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Home My WebLink AboutCO 091 D ) ) 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. r · 0 0 q I Þ Order File Identifier Organizing (done) D Two-sided 1IIIIII111111111111 o Rescan Needed 1111111111111111111 RESCAN DIGITAL DATA OVERSIZED (Scannable) D Maps: o Other Items Scannable by a Large Scanner D Color Items: D Greyscale Items: D Diskettes, No. D Other, Norrype: o Poor Quality Originals: OVERSIZED (Non-Scannable) o Other: BY: Helen ~ D Logs of various kinds: ~ther:: Y'í\ þ¡ p, 'J3;K H I ¡g IT Date:b ~ ~,$"' 151 htfJ 111111111111111111I 151 ,MP "A It NOTES: Project Proofing BY: Helen _~ I t Date: ~ :J..¡ 0'5" Scanning Preparation BY: Helen ~ \ x 30 = + = TOTAL PAGES I r'o c¡ (Coun} dm!s noJ include cover sheet) I/\A 4D Date:{p ~oS' 151 rrrr- 11111111111111 "III Production Scanning Stage 1 Page Count from Scanned File: I 7 0 (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: V YES NO , Helen ~ Date: (p . ~ D S 151 m·,) BY: Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Helen Maria Date: Isl IIII1111I1111111111 Scanning is complete at this point unless rescanning is required. ReScanned 11I1111111111111111 BY: Helen Maria Date: Isl Comments about this file: Quality Checked 11I1111111111111111 12/1/2004 Orders File Cover Page.doc ) Conservation Order 91D 1. November 21, 1975 Atlantic Richfield Company application re: CO 91D 2. November 26,1975 Emergency Order 3. December 1, 1975 Atlantic Richfield Company application re: CO 91D 4. December 8, 1975 Notice of Hearing and affidavit of publication 5. December 8, 1975 Alaska Center for the Environment request for information 6. December 10, 1975 Jerry McCutcheon's notice of objection to issuance of a permit for the flaring of gas on the North Slope 7. December 10, 1975 Alaska Center for the Environment notice of 0 bj ection 8. December 12,1975 Memo to file 9. December 12, 1975 Letter from the Commission to Jerry McCutcheon re: hearing date 10. December 12, 1975 Letter from the Commission to Harry Kugler re: hearing date 11. December 23, 1975 Transcript 12. December 23, 1975 Sign in sheet 13. December 23,1975 Ltr received after losing of record from Gerald Brookman 14. January 5, 1976 Ltr re: ARCO's request to increase flaring at Prudhoe Bay 15. January 6, 1976 Ltr from the Commission to Alyeska requesting information 16. January 14, 1970 Federal Energy Administration response to Commission ltr 17. January 15, 1976 News article 18. January 19, 1976 Alyeska's response to letter of January 6, 1976 19. January 21,1976 Notice of Hearing and affidavit of publication 20. February 5, 1976 Comments files by Nana 21. February 6, 1976 Comments filed by Kodiak Oilfield Haulers 22. February 6, 1976 Comments filed by Sea Airmotive Inc. 23. February 6, 1976 Comments filed by Halliburton 24. February 6, 1976 Comments filed by ERA Helicopters 25. February 6, 1976 Comments filed by Atlantic Richfield Company 26. February 10, 1976 Comments filed by Schlumberger 27. February 11, 1976 Comments filed by BP Alaska Inc. 28. February 16, 1976 Comments filed by Jerry McCutcheon 29. February 13, 1976 Comments filed by Nana 30. February 18-19,1976 Committee Minutes 31. February 24, 1976 Comments filed by Mukluk Freight Lines, Inc. 32. April 16, 1976 Ltr to Chancy Croft re: flaring volumes 33. May 11, 1976 Ltr from BP Alaska Inc. re: concerns of excessive flaring Conservation Order 91D ~- )~ ~- I State of Alaska Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99501 Re: The application of the Atlantic) Richfield Company for an order ) pursuant to Title 11, Alaska ) Administrative Code, Section ) 22.540 modifying Conservation ) Order No. 91-C to permit the ) operation of the Prudhoe Bay ) Topping Plant at a throughput ) rate not to exceed an average of) 13,000 barrels per day on a ) monthly basis, and to increase ) the volume of casinghead gas ) flared to an amount not to ) exceed an average of 6,000 MCF ) per day, on a monthly average ) basis from December 1, 1975 ) through December 31, 1976. ) IT APPEARING THAT: Conservation Order No. 91-0 Prudhoe Bay Field Prudhoe Oil Pool Prudhoe Bay Topping Plant February 27, 1976 1. The Atlantic Richfield Company submitted the referenced application on December 1, 1975. 2. The notice of the Atlantic Richfield Company request was published in the Anchorage Daily News on December 8, 1975 pursuant to Title 11, Alaska Administrative Code, Section 22.540 and two protests were received. 