity. As was previously Jnentioned, little or no porosity data is available. However, tocal knowledge often predicts that shallow Cook Inlet reservoirs will have high porosities in the 18-23% range. One Sonic log 13 available trom the Middle River State #1 offset well with data over a prospective zone from 3300 - 3420' MD where Jnaximmn SP deflection occurs. This interval is considered to be unconsolidated with the surrounding shale beds exhibiting slownes~ values of 132 us/ft. Utilizing the Wyllie Porosity equation with a cotnpaction factor correction, ihis interval yields a porosity of 30%. DT measured = 118 us/ft DT fluid Porosity = DTmeasured - DTmatrix i = 21 0 us/ft *' DTmatrix = 58 us/ft DT fluid - DT matrix (DTshale/lOO) DT shale = 132 us/ft With the uncertainties in porosity in Inìnd, a range of porosities will be used in the Rwa calculations. Three different porosity scenarios will be examined, 18%, 23%, & 30%. It was felt that the Humble variation òf the Archie equation was the best choice for the actual R wa calculation. Therefore the Archie saturation parameters will be set such that a = 0.62 and Tn = 2.15 . Rwa = poI''' * Rt a . - " ~ . Baker INTEQ GeoScience 24-Nov-03 I I I ¡ rl ['¡ r ¡ [ ¡ [I II ( r 1 [1 [I [ I [I U [j II II U II , ( Pelican Hill Oil & Gas ( lliamna #1 Results: . Kustatall Ridge State #1 Shell Oil Co. SE/4 Sec. 19, Twp. 9N, Rge 14W Schlmnberger Wireline Services- DIL / SP Date Run No. Bttn. Log Interval Bit Size Fluid Type Rtnf Tetnperature (BI-rr) 30-Aug-67 1 1319' 1 7 Yí" Ligno Sulf. 4.38 @ 69 F 70F 13-Sep-67 2 6712' 9 7/8" Q- Broxin 1.7~@65F 130 F Geothennal gradient = 1.1 degF / 100' SP Results: Zone Deptlls Zone Rmf@ Measured Calculated Converted NaCl (MD feet) Tenlp. Zone Temp SSP Rweq Rw Salinity (degF) (olunm) (In V) (olunm) (ohnun) (ppm) 475 - 495' 61 5.0 -32 1.70 1.8 3,200 2945 - 2975' 89 1.4 -52 0.26 0.28 22,500 3000 - 3015' 89 1.4 -52 0.26 0.28 22,500 3290 - 3330' 92 1.3 -68 0.15 0.16 42,000 Rwn Results: Zone Depths Zone Rw @ 18% Rw @ 23% Rw @ 30% NaCl Salinity (MD feet) Res. porosity porosity porosity Range (ohmnl) (olumn) (ohmm) (ohmm) (ppm) 475 - 495' 39 1.58 2.ó7 4.73 3,700 - 5,500 2945 - 2975' 3 0.12 0.21 0.36 17,000 - 60,000 - - 3000 - 3015' 2.75 0.11 0.19 0.33 19,000 - 65,000 3290 - 3330' 2.5 0.10 0.17 0.30 21,000 - 70,000 h, .. . ~ Baker INTEQ GeoScience 24-Nov-03 l I [ ¡ [ ¡ [I [ ¡ [ I II. [ ¡ (I [] [I [I [I U [[ 11 [J U U Pelican Hill Oil & Gas ( lliamna #1 . l\1iddle River State # 1 SheIl Oil Co. 1980' N & 1980' E of SW corner Sec. 5, Twp. ION, Rge 13W Schlun1berger Wireline Services- DIL I SP / Sonic Date Run No. BUn. ~og Interval Bit Size Fluid Type Rmf Tetnperature (BHT) 18-Feb-67 1 1267' 17 ~" Ligno Sulf. 1.76@60F N/A 5-Mar-67 2 5279' 9 7/8" Ligno Suif. 1.67@71F 148 F ASSUlne telnperature at 300' = 60 degF Geothennal gradient = 1.75 degF / 100' SP Results: Zone Depths Zone Rtnf @ Measured Calculated Converted NaCI (MD feet) Temp. Zone Temp SSP Rweq R\v Salinity (degF) (ohmm) (mV) (ohnun) (ohnun) (pþm) 638 - 663' 66 1.6 -10 1.15 1.25 4,600 3300 - 3420' 113 1.1 -33 0.40 0.45 13,500 Rwa Results: Zone Depths Zone Rw @ 18% Rw@23% Rw@30% Na<;ISa1inity (MD feet) Res. porosi ty porosity porosi ty Range (ohmlu) (oh1nn1) (omnm) (ohmm) (ppm) 638-663' 12 0.49 0.82 1.45 4,000 - 12,000 3300 - 3420' 5 0.20 0.34 0.61 * 9,500 - 31,000 * l11is porosity value is a calculated value ftomthe Sonic log . . ~ -. - .". Baker INTEQ GeoScienoe - - 24-Nov-03 I : II, Temperature ) (OF) (°C) r I 500 - 260 ..,. ~ - 240 ~ - ....- 220 [ I 400 ; 200 - ~:- 180 ' ~ r I -160 300 - =- :- 140 - - '- 250 ("\esist.i:ity of Equivalent NaCI Soluti~ ,,' _.1 ~ R (Qm) -=- 20 = EquIvalent ì~Q\J1 Concentration -80 -- 70 '150~ -60 - -- 50 - - 'I.'.) - 40 100- - 00- I -- 30 80- J - - ] 70- - 20 60- ,] - 50 -L 10 ~ ~( gr/gal ) kpprn @ 24°0 or 75°F 0.2,-- ...... 0.3- 0.4 ~ 20 --c -==--30 0.6 J- 0 e ~ 40 . ~ 1~ 50 -=- 10 =-8 -=-6 ..=., 5 -=-4 = 3 -=2 ""=100 2~ ..r '-1 ..=:.. 0. e -=- 0.6 -0.5 = 0.4 3 -:: 200 4-": .:£300 6 .;-. 400 8 -:::. 500 10~ . = - -=- 0.3 ..- 20:: 1000 -- -=°.2 30:- 2úOO 40-- .:.- 3000 60 :3:- 4000 -=- 5000 100~ == 1v, 200 -=-- 131- - 300 -=-17;500 = - -0.1 : 0.08 .::., 0.06 -0.05 -=- 0.04 -=°.02 = ( Tt + 6.77 ) Rw2 =: Rwt ,;op T2 + 6.77 Salinity (ppm at 75°F) = lOx -0.01 EngHsh: X~ 3.562 - log (RW75 - 0.0123) 0.955 Metric: ,I I) ,I ( Tt + 21.5 ). °C Rw2 ~ RWI T2 + 21.5 ' R., !:!!. 0.0123 + '''is 3647.S [NaCI(ppm)JO.955 Example Given: Temperature =: 250°F and NaCl concentration = 100,000 ppm. Determine: Resistivity R =: 0.024 Om u; ,. - . Rev. 1 12-95 l ¡ [ ¡ r I r ¡ [ I rl [ I [ I (¡ [1 [I [I [! [I [! [! U U l1 ( Rweq from the SSP ... W88T8R,_- AT-- ( - ..---- - 200 ," -, . I ,. ~ ------ -r---- ---_. -...- _.- ~ , .-..--- - ., H ~- j ------ ~- .--- ~ -175 :-. -=-~----------- ,- -ISO ~:~~~~~~-~-_~~~~5~~_:~~j ':-~~ ~-~.;: -~~#~: ,- ,- . -. ." - ::----- .-m-~-"-=--'- " --t1 -~ 200" . ê'~--,,'-','==-~-~=,' ,-~~ ,=-'--~ '~-- '-- ~'-- - ,-j:,'~~~,'~~:.fr ,~~;y tU - 5 - - ---- --_:-:: - - .. . ~". '" ~ 0 -,- - - - -,. - --- ..J'''' /_d" 1=' ~::-~,~~-:_, =:-----¡,g~Y~_:' - - .Y '. ..,. 1~iiJ.ß -- !! /,I~~."... - (f) a.. ~ ..,/ ---- ---- ..- ----- ....-,--.--- ....,...."-,,.,--,~ -----. .____'1_... ._- -- - 75 0.3 --,--, - --:::.=:¡r:::- , --..-- -"- --,-=~~:~::.~[ .==~-= ~~~ -. - _._,--..---- f '---- "- 1-- -- -' -- '.--~--~:~::~--=--=: l- .:...---==-.=.. =: ~ . 0.5 '1,0 3.0 5.0 10.0 ~,/Rw eq 30.0 Using T f in of; exp SSP 60 + O. J 33 T f Example Given: SSP == - 71 mY; Tf == i400P; ~ == O.55Q. m Determine: Rweq since RmrlRweq = 8.0 Rw == 0.55/8.0 := 0.069 Q. m eq , Rweq "" Rmf * 10exp OF = 1.8 (OC) +- 32 '-, 3--2 Rev. 1 12-95 " r: I l [ ¡ [ ¡ [ I [ ¡ [ ¡ [ ¡ U l! n [I u [! [1 [ ¡ r r l! 11 11 II Pelican Hill Oil & Gas ( (" lliamna #1 . lVliddle Rive.. State #2 The Cherryville Corp. 1501' N & 1604' W of SE corner Sec. 10, Twp. 9N, Rge 14W Schlunlberger Wire line Services- DIL I SP Date Run No. Btm. Log Interval Bit Size Fluid Type RInf Temperature (BHT) 17-Aug-68 1 2098 ' 17" 10-Sep-68 2 8268' 9 7/8" Ligno Sulf. 0.78@62F 148 F GEL 0.69 @ 67 F 85 F Geothennal gradient = 1.0 degF I 100' SP Results: Zone Depths Zone Rmf@ Measured Calcu~ated Converted NaCI (MD feet) Temp. Zone Temp SSP Rweq Rw Satirtity (degF) (ohmm) (lnV) (ohním) (ohmm) (ppm) - 630 - 645' 70 0.67 -28 0.26 0.28 22,500 700 - 730' 71 0.67 -30 0.25 0.27 23,500 3205 - 3240' 97 0.48 -38 0.15 0.16 42,000 3350 - 3365' 98 0.48 -45 0.12 0.13 55,000 R wa Results: Zone Depths Zone Rw @ 18% Rw@23% Rw@30% NaCl Salinity (MD feet) Res. porosity porosity porosity Range (ohtnm) (ohlnln) (oll1nm) (ohmm) (ppm) 630 - 645' 19 0.77 1.3 2.30 2,400 - 7,400 700 - 730' 18 0.73 1.23 2.18 2,600 - 7,700 3205 - 3240' 2.5 0.10 0.17 .30 20,500 - 70,000 3350 - 3365' 2 0.08 0.14 0.24 26,500 - 90,000 ".". -. ~.. - . Baker INTEQ GeoScience 24-Nov-03 I I II [ [ r ¡ , [ '[ ¡ I I ¡ ¡ I I [ [ ¡ [ ¡ Pelican Hill Oil & Gas ( lliamna #1 . West Foreland #1 Pan Atnerican