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Home My WebLink AboutCO 091 A ) ) 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. C () () 0 J f:\ Order File Identifier Organizing (done) D Two-sided 1111111111111111111 o Rescan Needed 1111111111111111111 RESCAN DIGITAL DATA OVERSIZED (Scannable) D Maps: D Other Items Scannable by a Large Scanner o Color Items: o Greyscale Items: o Diskettes, No. D Other, Norrype: o Poor Quality Originals: OVERSIZED (Non-Scannable) o Other: o Logs of various kinds: Scanning Preparation x 30 = + o Other:: Date: ~. ~. ()6' /s/ V\1 P , IIIIIIIIIIII~ 11I11 ntP = TOTAL PAGES tp (¡; (Countpoe") not'include cover sheet) Y141J Date: (p ~ OS- 151 II , ,7 1111111111111111111 I Date: Co :J- OL<:::" 151 I . NOTES: BY: Helen~ Project Proofing BY: Helen ~ BY: HelenC Maria) \ Production Scanning Stage 1 Page Count from Scanned File: & 1 (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: / ./ YES Helen~ Date:(p ''\ ·O~ I~ YES NO BY: NO 151 WVP Stage 1 If NO in stage 1, page(s) discrepancies were found: BY: Helen Maria Date: Isl Scanning is complete at this paint unless rescanning is required. 1111111111111111111 ReScanned 1111111111111111111 BY: Helen Maria Date: 151 Comments about this file: Quality Checked 1111111111111111111 12/1/2004 Orders File Cover Page.doc ) 1. January 11, 1974 2. 3. January 14, 1974 January 25, 1974 ) Conservation Order 91A Atlantic Richfield Company application re: CO 91 and CO 98B Rule 8 (91A) Notice of Hearing and affidavit of publication Transcript Conservation Order 91A ) J ~> ) STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oi I and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Re: The appl ication of Atlantic Richfield Company for an order pursuant to Title I I, Alaska Ad- ministrative Code, Section 22.540 modifying Conservation Order No. 91 to permit the operation of the Prudhoe Bay Topping Plant at a throughput rate not to exceed 6,300 barrels of oi I per day on a monthly average basis, to produce the volume of crude oi I and to ) flare the volume of excess casing-) head gas necessary, and to inject) unused fractions into the Prudhoe) Oi I Poo I, unti I December 31, 1976.) IT APPEARING THAT: Conservation Order No. 91-A Prudhoe Oi I Poo I Prudhoe Bay Oi I Field Prudhoe Bay Oi I Topping Plant February 25, 1974 I. Atlantic Richfield Company submitted the referenced appl ication dated January II, 1974. 2. Notice of publ ic hearing was publ ished in the Anchorage Dai Iy News on January 14, 1974. 3. A publ ic hearing was held on January 25, 1974 in the City Counci I Chambers at the Z. J. Loussac Library, 5th Avenue and F Street, Anchorage Alaska, at which time the appl icant was heard. 4. The record of Conservation Order No. 91 was made part of the record of the hearing. FINDINGS: I. Current production of 2,750 barrels of oi I per day, as authorized by Conservation Order No. 91, results in a deficiency of approximately 750 barrels per day of Arctic Diesel Fuel required for the development of the Prudhoe Bay Oi I Field and the construction of the northern portion of the Trans-Alaska Pipel ine project. ) ") Conservation Order No. 91-A Page 2 February 25, 1974 2. At the maximum topping plant throughput volume of approximately 6,300 barrels of oi I per day the Arctic Diesel Fuel output would be approximately 1,200 barrels per day which would alleviate 650 barrels per day of the diesel fuel deficiency. 3. At the maximum topping plant throughput volume the production of casing- head gas wi 1 I average approximately 4,600 MCF per day. 4 . I nit i a I I Y 2, I 00 MC F per day 0 r 46% 0 f the cas i n g he ad gas w i I I be be n e- ficial Iy uti I ized but by the end of 1974 it is expected that 100% of the casinghead gas wi II be beneficially used. 5. Appl icant's request is for temporary authority to flare excess casing- head gas and is strictly I imited to the operation of the crude oi I topping plant and is not intended as a precedent for the flaring of excess casing- head gas after commencement of ful I scale production in the referenced field. 6. Gas i,njection faci I ities are on order but wi I I not be operational unti I the trans-Alaska pipel ine is completed. CONCLUSION: I. An increase in topping plant throughput will provide fuel required for the Trans-Alaska pipel ine project and for development of the Prudhoe Bay Field. 2. No beneficial use for or injection of the entire 2,500 MCF per day of excess casinghead gas wi II be feasible during 1974; however, it is antici- pated that this excess gas wi I I be beneficially uti I ized thereafter. NOW, THEREFORE, IT IS ORDERED THAT: I. Conservation Order No. 91 is hereby revoked. 2. The Atlantic Richfield Company is hereby granted permission to flare casinghead gas from the Prudhoe Bay topping plant and to inject unused fractions of crude oi I into the Prudhoe Oi I Pool, subject to the fol low- ing conditions: A. The volume of crude oi I produced for topping plant use shal I not exceed an average of 6,300 barrels of oi I per day on a monthly basis. B. The volume of casinghead gas flared shal I not exceed an average of 2,500 MCF per day, on a monthly basis. ) '') Conservation Order No. 91-A Page 3 February 25, 1974 C. The Committee may, by administrative order, decrease the volume of crude oi I which may be produced for topping plant use if the produced casinghead gas is not beneficially uti I ized by January I, 1975. DONE at Anchorage, Alaska, and dated February 25, 1974. T~~a~"í~~Lt~rY Alaska Oi I and Gas Conservation Committee conz ;/ ~~ Homer L. Burrel I, Chairman Alaska Oi I and Gas Conservation Committee ar.#~~ 0.- o. K. 8i I breth, Jr., Me~r Alaska Oi I and Gas Conservation Committee #3 ) ) STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee CONSERVATION ORDER NO. 91-A Prudhoe Bay Topping Plant Prudhoe Bay Oil Field Atlantic Richfield çompany, Applicant H EAR I N G January 25, 1974 ) ) PRO C E E DIN G S Mr. Burrell: Good morning, gentlemen. This is a hearing of the Alaska Oil and Gas Conservation Committee, Conservation File No. 91-A, the request of Atlantic Richfield Company for an order to increase the throughput rate of the topping plant at the Prudhoe Bay Oil Field and to flare additional casinghead gas and to inject additional volumes of crude oil into the Prudhoe Bay Oil Pool at that field. In addition they request administrative discretion to increase or vary the throughput rate, and a he a r i n g 0 nth i s req u est .wa s pub 1 ish e d J a n u a r y 14, 1974 i n the Anchorage Daily News. My name is Homer Burrell, 11m chairman of the Committee; to my left is Mr. O. K. Gilbreth, who is Chief Petroleum Engineer and a member of the Committee; to n~ right is Mr. Tom Marshall, who is the Chief Petroleum Geologist and is the Executive Secretary of the Committee. We will invite testimony of any members of the public or any affected party at any time, at the conclusion of the testimony by the applicants. At this time 1111 ask the applicants to proceed with their testimony and Mr. Marshall will swear the witnesses after they have been introduced. Mr. Barrett: ~1r. Chairman, Corlllllittee Members, my name is Paul Barrett. 11m the attorney representing Atlantic Richfield at this hearing on our application. As rim sure it is not apparent to the Comrni ttee, I 1m nel¡./ to Alaska and I have not had the pri vi 1 ege of appearing before this Committee in the past. But rim sure it will be a pleasure to be here today and 11m looking forward to working with you gentlemen in the future. lid say what's probably not apparent, ) ) but probably will be apparent is that I am also new to the practice of law and if I appear at times to be somewhat awkard at the proceedings here today, at the procedure here today, and I hope you will bear with me, give me the benefit of your indulgence. I'm not sure what kind of format the Committee has utilized in the past in hearings of this type, nor am I sure of what type weill use today. I would propose this for- nlat however, and this will certainly be open to discussion or change at the request of the Committee. I brought with me, on my immediate left, Mr. Len Williams, who is a registered petroleum engineer in the state of Texas. He is prepared to testify as to his educational background and his experience. I hope the Committee will accept that background and experience as sufficient to qualify him as an expert to testify before the Committee. We would then propose that Mr. Williams would give some direct testimony in narrative form. I have that testimony, in fact he will read it, if the Committee will so allow. I have the testimony transcribed and will give it to the Committee and to members of the audience that may be interested before Mr. Williams testifies. . At the conclusion of that we anticipate that Mr. Williams will of course be available for questions by the Committee or by anyone in the audience that has anything special and we would hope to proceed in that respect. At th"¡s time I would like to give to the Committee the packages we have prepared for Mr. Williams I testimony. Before I do that I would indicate it is in three parts; the first part is the transcr'iption of the direct testimony, the presentation we anticipate Mr. Williams will gi ve to the Commi ttee, and I V¡OU 1 d propose tha t that be ma rked and -2- ') ) entered as Exhibit No.' 1. Attached to that is the draft that shows Arctic Heating Fuel requirements in the Prudhoe Bay Area. I would propose that that be marked and entered as Exhibit No. 2 and the final attachment is a graph depicting what we anticipate would be the gas production and beneficial use of gas from the Prudhoe Bay Topping Plant in the event our request is granted I would propose that be marked and entered as Exhibit No.3. Mr. Burrell: Thank you Mr. Barrett. Would you mind giving a copy of that to Mr. Marshall first here so we can be sure he gets the Exhibits so identified and without exception, without objection, we'll accept them and identify them as ARCO's Exhibits Nos. 1 , 2, and 3. Mr. Barrett: Is there anyone in the audience with objection? ~1ay I proceed? Mr. Burrell: Thank you Mr. Barrett, yes. Mr. Barrett: Before Mr. Williams gives his testimony I would like to make a couple of preliminary comments. This application was formally made by way of a letter dated January 11, 1974, addressed to the Oil and Gas Conservation Co~nittee over the signature of Mr. O. G. Simpson, who's the North Alaska District manager for the Atlantic Richfield Company. I think it would be appropriate that this letter be entered as Exhibit NO.4. Mr. Burrell: It will be done. Mr. Barrett: The Committee has a copy but I am prepared to submit a copy for purposes of the record. Mr. Burrell: Without exception, that will be Exhibit No.4. Mr. Barrett: I think it would be appropriate that I at least summarize the contents of this letter. Of course the Committee has received a copy, -3- ) ) but IIn1 sure the audience is not necessarily familiar with the contents of it and I think it would be appropriate for me to at least summarize it and unless the Committee has objection I think I would prefer to read i,t in its enti rety for the sake of the record. Woul d that be acceptab 1 e? Mr. Burrell: That would be acceptable, Mr. Barrett. Mr. Barrett: To begin this is a letter dated January 11, 1974 to the Oil and Gas Conservation Committee from Mr. O. G. Simpson, in his capacity as attorney-in-fact for Atlantic Richfield Company and it reads: Gentlemen: We repectively request that Conservation Order No. 91 be modified or superseded by an order temporarily authorizing Atlantic Richfield Company to increase the volume of crude oil produced for topping plant use to the maximum operating level as hereinafter,more ,specifically stated. In support of such request, the Committee is requested to con- sider the following: 1. On November 25, 