3. A public hearing was held in the conference room of the Division of Oil and Gas building, Anchorage, Alaska on December 23, 1975. Testimony was presented by the applicant and statements were received from the public audience. 4. An emergency order had been issued on November 26, 1975 permitting the "flaring of the excess casinghead gas necessary to maintain the current combined production rate of about 12,000 barrels per day at the Crude Oil Topping Plant until 7:00 AM, December 10, 1975. 5. Solicited and unsolicited letters were received subsequent to the closing of the public hearing and these were relevant to the public record. ) J ') 6. By public notice published in the Anchorage Daily News on January 21, 1976 the record of the hearing was reopened until February 17, 1976 so that the material received after December 23, 1976 could be made part of the record of the hearing and could be examined by the public. This would allow other public comments to be received based on the material received after the close of the hearing. 7. Numerous statements were received during the period that the hearing was reopened and these have been made a part of the record of the hearing. Findings: 1. When crude oil is produced to supply the crude oil topping plant, casinghead gas must be separated from the crude and becomes a by-product of the plant operation. 2. On October 11, 1975, the size of the crude oil topping plant was doubled and the crude input capacity is now 13,000 BOPD. 3. "Arctic heating fuel II is the product of the crude oil topping plant and the demand has escalated since the summer of 1973. With an input to the plant of 13,000 barrels of oil per day, approximately 118,000 gallons per day of arctic heating fuel can be made if a monthly average of 6,000 MCF per day can be flared. This would be reduced by 5,000 to 33,000 gallons per day if the topping plant were operated under the existing order limiting the flaring rate to 3,200 MCF/day. 4. The principle users of the fuel are the Atlantic Richfield Company, BP Alaska, Inc. and the Alyeska Pipeline Service Company, but there are a number of companies using smaller amounts. The expected demand is around 110,000 gallons per day. 5. Beneficial uses of the casinghead gas have increased, but the increases in gas use have not kept pace with the increases in total gas volume produced in order to supply the demand for arctic heating fuel. 6. The Prudhoe Bay IIField Fuel Gas Systemll is under construction. This system is scheduled to be operational by October 1, 1976 and at that time, most of the casinghead gas can be put into the system and beneficially used. Arco is investigating the feasibility of accelerating this construction. 7. Several written and oral protests were made objecting to the continued flaring of gas at the topping plant or an increase in the flared volume. 8. Several users of the arctic diesel submitted written statements asking for the approval of ARCO's request and stating their reliance on this fuel with no alternative source identified. -2- \.,. \ J -') 9. Arctic diesel fuel is in short supply in Alaska and there is no excess on the West Coast. Any additional arctic diesel fuel required in Alaska would most likely have to come from the Gulf Coast area. CONCLUSIONS: 1 . The Oil and Gas Conservation Committee has taken the position in Conservation Orders Nos. 98A, B & C, the Prudhoe Bay Pool Rules, that the flaring of gas is prohibited except in cases of operational necessity or safety. 2. It is an operational necessity that an increase in the products of the crude oil topping plant are required for the Trans-Alaska pipe- line project and for the development of the field. 3. The flaring of gas as an operational necessity is not warranted after Octobe~ 1, 1976 rather than the December 31, 1976 date requested by the applicant. NOW, THEREFORE, IT IS ORDERED THAT: 1. Conservation Order No. 91-C 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 oil into the Prudhoe Oil Pool, subject to the following conditions: a. The volume of crude oil produced for topping plant use shall not exceed an average of 13,000 barrels per day on a monthly basis. b. The volume of casinghead gas flared shall not ~xceed an average of 6,000 MCF per day on a monthly basis from February 25,1976 until October 1, 1976. c. After October 1, 1976 flaring of casinghead gas in excess of the 400 MCF per day needed for a safety flare shall cease. -3- ) ." ) Conservation Order No. 91-0 Page 4 February 27, 1976 DONE at Anchorage, Alaska and dated February 27,1976. á~.r 1/J;~f. . " Thomas R. Marsna 1, Jr., Executive Secretary Alaska Oil and Gas Conservation Committee Concurring: #~ H yle Hamilton, Chairman Alaska Oil and Gas Conservation Committee H:::::-:~er~~em':!1£/ Alaska Oil and Gas Conservation Committee #33 Mr. O. K. Gilbreth, Jr. Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99501 r ~ "·'1 ¡ ¡ í~·· l\ t toO" .ì .,-. ï' "'''Ò''R '\~/ ) r I c. GI~\, ATLANTIC .t<ICHFIELD COMPANY.-r. -.---':.... ~.. ,.' , . , C. ENG 'O. P. O. Box 360 :.,--r-T-ËNG C) Anchorage, Alaska 99510 r '\.._~~-'E. N~~¡~li~. '\ ~.__\._..~ .ENG_eJ . May 11, 1976 : I 4 r:¡.,<\("; \ j \..-.-. \ 5 n'10 -r \ .. -.' \ 1 ;:; ¡:::)"L \ µJ .,.- \ ~ CfC:)l-TbJ \ -"-'l 3 Gt~J\' .-.-..\ ·····-i<Ev \ \ I . , j ----1..'t,.RÄft\~ -_·'[:-~~~t-\ t' .~ -CONFER~ ; concem-.....- I f 11 . FlU: t o oWlng I...'..· ~i..,.."."1I"-~ 'cr ( ~N BP ALASKA. INC. P. O. Box 4-1379 Anchorage, Alaska 99509 ') DeaT Mr. Gilbreth: In response to your letter of April 29, 1976, advising us of your regarding the flaring of gas at Prudhoe Bay, we have prepared the comments. We anticipate three periods of activity that will necessitate flaring other than required safety flares: 1. Prior to Oil Production a. Fuel gas plant flash vapor emission b. Pipeline and vessel purging 2. Facilities and Pipeline Startup 3. Nonnal operations. A brief discussion of the need for flaring during these periods is attached. The relative volumes associated with time periods 1 and 3 will be small. It is difficult to estimate the flare volume associated with period 2. Establishing a stable operation will be realized only after considerable equipment shakedown and coordination of the various operating facilities. The need for gas flare operating flexibility is obvious, however, the adverse impact of flaring is paramount in our planning. We will be happy to pursue this matter further with you as you desire. Very truly yours, BP ALASKA INC. ATLANTIC RICHFIELD COMPANY ./j~JÛ:1Lx-R-? K. R. Keep Vice President & General Manager Attachment ,~/ /~. .. ~ - /. /- A': /< '. ./ y--./ C" (>~j (>. ( C;/ L.t, __ '-..jl/--t. Ct C/',/.;.· H. A. Slack Vice President Q Resident Manager 11)1E©E~W~~ ~ ~ .. MAY 1 9 1976 . ðiVt~tON OP Q)t ANô GAS ,ü.1OtO~Mê: ) I GM:> FLARING DISCUSSION - PRUDHOE BAl'FIELD 1. Prior to Oil Production a) October 1, 1976, is the planned startup date of the Field Fuel Gas Unit. Source gas for this unit, prior to startup of the Central Compression Plant, will be gas from one of the injection wells. One of the processes in the Field Fuel Gas Unit, hydrocarbon conditioning, will result in flash gas emission. As part of this process, gas is lowered to -40oF for removal of liquid hydrocarbons. These liquids are taken to a flash drum where they are pumped with gas cap condensates back into the reservoir. Flash vapors from this vessel are desigI:1ed to be flared prior to operation of the central plant compressors. The volume of flash vapors is influenced by gas delivery temperature and the required plant output. We estimate this volume would range from .5 to 2.0 MMCF/day. b) Prior to startup of facilities, purging of air or inerts from vessels and pipelines is desirable. Some venting of gas will be necessary in this procedure. It is not anticipated, however, that the volumes will be significant. 2. Facilities and Pipeline Startup We have received from Alyeska preliminary desired crude volumes on a day sequence schedule for the first 75 days. This schedule shows the crude requirements for the pipeline will approximate 200,000 ,bbls per day initially increasing to 600,000 bbls per day as soon as possible. Gas flaring requirements during this initial period of operation will be associated with these volumes of crude production. Assuming a Gas-Oil ratio of 800 CFPB, the total volume of gas to be handled would be 160 MMCF/day, increasing to a maximum expected volume of 480 MMCF/day. By maintaining these relatively low rates during the initial startup periods, we expect to minimize flare volumes while initial equipment shakedown is in progress. 3. Normal Operations The facilities have been designed with redundant equipment to minimize lost oil production and gas flaring. There will always be the necessity, however, for gas flaring associated with pressure relief, equipment maintenance and safety shutdowns. These volumes will be intermittent and of varying amounts. There will also be small continuously burning pilots associated with the emergency gas flaring systems. ,Æ œ a: IE ~ W œ Œ MAY 1 9 1976 OfVì$j'ON Of on AND' GAS ~Mti.t\t.;i.,itj #32 /pjt '¡¿v&L ~ TA/1 L- c~ K ~W, f"Ct5~./ DIVI~1()\<l (If. ()1'; 1:';'¡;,.