Petroleutn Corp. Sec. 21, Twp. 18N, Rge 14W SchIUtnberger WireIine Services- IEL I SP Date Run No. BlIn. Log Interval Bit Size Fluid Type Rtl1f T elnperatu~~JB HT) 3-Nov-61 1 1940' 12 ~" 16-Nov-61 2 7355' 12 ~" GEL N/A 74F GEL N/A 118 F Geothennal gradient = 0.8 degF I 100' RInf for Run 1 taken fr0111 chart 2-2 (see appendix) to be 4.2 ohmm @ 65 degF Rtnf for Run 2 taken froln chart 2-2 (see appendix) to be 4.5 ohmm @ 96 degF SP Results: Zone Depths Measured . - Zone Rmf@ Calculated Converted NaCl (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity (degF) (ohmtn) (mV) (ohmm) (olunm) (ppm) 430 - 435' 62 4.4 -45 0.96 1.05 5,600 '-- 490 - 500' 63 4.3 -37 1.24 1.3 4,400 655 - 670' 64 4.2 -38 1.17 1.2 4,800 2965 - 2995' 83 5.3 -41 1.40 1.5 3,900 3105-3115' 84 5.2 -40 1.43 1.55 3,800 3330 - 3390' 86 5.0 -46 1.14 1.2 4,700 Due to the age of this well, no Dual Induction resistivity is available as an Induction Electric log was run. Due to the inaccuracies of Induction Electric log interpretation, no R wa calculations were perfòrmed. Baker INTEQ GeoScience '- - 24-Nov-03 ¡ [ ! [ [ ¡ I I I I I I ¡ ¡ 1 .r ] ( Pelican Hill Oil & Gas lliamna #1 Conclusion: For t.he interval [roln 343 - 843' SSTVD, the formation salinity results are as follows (NaCI equivalent): Well Kustatan Ridge # 1 Middle River St. #1 SP Salinity (ppm) 3,200 4,600 22,500 - 23,500 ' 4,400 - 5,600 R wa Salinity (ppm) 3,700 - 5,500 4,000 - 12,000 2,400 -7,700 N/A Middle River St. #2 West Foreland #1 , The fonnation salinities from this group of data are all consistent with the exception of the Middle River State #2 SP derived results. The most notable difference from Middle River State #2 and the other offset wells was that this well utilized a relatively salty GEL nlud systeln. The othèr wells were either Ligno Sulfate or very fresh GEL lnud systelns. The relatively lnore saline, mud along with the large 17 ~" borehole 1nay have combined to adversely effect the SP readings in the Middle River State #2 well. t It is also worth noting that the tnore robust Rwa tec1mique yielded consistent results with no anomalies. These results suggest a formation salinity range of 4,ÒOO - 6,000 ppm NaCI equivalent for the upper interval of 343 - 843' SSTVD within the area around IIiamna #1. For the interval from roughly 2800 - 3300' SSTVD, the fonnation salinity results are as follows (NaCI equivalent): Well Kustatan Ridge #1 Middle River St. #1' SP Salinity (ppm) 22,500 - 42,000 13,500 42,000 -- 55,000 3,900 - 4,700 Rwa Salinity (ppm) 17,000 - 70,000 9,500 - 31,000 20,500 - 90,000 N/A Middle River St. #2 West Foreland #1 ..... . - . . '.. Baker INTEQ GeoScience 24-Nov-03 r ¡ ¡ ¡ ¡ I I 1 1 I I J J r J J J U Pelican Hill Oil & Gas (' lliamna #1 ( The formation salinities ffOlTI this group of data have a larger range than those ftom the shallower interval but they are still fairly consistent with the exception of the West Foreland #1 Well SP derived result. The log header fvr this well reports an unusual1y fresh tnud systetn for the run in question. It is the high Rmf values that drive the low salinity results ffOln this well. With the ¡nEf . . Hon available, it is impossible to say if an error exists on the West Foreland log. However, the result is clearly spurious and does not fit within the retnaining data cluster. It should also be noted that the very high salinity values (> 70,000 ppm) derived ftoln the Rwa technique result [TonI the low porosity scenario (18%). The one hard piece of porosity evidence we have frOln this interval (S'onic log) suggests the porosity is high and in the 23-30% range. I These results suggest a formation salinity range of 10,000 - 45,000 ppm NaCI equivalent for the lower interval of 2800 - 3300' SSTVD within the area around lIianlu9 #1. If one is willing to accept the assertion tbat the porosity within this interval is consistently ""30%, then the salinity range may be further refined to 10,000 - 25,000 ppnl N aCI. :'('1'116 Biography: The Author, Glen Horel, has been a Log Analyst with Baker Geoscience since 1995. He has worked both in Alaska and in Western Canada. He has co-authored several papers on the use of WirelineAcoustics for Seismic and Petrophysical applications. Currently he is assigned to Baker INTEQ Geoscience in Anchorage Alaska as L WD Data Analysis Manager (907-267-6612), - -.- Baker INTEQ GeoScience 24-Nov-03 '~ ~ m c: E .~ ('t) 0 I > 0 :z I "'I:t N ~ ~ .- ~ = a.ì Q. Q. < '",,-, (1) en 0 ro c:: (!) (1) , 'Õ c:ð C/) 0 Ô (l) 0 0 I w t- C :~ ro ~ .S2 (l) , .:x CD ro D... m - - - - ............... - ~--'\ ~ ,.-...- - - - -- ---- --- ---"foIl, -, ( Estinlntiol1 of Rlnf ßnd Rmc Rm (Q'm) -6 -5 -4 -3 ( Rmf or Arne (Q'm) -5 - 4 - 3 - 2 -1 -2 Mud WeIght - 0,5 (Ib/gal) (l<g/m1 16.18 1920-2160 -1 ~ ~ :: 1680 = - 13 - 1560 -- 0.5 - - 02 12 1440 . 11 -- 1320 10 - 1200 -=- 0.1 Mud Weight Ib/gal kg/rn:J C 10 1200 0.847 11 1320 0.708 12 1440 0,584 13 1560 0.488 14 1680 0.412 16 1920 0.380 18 2160 0.350 -0.05 -0.01 ~f ~ C(l\l1)1.07 n"., ~ 0.69 R.nr ( R¡¡, )2,65 ~1f Example Given: Rm = 0.7 .0. m at 200°F mud Mud weight, == 12.0 tb/got Detennine: Rmf and Rme Rmf == 0.4 n. mat 2000P Rme ~ 1.2 n . m at 2000P (from equat.ion) 2--2 - Rev. 1 12-95 ) /' . - 0.1 -0,05 - 0.02 -0.01 Note: 'nlis chart may be used when the .. measured values of ~f and ~ are not': available, but does not apply to llgn01ulfonate muds. _Iii W1I8TIiIlR ATLA8 , , ./ , .. " .J ...,) .) ) / Rev. I 12-95 Ê 2! j E a: iT ~ a: English: Rw f( '} Rweq as a Function of Thinper9tu~ "F) 2 - 4'</ , ~,..¿/ ,,""y / 75°F / ./ /' 100°F /, / /" ./ -:;:. 150'F ~/r./~~/ 2OQ°F P/' ~-" ' ./ //~ -- 300°F /' //-/ .-,.,-, . 'V. /",-r /-,...... --- -- 400°F' ...',J'J ~ ~~ .oil!. II' ~r / ~ ~ -- ....- - - 5000 ,,~'~'/~ ~ -- F r« ~..,. --".,- ~j:('/ /" .~// /' - - En ~s h 0.5 0.2 ~ --. --I .- ----_. - --......--. -- -- --., --- -- .-----.- 0.1 ==-11 ~--- \- 0 0.05 ,J,-_. - _~~1=: I ~ t\ ration /~å ". ,. -----./" ' '('('!1:.- 11 /~ 1~! ." --.1. - J ?Or"F 0.002:: J 7"'-- ~aoo = : ','" _~F- : I 500"1: 0.001 :~-.II HII." , f 0,005 0,01 0.02 0.03 0.05 0.02 ::--- - 0.01 - 0.005 -- ,..lIll III 0.2 0.3 0.5 0.1 2 Rw or Rml' (Q . m) Rw = Rw + 0.131 X 1O(I/log(fr/19-9») - 2 eq - 0.5 R + 1O(O.0426/1og(fr/50.8)) Weq Example Given: ~ = 0.069 Q. m, Tr """ 1400P eq Determine: ~; 1(,= 0.073 Q'm at 140oP. ~. ....fØ' A1'1JU For mostly NaCI fOffimtion waters, use the solid lines. Use the dashed lines for fresh formation waters that, are being influenced by salts other than NaCI, and for gypsum-based muds. 3-3 . "'-" ~ -= ~..z I..e ~:Þ CJ =z .~ ~ ~ . ' ~\ c:::: ~ [""'-, ~ ~ ~ '--.