1973, Alaska's Governor William A. Egan, addressed the state on the energy crisis. In that address the Governor made the following statements relevant to this request. At this point 11m going to quote several excerpts from the Gover- nor's address to the Sta te, as I say, they were Inade on November 25 last. IIMake no mistake about it. All Americans are confronted with an emergency of crisis proportions that cannot help but deteriorate even further as time goes on. II *** I'...due to shortages of construction materials already becom- ing evident because of a lack of capacity and availability of fuel -4- 'I) f ) for some key industries, the construction time for the (TAPS) project might well extend over a longer period then had been ant i cî pa ted. II *** "Decisive action must be almost immediately forthcoming in the national scene, if we are to have any chance for heading off massive unemployment..... The situation dictates that we cannot proceed merrily along oblivious to reality. II *** ...."Alaska's geographic location, its great size and our distance from main sources of supply impose a logistics problem of far greater magnitude then in other states." *** 11...it cannot be emphasized too strongly that there must be total understanding of the need to take unusually drastic conservation steps to make every gallon of heating oil or diesel oil last for the longest possible time." *** IIThese are hard realities to fathon I know, but I think it is necessary to state them in order that no one is led to believe that our country as well as our state isn't facing one of the most severe problems of our history. II Secondly, in paragraph no. 2 of that letter we state: 2. In an address to the nation on November 25, 1973, President Nixon described the present fuel situation as lIa major crisis" requiring that Americans "immediately take strong effective countermeasures. The President has also indicated the nation faces the IImost acute shortages of energy since World War II." -5- ) ) 3. The United States Congress in the Emergency Petroleum Allocation Act of 1973, has expressly found: '1(1) shortages of crude oil, residual fuel oil, and tefined pet- *** roleum products caused by inadequate domestic production, environmental constraints and unavailability of imports suf- ficient to satisfy domestic demand now exist or are iinminent.1I *** 11(2) such shortages h~ve created or will create severe economic dislocations and hardships, including loss of jobs, closing of factories and businesses, reduction of crop planting and harvesting, and curtailment of vital public services, includ- ing transportation of food and other essential goods. II *** 11(3) such hardships and dislocations jeopardize the normal flow of commerce and constitute a national. energy crisis which is a threat to the public health, safety and welfare andean be averted and min"imized most effectively to prompt action by the Executive Branch of government.1I 4. We indicate in paragraph No.4, that the Federal Energy Office has restated the foregoing congressional findings in the Federal Register dated December 13, 1973. 5. In the Trans-Alaska Pipeline Authorization Act, con- gressional findings include the following: *** lI(a) The early development and delivery of oil and gas from Alaska's North Slope to domestic markets is in the national interest because of growing domestic shortages and increasing dependence upon insecure foreign supplies....11 -6- ) ) liThe earliest possible construction of the Trans-Alaska Oil Pipeline from the North Slope of Alaska to Port Valdez in that state will make the extensive proven and potential reserves of low sulfur oil available for domestic use and will best serve the national interest. II 6. Products of .the subject crude oil topping plant are needed for the lIearly development and delivery of North Slope oil and gasll and for the earliest possible construction of the Trans- Alaska oil pipeline as contemplated by the aforesaid congress- ional findings. 7. At the level of production presently authorized by Conser- vation Order No. 91, a deficiency of approximately 7GO barrels per day 'IIi 11 ex is t duri ng the deve 1 opment of Prudhoe Bay Oi 1 Field and the constrution of the northern portion of the TAPS project. Approximately 650 barrels of this deficiency could be accotílodated by an increase in the production rate of crude oil topping plant to its maximum operational level, that is an output of approximately 1200 barrels per day of Arctic diesel fuel. 8. The only alternative to increasing the level of production froln the plant is to obtain the needed products from distant sources. Existing supplies of such products is substantially below demand levels and there is no reasonable basis for assuming that this situation will improve significantly in the foreseeable future. Even if, and to the extent that the aforesaid develop- ment and construction projects receive effective priority allo- cations, and if delays in transportation of such products to the -7- ) ') North Slope are somehow avoided, the products obtained and delivered would necessarily result in a corresponding decrease in the supply of such products to meet other demands in the S ta te of f\ 1 as ka and the rem a i nder of the na t i' on. 9. ~4hile the crude oil topping plant is operated at maximum level the production of casinghead gas will average approximately 4600 MCF per day. Initially 2100 MCF per day will be benefic- ially used, including that utilized for safety pilot. Addi- tionally uses are anticipated and it is expected that by the end of this year 100% of the casinghead gas will be beneficially used. I \·rill comment on that point in just a minute. 10. The Committee is respectively referred to Conservation Order No. 91 and to the evidence submitted in support thereof insofar as concerns facts and findings pertaining to the injection of unused fractions of crude oil into the Prudhoe Bay Sadlerochit Oil Pool. 11 ~ This request is for temporary authority to flare excess casinghead gas, is strictly limited to the operation of the subject crude oil topping plant and not intended as a request for a precedent for the flaring of excess casinghead gas or for any other purpose. On the contrary, the products from the plan t wi 11 b(~ used, .}DJ~_er _~J~, for the cons truct i on of the facility,to reinject casinghead gas upon the commencement of full scale production on the North Slope. Although the actual production and/or utilization of the subject products may from -8- ) ) time to time be less than the expected maximum demand level during the brief initial period, an imnediate need exists for the authority hereby requested through 1976 due to critical planning, logistic and lead time considerations. Therefore, the Committee is respectively requested to grant the Atlantic Richfield Company, as opefator for itself and Exxon Company USA, per- mission to operate the subject crude oil topping plant at its maximum operating level to produce such volume of crude oil and flare such volume of casinghead gas as is necessary to that end, and to inject unused fractions of crude oil into the Prudhoe Bay Sadlerochit Oil Pool, all until December 31, 1976. It is further requested that such order in- clude a provision to authorize the Committee by Administrative Order to increase further the volume of crude oil 'produced for topping plant use and to further extend or otherwise modify said order. Respectively submitted: Atlantic Richfield Company. rim sorry for taking up the Committeels time, but I think it is necessary for the preservation of the record. One other matter, before Mr. Williams, with the permission of the Committee, would offer his testimony. I would like to point out that at one point in the letter it did indicate, this is paragraph no. 9, it did indicate that we expected to beneficially use 100% of the casinghead gas by the end of 1974. I regret to inform the Committee that I have to take fault for the regrettable choice of words. As Mr. Williams ",ill indicate, it can be argued that our anticipation is not to use quite 100%. I say this only, Mr. Williams will elaborate at some length 'on this. I say this only to apologize to the Committee for the extent that I may have ...;9- ) mi sled them by, \vhat I agai n refer to as a rather unfortunate choi ce of words. If the Committee has no objections, we are prepared to go ahead with Mr. William's testimony. Mr. Burrell: Thank you very much, Mr. Barrett. I'll ask Mr. Marshall to swear Mr. Williams, qualify him as an expert witness and proceed with· his testimony. Mr. Marshall: Would you please stand, raise your right hand. In the Inatter now at hearing, do you swear to tell the truth, the whole truth and nothing but the truth so help you God? Mr. Williams: I do. Mr. Marshall: You may be seated. Thank you. Mr. Burrell: Please proceed, Mr. t~ i 11 i ams . Mr. Will i alllS : Well, before I proceed with my qualifications state- rnent, I believe Paul said the letter of January 4. Mr. Burrell: I think that was January 11. Mr. Williams: Yes sir, I was going to suggest that it is January ll~ In 1949 I graduated from the University of Tulsa with a Bachelor of Science degree in Petroleum Engineering. Immediately following graduation I started to work as an engineering trainee for the Atlantic Refining Company, predecessor to Atlantic Richfield Company. I progressed through various engineering assignments, both staff and line, culminating in n~ assignment as District Engineer for the Southwest Texas District of Atlantic Richfield Company in 1961. In this assignment I supervised about 25 professional people and had direct responsibility for all the petroleum engineering for the district. In 1967 I became Drilling and Production Superintendent for that district, assunling responsibility for all drilling and production activity. In May 1972, I moved to Alaska -10- ) ') as Operations Manager for the Atlantic Richfield North Alaska District, my current position. My duties include supervision of drilling, producing and related activities for the Prudhoe Bay Field. 11m a registered pro- fessional engineer in the State of Texas and I have appeared as a quali- fied witness before various regulatory agencies in that State. Mr. Burrell: Thank you Mr. Williams. Unless therels an objection from some member of the Committee weill accept your qualifications a5 an expert witness. Mr. Williams: Thank you sir. Mr. Burrell: Thank you sir. Mr. Williams: My presentation today will be confined to the physical aspects of producing 6300 barrels of oil plus associated natural gas to our crude oil topping plant and the disposition of the products resulting from plant operation. I do not plan to discuss operations inside th~ plant walls and reservoir performance since this was covered during the original hearing in May, 1970. During the past 3-1/2 years we have made some changes in the plant and refined our gas/oil ratio information. I will discuss each of these to help bridge the time from May, 1970 to date: 1. Supply and injection Wells In May, 1970 we were using the Sag River State No. for both our supply and injection. This was a two string dual with a packer separating the producing and injection intervals. We subsequently recompleted our #1-1 as the producing well and our #1-3 as the injection well. After having done this, we temporarily suspended the Sag River State well. 2. Gas/Oil Ratio - A GOR of 900 CF/bbl was used in the testimony of the 1970 hearing. Recently we have been reporting a GOR of -11- ) ) 730 CF/bbl. Following the hearing in 1970~tests were run in the crude oil topping unit at high and low rates at which time PVT sanlples of gas and oil were taken. Based on these tests and samples, a new GOR of 750 CF/bbl was calculated in October, 1970. At that time the Sag River State #1 well was being used as the source well. In December, 1970 we discontinued using the Sag River State well as the primary source well, although we did keep it in a standby status for a period of time, and converted the #1-1.