~,;'¡,\3 ~,!'\-¿H(:! ".t,t "; As a result of a hearing on December 23, 1975 and infoxmation submitted up to February 17, 1976, the Conservation Committee issued Con,servation Order No. 91-D which qives Arco t.he opera- tor of 'the toppinq plant, permission to operate the plant. at high rates and flare up to 6,000 MCP per day until October 1, 1976 at which time 1:he flare must be reduced to a safety flare not to exceed 400 MCF per day. The order and some pertinent information is also attached for your informat.ion. Your par- ticular attention is called ~o the firs~ paqe of the PEA letter of 14 January 1976 and the ramifications of restricting r-' ...,'., .--" œ IiV \;; , li '~;'1 \ ¡". ;. .. ,'\ ¡ ,..... t" I·· t_ . \': 'i"~ . . \ \~L. j }. r~ lklJ r: ! \') lð~ :~ \ì !~.'. , \, I: .':' ~l ~" . .. "',I,,., q ',~"'n ! ,~ t \ 6 ;._' I I \' 247.50 495..00 742.50 1500 3000 4500 112.20 224.40 336.77 $O~25 0.50 0.75 680 1360 2041 Total Stat.e Interest . ··'v·,',-'_.......··,-_', rn· ..,"j,.... __-_.1/:'_.. _j....".~·-,Lo\.:I'·· '_ll'11_"'_V~.. Total state Interest .. ",,~~i_"'.iI·_·'" ............... ...."'tl"'ll__'."_ '_·~'I'I."-__·"'IIII'~_I . vor:úmë"niX:a~ð/~Y fl~dM~1~~~š.lbfë·vòl _,' _'.... lre~>4,.J~J.\"L ..., """,,,,. _.. H.,..~,O.º~".~!£!L~fl:l\,.",,,, . 1:'he att.a.cQed t.able shows t.be amount of gas produced, used and flared on It ~cnt.hly basis as a result, ofopera1:1on of t.he top- ping'plantat Prudboe Bay.. Insofar as 1:118 value is concerned t we do not: know what it will ult:imat.e.ly turn out 'to be. but on the, hasis of dally 'volumes. pos$1ble,the value would be ,as follows for diff·erent wellhead prices. Wellhea.d Y!l~!..,^,fß~!" HOßorableChancyCroft 'President of' the Senate Pouch V # ·St.at.e Capitol Juneau " Alaska. 99811 De'ar Chancy ~ The followlnq information is in answer to your question a,bout; qas flarl,nq at. Prudhoe l~ay. Ap,ril 16, 1976 ( t'J (1' It .,,, . .,. \..,"~ "'Î \ \ \ .(. } The Honorable Chancy Croft: .,4:/"J~( .' ' Ifi::iI7,Þ~' -2- April 16, 1976 the availability of diesel for the pipeline construction. I share your concern regarding the permitting of any flaring in the State of Alaska., and have been sensitive and demand- ing in my analysis of t.he work of t.he Oil and Gas Conservation Committee. One of the things that. doesn't show in t.he record, but which has been extremely important in t.heir deliberations, has been the consideration of State inoome loss if the pipe- line is delayed for any period for reasons connected to small scale flaring. I have recently requested t.he Conservat.ion Committee to make a. formal request. t.o t.he operators of Prudhoe Bay regarding any future plans for flarinq. It is my purpose in making- this request t.hat any possible flaring in the future should be put on the reoord so tha.t. steps t.o avoid or minimize it. can be taken as early as possible rather t.han treating each situation within a short timeframe and on anem.ergency basis. As you know, any flaring, even that on a small soale is a matt-er of cost. trade-offs, and it is my hope that we can minimize the cost of avoiding the flaring by looking far enough ahead to plan ~o avoid it. I hope this is responsive, and will be glad to supply any furt.her information you desire. Best reqards, Guy R. Martin Commissioner Enolosure bee: The Hon. Jay S. Hammond, Governor Mr. O,K. Gilbreth, Director of Oil and Gas )1 Disposition of Gas from Crude Oil Topping Plant ..', . Prudhoe Bay Field Total Volume Volume Used Volume Flared Month & Year (MCF) (r~ C F ) (MCF) , 2/76 236,836 157,933 78,903 1/76 285,111 182,816 102,295 12/75 ' , 292, 744 171,089 121,655 11/75 260,830 134,602 126,228 10/75 221,667 101 ,869 119,798 9/75 148,393 " 71 ,804 76,589 8/75 146,665 63,794 82,871 7/75 11 9, 182 59,411 59,771 6/75 99,244 63,668 35,576 5/75 ' 154,019 76,535 77,484 4/75 157,247 77,989 79,258 3/75 160,153 83,824 76,329 . ' ~., ¡,\. \ , , ,\ , . , .~. , ., " , .. ' . '¡'.., , '1(,,; .~" .. "~' ., ';I' ... ...' "';:,...: "\'';'<. , :,. ~i, ,. ,::'-171t~~.t~')~~;,,~, ,,'& :. "", J' h'/¡",,:,J:f:,:.. ,,::: '\ :'''''l'tJ;t;.,~\,1 #31 .. '}: ) MUKLUK FREIGHT LINES, INC. ONE OF THE CROWLEY COMPANIES ANCHORAGE, ALASKA 99502 PHONE (907) 274-9531 {~~~"'I~ rG+.ÓëÖra ~\ =rI~::::;:fß, . ~i, I , 2 r.:"'I)~.-""..-- ..- F !-,--,-;;,;,~. \,~'.J I11I\A J.w:----..-.