- ---- - - -- -, n Alaska Oil and Gas Conservation Commission Application for Underground disposal of Drilling waste Pelican Hill Oil and Gas II iamna No. I Permit No. 203-172 AFFIDA VIT OF NOTIFICATION I, ¡}lèLE AI EH M do hereby affirm that a full and complete copy of the captioned "Application for Underground disposal of Drilling Waste has been sent to the only surface owner within '!1mile: 1\1r. Pau I Ostrander Kenai Pen insula Borough 144 N. Binkley Soldotna, Alaska 99669-7599 ~~~ NOTARY ACKNOWLEDGEMENT " STATE OF ALASKA ) )SS. THIRD JUDICIAL DISTRICT) The roregoing instrument vvas acknowledged before me this I? day of December, 2003, by Arlen Ehm, Registered Agent ror Pelican Hill Oil and Gas Inc.. on behalf of the corporation. \\ \\\111/1/1 U:'l'l: \'~\ ~ þ,N L Â 11.t¡: :-"\~~i\""""""":'~'VI/. .~. ,,':' O~'," ,I."..() ~ ~'::,: "' 11/0-,.. "',::.<\."" " ~ .,- . I - lo.':';"~.. ~ / ..q~'Yy \(ñš g t ;~f T""'., §OË' ~(n.~ VSl../r> f<f# f£ -;\ ~ ,../ $ ~ ~I'"", "",''t.,.. ~ -.:::~, Of:;"'''',,,,,,,,s, ~r,,~ ''.1',. A LA \\\. " 1/'!lf!lf/1 mHi \' :2~~n ~Iaska My commission expires: ¿jIo t... /Oh Pelican Hill Oil and Gas Inc. 1401 N. EI Camino Real, Ste 207 San Clemente, CA 92672 ~ ~A>ll ;, . 4t"... ''I V~ Jf~.i" 8 (ìnlJ . ".A. VVJ "'4I....~, , t COllI¡ .,. ~~,~ December 8, 2003 Alaska Oil and Gas Conservation Commission 333 W. 7th Ave, Ste 100 Anchorage, AK 99504 Re: Application for Underground Disposal of Liquid Drilling Waste Pelican Hill Oil and Gas Inc lliamna No.1 Permit No. 203-172 Dear Sir, Pelican Hill 0 & G Inc. respectfully submits this letter of application requesting a Commission Order authorizing the underground disposal of drilling waste generated during the drilling of the captioned well. This request is made in accordance with 20 MC 25.252 a) with the requirements thereof satisfied as follows: 20 MC 25.252 b) The captioned well has 5-1/2" .pasing set at 3517.' MD. The 5-1/2" casing was cemented with vf 36 bbl of cement, which 'is equivalent to the theoretical annular volume from the shoe (bit) to surface plus 100/0 excess in open hole. As this was a "drilling with casing" well, no floats or landing collars were used. Instead the cement was displaced with a wiper plug followed by water. The wiper plug was displaced to 3327' and the 5-1/2" casing was shut in with 950 psi to balance the "U- Tube". Full circulation was observed throughout the job. Furthermore, the 950 psi of "lift" (shut in casing pressure) indicates that cement was displaced from the shoe up to .:!:. 300' RKB~ As such, Pelican believes that cement channeling did not take place and that the cement across the proposed disposal zone is competent. Note that Pelican Hill ordered a memory CBL from Reeves Wireline but Reeves has thus far been unavailable. c) Attachments: 1. A plat showing the captioned well is attached however there are no wells within X mile of the captioned well. 2. There are no operators within X mile of the captioned well. The surface owner within X mile of the captioned well is: Kenai Peninsula Burough. 3. The only pertinent surface owner has been provided a copy of this application as confirmed by the attached affidavit. 4. The formation chosen for waste disposal in the captioned well is a Tyonek sandstone from 3166' -3181'. 5. A cased hole Gamma Ray log of the captioned well is attached. 6. A) The mechanical integrity of the casing-tubing annulus will be tested to 1500 psi in accordance with accepted practices. A wellbore schematic is attached. B) The drilling waste will be injected at a pressure that is less than the expected frac gradient: 15.4 ppg EMW. As such, the maximum allowable injection pressure (assuming an average fluid density of 9.0 ppg) will be ~ 1025 psi. Frac Gradient chart attached. 7. The drilling waste to be disposed of is drilled cuttings and fresh-water based drilling mud as per the mud program included with the approved permit No. 203-172. There are approximately 3000 bbl of mud and cuttings currently on location requiring disposal. 8. The estimated average injection pressure is +/- 800 psi and the maximum expected injection pressure is +/- 1000 psi. The appropriate frictional pressure losses must be added to the expected average pressure and to the expected maximum pressure. The frictional pressure loss is dependant upon the injection rate: 1 - 2 bpm. 9. The closest offset' well is: Shell Oil Company's Kustatan Ridge State No.1 located about 1.5 miles NNE from the captioned well. The offset well has an open-hole log suite: SP / Dual Induction Laterolog. The proposed disposal zone in lliamna #1 (3166' - 3181') correlated to the Shell well (3515' - 3535'). The open hole logs from the Shell well indicate that the chlorides in the sand at 3515' are ~ 11,000 ppm using the Archie equation and "worst case" assumptions: <I> = 46%,Sw = 100%). Since Rt = 2 0, solving the Archie equation (see attachment) for Rw = 0.42 o. An Rw = 0.42 0 equates to 11,000 ppmat 95° F as measured in lliamna #1. In reality, the porosity is more likely to be :!:. 300/0. If so, Rw = 0.18 0 which equates to :!:. 28,000 ppm. Also in the Shell well, there are 2.0-2.5 0 sands as high as 2705'. It is safe to conclude that, based on porous sand resistivity, shale resistivity and SP deflection, that there are no fresh water sands for at least 800' above the proposed disposal zone. Furthermore, it is not likely that the proposed injection could possibly propagate a fracture height of 800'. 10. A laboratory water analysis is not available, however, an analysis of logs from offset wells has been done by Baker-Inteq (attached). That study roughly agrees with the Archie equation analysis used above. 11. Not applicable 12. There are no wells within % mile of the lIiamna No.1 location. ~~ Arlen Ehm for: Pelican Hill Oil & Gas Inc Attachments: 1. lliamna No.1, Location Plat 2. lliamna No.1, Location Map 3. Affidavit of notification: Kenai Peninsula Burough 4. lliamna No.1 Current Well bore Schematic 5. Procedure for disposal and plug back 6. lliamna No.1, Proposed Wellbore Schematic (disposal) 7. lliamna No.1, Proposed Wellbore Schematic (plug back) 8. BJ Cementing Reports: 9-5/8" casing & 5-1/2" casing 9. MW & Frac Gradient chart 10. Cased Hole log of lliåmna 'No. 1 11. Archie equation calculations from nearest offset well 12. Baker-Inteq's Formation Water Salinity Study ( Alaska Oil and Gas Conservation Commission Application for Underground disposal of Drilling waste Pelican Hill Oil and Gas Iliamna No.1 Permit No. 203-172 AFFIDAVIT OF NOTIFICATION I, IJ eLl? AI E H M do hereby affirm that a full and complete copy of the captioned "Application for Underground disposal of Drilling Waste has been sent to the only surface owner within Y4 mile: Mr. Paul Ostrander Kenai Peninsula Borough 144 N. Binkley Soldotna, Alaska 99669-7599 ~~~ Arlen Ehm NOTARY ACKNOWLEDGEMENT STATE OF ALASKA ) )SS. THIRD JUDICIAL DISTRICT) The foregoing instrument was acknowledged before me this 2 day of December, 2003, by Arlen Ehm, Registered Agent for Pelican Hill Oil and Gas Inc., on behalf of the corporation. ~\\\\lm"'IIII(¡~ ~\\\.. þ.N L. 4~ ~~\'i:"",",,,,,,,,,,,,~~ ~ O,,~\. A, II~~~~ §~.:o\\ ØyO"'A '~~~ ~ I ""'~.