· Since that conversion, we have reported GOR's ranging from 680 to 750. In our current application to increase throughput, we have indicated a GOR of 730 CF/bbl. This ratio is based on data from high rate tests run on #1-1 in 1972 and 1973. 3. Plant Products - The plant as originally designed only made one product - Arctic Heating Fuel, a modified diesel oil. We subse- quently added the ability to recover naphtha. This is about a 70 octane product which is used in our gasoline burning engines. The naptha constitutes about 10% of the crude· oil inlet stream. Any ~nused naphtha is recombined into the residual stream for in- jection into the #1-3 well. 4. Design Rate - The plant manufacturer guaranteed a design inlet rate of 5000 BPO. During the earlier life of the plant, we processed up to 5000 BPD but never attempted to determine its absolute limit as there was no need to do so. Last June, with permission from the Oil and Gas Division, we conducted a throughput capacity test -12- ') of the plant prior to the plant's first major turnaround. We were able to stabilize about 5800 BPa through the plant making specif.i- cation products. During the subsequent .turnaround, we made test· indicated minor modifications in the plant to hopefully enhance its throughput capacity. Time constraints of other projects prevented our running another throughput capacity test until early last month. This high rate test showed the plant now has a maximum throughput capacity of 6300 BPD. We have run the plant at this rate for a number of days making specification products. With this throughput capacity of 6300 BPD, we have the ability to make 1200 BPO of Arctic Heating Fuel. 5. Storage Capacity - Original storage capacity at the plant for Arctic Heating Fuel was 10,000 barrels. In the latter part of 1972 we 'increased this capacity to 20,000 barrels. I'll now talk about Arctic Hearing Fuel requirements for the next three years. During the latter part of the third quarter of 1973, we started to put available fuel estinlate numbers together to get a current fix on Arctic Heating Fuel requirements for the next three years. When we analyzed the 1974 information, it became quite obvious we could not con- tinue the plant operation lias isll and meet the requirements for fuel on the Slope. In fact, we cannot meet the fuel requirements for 1974 with the plant operating at capacity. We extended the fuel estimates for 1975 and 1976 and the picture changes slightly. -13- ) My first exhibit shows our estimates of Arctic Heating Fuel re- quired for 1974, 1975 and 1976. Fuel requirement in average barrels per day for the year is plotted on the "YII axi s wi th time on the "XII ax"j s. The fuel estimates iriclude A~R. Co., BP and Alyeska requirements in the Prudhoe ar~a, plus Alyeska requireménts south to Atigun, just north of the Continental Divide. These estimates include both company and contractor needs, plus minor third party requirements. Let me go to the board over here and explain that exhibit, if I may please sir, possibly a little bit more than I have done so now. Mr. Burrell: We're going to have difficulty hearing you if you get over there so would you speak very loudly. The microphone will probably lose you, we only have one. Mr. Williams: Well, maybe..... Mr. Burrell: In fact, a little economy in the budget here, so we only have one. Mr. Williams: Maybe I can do it from here~ Mr. Burrell: That would be fine Mr. Williams. r~r. Barrett: Excuse me, before t/1r. Williams does explain the exhibit, what we refer to as an exhibit, I would like to indicate the chart that he is about to explëdn to the Committee and to the audience, we do not purport it to be an exhibit per se. It's for the convenience of the Committee, in keeping a record and I think everyone can recognize it would be rather burdenson to include something of that size. . However it is an identical copy to the exhibit I tendered earlier which we asked be marked and entered as ARCa Exhibit No.1. -14- ) ) f~r. Burrell: Mr. t~arsha 11 : stand? Mr. Barrett: 11m sorry, Exhibit No.2, 11m sorry its exhibit, we asked it to be entered as Exhibit No.2, as the first attachment to the testimony. Mr. Gilbreth: These are, this is a representation of the same information here. I notice a slight difference in the block, but it is purported to show the same thing? Mr. Williams: Yes sir. Mr. Gilbreth: From the end of 1975 on, on the top curve, it goes above the line on the one we have and below the line up there, at 1200. Mr. Williams: The reason for that Mr. Gilbreth is that in fact the dashed line is an overlay of the solid line. Mr. Gilbreth: I see. Mr. Williams: In one case we did it below and in another case we did it above. Mr. Gilbreth: But it is the same information, alright. Mr. Burrell: Mr. t~-illiams, if I may recommend just a little house- keeping, would you state whether or not Exhibits Nos. 1,2 and' 3 were prepared under your supervision. Mr. Williams: Yes sir. Thank you Mr. Barrett. Pardon me, Exhibit No. 1 was the text, did I under- Mr. Burrell: Thank you very much ~1r . L-J i 11 i ams : Time and again. The lowermost solid 1 i ne is identified as COT Arctic Heating Fuel output at present time. This line equals -15- ) ) 550 barrels per day and is the output which results from throughput of 2,750 barrels per day. The second solid line is the COT Arctic Heating Fuel output at maximum rate. This is 1200 barrels per day and it results from the throughput of 6,300 barrels per day. The dashed line is the Arctic Heating Fuel requirements that I have put together based on estimates which I have received from Alyeska and BP plus estimating land Atlantic requirements plus estimating what I have called the third party requirement. And let me talk for a minute about the third party. When I say third party, I am referring to the typical service companies that use fuel on the Slope. Insofar as the major contractors who would be up there working for us, those numbers have been included with the Atlantic numbers and they are included with the BP numbers and they are included with the Alyeska numbers. For the year of 1974·, our summation of these indi- vidual estimates comes up to about 1,370 barrels per day, as an average for the yea~. All of these numbers are, insofar as the top line is concerned, are yearly averages. Consumption of Arctic Heating Fuel is going to vary greatly from winter to summer and, for instance, in 1974 we estimate that monthly consumption will vary from the low of about 15,500 barrels to a high of over 60,000 barrels in July. So I have taken all of these and prepared an average number here. 1975 reduces to about 1,250 barrels per day on the average. The primary reason for this reduction is due to a reduced estimate insofar as Alyeska is -16- ) ) concerned. A part of their 1974 estimates includes acquiring fuel for storage so that they'll have something to work from. At this point in time they have very little fuel in storage on the Slope, and they've got to build this storage up. While we're speaking about storage, it's appropriate for me to point out at this time that in addition to the 20,000 barrels of steel tankage that Atlantic Richfield has on store, BP has about 12,000 barrels of steel tankage at their new base camp, additionally they have more tankage at their gathering centers one and two. Assuming that we have the ability to produce fuel for Alyeska's needs, they plan to put together about 4 miles of 48" over at the Alyeska pipeyard for fuel storage. This is pipe that was on the barge that sunk, or turned over or something, 11m not sure what happened to it, but its pipe they don't intend to use in the line.' This will provide about 40,000 barrels of storage. Summating all of this, gives about 70,000 barrels plus of steel tank storage (calling a 48" line a tank) on the Slope,. Alyeska additionally will have additional tankage at their camps down the line. How much that will be, I do not know. But the point being that, dur- ing the winter time we will be filling tankage because we'll not be us"ing as much as 1200 barrels per day. During the summer time that fuel from the tankage will dissipate rapidly because we can't possible meet the requirements during the summer. In 1976, according to our best estimates, it levels out to about 1,200 barrels per day. The reason for this is a slight reduction in -17- ) Alyeska demand~ but an increase in BP's demand~ so that these two counter- balance each other. Are there any questions that I might answer con- cerning that exhibit that I have not handled yet or would you prefer to wait until later sir? Mr. Burrell: Mr. Williams~ would you .prefer that we ask questions as we went along or would you like to finish your testimony? Which would be easier? We could write them down or try and remember them, but. we hate to interrupt your chain of thought. r~r . Williams: Well I'd be happy to do it either way~ your pleasure. Mr. Burrell: Mr. Gilbreth has a question at this time then. Mr. Williams: Yes sir. Mr. Gilbreth: Mr. Williams, speaking of Alyeska's demand there, is this a demand for all of their sub-contractors in the laying of the line or is it just Alyeska itself? Mr. Williams: No sir, this includes the contractors who would. be working for Alyeska. Mr. Gilbreth: In other words they would furnish fuel for their contractors to do the work. Mr. Williams: Yes sir, as a matter of fact Alyeska is reworking their numbers now. We're all going to be reworking our number, ob- viously, but the 1974~ 75, 76 numbers that I got from Alyeska are being revised. They may not be revised, they are being looked at again by their two prime contractors and there maybe some changes in those numbers . r~a ter of fac t I 'm sure there wi 11 be changes in those numbers because we're not smart enough to project the fuel demand precisely over a three year period. -18- ) ) Mr. Gilbreth: Okay, one other question on the third party that you've included there. You mentioned your sub-contractors. Would this in general cover their needs for work that they might be doing for other companies also? For example, if somebody wére drilling a well for Mobil, or Standard of Calif., would the need that you included here be included there for those people? Mr. Williams: Yes sir, actually I included people such as Mobil as third party people. Mobil has a rig running on the Slope now and they are taking fuel from us, as does City Service. The.se needs I have attempted to anticipate and I likely have not done a very good job on third party because I don't have any good history to go on. ~1r. Gilbreth: I realize that. I was just trying to get some feel of how much the third party demand would be up there. Would you guess it included lO~; or 50% or 80%? Just wondering of what magnitude the third demand might be that is not included here? Mr. Williams: I hope that I have taken care of third party demand· insofar as the Prudhoe Area is concerned. Conversely, I understand from reading the paper that there is going to be many miles of seismic run in NPR4. If the folks that are going to do that come to us for fuel, I have not made provisions for them in these numbers. That's the point tha t I was try; ng to make earl i er. I have no 'tlay to get a good hand 1 e on these kinds of demands. Mr. Gilbreth: We realize that. ~lr. Williams: Basically that is Prudhoe and the adjacent immediate area. -19- ) ) Mr. Gilbreth: I had one other question on the GOR that you spoke about. Mr. Williams: Yes sir. Mr. Gilbreth: You mentioned the figure of 750 and 730 before, and' I noticed you say that PVT samples \lJere taken. Is this, just It/hat is this particular figure? Is this a producing GOR, is