~r::~\i'llJV · \ .:'/ .:1..'1:" 'i" (..... r i ·-f--t. "~\.' '.;(: . ··1..·-..·.. ' I _,__.. .., ,. ,.i'.;> ! . I 'i- GCCL'Ii7 : 'I' ') ·.(~¡.'·.('l. ·.·.-1 ~.-.- \i-,. ~ ·s": ;,'L ' ·1 1::::: \ ,,~~ "'-; .":' ......J '=¡.=~,p,~v ..'..J '- -L~~~~Fi--l'- f. SEC'---'¡--- CÕNj:~R;'--"~- J, Fïi.Ë-;-~-'--~"- ~"'''.) V 570 W 53rd AVE. RALPH A WOOD PRESI DENT February 24, 1976 Alaska Oil and Gas Conservation Committee State of Alaska Department of Natural Resources Division of Oil and Gas 3001 Porcupine Anchorage, Alaska 99504 Gentlemen: This letter is in response to your public notice inviting additional comments for the hearing record of Conservation Order No. 91D. Mukluk Freight Lines has served the Prudhoe Bay area oil development since its discovery. We are active in transporting materials to the North Slope and additionally provide trucking and associated services to that area. Mukluk is now using over 100,000 gallons of arctic heating fuel per month, providing services to the operations in the Prudhoe area. To date this fuel has been obtained from Atlantic Richfield's Crude Oil Topping Plant. We understand there will be a shortage of arctic heating fuel in the Prudhoe area during 1976 if Atlantic Richfield's plants are constrained by existing flare limitations. Were this to occur and we were required to provide fuel from Fairbanks or further south, it would create problems not only for us but would also influence others since we would be taking fuel from already limited stocks. ·0 ~©~"wæ~ ~ r j\\ ..;:.J FE~ 2 5 1916 DIVISION OP Oil AND GAS ANCHOR,A,Gc "NOTHING TO SELL BUT SERVICE" ~~ '. Alaska Oil and G } Conservation Committee February 24, 1976 Page 2 MUKLUK FREIGHT LINES, INC. Mukluk supports Atlantic Richfield's request for additional flare authority. The logic of additional incremental flaring during 1976 argues favorably against the alternative of acquiring arctic heating fuel from limited avails and transporting it many hundreds of miles. Ralph A Wood kd W~©lli~W~[[ FEH 2 5 1976 DIVISION OF OIL AND GAS ANCHOÞAGc #30 ) ; k t \ Conservation Order No. 91-0 Committee Minutes February 18, 19, 1976 Harry Kugler and Tom Marshall met at various times to review the transcript of the hearing held on December 23, 1975. Hoyle Hamilton was in Washington, D.C. February 23, 1976 Kugler and Marshall wrote some findings and several conclusions. Hamilton was in Juneau. February 24, 1976 Kugler, Marshall and Hamilton reviewed findings and conclusions and the order. February 27, 1976 Final order was proofread, retyped and executed. March 1,1976 Order sent to print shop for duplication. #29 ) ) BOX 4-584 ANCHORAGE, ALASKA 99509 I~I!, I~j ,A\, ¡It.N ~ ~",foI\\.m , ¡ OilFIELD SERVICES, INC. (907) 279 - 0569 A SUBSIDIARY OF NAN A DEVELOPMENT CORPORATION ~ø··"·l;:::"'· ~.-'\" /- ' I '., ~~fE'."G;, I( _'."'\ " : .......,'\ " February 13, 1976 Mr. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchor,age, Alaska 99501 Dear Mr. Marshall: L "":,,,,",._~~~~~i'~ .:..., .i.'.i"W·n"'·~~·~".' ".', .('-" I ,... ~~,," ( "\ ...Q .. 'f.)'''' L ,,1\ ,·t, .. \ ,~,,,,( r~ '\ Re: CONSERVATION FILE NO. 91-D It is the understanding of Nana Oilfield Services, Inc. ,that Atlantic Richfield Company is requesting a permit to increase its Prudhoe Bay crude oil topping plant throughout to a maximum of 13,000 barrels per day and to increase the volume of casinghead gas flared to a maximum of 6,000 mlf per day. Nana Oilfield Services has a continuing monthly requirement of 40,000 gallons of the Arco plant output. We are concerned that accelerated activities in the Prudhoe Bay area will see the existing Arco plant unable to meet demand, with resultant severe impact on our ability to provide support in that area. Consequently, NOSI is of the op~n~on that there is a definite need for the additional topping plant production and would urge that the committee act favorably on that request by Arco. In addition, we are aware of the requirement by the State to seek maximum beneficial use of State natural resources. Consequently, we feel that if a productive use could be made of the gas that is to be flared, we urge the committee to look favorably on any such requests, if they appear reasonable. ;;;;;",kI- .,....... , :Ö). Œ © lli ~ W æ [..-~ J~ 0, '_ ... ,",J F E ~ 1 7 1976 Burton H. Atwood, ~~ President ~, . BHA:ab OIVí$ION OF OIL AND GAg ANCHð~^~r:, Member Villages: Ambler, Buckland, Candle, Deering, Kiana, Kivalina, Kobuk, Kotzebue, Noatak, Noorvik, Selawik, Shungnak #28 ~7-': rr C I C y\.