-\fi)= ~ f I:> ""'., r ioë 3cn¡ 'lJIJI..'c ¡-=s; :::~s.. II I ii' ~~\ , ~J ,~ ~ ~ "" ~\~tIi... ~ ~ O~/'''''''"II~~~~' ~ if"" A LAv ~,\~ ~llllllIlIJm,\\t ~ubfm~laska My commission expires: '-;/0 &... /O,b ¡y ARLEN EHM Geological Consultant AAPG Certified Petroleum Geologist Certification #2503 2420 Foxhall Drive Anchorage, AK 99504 Phone: 907-333-8880 * Fax: 907-333-3454 E-mail: arlenehm(a).gci.net December 8, 2003 Mr. Paul Ostrander Land Management Officer Kenai Peninsula Borough 144 North Binkley Street Soldotna, AK 99669-7599 Re: Underground Disposal Dear Mr. Ostrander: / Pelican Hill is presently holding KPB Land Use Permit 17.10.180 issued on October 9 and which expires on September 18,2004. This permit was later amended to include the temporary above ground storage over the winter. Pelican Hill is requesting a modification of this amendment as follows: MODIFICATION . Inject all drilling fluids immediately as perAOGCC regulations and permit Grind and inject all cuttings immediately as per AOGCC regulations and permit Vacate the tank farm area completely immediately following the injection . . RATIONALE . Will eliminate the presence of any solid or liquid well wastes on KPB land surface now instead of next summer Will preclude Pelican Hill from returning to the site and initiating operations again. . METHODOLOGY . Pelican Hill's engineer is presently preparing a plan for underground disposal for liquids and solids, which should be filed today Pelican Hill will ship the necessary equipment to Kenai today for barge shipment to Trading Bay tomorrow The necessary personnel will travel to Trading Bay for the operation Pelican Hill personnel are still onsite and they will assist in the injection operation . . . . Mr. Paul Ostrander December 8, 2003 Page Two . Pelican Hill personnel will then vacate the rig location, the tank farm area and the roadside staging area The upper layer of matting boards presently under the rig will be removed at this time The lower layer of matting boards will be next spring after break-up and before vegetation begins to grow The locations will then be given a final clean up for anything that was left below present snow cover . . . DOWNSIDE . Keeping the rig at this location to accomplish the downhole injection will preclude our moving to the Beluga River area yet this winter Our drilling program will be delayed at a cost to Pelican Hill Attempts must be made to renegotiate drilling commitments for operations at the Beluga River site . . CONCLUSION . In spite of those downside items, Pelican Hill believes this to be a win-win situation both for the KPB and Pelican Hill Pelican Hill fully realizes that we are asking for expedited approval without any advance indication to the KPB. However, we became convinced over the weekend that this is the procedure that should be followed. Once again, your assistance in obtaining timely KPB approval will be greatly appreciated. Sincerely, ~~ '. Arlen Ehm Enc. Cc: Al Gross, Pelican Hill r t N R R 15 14 W W 30 29 SCALE: 1" = 2000' 25 t 1578' L ILlAMNA 1 - ,.. (SET 5/8" REBAR) 36 32 --'-- 2480' 71 ~J Wen Name Northing EastinQ Elev ILlAMNA 1 2499737.76 1314210.55 203.83 R R 1.5 14 W W T9N TaN 6 Units:U.S. Survey Feet Horizontal Datum:NAD 83 Coordinate System:State Plane; Zone 4 Vertical Datum:NAVD 88 Horizontal locations are based on the NGS published coordinates for KUSTATAN RESET of (N2459304.37, E1326298.47) Elevations were generated using RINEX data from CORS Stations TLKA (Talkeetna CORS ARP) and KEN1(Niki USCG B); ELEVATIONS ARE +/- 5' SECTION LINES ARE DRAVVN USING PROTRACTED COORDINATES. r ' F. Ro bert--- -~ ~- .., ]0 , ~ (~<o ~ -- ~ ff)~~rnœo lOCA TION OF PELICAN HILL Oil & GAS INC. WELL lOCATION FOR ILlAMNA 1 SEC. 31, T 9 N, R 14 W, $,M., AK PREP ARED FOR: PELICAN HILL OIL AND GAS INC. DRAWN BY: JZW CHECKED BY: CBS JOB NUMBER: 2003-510 1" = 2000' (NCIN£ERS AND LAND' SURVEYORS 801 WEST flR(WEED LANE SUiTE 201 ANCHORAGE. ALASKA 99503-' 801 '-. PHONE (907)-274-5257 SCALE: " , / JL?' 2000 I \. ~:~:l ,.-..-, f.&" Pelican Hill Oil & Gas Inc. lliamna No.1 Permit No. 203-172 13-3/8" Casing at 80' Cemented with 25 sx of "G" mixed at 15.6 ppg and 1.16 cf/sx 9-5/8" Casing at 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 ,mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface 5-1/2" Casing Cemented: Mixed & pumped 258 sx (84 bbl) of lead slurry mixed at 13.5 ppg and 1.83 cf/sx followed by 248 sx (52 bbl) of tail slurry mixed at 15.8 ppg & 1.16 cf/sx. Displaced with water to 3327'. Cement volume pumped = 8%) excess over theoretical annular volume from TO to surface. 5-1/2" Casing at 3517' Pelican Hill Oil and Gas Inc. 1401 N. EI Camino Real, Ste 207 San Clemente, CA 92672 December 8, 2003 Disposal, Plug Back and Completion Procedure: 1. Test the 5-1/2" casing to 1500 psi for 30 minutes on chart. 2. RIH with TCP gun on 2-7/8" tubing. Tag PBTD and space out the TCP gun. Perforate the disposal zone: 3166' - 3181'. Break down the perforations and establish injection at ~ 1000 psi +A Pt. POOH. 3. RIH with an EZSV on 2-7/8" tubing. Set the EZSV at.:!:. 3130'. Release the running tool. Sting back into the EZSV and conduct an MIT on the annulus at 1500 psi for 30 minutes on chart. Notify the AOGCC field inspector at least 24 hours prior to conducting theMIT. 4. R/U SWAGO's grind and inject equipment. Grind and pump the.:!:. 3000 bbl of liquid drilling waste and cuttings into the disposal perforations maintaining the surface pump pressure at ~ 1000 psi + A Pt. 5. After disposing of all approved drilling waste, R/U BJ Services. Mix and pump .:!:. 50 sx (10.3 bbl) of class "G" neat cement through the EZSV and into the disposal perforations. Displace the cement with.:!:. 17.5 bbl of 30/0 KCI water. Pull out of the EZSV and dump the last % bbl.of ce.ment on top of the EZSV. Pull up hole ~ 100' and reverse circulate the tubing clean. Test the casing and EZSV to 1500 psi for 30 minutes on chart. POOH. 6. RIH with TCP guns and production packer to perforate for production as directed by the geologist. Space out, set the packer. N/U and test the tree to 1500 psi. Optional: swab the tubing down 500' - 1000' for "under balanced perforating". When ready, drop the bar and fire the TCP gun(s). 7. Flow/test the well for commercial production. If the well does not flow, load the tubing and break down the perforations with 5-10 bbl of 30/0 KCI water. Swab back the load water and test the well. J l (' Pelican Hill Oil & Gas Inc. lIiamna No.1 Permit No. 203-172 9-5/8" Casing at 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface Disposal Plan: 1. Run cased hole memory logs: GR/Pulse Neutron 2. Perforate for disposal: 3166' - 3181' 6 spf 3. Run 2-7/8", 6.5# tubing and an EZSV to +1-3130' 4. Set the EZSV. Perform an MIT on the annulus 1500 psi. 5. Establish injection pressures with water . Maximum Break down TP = 1500 psi . AVG Injection Pres ~ 1000 psi 6. Dispose of +1- 3000 bbl of liquid drilling waste. . The liquid waste consists of fresh water based drilling mud (as per the APD), and fresh wash water, etc, incidental to drilling operations. 