it a bottomhole sample GOR? I'm sorry I missed that. Mr. Williams: This is the total gas from the reservoir taken all the way zero PSI and 60 degrees F. This is the whole thing. Mr. Gilbreth: It's original solubility? Mr. Williams: Yes sir. Mr. Gilbreth: That's all. This is actually a reservoir ratio. Mr. Marshall has some questions, Mr. Williams. ~1r. Williams answered my question in h"is last Mr. Williams: ~1r . Burrell: t~r . Marshall: answer. Mr. Burrell: Thank you, go ahead Mr. Williams. Mr. Williams: Yes sir. We have not made projections beyond 1976 since we expect the fuel requirements to diminish rapidly starting in 1977. This assumes pipeline and field development will be in its final stages and the majority of the work will have been accomplished. Also, we are now projecting the field fuel gas system to be operational in the 1 atter part of 1976 and any excess gas from the topping plant will be beneficially used in the field fuel gas system. I would now like to describe our operational plan for the COT plant when fieldwide production is initiated. As I mentioned earlier, we -20- ) ) will have a field fuel gas system. This system will, among other things, provide fuel for the plant and base camp. We will have an oil gather- ing system running west from our most easterly flow station. This oil system will pass by our plant to the north and will be tapped to pro~ vide the source fo~ input to the plant and take residual from the plant. When the total system I have just described is operational, we plan to recomplete the #1-1 and #1-3 wells as producers for the field. BENEFICIAL USE OF GAS Earlier I discussed GOR changes from the 1970 hearings. I will now discuss total gas produced with the current allowable, total gas produced with the requested allowable, and its disposition. The current allowable throughput of 2,750 BPD provJdes a gas volume of about 2,000 MCFD. This gas is beneficially used for plant fuel, base camp heating, base camp electricity generation, solid waste disposal, and safety flare. The requested 6,300 BPD will provide a gas volume of 4,600 MCFD. We will incrementally be producing about 2,600 MCFD with the proposed additional oil rate. We have investigated various alternatives for the beneficial use of the incremental 2,600 MCFD, including: 1. Sale to BP for their power Plant. 2. Sale to third party camps between the plant and Deadhorse. 3. Reinjection into the reservoir. 4. Use in drilling and workover rigs. Before discussing each of these individually, I would like to re- emphasize our time frame of reference. We are concerned with the remainder of 1974, 1975 and the first part of 1976. I stated earlier we plan to have a field fuel gas system operational by the latter part of 1976. -21- ) ') 1. Sale to BP - BP will be putting the first increment of their power plant into service l·ater this year. They testified at a hearing before the Committee in February, 1973 they required a volume of 5,000 to 8,000 MCFD as fuel for their first increment. Our volume obviously could not handle this requirement. In addition, we do not have, nor could we get, the 9 miles of line pipe required, and install it to provide any gas delivery during 1974. 2. Sale to Third Party Camps - The volume involved in providing natural gas as fuel to third party camps is substantially less than the incremental volume to be beneficially used. Should we select this alternative, it would only be a partial solution to the problem. There are other drawbacks to this alternative. As with the sale to 8P, we do not have the necessary piping to put in such a system and since we could not guarantee an unin- terruptable supply, the camps would have to install dual fuel capabilities. 3. Reinjection - Although reinjection is not necessarily defined as beneficial use, we have included it here for convenience. We can reinject the incremental gas back into the reservoir - possibly with the residual stream into #1-3, but more likely into a different well. We are not now convinced that our exist- ing pumps could handle the added residual volume plus the higher pressure required if the incremental gas were added to the in- jection stream. In any case, we could not get the necessary -22- ') ) Compression equipment installed and functioning before the end of this year. This means that reinjection ,would only be useful during 1975 and in 1976 until the field fuel gas system is operational. At that time the compression equipment would have no further utility. 4. Rig Use - Now that the pipeline has hopefully experienced all of its possible delays, we are planning to restart our development drilling program this summer. It is our intention to start one rig about June and a second rig a few months later after we have the first rig running smoothly. The~e two rigs are now on the Slope and we are in process of negotiating with the contractor. An integral part of our negotiations includes rig power. We want more power than is now on the rigs to take advantage of drilling parameter refinements we wish to employ. We will either add to existing rig power or completely replace the power package. As a corollary to either power addition or replacement, we intend to acquire dual fuel cap- abilities so that either natural gas or diesel may be used as rig fuel. Providing dual fuel capabilities will take a minimum of six months after the order is placed and more likely eight months. This timing information is based on the turbine manufacturer's response in November. Hopefully the lead time has not materially increased in the past two months. He have a gas line running northwest from the plant towards the Prudhoe Bay State #1 and another line running east to the Surfcote Plant. It will be quite easy for us to make gas avail- able from these lines to the existing drill site's 1, 2, 4, and 5, -23- ) plus two new drill sites to be built in the vicinity of Flow Station #1 and Flow Station #2. All of these drill sites are west of the Sag River. We also intend to drill on Drill Site #3 during our frame of reference. This drill site is east of the Sag River, and therefore complicates our capability to use natural gas. We can ,lay a temporary line across the river for use when the river is frozen. We doubt we can keep this line in place during breakup. The existing gas conditioning facilities at the plant are not capable of handling the incremental gas. Fortunately we have a gas conditioning unit located at the Prudhoe Bay State Well which can process the incremental gas and provide dehy- ration to -60 degrees F. This unit will be moved to a location adjacent to the plant this year before breakup. We believe the use of natural gas to fuel drilling rig is the only realistic alternative available to us. It provides the fastest means to beneficially use gas, and it makes the Arctic Heating Fuel which would otherwise be burned - about 220 barrels per day - available for other uses. So far, I have only talked about drilling rigs - now let me add a plus feature. We plan to ship a workover rig to Prudhoe with the 1975 barges. We are designing this rig to have dual fuel capabilities. If excess gas is available, we will have the option of using it in the workover rig if the volume is sufficient. -24- ) ) I have another exhibit which I will explain now. This exhibit shows produced gas plotted on the II Y" ax -j sin MCFD. As wi th the pri or exhi bi t, time is plotted on the "X" axis. Mr. Barrett: The exhibit that Mr. Williams is about to refer to ~ is previously entered into the records as Exhibit No.3 and a facsimile of that exhibit is the chart on the right. Obviously it is not an identical copy, but as with the previous chart, it shows the identical information. Mr. Burrell: .Thank you Mr. Barrett· Mr. Williams: This chart is one line simpler than the proceeding" one. I have shown in the solid dashed line the total gas production that would be associated with 6,300 BPD from one well. Mr. Burrell: Excuse me, you said the solid dashed line. Mr. Williams: Did I say solid dashed line? Mr. Burrell: I think you did. Mr. Williams: That's got to be an error. If I may rephrase that, the solid line, it represents 4,600 MCFD. The dashed line is the beneficial use line based on the conversion of the two drilling rigs to dual fuel capabilities. Starting at the left hand side of the chart we're producing about 2,000 MCFD now and that would continue until -the first of the two drilling rigs were converted to dual fuel capab- ilities such tha t \'Ie could use natural gas in it. At that point in time, which I have shown to be about the middle of the fourth quarter of 1974, we would beneficially use about 1,200 MCFD with that first rate conver- sion. Of this amount 150 to 200 MCFD would be used in fuel for the con- ditioning unit that we would be bringing down from the Prudhoe Bay -25- ) ) , State well~ This level would continue until we had converted the second rig which I had shown to be about the middle of the first quarter of 1975. Now it is quite possible that we could get both conversions simultaneously and accomplish that conversion simultaneously. I don't really believe that is the way it would happen but that's possible, ~o in effect 11m saying that the second conversion would be a year from now. At that point in time we would use about a million a day in the' second rig, bringing us then up to a total about 4,250 MCF a day. But, as"wi th the precedi ng chart, I have averaged numbers for the year. Very obviously there will be a substantial swing in gas usage, particularly for a d rill i n g rig. t~ e est i ma t e t hat a d rill i n g rig can vary, a d ri 11 i n g rig that we intend to use can vary as much as 500 MeF per day based on whats its doing. If welre logging we have one problem, if we're drilling surface holes and trying to move a whole lot of dirt we've got'another problem. We've ~ot obviously a much different fuel requirement under those two circumstances, so thatls idealized as the average for the year. 1111 back up to the intersection, let me point to the intersection and tell you what I'm going to back up to, after I continue on. Let me return to this intersection at a later date, after I have done the rest of this. I mentioned the workover rig that would be coming with the 1975 barges. I did not mention our base camp expansion. At this moment we are doing engineering and architectural work for an expansion to our base camp. Our people projections tell us that we must have additional facilities on the Slope for people. We can not make the 1974 barges but we intend -26- ) ) to make the 1975 barges. With the base camp expansion and at that point in time we will likely have Base 2 in service. We know that our fuel requirements, our natural gas fuel requirements, for the base camp complex are going to be increased. Until we get our engineering done I donlt know how much its going to be increased. It is quite possible that weill have to add a third generator to our generating plant. At this point in time we have two generators plus the spare. The two prime generators are being driven and they incidentally also are dual fuel capability. I think that there is likely going to be the need of the third generator to take care of the expansion plus putting Base two into service. If that's the case, then the number that I had indicated here as additional requirements for the base camp is low. Our existing turbines use about 350 MCFD under full load. live drawn a line there that rep0esents maybe 200 MCFD, just because I didn't know, . that's a good round number, thats how I got that. Continuing on, our plan is to have the field fuel gas system in service July 1, 1976. I have shown that actua 11y comi ng on in the fouy'th quarter 1976 to gi ve me three months leeway get all of the bugs worked out and that sort of thing. It is quite possible that we will be able to