-, Ci' ì i I -~ ," ¡ ,,/~/'I 91 - D ._~ f l" ., ".- t Oil and Gas Conservation Committee Anchorage, Alaska RE: ARCO NORTHSLOPE FLARING. F; / þII &f I II. ~ D ¡-(('co'rd open ~6V '7/-0 CH1//. I request that the permission to flare 6 million cubic feet of gas a dày be denied. It makes little sense to flare half as much energy as one is going to produce and there is no need for this flaring. ARCO has had 7 years to build a gas reinj ection facility and has promised repeatedly through the years to build the gas reinjection facility. Not only did ARCO not build the reinjection facility but built another topping line doubling its capacity. ARCO knew they could get away with not building a reinj ection facility. There is little doubt that the Oil and Gas Conservation Committee are in bed with ARCO. Further, I request you decrease the input into the topping plant until such time as a beneficial use is found for all the gas that is produced as a result of the oil production. Next, I request that the Commission certify that the additional 400,000 cubic feet a day of gas that is flared that is called a safety flare, is the lowest amount of gas that would be flared by any replacement safety device and that the Commission has thoroughly studied the subj ect or that the plant production be halted until replacement safety equipment is in- stalled that wastes less gas. The joint conspiring of the Committee and ARCO to cover up the abuse of public office by trying to prove that there are no other sources of Arctic fuel are but a continuation of the joint conspiring of the fraudulent claims of possible beneficial use of the gas throughout the previous years. This Committee has knowingly accepted false information without making even a feeble attempt to verify the data. I demand that the Oil and Gas Conservation Committee produce the correspondence and all other records pertaining to a letter that was sent to ARCO as follows: 'We now have received your October report and it shows according to our calculations that approximately 4.4 barrels of net reservoir space are being voided for each barrel of output from the plant. This does not seem to be a prudent practice to the Committee. Further reinjection of all produced gas in excess to that beneficially used will be a consideration in granting the extension". Gentlemen, I have asked repeatedly for this information. I would like all the records produced and explanation of why it was of concern then and why it is no longer a concern now. "1 ~ 'If!: , I ~jt .J>' !~,:~l/).r I.' , ï .~ ~l!~ :', fr .---, -2- Next, I demand that an economic evaluation of the flaring be had before allowing any flaring. And that ARCO be ordered to give the value of the gas being flared by ARCO. With the possibility of a loss of up to $10, 000 a day, the evaluation is essential. Last, that this Commission explain how it has let 7 years go by with- out requiring reinj ection. Gentlemen, the statement that there are no other sources of Arctic heating fuel in Alaska is false. Any statement by any Federal Energy official that there are inadequate supplies should be subj ect to an appropriate investigation. Alluding to the operation of ARCO f s plant as somehow helping the balance of payments and the energy crisis, are totally false. The United States has had a very favorable balance of payments with over $11 billion surplus in the last year J the highest in history. Some economists consider it excessive. The world enjoys a surplus capacity of 12 million barrels of oil a day and we are even having gas wars in the mid-West. In conclusion, gentlemen, I am asking the Legislature to investigate the Oil and Gas Conservation Committee. This Committee's operation has 'all the earmarks of the operation of the Alaska State Housing Authority. I doubt if they will find evidence of criminal activity, for those records will be found missing as they were at the Alaska State Housing Authority, but I am sure an investigation will find a trail of missing records, mismanage- ment and incompetence as was the case at the Alaska State Housing Authority. IJ.A. ~~- ~;~cCutcheon Box 2340 Anchorage, Alaska 99510 February 16, 1976 #27 ----A-_ } ) ~ BP ALASKA INC. MAILING ADDRESS: P.O. BOX 4-1379 ANCHORAGE, ALASKA 99509 r··"J··~!~~j-~;'·-··I~,~, L..I (":-OLI}~ I I ~ f=1 1~.=1 I ( r-'-) :'l-'¡: ., r T""'''¡, ., , '1'---¡: " ',-'~],=-J ~ \,' ~ ~ ¡ . ·,q--··~--'-~î ~¡ 9/:"z:r"i c'··"[7r'~:-o.,r···T~.. 