7. After disposing of the liquid drilling waste, mix & pump 50 sx of class G (10.5 bbl) into the disposal perforations. Pull out of the EZSV and dump the last % bbl of cement on top of the EZSV resulting in 25' of cement cap. 8. Test the EZSV, cement & casing to 1500 psi. EZSV set at +/- 3130' Perforate 3166' to 3181' (15') w/ TCP 5-1/2" Casing at 3517', PBTD = 3327' J l ( Pelican Hill Oil & Gas Inc. lIiamna No.1 Permit No. 203-172 9-5/8" Casing at 588' FIT = 14 ppg EMW Cemented with 191 sx of Type 1 mixed at 14.7 ppg and 1.48 cf/sx. 22 bbl of cement to surface 5-1/2" Casing Cemented: Mixed & pumped 258 sx (84 bbl) of lead slurry mixed at 13.5 ppg and 1.83 cf/sx followed by 248 sx (52 bbl) of tail slurry mixed at 15.8 ppg & 1.16 cf/sx. Displaced with water. Cement volume pumped = 100/0 excess over theoretical annular volume from TD to surface. Disposal Perforations To Be Cemented: Mix & pump 50 sx (10.3 bbl) class "G" mixed at 15.8 ppg and 1.16 cf/sx. Squeeze 9.8 bbl below the EZSV and dump % bbl on top. Then test the EZSV and plug to 1500 psi. EZSV set at 3130', TOC = 3105' Peñorate 3166' to 3181' wI TCP 5-1/2" Casing at 3517' !£j ( ~. " ',"', ',"" '.".', ...', '\1"\ '~'" . , CEMENT JOB RE?ORT J l.:A$f: 80 W:L.L. NAME lliOmn;.3#1 D!STRICT K!;n<li SIZE & Type Of!! PLUGS L.IST-CSG-HARDWARE I Cp.ment PI~!J. Rlfb~er. Bottom 9--;81 C~;:;~(~i2E!r, INrtn ¡::inf'l. ;.¡ 5.'8 '1(1 Cement rlllg, Rubber. Top 9-5.'8 In CUSTOMER Pelic:m Hill Oil & G:~II(;. \ \.1 '~' \11\" , ", ... I ..... ' ....- . ¡F.R. # 276510175 I I DATE 11-NQV-03 I . :LOC"-T\QN - ~fC..TeN-R14W DRILLING CONTRACTOR RIG # SE~V. SUPV, Floyd Pt~~!I! Jr - .-- ----..- ---.,. C<;,)UNTY.P AR\SH.ßlOC\< 'KerJ!Jj AJäska .--- ., - - Type OF JOB Sill f<\t:c ---........ --. .~.I:fYSICAI.. SLURRY PROPERTIË~ '-'- .-- SACK~ S\..'uRRY SUJRR:v WJ\TE.I\ PUMP Bbl - Bbl OF WQT YLD GPS TIME SLURRY MIX 'I CEMeNT PPG !!'t~ HR:MIN WATER I ~.e~~ C':I:::~nt (Sur\ace) MA,TE'A'IALS FUr:NISliêD BY ElJ 50 31.61 Avallablf> MI'IC W('\\tr.. ,_.2QC Sbt 19' V1~ 7 ù4',22 Þ.\lB\\Bb\e O\!I.~t. ~ll,li<I. 300 Bbl. 31.61 TOTAl.. 1 50 COLLAR DEPTHS FLCA,. SJZF, 12.25 . HOLE % r:~CE$S'" '-'.'D'E!pi~-... .n %,~~.. ....-.ø..-. WGi. 50 560 9.6::?5 :';2.3 .~~()E TSG-CSG-D,p. 'TYP'Ii CSG STAG~ t)'E'P'1H 550 GRADE LA.ST CAS\NG PKR.CMT REi-BR I3L-UNER PERF.OEfl1"H TOP CONN 'SiZe, WGT 'l:'V,PÊ... þjSPTH_~_......,_iBAND& TYPË-' '-'DEPTH-,-':"".J:QP... I 'sTir'" ""SIZE .l..D;~.o 13.375 77 ,CSG 80 9,3'75 I 8 RD CIS PI... VOLUME VOLUME UOM WELL FLUIO . "TYPft.... -- WGT. WATER 9.2 BASED MUD ........- --- -OO' .. . . DJSI'L FLUID ~~~: ~~I. . ~AL. ~AX PSI, OP. MAX ~AX !~G ~Sl TYPE WGT. aUMP PLUG TO ~EV. SQ. P~r AATeC, Operator .--- . --... 'j'r BBLS MAX CSG PSI MIX WATER RATED opel ~lor ----. 0""_"'" _0_-._0 1:29 1000 1 fi1 f') rig . .... ..... .. - ..---oo- ....-.... -.- ...-.. . -- , EXPI.ANATION: l'ROUBLE SETTING TOOL, ~UNN'NG CSG, ETC, PRIOR TO CEMENTING: . ........ ----..-,. - J I I ¡ i I ! ! . .-...-...... PRESSURE/RATE; DETAIl. fLUIO TYPE EXPL^NATlON &Afe:T\r""M¡;.ïiTIN~; eJ CReW ox. eel. REP. -¡ .. .. .....-.. ........- TEST LINES 3000 PSI CIRCUl.ATIN~ weLL'--RiG'" --. X . 11-11-D3 arrive heliport arrive trading bayLsettJc in LQrJ.C!r:'Itabonl Wi'Jit on rig 11-12-03 WAIT ON ~IG I WRATHER 11-13-Õ3-WÄii"ON RIG Mo- . 11-14:93 Wai.! on-ng . 11-15..03 walt on rig I 1 '-1 (,ì-03, ~fet.y meF.:.~~}la , w~ter í3hcad I test suriãc-ë iÒ3òoD PSI . :..LE!~1 qr H70 i:lheñd : 14,7 #Jg;¡¡1 I Start D'lsp1acer'r'len~ , ~rop muo tc;¡ pits / divert to cell~>r R.~st I)f ¡¿~p'lace.æe~t ' .. f:ótop I dlGp. done ~tC1p . check floats.! th€;y l10ld cmt wa:l. C'(!rnpos¡:d ur lYfJ~' 1 ::er.¡ent '04% 86.- i Û+O 5% ca.:; ,!"'O 2r,.(¡ B~o (,)/\ 1 h"''''Ú "1 ' ..v'" g.., I r OL. i I i I i TIME I I-IR.:MIN. PR.ESSURE. PSI PIPE ANNUI.t.JS 09.00 m:J' ::!O - .-.. ---"'.-- . --..-- ... ... .. I, .. : n. - ______i.... I I , .1 I , ' ..-.. '-1-""-'''''''''' -r--'" I I ! . . .~-~p. ! 200 I 360 ' 0 0 17 ;40 18:09 , ,.i 18:11 I - .'@~:4.9- 18:34 18:48 18:53 18'54 19:04 HJ Of) I -.. 32~Ü... 600 1000 '" . 1'ö6(1' 0 PT 1552 112/98) RATe 8~M Bbl. FI..U\C PUMPËD ElJ ¡". ....... \ 1 I ? H2O 21 4i .á " 0' '2. S'H2ó' 50 .. ëÑi{ '--"o'~'8-~H2Õ' . --. If,; .H'2Õ- 7.2 H2Q .. ...... .--... Pagt: 1 .. ~I;.'()'; Em ( CH d'" I r L " . I', ,.1, " . .' '~1 . , SUPPLE.MENTI\L CEMENT JOB REPORT r,T J Field Receipt # 7.~~1 0175 CUSTOMEFt PCIÎt;,H1 Hill Oil & Gaq:!!!.g:. -- -. -- LëASE & WELL NAMe - OC5G . _!I~a!nn~:II1 C:STRICT Kenm I CATe I F.R. '# \ 1~:f:-I..QV-OJ --... " 27~_~~~.. , LOCATION ,- ~.. ~t';'!.".AK -.--.. .-.. DRILLING CONTRACTOR RIG ~ I' ---.. TIME HR:MIN PRESSUREIRA TE OEr AIL - . .. . , .. - .-.,... PRES~,\JRE .. ?$\ RATF Bh¡¡:UJ1D flUID PIPE ANNULUS BPM PU;v1i-'Eo TYPE seRVo SUPv, FI~y£p~ J,I COUNTY -PARISH-BLOCK ~._~~~i Þ.\2~.k;'\ , TYPE OF JOB S III r¡¡C;C~ 'E){PL.ANA lION BUMPED PLUG PSI TO SUMP PI.UG . '''''.'-- --.-.-.-....... ræST 8BL.CMT TOTAL PSI SPOT 'V~') . fLOAT ¡;¡:eTU~NS¡ BBL LEFT CN TOP OUT EOUIP. REVeRSE" PUMFED ¡'; 05 G CEMENT , -' '" IrJ~yt " 'f ~I :l.2 '5ï Q 'j ~~ '" 'f N I II °1 '.,:./="1 'j ~/~T~) Pagc- 2- or ,~ 'N'';:: I E£j ( CEMENT JOB REPORT --- - ) CUSTOMER Pelican Hill Oil & Gas,lnc. I DATE 02-DEC-03 ¡lOCATION I DRILLING CONTRACTOR RIG # Pelican Hill LIST -CSG-HARDWARE I LEASE & WELL NAME ILlAMNA 1 - API 50133205270000 DISTRICT Kenai SIZE & TYPE OF PLUGS Cement Plug, Rubber, Top 5-112 in MATERIALS FURNISHED BY BJ MCS-4D Spacer System Casing Drilled Section - Lead Cement Casing-Drilled Section Tail Cement 2 BBLS Cement + Drilling Mud IF.R. # 1001146757 SERVo SUPV. David Wallingford SACKS OF CEMENT COUNTY-PARISH-BLOCK Kenai Alaska I TYPE OF JOB I Long String PHYSICAL SLURRY PROPERTIES SLURRY SLURRY WATER PUMP WGT YLD GPS TIME PPG FT3 HR:MIN Bbl I Bbl SLURRY I MIX WATER 10.5 30 170 13.5 1.83 9.23 04:10 55.31 37.36 248 15.8 1.16 3.92 00:48 51.36 23.13 10 80.78 Available Mix Water 300 Bbl. Available Dlspl. Fluid 300 Bbl. TOTAL 217.45 60.49 HOLE TBG-CSG-D. P. COLLAR DEPTHS SIZE % EXCESS DEPTH SIZE WGT. TYPE DEPTH GRAD,E SHOE FLOAT STAGE 7.875 3500 5.5 15.08 CSG 3500 SIZE 9.625 LAST CASI~G WGT TYPE 32.3 PI<R-CMT RET -BR PL-LlNER BRAND & TYPE DEPTH DEPTH 550 DISPL. VOLUME VOLUME UOM PERF. DEPTH TOP BTM TOP CONN SIZE THREAD WELL FLUID TYPE WGT. WATER 10.5 BASED MUD DISPL. FLUID CAL. PSI CAL. MAX PSI OP. MAX MAX TBG PSI TYPE WGT. BUMP PLUG TO REV. SQ. PSI RATED Operator MAX CSG PSI RATED Operator MIX WATER 80.8 BBLS 2 BBLS Ceme 10 900 Fresh EXPLANATION: TROUBLE SETTING TOOL, RUNNING CSG, ETC. PRIOR TO CEMENTING: TIME HR:MIN. PRESSURElRATE DETAIL PRESSURE - PSI RATE Bbl. FLUID PIPE' ANNULUS BPM PUMPED FLUID TYPE 14:00 15:00 16:30 17:40 2 WATER 18:00 18:18 18:47 19:27 19:45 19:55 20:50 23:30 01:00 30 SWEEP 84 LEAD 52 TAIL 1150 85 WATER EXPLANATION SAFETY MEETING: BJ CREW ~ CO. REP. ~ TEST LINES 2000 PSI CIRCULATING WELL - RIG ~ Arrived at airport 12-02 Arrive at camp Safety meeting 12-03 Fill lines and test Top drive valve leaks Retest lines OK Pump sweep Mix and pump 258 sks lead Swap to tail Tail cement done Drop plug Displace plug. Did not bump. Washed up and moving equipment Back at camp 12-04 BJ u TOTAL PSI SPOT SERVo SUPV. BBL.CMT LEFT ON TOP OUT w~ PSI TO TEST RETURNSI BBL. CEMENT Cû~\r. BUMP FLOAT REVERSED PUMPED CSG BUMPED PLUG EQUIP. 