have the field fuel gas uni t ; n servi ce July 1, 1976. My poi nt here be; ng that once \lJe have this system in, beneficial use of gas is obviously taken care of. This is one of the first things we're going to have in the field for us to complete all of the things that we need to do at flow stations, so forth and so on, that is to have an adequate fuel supply. So, my dashed -27- ) line that subsequently intersects the solid line) I think may easily be moved back. Now let me back up to the point that' I identified ear- lier. Mr. Barrett: Excuse me) for the record the point that Mr. Williams is about to refer to is located on the dashed line that indicates gas beneficially used in Exhibit No.3 and is at the uppermost point of the second vertical line. Mr. Burrell: Thank you Mr. Barrett. Mr. Williams: The consumption that I have shown at that point is based on numbers that were given to us by the turbine manufacturer. The turbines that we're talking about for the rigs are similar to the turbines that we currently have in our base camp. The numbers that the manufacturer has given to us for our turbines do not equal our perfor- mance. We have had to use more fuel than the manufacturer said that we would have to and if I were selling a machine I' would likely do the same thing. My point here is that I have used the manufacturer's number. Once I get the turbine in the field and it starts functioning, almost assuredly that number is going to be low. One other point that I need to make here is that if it is winter time, if both rigs happen to be drilling surface holes simultaneously and all of my require- ments stack up on me, all of my pigs turn out to be pigs, then I can1t possibly provide all of the gas that is going to be required at those points in time. We will have the versatility to take care of our needs, and the critical ones are going to be at the drilling rig, because I have the ability to convert both of n~ turbines at -28- ) ) the generating plant in the base camp almost instantaneously from gas, from gas to diesel, so that I can pick up 700,000 CFGD almost immed- iately, so that I will be able to accomplish those things at a time critical to me without getting into a real problem. I think that from a practical standpoint with the kind of a system that we've got, that is I've got a limit of 4,600 MCFD and there are going to have to be various adjustments after we put the second rig on at different points in time to accomodate whatever our needs may be and we will have the ability to do that. It is quite possible that when the base camp expansion occurs that 1111 have to do other manipulations in that I very obviously have got to have natural gas fuel at the base camp for heating. So that assuming that I can, my dash line can't from an operational standpoint operate that closely to the solid line, then I will have to make other adjustments. So this is an idealized situation and since I used averages it looks good, but we recognize that my perfor- mance is going to be a little different than I have displayed. And·that is all I have to say about that exhibit. Mr. Burrell: Thank you Mr. Williams. Do you have any additional testimony to give or are you ready for questions or where do we stand? Mr. Williams: Oh, 11m through. Mr. Burrell: You, think you're through~ Mr. Gilbreth has some questions. Mr. Gilbreth: Mr. Williams, on the last point in your testimony, about the averaging of the curves, could you give us an example from -29- ) ) the exhibit you have on the board, just where your maximum and mini- mum useagesmight fall, for example here in the yea~ 74. You have a dash line there just above 2,000 MCF a day and that's obviously on an average basis. Mr. Williams: Yes. Mr. Gilbreth: Some days you're going to have a much larger demand 'and other days perhaps smaller. What kind of a swing do you anticipate during 74 that would give you that average? Mr. Williams: The swing that we would have during 1974 would be minimum Mr. Gilbreth, primarily because this fuel that accomodates the 2,000 r~CF per day is essentially basecamp fuel and I would expect a variance there of no more than, say a couple of hundred MCF a day, from a min to a max. Mr. Gilbreth: Okay then this would in essence represent a mini- mum. There is a possibility it could be higher but probably not lower than. Mr. Williams: Yes sir, right. Mr. Gilbreth: You mentioned that you hope to have your gas gathering system in operation there during latter 1976. Mr. Williams: Yes, Mr. Gilbreth: I think sometime back in the discussion with the Committee your company had indicated they hoped to put a system in and have it in operation in 1975. Could you tell us what happened there that has delayed it? Mr. Williams: We intend to ship it in 1975 with the barges. I -30- ') ) don't know the conversation that you are referring to and if, to identify our timing problem, we have had a substantial number of changes in our timing estimates. Since I have been here our estimate has changed from 75 to 76 because we couldn't proceed with our work because we didn't have the pipeline permit. Hopefully we have now reached the point in time that we can better define our timing because of the actions of last Wed- nesday. Mr. Gilbreth: Mr. Williams, can you tell us about what the Arctic Heating Oil or diesel fuel inventory on the Slope is right now? Mr. Williams: Yes sir, I can give you a resonable idea. This morning at report time we had 15,144 barrels in our tankage. BP has in their steel tankage right at 12,000 barrels. They've got some minor amounts in bladder tanks which they are currently using out of. I under- stand they plan to get rid of the bladder tanks. I don"t know how much that is . Alyeska has moved a few Herc loads of fuel to the camps to the south. I'm not sure how much they have moved but its only a few thousand barrels, so summating all of this we have 15,000, BP has atleast l2,OqO, that's 27, lid say probably between 30 and 40. Mr. Gilbreth: Still quite a bit of storage space left then? Mr. Williams: Yes sir. Mr. Gilbreth: What degree of urgency is there in the Committee issuing an order on your request or approval? Mr. Williams: I have averaged the requirements for the year and I have averaged and I have compared this against an average of 1,200 -31- ) ) barrels per day. So right now I'm saying that my best estimate is there will be 170 barrels per day shortfall north of the Brooks Range. It cannot be imported. That's based on our ability· to produce 1200 barrels a day from \January 1 and based on the es ti ma ted consumpti on as I i denti fi ed earlier, so let me make one other point here. We've got a number of irons in the fire·, one of which is our two phase flow test which is currently being conducted on the Slope. This test will not be com- pleted for another probably two weeks. The volume that we need to pro~ duce through the plant will be controlled by the constraints of that two phase test, whatever they may be, and they may very well be less than 6300 barrels. As a matter of fact, when we were running through the seven inch we were producing at a rate of 6,000 barrels per day. We're getting ready to run through the 9 5/8 inch and I would assume that we would probably attempt to reach 6,300 barrels per day as we go to that large diameter pipe. So the point being that I have assumed 1 ,200 barrels per day from January 1 counting the number of days we don't produce that we'll add to the increment that is above the solid line. Mr. Gilbreth: In other words you need approval fairly soon. Mr. Williams: Yes sir. Mr. Gilbreth: Or delayed approval will result in more short fall. Mr. Williams: The more that would have to be imported. Mr. Barrett: I would like to elaborate on that to the Committee, on paragraph 12 in our application letter. The urgency in our request as far as timing goes is really governed by two parameters and that is the degree of shortfall t hat we \\1 0 u 1 d experience with delay in the authorization should it be forthcoming, but secondly and perhaps more -32- ) ') critically is our need for relatively soon to know whether or not we will be allowed to do this and the extent we'll be allowed to do this and what extent conversely these fuel requirements will have to me~t from alternative sources and so really perhaps, I say more crucial than the actual timing of the shortfall is the lead time consideration. We just have to know to make effective plans to see the orderly development of this oil field. Mr. Gilbreth: . As I understand your application you're requesting Committee approval to produce the wells at rates up to or to average 6,300 barrels per day and you will utilize as much gas as you can and flare the balance that you can't use. Is that the essence? Mr. Williams: Yes sir and to elaborate on that a bit. If, heaven forbid we have subsequent delays in the pipeline, then very obviously we will not have the need that I have projected, and what we're asking for is the ability to produce up to that point whatever, based on whatever the needs are, and if those needs are changed dramatically then we have no reason to want to produce at the rates that we have asked for because we are not a marketing facility. That facility is for field use and is installed for such purpose. We'y'e not out trying to sell fuel· I guess is ~vhat I'm trying to say. Mr. Gilbreth: But your request is to produce up to 6,300 barrels per day on a monthly basis is it not, or are you aSking for approval just to produce up to 6,300? Mr. Williams: No sir, what we're asking for is that average on a monthly basis because, once again, all my lines if you notice are very -33- ) ) straight and it just doesn't happen that way in the oil field. Mr. Gilbreth: We understand that. I have one last q~estion. The gas that is being flared there~ is there any way, any feasible way~ that the gas could be cleaned and compressed for a particular use up there? Mr. Williams: I'm sure there is a way, I don't know if there is a ,feasible way. None of the engines that we have up there now have the ability to consume NLPG so that we would have to convert all of those. Additionaly we'd have to convert all of the trucks that we have ordered for the barges for this year. Naptha is a marvelous fuel ~ as it turns out, for gasoline burning engines. You've got to repair the timing a little bit~ we have to add top oil to it. It's a reasonably volatile product, which makes easy starting and so on. Naptha can easily handle all of our pickup type requirements without problems. Thats not a problem, and so there's no real incentive for us to attempt to approach an LPG burning device. 11m not sure if that answered your question. Mr. Gilbreth: Well, live seen these Anchorage Natural Gas pick- ups running around town with signs on them, this is because we're runn- ing on compressed gas and its my understanding that their not LPG, per se. Mr. Williams: I plead ignorance. ~lr. 