3111 .. C .. STREET. TELEPHONE (907) 279-0644 February 11, 1976 Alaska Oil & Gas Conservation Coomittee State of Alaska Department of Natural Resources Division of Oil & Gas 3001 Porcupine Drive Anchorage, Alaska 99501 Re: Conservation Order No. 91-D Gentlerren: Pursuant to your public notice published. January 21, 1976 we' understand that the record in the referenced' Conservation Order shall remain open to February 17, 1976. Accordingly, we wish to sub:nit this letter in support of the application of Atlantic Richfield Canpany in Conservation Order No. 91-D and would bring to the Committee's attention the follCMing: 1. BP Alaska Inc., as operator for Standard oil Canpany of Ohio of the western portion of the Prudhoe Bay field has a critical need for the arctic heating and diesel fuel prcxluced. by Atlantic Richfield Company's Prudhoe Bay Crude Oil Topping Plant, as has been, in our opinion, amply dem:mstrated. in the record næ before you. 2. We would direct the Conmittee' s attention to the letter in the record to Mr. Hoyle H. Hamiliton fran Mr. Fred Chiei, Jr., Deputy Regional Administrator, Federal Energy Aàministration dated January 14, 1976. We feel this letter makes it clear that: (i) the nearest alternate source of arctic diesel is IIDst likely the Gulf Coast area of the U. S.; (ii) that both supply interruptability and the potential for environmental impact increases as a result of trans- portation and storage necessary to acquire this fuel in the U. S.; and (iii) that the total energy conSUIœd in the effort of transporting arctic heating or diesel fuel fran its nearest point of availability to the North Slope will probably exceed by many times the energy consmned. in the flaring of gas on a temporary basis fran the Atlantic Richfield Company plant. If the Corrmittee has any questions it wishes to direct to BP Alaska Inc. as the operator of the western portion of the Prudhoe Bay Field, please do not hesitate to do so and I will undertake to anS'Ner them and file them of recorw. a~s~:_ as ~s~~le. ... '..., n \;'7: [ j ~ rOc ~ IC /I J7 it::! 1','~; U" \ ,,~~ .., Û 1=J ¡ ¡ ¡ ~ t t, ,.,_'.. Ud) I· ¡... M 1 ¿ ; a j f, - ·oJ ~ ~J ¡ ¡.,< Very truly yours, DIVISION OF ()if. ~,;>';i"'> r-- ,.,_ '.. . ,] \,/'. ¡ -" oJ ANCHCì·".~\''3,r:; - ....., BP AIASKA INC. /'" ,"Î je;",. ,. /:) .//K.- I !.-/~ '-..X.,../L --('1 , ) K. R. Keep 1/1-- Vice President & General Manager JAR.:blm #26 '~L\ I SCHLUMB :R OFFSHORE SERVICES 5000 GULl- ,~EEWAY, p,O, BOX 2175 HOUSTON, TEXAS 77001, (713) 928-2511 ) PLEASE REPLY TO 512 W. INTERNATIONAL AIRPORT ROAD ANCHORAGE, ALASKA 99502 (í ! r}) I 1.."'--":1 . .."'·D·...,4. .r..-.-:.'......-I.'."-l. I ,I., I r,-T(~~·-'(·~: ¡-.- ~----I-·-C. I'" 10 ~l9~¿ 1;1'1+ , [---iI' : I '---I I I ¡ I ,.' IY'i I ,-e., o· February Alaska Oi.l and Gas Conservation Canmi ttee 3001 Porcupine Drive Anchorage, Alaska 99501 Dear Sir; It has been noted ·that t.he Atlantic Richfield Company has filed an application .lea allüw increased operations of their toping plant in Prudhoe Bay. I vJould like to st"Longly urge that Atlantic Hich:f::ield Con~pany be allowed to increase the output of their crude oil toping plant. Schlumberg'er Offshore Services is a sexvice industry 'that is essential to the definitition, evalTh~tion, and production of thE~ hyc1ro"-'carbon in the state of Alaska. Vve would be unable to afford tJ1e excessive expense of facili ties and transportation in order to obtai.n Arctic fuel.:, and lubricants if they were not available under a service contract in the Prudhoe Bay area. Not only would t_he cost be prohibitive to us but we are also tmable to control transportation or enviromental considerations that would be associa-ted with transporation and storage of relatively small amounts of this type fuel and lubricants. Schlumberger is not the only service related indus-try tløt have this problem. It could be disas-trous to ha,ve many small companies attEmpting to handle their own pU"Lchase, transportation and storage of fuel and lubricants. Not anI y would the smaller companies be ineff icie.nt in this aspect but they would also not have the st.aff nor resources in order to handle an operation in an efficient, safe manner. l\.gô.ir.., it is :!:"equesteð t.h;rt. thi s ;:rppl.ica.tjon :for additional output by Atlantic Richfield be granted for their prudhoe Bay Toping plant. 1:hank you for your consideration in this matter and I will be free to provide any additional information or help if you so desire. , , ø"~~~ viJilliam M. Blair District Manager Schlumberger Offshore Services ~"z.1B / sh CC: File ~. . A DIVISION OF SCHLUMBERGER LIMITED #25 AtlanticRichfieldCompany North Amp' 'il P~Oducing Division North AI,;'lstnct , .