950 Y [!!] Jr8004 PLUG 253 Y fNl Y [!!] PaCé 1 PT 1552 (12198) I 11337š1r,,~-,. , 19.625" ~ . "i'w :¡ ~ 1000 \ ., j ..~ :\ MUD WEIGHT, AND CASING PLAN (' \ .. CONGLOMERATE . E811 : E8n9~8Hg"M~ . Coal GesSVCOO'i. Cool Gassy Coal. Coal . Coa' G2SSY Coal a¡a~¥ P.RlI G2SSY Coal Gassy Coal Gassy Coal I.C081 G..~6~ COdl " ~ e=¡J E8I1 I Gessy Coal ~assy Coal , '3assy Coal - r . coal , G8IIssy Coal c;.ssy Coa' Gessy Coal I Gaisy Coal t §å. Y 8881 82S$( oa t ass'" Coal Gess~Coal. - CONGLOMERATE Gassy1CoaJ Gassy -':081 ,. Coal Gassy Coal .6. . I j" 15 16 Mud Weight, Pore Pressure, Fracture Gradient (PPG Equivalents) . 2000 .. ~ - .-. "l .. : ~~J : it: ~.,,""'\\ )i Po N .~, . ~ - ij'" t;-: ~ 3000 '. '. - ,. . . :¡ 4000 u. ~ o!f C :E -, ¡ 5000 h-- '- :- ..! \28j u ~ . 5.5" .. .. .. --'-_. I: ! , .... ! .. - .. . , 6000 <> -~ ~ " :,.: 7000 - Expected Frac Gradient 15.4 ppg EMW = 0.8 psi/ft Maximum Allowable Injection Pressure < 1000 psi 9 ppg fluid = 0.47 psi/ft 3100' x (0.8 - 0.47) = 1023 psi (Does not account for A Pf) 8000 - 9000 8 , ---r----'-c---r-_nn_-r------rnn ,., nu_,- 11 12 13 9 10 ILIAMNA DRILLING PROCEDURE REV IOOCT.doc Pelican Hill Oil and Gas, Inc. Page 29 , 1 Structural Casing 'Surface Casing Production Casing [11 ProductionTubing . PROPOSED MUD WEIGHT IlIAMNA 1 . ANTICIPATED PORE PRESSURE 'EXPECTED FRACTURE GRADIENT ",...,:-""~,,w Forelands State A No 1 """""",,,,,,,.,"""'KUSTATAN No 1 .MOKUAKIE No 1 ANTICIPATED CONGLOMERATE ANTICIPATED Low Gas COAL BEDS ANTICIPATED GASSY COAL BEDS I , I I 14 17 19 20 18 10110/03 ( The Archie Equation as applied to the offset well: Shell Oil Company Kustatan Ridge State #1 Sec 19 T9N R14W Archie Equation: -- -.... Sw = «þ2r1 x Rw 1/2 Rt -- -" Assumptions: . the sand at 3525' is 100% water saturated: Sw = 100% =1 . Rt (from the log) = 2 Q . The maximum possible porosity in a well sorted & rounded sand is 46% Since Sw = 1, we can square both sides of the equation and get: 1 = (.462r1 x R~ 2 Solving for Rw we get: Rw = 0.42 Q The temperature at this depth in lliamna No.1 is 95° F. Using the standard chart, the salinity of the formation water is:!:. 11,000 ppm. If we use a more realistic porosity such as 30%, Rw is: 1 = (.302r1 x Rw 2 Solving for Rw we get: Rw = 0.18 Q Using the standard chart and 95°, the salinity of formation water with Rw = 0.18 Q is:!:. 28,000 ppm. In reverse, we can calculate the expected Rt if the salinity = 10,000 ppm, the temperature = 95° and the porosity = 340/0: Rw (from the chart) = 0.47 Q 1 = (.342f1 x 0.47 Rt Solving for Rt we get: Rt = 4.0 Q There are no clean, porous sands below 2200' in the Shell well, and therefore, one can reasonably assume that the salinity below 2200' is> 10,000 ppm. (~C (~. - TEQ Id .r ,¡ .;wI' Salinity Determination of the Formation Waters of Iliamna #1 r'l. BAKER HUGHES INTEQ I I I I I I I I ( ( I I I ( ( I ( ( I In making interpretations of logs our employees will give Customer the benefit of their best judgment, but since all interpretations are opinions based on inferences from electrical or other measurements, we cannot and we do not guarantee the accuracy or correctness of any interpretation. We shall not be liable or responsible for any loss, damages or expenses whatsoever incurred or sustained by the customer resulting from any interpretation made by any of our employees. I I I I I ( ( I I ( ( I I ( ( I I I ( Pelican Hill Oil & Gas Formation Water Salinity Determination Iliamna #1 Iliamna Field Baker INTEQ GeoScience Iliamna #1 24-Nov-03 I I I ( ( I [ I I ( I [ [ [ [ I [ I Pelican Hill Oil & Gas lIiamna #1 Objective: The purpose of this study is to determine the formation water salinity in the vicinity of the Iliamna # 1 well in the Iliamna field, Cook Inlet, Alaska. Formation water salinity is required in order to determine the feasibility of cuttings disposal through re-injection back into Iliamna #1. Two separate intervals within Iliamna #1 are being considered for cuttings disposal. The first candidate is the open hole strata below the cemented 9 5/8" casing tail at 343' SSTVD (560' MD). Any clay-free water bearing strata below the casing tail and within 500 feet (343 - 843' SSTVD) will be examined for salinity analysis. The second candidate is the interval between roughly 2800 - 3300' SSTVD (3000 - 3500' MD). Likewise, any clay-free water bearing strata within this interval will be examined for salinity analysis. Method: At the time of this report, drilling operations are on-going at I1iamna #1. No formation evaluation data, either L WD or wireline has been acquired from this wellbore at this time. Therefore, salinity determination for this area will be done through the use of wireline data acquired at offset well locations. F our different offset wells from the area will be used to determine formation water salinity for the two intervals in question. The four offset wells were drilled between 1961 and 1968. Due to the age of these wells, wireline log data is limited to primarily Dual Induction (DIL) and Spontaneous Potential (SP). There is no Gamma Ray data available and porosity data is limited to one Sonic log over the deeper interval. Two techniques were used to determine the salinity of the formation water (Rw), SP interpretation and the R wa resistivity method. Both of these techniques assume that the zone in question is 100% water bearing and clay free. It is reasonable to assume that the shallow zone (350-850' SSTVD) will be free of hydrocarbons (Sw=100%) due to it's shallow depth. The deeper interval, 2800 - 3300' SSTVD is assumed to be hydrocarbon free (Sw= 100%) through local knowledge of offset well information. The lack of gamma ray data is not an issue in determining clay content for this study. The presence of radioactive volcanic minerals that are often found in the Cook Inlet render GR logs inaccurate for determining clay volume. A more common practice for determining clay volume in this area is to assume a constant R wand associate any changes in the SP log are due to changes in the clay content. It then follows from this same reasoning, that to determine an accurate R w from the SP, one needs to look for the maximum SP deflection within an interval in order to obtain the most clay free reading. Therefore, only those zones exhibiting maximum SP deflection were considered for R w calculation. Baker INTEQ GeoScience 24-Nov-03 I I 1 I ( I' I I I ( [ ( [ ! [ Pelican Hill Oil & Gas Iliamna #1 The SP interpretation procedure is as follows: 1. Determine temperature at the zone of interest 2. Determine Rmf at the zone of interest temperature 3. Using the maximum SP deflection from the shale baseline (SSP), find Rweq utilizing the following equation: SSP = - (60+0.133*Temp) log (Rmf/Rweq). See chart 3-2 in appendix. 