'Gi 1 breth: have one fu rther ques t ion. I don I t be 1 i eve the Committee has any information subsequent, any information that indicates any damage to the reservoir due to injection, subsequent to the last hearing. Can you tell us, have you discerned anything that would indicate any possible danlage to the reservoir by injecting the refined bottoms or the bottoms of the topping plant back into the reservoir? -34- ) Mr. Williams: Absolutely none. We have been most happy with the way that we have analyzed this oil performance based on the infor- mation we have learned up to now. Mr. Burrell: May I interrupt here, that was goin~ to be one of my questions. Would you have any objections to incorporating the record of Conservation File No. 91 at this hearing which Mr. Gilbreth referred to in this record? You have read it, you are familiar with it? Mr. Williams: Yes sir, I have read it. ~1r . Burrell: This particular area, the effect of the injection of the heavier ends back into the reservoir. Mr. Williams: Yes sir. Mr. Burrell: And as far as you know that is totally accurate. Mr. Williams: Absolutely, I think that we probably did an excellent job on this. I can say this since I wasn'tassociated with it, but I think that's true. Mr. Burrell: Unless you object then, we'll incorporate that into the record of this hearing. Mr. ~Ji 11 i ams : A 1 ri gh t. Mr. Burrell: I have some more questions. ~1r . Williams: Yes. Mr. Burrell: Following another one of Mr. Gilbreth's questions you asked for the 6,300 BO rate, monthly average, till December 31, 1976? Mr. Williams: Yes. Mr. Burrell: And the injection and flaring that gas with that? -35- ) ) Mr. Williams: Yes. Mr. Burrell: Did you also ask provision to authorize an increase in the volume of the crude oil produced and to further extend or other- wi se modi fy the order by Admi n is trati ve Order, and I \'Iondered, do you want all those things in the Administrative Order? In other words do you want, do you really think you can increase the volume of throughput above 6,300 BO monthly average? If so, then you do want that. Do you have any additional plans for injection of the heavier ends? What modification to you seek from the Committee there, and on the time you seek modification from the Committee there. You seek the modification Committee on the flaring. Do you seek Administrative authority in this order to do all those things, or just some of th~m? Mr. Williams: Wel\ our request is for the average of 6,300 BID. We think we have done everything that we c~n do with the plant as it now exists such that we will not be able to enhance its throughput any more because we've taken from 5,000 barrels to 6,300 barrels and welre running across restrictions in piping, valving, on and on. Its not that I can do anything, live done all the little individual things I can do, so with the existing plan I see no way that we can enhance that to any degree, so that I would not need an increase beyond that point. Mr. Burrell: 11m trying to.find out what you want us to provide for in this so called administrative authority portion of the order. Youlve asked for about four things; one is the 6,300 BID monthly average, the others are the right to inject, another is the right to flare and the other is the date, December 31, 1976. Which one of those do you want us to -36- ) ) retain administrative authority to modify? Mr. Williams: I guess we see no reason why you that you couldn't administratively modify any of those. Mr. BÙrrell: You want us to retain blanket authority to modify all four of those. Mr. Williams: Yes sir, that's correct. Mr. Barrett: Our intent in phrasing our request that way was merely to suggest to the Committee that it might want to retain this kind of administrative flexibility in modifying the order and of course implicit in ,that is the Committee's flexibility to modify that order to our detriment, if that is the word to use, to modify downward or back- ward in the time frame, or otherwise to extend or to increase. 11m sure its just an attempt to make it clear to the Committee that we would hope and expect that you would retain this kind of discretion at an administrative level, and of course should it be necessary, at the Committee's discretion that any application should be on the basis of further te'stimony or evi dence \lJhy we woul d be more than happy to supply whatever is necessary. Mr. Burrell: I'm sure of that, but you wouldn't object if we put some parameters on the administrative discretion; for instance, instead of going to December 31, 1976 we might not want to go, say, more than another year administratively, without another hearing. We might not want to let you go more than 10% on the throughput without another hearing. I just mention these numbers arbitrarily but we might take that approach, I don't know. Would you have objection to some lin1itation on our admin- istration discretion imposed on ourselves, by ourselves. Mr. Wi 11 i ams : No sir. -37- ) ) Mr. Burrell: Thank you. Mr. Barrett: I think as a binding matter we would prefer that the Committee not impose these kind of parameters. We would certainly be quite willing to accept them~ In substance I don It know if it makes a great deal of difference because the Committee is given blanket autho- rity to have flexibility to do whatever the situation turns out to be and whatever it dictates, but purely as a binding matter both to relieve the administrative burdens on this Committee and frankly to relieve what we would feel would be unnecesary and redundant reproving the case to prove speculatively, we hope, for these reasons~to some extent you would want to limit your own discretion. Mr. Burrell: Thank you Mr. Barrett. Mr. Marshall: I have a question of Mr. Williams. Referring to Exhibit 3, it appears that during the greatest part of 1974 you'll be flaring approximately 2 1/2 million cub"ic feet a day. r~y question is, is your present gas flare burner system capable of flaring this amount on a continuous basis for the better part of a year? Mr. Williams: Mr. Marshall, I will respond by saying I think so. We have produced through the plant at this rate for several days. We have more eyeballs then you can imagine watching everything associated with the plant to assure ourselves that it would in fact function satis- factorily. 1111 go one step further. Assuming that there is some detriment in the flare system as a result of the volume, then we will nlake changes in the flare system to accomodate whatever those changes may be. -38- ) ') Mr. Marshall: 1 see, 11m always impressed at, the complexity of flaring equipment, its not really a very simple process, there is a lot of heat to be dissipated and there are safety factor and this sort of thing, I know it takes some planning and 11m glad to see that this is part of your pilot program- the recent testing through the plant. There is some data on that? Mr., Williams: Yes sir, flaring is not, its sounds easy, but it isnlt. Mr. Marshall: One other question Mr. Williams, it appears that at the third quarter of 76, your field fuel gas system will be in service, again referring to Exhibit 3. Now you may have answered this question and I missed it, and its a highly speculative answer but I would be interested in when on this Exhibit 3 you would expect to find substantial field production to start, in other words the completion of the pipeline. What kind of a guess would you have, just fitting it into this graph? Mr. Williams: That projection does not fit onto this graph unfor- tunately. We are shooting for 7/1/77, we are running for 7/1/77. I hope we are off to the race. Mr. Marshall: That answers my question, thank you. Mr. Burrell: Mr. Gilbreth has a question. Mr. Gilbreth: I have one more question. Are any of the drilling rigs on the Slope now equipped to use gas, do you know? Mr. Williams: Let me answer it this way. I ,know of none. -39- ') )" Mr. Gilbreth: None that work for your company or would be drilling for your company? Mr. Wi 11 i ams: None of whi ch I am fam"¡ 1 i ar have that ab"¡ 1 i ty. These will be the first with that ability and it will be reasonably easy to prov"ide this ability since the rigs I am talking about are turbine equipped. Mr. Burrell: Do you have any additional testimony? Mr. Williams: No sir. Mr. Burrell: Is there any member of the audience who has any interest in testifying in this matter or ask any questions of the witness or of the Committee or of anybody else? If not then the Committee has decided to issue an oral order at this time granting the request as made in the letter of January 11, 1974, pending execution of a written order with the appropriate findings and formalizing. Mr. Barrett: Thank you sir. Mr. Burrell: Thank you very much. The hearing is adjourned. -40- January 25, 1974 ) PREPARED HEARING TESTIMONY FOR STATE OF ALASKA . DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee Conservation File No. 9l-A BY: L. K. Williams ATLANTIC RICHFIELD COMPANY ~) Q+{.,~ .(,,"- 4.R.C.Q --, t 6 J _tf"/ ,~ rv I · J /2,-J..5 II / / I I; ~,(, J, + Y I 'j I~ It (>v 0 t- ~,,'p, ) ') Page 2 REVIEW FROH MAY, 1970 TO DATE MY presentation today will be confined to the physical aspects of producing 6300 barrels of oil plus asnociated natural gas to our crude oil topping plant and the disposition of the products resulting from plant operation. I do not pl~n tö discuss operations inside the plant walls 'and reservoir performance since this was covered during the original hearing in May, 1970. During the past 3-1/2 years we have made some changes in the plant and refined our gas/oil ratio information. I will discuss each of these to help bridge the time from May, 1970 to date: 1. Supply and Injection Wells - In May, 1970 we were using the Sag River State No. 1 for both our supply and injection. This was a two string dual with a packer separating the producing and injection intervals. We subsequently recompleted our #1-1 as the producing well and our #1-3 as the injection well. After having done this, we temporarily suspended the Sag River State well. 2. Gas/Oil Ratio - A GOR of 900 CF/bbl was used in the testimony of the 1970 hearing. Recently we have been reporting a GOR of 730 CF/bbl. Following the hearing in 1970, tests were run in the crude oil topping unit at high and low rates at which time PVT sa.mples of gas and oil ~..rere taken. Based on these tests and samples, a new GOR of 750 CF/bbl was calculated in October, 1970. At that time the Sag River State #1 well was Page 3 ", ') ') being used as the source well. In December, 1970 we discontinued using the Sag River State well as the primary source well , although we did keep it in a standby status for a period of time, and converted the #1-1. Since that conversion, We have reported GaR's ranging from 680 to 750. In our current application to increase throughput, we have indicated a GaR of 730 CF/bbl. This ratio is based on data from high rate tests run on #1-1 in 1972 artd 1973. 3~ Plant Products - The plant as originally designed only made one product - Arctic Heating Fuel, a modified diesel oil. We subsequently added the ability to recover naphtha. This is about a 70 octane product which is used in our gasoline burning engines. The naphtha constitutes about '10% of the crude oil inlet stream. Any unused naphtha is recombined into the residual stream for injection into the #1-3 well. 4. Design Rate - The plant manufacturer guaranteed a design inlet rate of 5000 BPD. During the earlier life of the plant, we processed up to 5000 BPD but never attempted to determine its absolute limit as there was no need to do so. Last June, with permission from the Oil and Gas Division, we conducted a throughput capacity test of the plant prior to the plant's first major turnaround. We were able to stabilize about 5800 BPD through the plant making specification products. During the subsequent turnaround, we made test-indicated minor modifications in the plant to hopefully enhance its throughput ) Page 1+ capacity. Time constraints of other projects prevented our running another throughput capacity test until early last month. This high rate test showed the plant now has a ma.ximum throughput capacity of 6300 BPD. ¡¡,Ie have run the plant at. this rate for a number of days making specification products. With this throughput capacity of 6300 BPD, we have the ability to make 1200 BPD of arcti c heating fuel. 5. Storage Capacity - Original storage capacity at the plant for arctic heating fuel was 10,000 barrels. In the latter part of 1972 we increased this capacity to 20,000 barrels. ARCTIC HEATING FUEL REQUIREMENTS FOR THE NEXT THREE YEARS During the latter part of the third quarter of 1973; we started to put available fuel estimate. numbers together to get a current fix on arctic heating fuel requirements for the next three years. When we analyzed the 1974 information , it became quite obvious we could not continue the plant operation "as is" and meet the requirements for fuel on the Slope. In fact, we cannot meet the fuel requirements for 1974 with the plant _operatjng at capacity. We extended the fuel estimates for 1975 and 1976 and the picture changes slightly. My first exhibit shm.