4. Determine Rw from Rweq using chart 3-3 (see appendix). 5. Convert Rw to Equivalent NaCl salinity using chart 2-5 (see appendix). Due to the many variables that can effect SP response besides water salinity, the use of SP to determine Rw is generally considered to be the method of last resort. Using the Rwa method with an Induction measurement would normally be considered a more accurate approach. However, in addition to water salinity, porosity effects the resistivity measurement and thus the calculated salinity. As was previously mentioned, little or no porosity data is available. However, local knowledge often predicts that shallow Cook Inlet reservoirs will have high porosities in the 18-23% range. One Sonic log is available from the Middle River State #1 offset well with data over a prospective zone from 3300 - 3420' MD where maximum SP deflection occurs. This interval is considered to be unconsolidated with the surrounding shale beds exhibiting slowness values of 132 us/ft. Utilizing the Wyllie Porosity equation with a compaction factor correction, this interval yields a porosity of 30%. DT measured = 118 us/ft DT fluid = 210 us/ft DT matrix = 58 us/ft Porosity = DT measured - DT matrix * 1 DT fluid - DT matrix (DT shale / 100) DT shale = 132 us/ft With the uncertainties in porosity in mind, a range of porosities will be used in the Rwa calculations. Three different porosity scenarios will be examined, 18%, 23%, & 30%. It was felt that the Humble variation of the Archie equation was the best choice for the actual R wa calculation. Therefore the Archie saturation parameters will be set such that a = 0.62 and m = 2.15 . Rwa = porn * Rt a Baker INTEQ GeoScience 24-Nov-03 I I I I I I I I I ( I. I I ( I I I I [ Pelican Hill Oil & Gas lIiamna #1 Results: . Kustatan Ridge State #1 Shell Oil Co. SE/4 Sec. 19, Twp. 9N, Rge 14W Schlumberger Wireline Services- DIL / SP Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 30-Aug-67 1 1319' 1 7 1'2" Ligno Sulf. 4.38 @ 69 F 70F 13-Sep-67 2 6712' 9 7/8" Q-Broxin 1.79@65F 130 F Geothermal gradient = 1.1 degF / 100' SP Results: Zone Depths Zone Rmf@ Measured Calculated Converted NaCl (MD feet) Temp. Zone Temp SSP Rweq Rw Salini ty (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 475 - 495' 61 5.0 -32 1.70 1.8 3,200 2945 - 2975' 89 1.4 -52 0.26 0.28 22,500 3000 - 3015' 89 1.4 -52 0.26 0.28 22,500 3290 - 3330' 92 1.3 -68 0.15 0.16 42,000 Rwa Results: Zone Depths Zone Rw@ 18% Rw @ 23% Rw @ 30% NaCl Salinity (MD feet) Res. porosity porosity porosity Range (ohmm) (ohmm) (ohmm) (ohmm) (ppm) 475 - 495' 39 1.58 2.67 4.73 3,700 - 5,500 2945 - 2975' 3 0.12 0.21 0.36 17,000 - 60,000 3000 - 3015' 2.75 0.11 0.19 0.33 19,000 - 65,000 3290 - 3330' 2.5 0.10 0.17 0.30 21,000 - 70,000 Baker INTEQ GeoScience 24-Nov-03 I I I I I [ [ I [ I ( ( ( I I I I I I Pelican Hill Oil & Gas lIiamna #1 . Middle River State #1 Shell Oil Co. 1980' N & 1980' E ofSW corner Sec. 5, Twp. ION, Rge 13W Schlumberger Wireline Services- D IL / SP / Sonic Date 18-Feb-67 5-Mar-67 Run No. I 2 Btm. Log Interval 1267' 5279' Bit Size 17 1'2" 9 7/8" Fluid Type Ligno Sulf. Ligno Sulf. Rmf 1.76 @ 60 F 1.67 @ 71 F Temperature (BHT) N/A 148 F Assume temperature at 300' = 60 degF Geothermal gradient = 1.75 degF / 100' SP Results: Zone Depths Zone Rmf@ Measured Calculated Converted NaCl (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 638 - 663' 66 1.6 -10 1.15 1.25 4,600 3300 - 3420' 113 1.1 -33 0.40 0.45 13,500 Rwa Results: Zone Depths Zone Rw @ 18% Rw @ 23% Rw @ 30% NaCl Salinity (MD feet) Res. porosity porosity porosity Range (ohmm) (ohmm) (ohmm) (ohmm) (ppm) 638 - 663' 12 0.49 0.82 1.45 4,000 - 12,000 3300 - 3420' 5 0.20 0.34 0.61 * 9,500 - 31,000 * This porosity value is a calculated value from the Sonic log Baker INTEQ GeoScience 24-Nov-03 I I I I I I ( I I ( I ( I ( I ( ( I I Pelican Hill Oil & Gas lIiamna #1 . Middle River State #2 The Cherryville Corp. 1507' N & 1604' W ofSE corner Sec. 10, Twp. 9N, Rge 14W Schlumberger Wireline Services- D IL / SP Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 17-Aug-68 1 2098' 17" 10-Sep-68 2 8268 ' 9 7/8" Ligno Sulf. 0.78@62F 148 F GEL 0.69 @ 67 F 85 F Geothermal gradient = 1.0 degF / 100' SP Results: Zone Depths Zone Rmf@ Measured Calculated Converted NaCl (MD feet) Temp. Zone Temp SSP Rweq Rw Salini ty (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 630 - 645' 70 0.67 -28 0.26 0.28 22,500 700 - 730' 71 0.67 -30 0.25 0.27 23,500 3205 - 3240' 97 0.48 -38 0.15 0.16 42,000 3350 - 3365' 98 0.48 -45 0.12 0.13 55,000 Rwa Results: Zone Depths Zone Rw@ 18% Rw @ 23% Rw @ 30% NaCl Salinity (MD feet) Res. porosity porosity porosity Range (ohmm) (ohmm) (ohmm) (ohmm) (ppm) 630 - 645' 19 0.77 1.3 2.30 2,400 -7,400 700 - 730' 18 0.73 1.23 2.18 2,600 -7,700 3205 - 3240' 2.5 0.10 0.17 .30 20,500 - 70,000 3350 - 3365' 2 0.08 0.14 0.24 26,500 - 90,000 Baker INTEQ GeoScience 24-Nov-03 I I I I I f f I f f ( I I I f ( f ( I Pelican Hill Oil & Gas Iliamna #1 . West Foreland #1 Pan American Petroleum Corp. Sec. 21, Twp. 18N, Rge 14W Schlumberger Wireline Services- IEL / SP Date Run No. Btm. Log Interval Bit Size Fluid Type Rmf Temperature (BHT) 3-Nov-61 1 1940 ' 12 'i4" 16-Nov-61 2 7355' 12 'i4" GEL N/A 74F GEL N/A 118 F Geothermal gradient = 0.8 degF / 100' Rmffor Run 1 taken from chart 2-2 (see appendix) to be 4.2 ohmm @ 65 degF Rmffor Run 2 taken from chart 2-2 (see appendix) to be 4.5 ohmm @ 96 degF SP Results: Zone Depths Zone Rmf@ Measured Calculated Converted NaCl (MD feet) Temp. Zone Temp SSP Rweq Rw Salinity (degF) (ohmm) (mV) (ohmm) (ohmm) (ppm) 430 - 435' 62 4.4 -45 0.96 1.05 5,600 490 - 500' 63 4.3 -37 1.24 1.3 4,400 655 - 670' 64 4.2 -38 1.17 1.2 4,800 2965 - 2995' 83 5.3 -41 1.40 1.5 3,900 3105-3115' 84 5.2 -40 1.43 1.55 3,800 3330 - 3390' 86 5.0 -46 1.14 1.2 4,700 Due to the age of this well, no Dual Induction resistivity is available as an Induction Electric log was run. Due to the inaccuracies of Induction Electric log interpretation, no R wa calculations were performed. Baker INTEQ GeoScience 24-Nov-03 I I I I I I I I I I I I ( I I I I I I Pelican Hill Oil & Gas lIiamna #1 Conclusion: For the interval from 343 - 843' SSTVD, the formation salinity results are as follows (NaCl equivalent): Well Kustatan Ridge #1 Middle River St. #1 SP Salinity (ppm) 3,200 4,600 22,500 - 23,500 4,400 - 5,600 Rwa Salinity (ppm) 3,700 - 5,500 4,000 - 12,000 2,400 -7,700 N/A Middle River St. #2 West Foreland # 1 The formation salinities from this group of data are all consistent with the exception of the Middle River State #2 SP derived results. The most notable difference from Middle River State #2 and the other offset wells was that this well utilized a relatively salty GEL mud system. The