¡s our estimates ,of arctic heating fuel required for 1974, 1975 and 1976. Fuel requirement in average barrels per day fo:: the yep.r is plotted on the "y" axis with time on the "X" axis. The fuel estimates include A.R.Co., BP and Alyeska requirements in the ') Page 5 Prudhoe area, plus Alyeska requirements south to Atigun, just north of the Continental Divide. These estimates include both company and contractor needs, plus minor third party requirements. "Explain Exhibits" $ ~~ ~ ~,~,-\- tL ~ We have not made projections beyond 1976 since we expect the fuel requirements to diminish rapidly starting in 1977. This assumes pipeline and field development will be in its final stages and the majority of the work will have been accomplished. Also, we are now projecting the field fuel gas system to be operational in the latter part of 1976 and any excess gas from the topping plant will be beneficially used in the field fuel gas system. I would now like to describe our operational plan for the COT plant when fieldwide production is initiated. As I mentioned earlier, we will have a field fuel gas system. This system will, among other things, provide fuel gas for the plant and base camp. We will have an oil gathering system running west from our most easterly flow station. This system will pass by our plant to the north and ~ill be tapped to provide the source for input to the plant and take residual from the plant. When the total system I have just described is operational, we plan to recomplete the #1-1 and #1- 3 wells as producers for the field. BENEFICIAL USE OF GN3 Earlier I discussed GOR changes from the 1970 hearing. I will now discuss total gas produced with the current allowable, total gas produced with the requested allowable and its di8position. '} ') Page 6 The current allowable throughput of 2750 BPD provides a gas volume of about 2000 MCFD. This gas is being beneficially used for plant fuel, base camp heating, base camp electricity generation, solid waste disposal, and safety flare. The requested 6300 BPD will provide a 'gas volume of 4600 MCFD. ;'¡e will incrementally be producing about 2600 MCFD with the proposed additional oil rate. We have investigated various alternatives for the beneficial, use of the incremental 2600 MCFD, including: 1. Sale to BP for their power plant. 2. Sale to third party camps between the plant and Deadhorse. 3. Reinjection into the reservoir. 4. Use in drilling and workover rigs. Before discussing each of these individually, I would like to re-emphasize our time frame of reference. We are concerned with the remainder of 1974, 1975 and the first part of 1976. I stated earlier we plan to have a field fuel gas system operational by the latter part of 1976. 1. Sale to BP - BP will be putting the first increment of their power plant into service later this year. They testified at a hearing before the committee in February, 1973 they required a volume of 5000 to 8000 MCFD as fuel for this first increment. Our volume obviously could not handle this requirement. In addition, we do not have, nor could we get, the 9 miles of line pipe required and install it to provide any gas delivery during 1974. ) ) Page 7 2. Sale to Third Party Camps - The volume involved in providing natural gas as fuel to third party camps is substantially less than the incremental volume to be beneficially used. Should we select this alternative , it would only be a partial solution to the problem. There are other drawbacks to this alternative. As with the sale to BP, we do not have the necessary piping to put in such a system. and sinc~ we could not guarantee an uninterruptable supply, the camps would have to install dual fuel capabilities. 3. Reinjection - Although reinjection is not necessarily defined as beneficial use, we have included it here for convenience. We can reinject the incremental gas back into the reservoir - possibly with the residual stream into #1-3, but more likely into a different well. We are not now convinced that our existing pumps could handle the added residual volume plus the higher pressu~e required if the incremental gas were added to the injection stream. In any case, we could not get the necessary comp~:'ession equipment installed and functioning before the end of the year. This means that reinjection would only be useful during 1975 and in 1976 until the field fuel gas system is operational. At that time the compression equipment would have no further utility. 4. Rig Use - Now that the pipeline has hopefully experienced all of its possible delays, we are planning to restart our development drilling progr&~ this summer. It is our intention to start one ) ) Page 8 rig about June and a second rig a few months later after we have the first rig running smoothly. These two rigs are now on the Slope and we are in process of negotiating with the contractor. An integral part of our negotiations includes rig power. We want more power than is noW on the rigs to take advantage of drilling parameter refinements we wish to employ. We will either add to existing rig power or completely replace the pm-ler package. As a corollary to either power addition or replacement, we intend to acquire dual fuel capabilities so that either natural gas or diesel may be used as rig fuel. Providing dual fuel capabilities will take a minimum of six months after the order is placed and more likely eight months. This timing information is based on the turbine manufacturer's response in November. Hopefully the lead time has not materially increased in the past two months. We have a gas line running northwest from the plant towards the Prudhoe Bay State #1 and another line running east to the Surfcote plant. It will be quite easy for uc to make gas available from these lines to existing Drill Site's 1, 2, 4 and 5, plus two new drill sites to be built in the vicinity of Flow Station #1 and Flow Station #2. All of these drill sites are west of the Sag River. We a~so intend to drill on Drill Site #3 during our frame of reference. This drill site is east of the Sag River and, therefore, complicates our capability to use natural gas. We can lay a tem~orary linè across the river for use when the river is frozen. We doubt we can keep this line in place during breakup. ) ) Page 9 The existing gas conditioning facilities at the plant are not capable of handling the incremental gas. Fortunately we have a gas conditioning unit located at the Prudhoe Bay State well which can process the incremental gas and provide dehydration to -60°F. This unit will be moved to a location adj acent to the plant this year before breakup. We believe the use of natural gas to fuel drilling rigs is the only realistic alternative available to us. It provides the fastest means to beneficially use gas and it makes the arctic heating fuel which would otherwise be burned - about 220 barrels per day - available for other uSes. So far, I have only talked about drilling rigs - now let me add a plus feature. We plan to ship a workover rig to Prudhoe with the 1975 barges. We are designing this rig to have dual fuel capabilities. If excess gas is available, we will have the option of using it in the workover rig if the volume is sufficient. I have another exhibit which I will explain noW. This exhibit shows produced gas plotted on the "y" axis in MCFD. As with the prior exhibit, time is plotted on the "X" axis. "Explain Exhibit" Set t'l~,(¡(i tt 3 . I ¡ ¡ I . -i-~~ ; -~L~~~ j l i i ! i ! '+--~----'----' ì :-i ; , I I -~- / ¡ ¡ I I i '+- ~~ '-' ..., ~ --~ .(A.. -----~. . : ~ ~ - rJ ~ ~ ...., 1976 , I í ¡ I I i ! r- ; ~ - >- . -- ~-t . _. I I . L_ - ¡ ¡... t ju ~- ¡ J 1975 _. - o ¡ 1974 ..--_~ "- ¡- . ¡. .¡. .- -. -1" ~. I· i ¡ {.. I l 1Zoo t t ! .'~~ ~.~ I t- ! 1--;- ,=' ,F ;.. t- "'- ..-... '-.~~ ---'1 . -¡ ~ . ~ -;.' ~:--'~-~r.·--·-f - . I' ". I "0".' ..__.____.. ! -~-¡ . " . ¡ - - ¡. r -----J : -t ~-- -:-i._ I -..- , \-1 :-.J.__¡: . '.;. .. .o,; ,.. :'-'1' 40:t=!~~~~~~t#t~~~L=:=:~ :'J:-.~ .,-.~ ~.~ I.---'=:-~--= ¡ ! ~-' 200 I .: f - 600 en .....L Q),~ J::~ c~L &:q¡ 800 ____e- lor r"-- j- ¡~ j-,. ., . n ,,_+- ·'___n'· .......... .......... ; .......... #' ~r:~fMvj~-~~~;-·~~~l=.~' . "'- . -T .......-...-.................~ 0-_ --,----i-__;_~_..__ , ~_~______ __ __---:___'"-- .~_.~___4_ ---~-.-----.-.. -- .........--~.........~--- ~~ -......... -- -.,-- -,-; -----;- - -,,--- - --~ - - '--.. --- - ~ --- . -~---....--- -~ - --.---~ ! . PRUlliOE BAY AREA ==~jJ-[ ;J~·S:-:1·I±-_~_~;"1 .. ,._-..[~~~~~tjl~ -'-'.- -'-. , . - ;, - _. . .~__~ -0.___ ___ -------------....-~ j.- .__ J --~----~ --t-- ARrI C HEATING FUEL StJM..1ARY .~"::;F.:~!; U.SaL rr{~¡:E ;~ ~o'~<;T? AT:.~:~}~~,~~ KEUFFEL & ESSER CO.. 46 0706 !U' j. ~ ¡r,'1'" ~ 10 X fO TO THE INCH 7 X 10 ¡,~. . ÞL8ANENE@ KEUFFEL 8< ESSER CO. 46 0706 "'DJ: IH U.!t." A.R.CD. - EXXON TOPPING PLANT - PRtJIH)E F1ELD fL., i. f ' . 6000 . .'---}~-;~~ ,.: J_~~~'c~~}~'if :.1 ~ ..- --. ---- --~-+------- -- f·~~ -:- - -<-----~-"':"-'---; -- ---;.----+-r---.,.---.....--+--~~- . .',.. ,1 ·.~;{;T~Ef~.·; .'~.. E£+¡F;...·: .¿H=:-F:~~ .... H -~._--- --,-- _..:.~ --:---- -r -~-.::-- ~ --T""------~t------;.-~-- ~~~--~ -- - -""----'----'-- ---- . . - " '. . - - -' - ¡ , --,--- .----- --- --~-- -~---'"--.--!---~.-~~- ~-.--- -~ --i- --~- "':"-_.~ ~r------.o.-- ~-___4-- -, - .- - '; ,; ;',: :, , .' - .,..-. --;.. -.. -'...- - .-!-. . . - - . --___ __._ ____~_~__ ,.----t----. -- -__.:-_~ -~-!'-_.... ----..-- -----.---~- "T-~- - ~__2~_----:.-_~~_~ !. ---- 1_..\-_ -,------ r~-i- - -+- -~- ~-~ ----~--.-~-.--- ~-- - ~-_=·~-:~~-.:~_.-L-t -_~.~C~-.é_ :=='.==~J : .:-- ~-T=tr~-= ;. . =;--J-~~ .l_.:. 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L I i -r~ I I : I i r i J I I I ! ~~{ j I t~ I I #2 ') ) NOTICE OF PUBLIC HEARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska oil and Gas Conservation Committee Conservation File No. 91-A Re: Prudhoe Bay Oil Pool Prudhoe Bay Oil Field Prudhoe Bay Topping Plant Notice is hereby given that an application was received from the Atlantic Richfield Company on January 11, 1974 applying for an order pursuant to Title 11, Alaska Administrative Code, Section 22.540 modifying or superseding Conservation Order No. 91 to operate the subj ect' crude oil topping plant at a throughput rate not to exceed 6,300 barrels per day on a monthly average basis, to produce such volume of crude oil and flare such volume of casinghead gas as is necessary to that end, and to inject unused fractions of crude oil into the Prudhoe Bay Oil Pool, until December 31, 1976. In addition it is requested that the order include a provision to authorize the committee to administratively further increase the volume of crude oil produced for topping plant use and to further extend or otherwise modify said order. A hearing on this matter will be held in the City Council Chambers at the Z. J. Loussac Library, 5th Avenue and F street, Anchorage, Alaska at 9:30 A.M. on January 25, 1974, at which time the operator and affected and interested parties will be heard. ~ rC. mt--UJ L. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Publish January 14, 1974 AFFI[ÞAV1T OF PUBLU.,~TION STATE OF ALASKA, THIRD JUDICIAL DISTRICT, ss. . _ _~l ~ ry.__ L._"Sha.ke.. -... --- - - ...... being first duly sworn on oath sn8 deposes and says that.......-.---.... is the.. .~.~.~~).~.~.__çJ ~~ !.·.K of the Anchorage News, a daily news- paper. That said newspaper has been approved as a legal news- paper by the Third Judicial Court, Anchorage, Alaska, and it is now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all of said time was printed in an office maintained at the aforesaid place of publication of said news- paper. That the annexed is a true the sum of $ 1 5 .00 which amount has been paid in full at the rate of 25¢ per line; Mini- mum charge $7.50. '-11)'ì J ./~/ / / ,/ .' :1/.~ /"/ . I '/""l// / . . t-... -f - t/?.. ."--:: -:"·61- - _~.I~Z_..I. ¿<..- Subscribed ~pp--sworn to before me this -----1-4<:fay of..--;J-~r"'n~T""'" 74 . 19.._.... ._~._.m.. NOTICE o.F PUBUCHII:ARIINIG " 'SliATE OFALA:SKA- DE PÞ,RTMEiNl O,FNIAiTU:~~~RE'S'OIU RC E'S IDIVISI,ONOIF ()\IL ~NIDGAS- "'aska Oil ,Ind. Gas. C~,n~,e:~~~t\ron . ' Gommift..; .) 1"; . .' . conserv~t¡i)~' FiI·~{:"~li',.:"¡~1.A·' , " ',' ",,; .' ,: ,¡1,~(I":'~',':',,,.:,''''I:.',~:~,i:i1':'':;':',,': ,I R~:" pr&dhoe.BaYII)I;Q'¡I'"::li_\rl'~. \:~.i¡" Prudlhoe,ß.ayðl,. F,'~ I hiM crude prlJdlh. .,0. e,·.',·,.·...,,$oII. ,.'1, ....,;...., T. O.'øl,~¡,n.'.oP. ·.Ia,n, furfhe.r. .in. oreaset..~. V.,o.ume.;., 'ent us. '. .".' . .... ' ...... ' oil .produced fOr· toppmg 1" "~I .. ' Notice·.is~ ~~rebY:' ¡I"enthllt anaIP"andi'O 'ful"ther, ext,el1-d or bt'~'tw¡S~ plication WIlS recì¡v~d from 1'heAt" rJ1'o~lfy sa:idorder. ,..' lantlc . 'Ri,~ry~I:!. I:~~!,c~pa. n¡, /~ ~:~n~t~,:,,~ i~ -.'h~~.,r¡n.g'>·b.1'it¡'i,s "",lItt$r wIlt b~: 111, 19741,ifP'þ\Y10ll. or.. r. " . '.', '. i .elt· CI>"ncl-\, Clham'bers nt 'to 1-1t1!' 1 1 .' AI'a's~1 Mml"'.ist'ra" hllld1\' }, ~,. fha.", ..' V·" ,.' ·.Ü.b. 5th ~~.vaa .C. '~.:e,,::,:S.'è+i;n, .,22~.54Q,. ,",~~¡fYi.d.n,!!. a,t. 'I '. h~' ..' Z. ·d· . ·FJ·St'LOUe~'S~~nC.b. .01. r,~.~:. ' I Ala~ë d' CO'nservatlon Or er Aven·ueln, .' . .re. I, "', ,'. , , ' . ,,,,," ora.. ~;pe;~\~;:rate the tUlbil~ctcr~·ce ka ·at.?:30 A.M. on Janu~1'V .t!~~1~~I~: IN., toppin'l plant'at I throu'gihputat whldl'l tl,;,e the;p.r~r .... '-1,¡be ~~te o,ot tl)'è~c~ed6,300 ~~'.rr~l.s ,perfected .and mtè~est,~.'!r,fll, es . ~I.. . d ' Itn'l month1Iy'averale. basIs, ,to hea'rd.., ' . . . a'{, ". '. . '. 'I ··.fru,de oil a,nd :' . producèS'~ch vo ~:m..1!.0 .c,' ,'II'S(S) ,..hom!Ìs ~. Marsha:!I, Jr. ,flll'ra "su·o~. vol~.~'o,fCllsln-Þ,~ead gtoEXeoutiv;eSeoretart . \ as is.,,¡:\ep. ~s.,~.a'f~ :.1:O!.hat.. èj4.è a~d '. 'AlaS,kll" Oil. ,lInd Gas ,çonservlI,' ¡nieet ':~nò-ied '~I'a-cf."ðnsø .rll e a~1 ' tionCommlttee \. .. ¡.nto tho! ,PM~h,~e .8..a'Y. 011, FO~I, .'u.n11-... , 300. .. l:por,'o. .uIP¡,n. 1Drlve.. \ t>eeemb~r 31-, 1976. Ancihor.à>lIe, Þ.IUk,a 99501 '·'.In ad'dl'l~"·.¡tl'S 'r~~·uested ,tht-!ht t~& p'ublish: J'lInulfV 1.-4, 1~74' " . \ d . I de a prlWIslon. to 8U onze . air er '"o'Om~¡ttee te:a-d.m¡"I~tntlv~IV lèQa'l N·otite 2063 \t,e c .' . . . --~ copy of a ··be·ga-l---Nertt-e:e· 2063 as it was published in regular issues (and not in supplemental form) of said newspaper for. a period of .--one·.----- insertions, 14 commencing on the .........__.day of __<!.ªr~!}~~.~):_...__.,19 .Z4, and ending on the...m..1.4·...... day of Jarrnarv 74 of .. ..... _.. _. _.. ._..:........__. ., 19....____, both dates inclusive, and that such newspaper was regularly distributed to its subscribers dur- ing all of sa,id period. That the full amount of the fee charged for the foregoing publication is u~__u the State of Alask.a. Third Division, Anchorage. Alask.a MY COMMISSION EXPIRES _..._f)~n'...../¿, 12.>-- #1 AtlanticR ichfieldCompany .w.,'" ,.,." ·¡f* North Americ~n Producing Division Alaska Expl~ " )tion & Producing Operations Post Office ¡L360 Anchorage, Alaska 99510 Telephone 907 277 5637 O. G. Simpson North Alaska District Manager ) ~-... ~". January 11, 1974 Alaska Oil & Gas Conservation Committee State of Alaska Department of Natural Resources r A Division of Oil & Gas ,4A1f ~~.4"", ..(.0;,0 , 1.- 3001 Porcupine Drive r I~ Anchorage, AK 99504 Subject: Application re Conservation Order No. 91 & Conservation Order No. 98-B, Rule 8. Gentlemen: We respectfully request that Conservation Order No. 91 be modified or superseded by an order temporarily authorizing Atlantic Richfield Company to increase the volume of crude oil produced for topping plant use to the maximum operating level, as hereinaft'er more specifically stated. In supporto! such request, the Committee is requested to consider the following: 1. On November 25, 1973, Alaska's Governor William A. Egan addressed the State on the energy crisis. In that address the Governor made the following statements relevant to thìsrequest: "Make no mistake about it. All Americans are confronted with an emergency of crisis propor- tions that cannot help but deteriorate even further as time goes on." * * * ". ..due to shortages of construction materials already becoming evident because of a lack of capacity and availability of fuel for some key industries, the construction time for the [TAPS] project might well extend over a much longer period than had been anticipated." * * * "Decisive action must be almost immediately forthcoming on the national scene if we are to have any chance for heading off massive unem- ployment.. ..The situation dictates that we cannot proceed merrily along oblivious to reality." * * * l -J:J. l.1 f ¥ I ~!. ,. . t' ·~ ) Alaska Oil & Gas Conservation Committee January 11, 1974 Page 2 "...Alaska's geographic location, its great size, and our distance from main sources of supply impose a logistics problem of far . greater magni tude· than in other states." * * * "...it cannot be emphasized too strongly that there must be total understanding... of the need to take unusually drastic conservation steps to make every gallon of heating oil or Diesel oil last for the longest possible time." * * * "These are hard realities to fathom, I know. But! think it is necess·ary to state them in order that no one is led to believe that our country as well as our state isn't facing one of the mos t severe prob lems 0 f our his tory. " 2. In an address to the Nation on Novemher 25, 1973, President Nixon described the present fuel situation as ·"a majorcrisisn requiring that Americans "immediately take strong effective countermeasures." The President has also· indicated that the nation faces "the most acute shortages of energy since World War II." 3. The United States Congress, in the Emergency Petroleum Allocation Act of 1973, has expressly found that: "(1) shortages of crude oil, residual fuel oil, and refined petroleum products caused by inadequate domestic production, environmental constraints, and the unavailability of imports sufficient to satisfy domestic demand, now exist or are imminent; "(2) such shortages have created or will create severe economic dislocations and hardships, including loss of jobs, closing of factories and businesses, reduction of crop plantings and harvesting, and curtailment of vital public services, including the transportation of food and other essential goods; and ) ) Alaska Oil & Gas Conservation Committee January 11, 1974 Page 3 "(3) such hardships and dislocations jeopardize the normal flow of commerce and constitute a I national energy crisis which isa threat to the public health, safety, and welfare and can be averted or minimized most efficiently through prompt action by the Executive branch of . Gove rnmen t . " 4. The Federal Energy Office has restated the foregoing Congressional Findings in the Federal Register of December 13, 1973. 5. In the Trans-Alaska Pipeline Authorization Act (Sec. 202), the Congressional Findings include the following: "(a) The early development and delivery of oil and gas ·from Alaska's North Slope to domestic markets is in the national interest because of growing domestic shortages and increasing . dependence upon insecure foreign sources.... "(c) The earliest possible construction of a trans-Alaska oil pipeline from the North Slope of Alaska to Port Valdez in that state will make the extensive proven and potential reserves of low-sulphur oil available for domestic use and will best serve the national interest." 6. The products from the subject crude oil topping plant are needed for the "early development and delivery of North Slope oil and gas" and for the "earliest possible construction of the trans-Alaska oil pipeline" as contemplated by the aforesaid Congressional Findings. 7. At the level of production presently authorized by Conservation Order No. 91, a deficiency of approximately 750 barrels per day will exist during the development of the Prudhoe Bay Field and the construction of the northern portion of the TAPS project. Approximately 650 barrels per day of such deficiency could be accommodated by an increase in the production rate of the crude oil topping plant to its maximum opera- tional level, i.e., an output of approximately 1200 barrels per day of Arctic Diesel fuel. \ ,~ ) Alaska Oil & Gas Conservation Committee January 11, 1974 Page 4 8. The only alternative to increasing the level of production from the plant is to obtain the needed products 'from dis tan tsources . Existing supplies of such products are substantially below demand levels and there is no reasonable basis for assuming that this situation will improve significantly within the foreseeable future. Even if and to the extent that the aforesaid development and construction projects receive effective priority allocations (and if delays in transportation of such products to the North Slope are somehow avoided) the products so obtained and delivered would necessarily result in a correspDnding decrease in the supply of such products to meet other demands in the State of Alaska and the remainder of the nation. 9. While the crude oil topping plant is operated at the maximum level, the 'production of casinghead gas will average approximately 460GMCF per day. Initially, 2100 MCF per day will be beneficially used, including that utilized for a safety pilot. Additional bene- ficial uses are anticipated and it is expected that by the end of this year 100% of the casinghead gas' will be beneficially used. 10. The Committee is respectfully referred to Conservation Order No. 91 and to the evidence submitted in support thereof insofar as concerns facts and findings pertaining to the injection of unused fractions of crude oil into the Prudhoe Bay Sadlerochit oil pool. 11. This request for temporary authority to flare excess casinghead gas is strictly limited to the operation of the subject crude oil topping plant and is not intended as a request or precedent for the flaring of excess casinghead gas for any other purpose. On the contrary, the products from the plant will be used, inter alia, for the construction of a facility to reinject casinghead gas upon the commencement of full- scale production from the North Slope. 12. Although the actual production and/or utilization of the subject products may, from time to time, be at less than the expected maximum demand level during a brief initial period, an immediate need exists for the authority hereby requested through 1976 due to critical planning, logistics and lead time considerations. 'D ) Alaska Oil & Gas Conservation Committee January 11, 1974 Page 5 Therefore, the Committee is respectfully requested to grant to Atlantic Richfield Company, as operator for itself and Exxon Company, U.S.A., permission to operate the subject crude oil topping plant at a throughput rate not to exceed 6,300 harrels per day on a monthly average basis, to produce such volume of crude oil and flare such volume of casinghead gas as is necessary to that end, and to inject unused fractions of crude oil into the Prudhoe Bay Sadle- rochitoil pool, all until Decemher 31, 1976. It is further requested that such order include a provision to authorize the Committee, by administrative order, to increase further the volume of crude oil produced for topping plant use' and to further extend or otherwise modify said order. Respectfully submitted, ATLANTIC RICHFIELD COMPANY .""'''- ) ~ v.......... '~,ì..'~' OGS/JRS:job '"