other wells were either Ligno Sulfate or very fresh GEL mud systems. The relatively more saline mud along with the large 17 ~" borehole may have combined to adversely effect the SP readings in the Middle River State #2 well. It is also worth noting that the more robust R wa technique yielded consistent results with no anomalies. These results suggest a formation salinity range of 4,000 - 6,000 ppm NaCI equivalent for the upper interval of 343 - 843' SSTVD within the area around Iliamna #1. For the interval from roughly 2800 - 3300' SSTVD, the formation salinity results are as follows (NaCl equivalent): Well Kustatan Ridge # 1 Middle River St. #1 SP Salinity (ppm) 22,500 - 42,000 13,500 42,000 - 55,000 3,900 - 4,700 Rwa Salinity (ppm) 17,000 - 70,000 9,500 - 31,000 20,500 - 90,000 N/A Middle River St. #2 West Foreland # 1 Baker INTEQ GeoScience 24-Nov-03 I I I I I I I I [ I I I I I [ [ [ [ I Pelican Hill Oil & Gas lIiamna #1 The formation salinities from this group of data have a larger range than those from the shallower interval but they are still fairly consistent with the exception of the West Foreland #1 Well SP derived result. The log header for this well reports an unusually fresh mud system for the run in question. It is the high Rmf values that drive the low salinity results from this well. With the information available, it is impossible to say if an error exists on the West Foreland log. However, the result is clearly spurious and does not fit within the remaining data cluster. It should also be noted that the very high salinity values (> 70,000 ppm) derived from the Rwa technique result from the low porosity scenario (18%). The one hard piece of porosity evidence we have from this interval (Sonic log) suggests the porosity is high and in the 23 - 30% range. These results suggest a formation salinity range of 10,000 - 45,000 ppm NaCI equivalent for the lower interval of 2800 - 3300' SSTVD within the area around Iliamna #1. If one is willing to accept the assertion that the porosity within this interval is consistently ,..,,300/0, then the salinity range may be further refined to 10,000 - 25,000 ppm NaCI. Biography: The Author, Glen Horel, has been a Log Analyst with Baker Geoscience since 1995. He has worked both in Alaska and in Western Canada. He has co-authored several papers on the use of Wireline Acoustics for Seismic and Petrophysical applications. Currently he is assigned to Baker INTEQ Geoscience in Anchorage Alaska as L WD Data Analysis Manager (907-267-6612). Baker INTEQ GeoScience 24-Nov-03 ~ co c: E .~ ('I) 0 I > 0 Z I ~ N ~ .- ~ = QJ ~ ~ -< en Q) U co c: (!) Q) '(3 oð CJ) 0 ð Q) (!) .- 0 I w ..... c: Z co L.. .~ Q) CD ,.:¡,:: ro a.. CC ~ - --- ~ ~ --- --.. ~ - --- ......., --...... ---- - I I Estimation of Rmf and Rme W&íi8 WIr.:& ..:RIt A1'I.AS I Rmf or Rme (Q. m) -5 I - 4 - 3 I - 2 I I Rm (Q' m) -.-6 -5 -1 -4 -3 Mud Weight -2 (Ib/gal) (kg/m3) -0,5 16-18 - 1920-2160 -1 15 = 1680 14 - 13 - 1560 - -0.5 - 12 - 1440 - 0.2 - 11 - 1320 - 10 - 1200 /) -=- 0.1 - 0.1 Mud Weight Ib/gal kg/m3 C - 0.05 - -0.05 10 1200 0.847 11 1320 0.708 12 1440 0.584 13 1560 0.488 14 1680 0.412 16 1920 0.380 -0.01 18 2160 0.350 - 0.02 I [ I I I I I ~ = C(~)1.07 I ~ = 0.69 ~ ( :: Y65 -0.01 Example I Given: Rm = 0.7 Q . m at 200°F mud Mud weight = 12.0 1b/gal Note: This chart may be used when the measured values of Rw and ~c are not available, but does not apply to lignosulfonate muds. I Determine: Rmf and Rme Rmf = 0.4 Q . m at 200°F Rme = 1.2 Q . m at 200°F (from equation) 2-2 Rev. 1 12-95 I I Temperature (oF) (°C) I 500- 260 -- -- 240 - - ..: 220 I 400 ; 200 - ~180 -- I -160 300 - :- :- 140 - - - I "'- 250 - .- 100 I 200- - .- 90 - - -80 . I - -- 70 150 --- -60 [ . - .- 50 I - 40 100- - 90- I -- 30 80- - - ( 70- - 20 60- - . 50 - 10 English: Resistivity of Equivalent NaCI Solutions Equivalent NaCI Concentration ~ )( gr/gal ) kppm @ 24°C or 75°F 0.2-. ""'- 0.3-- 0.4::5 20 -<: 0.6 :::: 30 0.8 ?- 40 1~ 50 -- ~100 2~ .- 3 -::.. 200 4--= ~300 6 .;. 400 8~ 500 10~ - --- 20 .:- 1000 .- Salinity (ppm at 75°F) = lOx ( T 1 + 6.77). of Rw2 = RWl T2 + 6.77 ' Metric: 3.562 - log (RW75 - 0.0123) 0.955 x Q,! (Tl + 21.5 ). °C Rw2 = RWl T2 + 21.5 ' RW ~ 0.0123 + 75 3647.5 [NaCl(ppm) ]°.955 Example Given: Temperature = 2500P and NaCl concentration = 100,000 ppm. Determine: Resistivity R = 0.024 Qm Rev. 1 12-95 2-5 rliií8 VII::' .~RWt ATLAS R (Qm) -=- 20 -10 =8 -=-6 -5 -=4 = 3 -=2 -1 -=. 0.8 = 0.6 -0,5 -=-0.4 -=- 0.3 -=0.2 -0.1 = 0.08 -0.06 -0.05 -=- 0.04 -=0.02 - 0.01 I I I -200 I -175 I -150 I -125 I :> .s - 100 a.. C/) C/) I -æ ~ -75 () Õ a.. CJ) I ::! 0 () æ -50 ë 0 a. I C/) 0 ~ U5 - 25 I 0 I 25 I 50 I I I I I I Using Tf in of; SSP exp = 60 + 0.133 Tf Rweq = Rmf * lOexp OF = 1.8 (OC) + 32 Rev. 1 12-95 Rweq from the SSP ' .' è- 'f--+T 4 ¡',;H," .' . '" .-H- "C: ¡I' ¡ "', .- ",,' "" . IH'TC- ;, " -1..';' ; '1:":::" " '''ii' " H', " " ~ ' , ;, L ' . " , . T ';T ",-, ' . . I" ,: ', ' ì ; i ,", ¡:T ill i ; ',¡ H- , . 1, -f .. l ' . ¡, ,!, I tit ! I Ti : : ¡j i I 'T] Hitl '/1 i,¡ k .r ,I i... ' . . " ~ j ~1I[ff ,, ', ~I ~ ~~ ,,--,-, -",',..", )I ---.. i..,.. -+ -, .~ I I 'r I ~Ii ¡~ ,..."....., ~ IB tf!i c--¡.., i-t'-.. ~....~, .,...,~.. ' =~. , ~ ,.., I"" ¡.' ,, -r- .... ,....- ,-', i ¡ ! i ... ! ¡ ( -..... I ¡ !! ~: ;! i ,: : , .,..,,- lttFtt " - ; I! ~ iH~J ' i n T ii' T ,', , , ¡ 75 0.3 3.0 RmfJRweq 5.0 1.0 10.0 0.5 r&íi8 WESTERN ATLAS 500°F 250°C 400°F 200°C 300°F 150°C 100°C 200°F 50°C 100°F 30.0 Example Given: SSP = - 71 mY; Tf = 140°F; ~ = 0.55Q. m Determine: Rweq since Rmf/Rweq = 8.0 ~ = 0.55/8.0 = 0.069 Q. m .L'Weq 3-2 I I I I I I I I ( I I ( I I ( I [ I I Rev. 1 12-95 Ê Qt -0- W E a:: 0 0- W s; a:: Rw from Rweq as a Function of Temperature (OF) r&íí. WESTERN ATLAS 2 :: I ' I I , I' I L« 9~ ''fA' ! ,/' 75°F I .. /',,/ '100°F '" .... r .-v/;::=" 150°F v/ /' /;::",. 200°F ~r // // ~- 300°F ~ ' // ,e.- V ~:>',/ r::: ~ ..-'- 400° I I' II ' ~¿?ft~" "~~o: I " ,: ' I. !'~~ - " I ! If 'I III~ , I 1-- .' ~ ' 't T4 1,1 " I ' I ..-1 I' I " I' 1 I' '...' I . I ,1 I I {' . . III n I II ~ I I I i . ".. : . ..,/~w~tion 1111' 'j i , /- /...,.oF' . 0.005 f I' - I , l!l[} / ~~f/CO~, , . 0.002 ~.'¿' OOê"F I " :: I r:=-- 3000:: ~ j /--- 4pO°F 0,001 :~5000r- I I I 11111 0.005 0,01 ' :; 0.02 0.03 0.05 - - , I - EnJlish 0.5 ! 0.2 § ! - III I ' I -II 0,02 - ' f 0.1 0.05 - 0.01 - II II III I , I . 0.1 0.2 0.3 0.5 2 Rw or Rmf' (Q . m) English: Rw + 0.131 X lO[l/log(Tf/19.9)] - 2 eq R = w - 0.5 R + 10[O.0426/1og(ff/50.8)] Weq Example Given: ~ = 0.069 Q .m, Tf = 1400P eq Detennine: ~; ~ = 0.073 Q.m at 140°F. For mostly NaCl formation waters, use the solid lines. Use the dashed lines for fresh formation waters that are being influenced by salts other than NaCl, and for gypsum-based muds. 3-3 \,-" ~ ......... --- --- ......... ---.. ~ ~ , ........ ......... . 10 ~..z IlIIe ~:» 0 .cz ~ aI ~ Z ~ ~......................................-.......¡---.;--'----