¡ Post Office Box 360 Anchorage, Alaska 99510 Telephone 907 277 5637 Subject: Conservation Order No. 9l-D f(' 'y / ~'----- , ;- I c. ~"--, c. r \, r=¡; , ' - -" j .. / 1'.. I ¡ N I h . I I , f"····" ' I ~, ¡ _~"i ..... Ir:¿'\/ /'11,1 I)....·· ....--, r. --..-- ., i... ....t..,..s~~·..·T----' CONF~¡<; ---- :~~~~:~~;, (.. -.?,..,.~~~-r-o"- ".,"'.r(' ,..~,.".,\,,,.. '-!1 ,.. .,'. (j \"- I I " .,'. ("""Ii,,"~ t I..t. February 6, 1976 Alaska Oil & Gas Conservation Committee State of Alaska Department of Natural Resources Division of Oil & Gas 3001 Porcupine Drive Anchorage, AK 99501 Gentlemen: This supplements my direct testimony of December 23, 1975. In my original testimony, I explained why we fear third parties would be adversely impacted if we are forced to reduce production of Arctic heating fuel. I explained how such impact would be felt, not merely on the North Slope, but throughout the; State because of the "domino" effect of removing up to 33,000 gallons per day from the Alaska market. In addition to such indirect effects, perhaps I should have also emphasized there are numerous third parties at Prudhoe who could suffer very direct impacts. These include at least one federal agency (the Federal Aviation Administration), one State agency (the Alaska Division of Aviation), and various private parties who serve the area. During the month of December these third parties took over 350,000 gallons of Arctic heating fuel from the crude oil topping plants. We appreciate your thoughtful consideration of our application. Very / ly you~s, . "7Ø~~ -L.K. Williams Operations Manager II~ ti? i:; .1 " ,~:~, \ ." . I I.: '"".. ~;"-.J ¡ : "-- ~ r:- C t: 1 í) , ~- ¡ .. .'~, D :\'1 ': r~;~: 2;:,~) !\\ :,' '--:, #24 ERA ) HELICOPTERS, ì INC. 5051 WESTHEIMER - SUITE 1900 HOUSTON, TEXAS 77027 ' TELEPfrlONE 713 621-7800 P. Q. BOX 60149 FAIRBANKS, ALASKA 99701 TELEPHONE 907 452-1838 P. O. BOX 762 ANCHORAGE, ALASKA 99510 TELEPHONE 907 272-5422 t~~'~.:'1I'¡' I'i'¡-'-'',:., . ,~, February 6, 1976 r" .. , ,--".",_. ~ I D1R I I PLEASE REPLY TO: ~-IC--GÈOL·RM Anchorage.! ~"-f--'C~-'ENG""I:~I ,:=[=~-:-'-~N~-] _~_ ¡ t ... L Nb I ¡ ,.--..........-,.-..".¿.." ,.....,' ~. .1. . 3. --:' I""' ...'.--' - -- _.1' ". ... t. ~ '. ~'" ¡ :: I-:;;"~::i-i '. '.. ~ ¡ ." (.: ~ ~:'L_Ji~ ,- I ~¿ C:':':(iL I L,.--/ .........,.. ... I''''''~-I ~ ~"...' 3 , ¡~:I:~~;1~~T_=F ~ . _ J. ',." ~~-~ -_-,",L ~ tON~$¡ ..' ~.,~-,~,'".,...._-".;,.-..- ",-" ~ f!lE:( 0 qt·\) ~i,I.J:11· . -' T ""7 ,<Ii". Alaska Oil & Gas Conservation Committee 3003 Porcupine Drive Anchorage, Alaska 99501 Reference: Conservation Order 910 Gentlemen: ERA Helicopters, Inc. is assisting in the development of Alaska natural resources on the North Slope of Alaska. It is doing so both on a contractural basis with various oil companies on the North Slope and on a casual aircraft charter basis from it's facility at Deadhorse, Alaska. A fact of the matter is, little, if any, of ERA's business conducted from it's base at Deadhorse is related to any other form of enterprise. In maintaining it's base at Deadhorse, ERA presently purchases from Atlantic Richfield Company, varying quantities of their locally produced Napatha and Arctic heating fuel. If this were not available to ERA at Prudhoe Bay, we would be forced to transport these products from as far away as Fairbanks. We consider the availability of these fuels at Prudhoe Bay a great asset in the orderly development of other natural resources on the North Slope. If they were not available, both great inconvenience and expense would be involved in transporting them from elsewhere. Sincerely yours, ERA HELICOPTERS, INC. (;2j." -- i' I ..e , /t-::?::::;::;;/"/. - ... .. .-fG _......~ ~ David L. Baumeister Vice President of Sales & ~~,:, ~ {-_....:=-~ ------ Contracts I, ---" (~,; (r'J I;,:::: \~ , .. ¡' \ ,::: I; r' \ ' tl \ ':)' J L~, \~: ..:;; :, \ \\\ ,,-- c\ ..' \., ',,'. \j _..' \i~ ',y'..r;~,\c.~ì"~ ?~ (,~:,\,~..:;·>:'0 C:.i,'-:' f.~"J " ,1,1 #23 1) -III '. ALLIBURTON SERVIOES P. O. BOX 6287 - AIRPORT ANNEX ANCHORAGE, ALASKA 99502 PHONE NUMBER: 907/279-3444 CARL A. LANE Manager, Alaskan Operations February 6» 1976 Alaska Oil & Gas Conservation Committee 3001 Porcuoine Drive Anchorage,' Alaska 99501 Re: Conservation Order Gentlemen: ·t ~~,\¡., 4ft. I:':~! ''''''''. . '.,,,~ :~.. i ~. lI] . ", I :r-"¡ (·::;-1 :1-- I . ~-_. :.:...~,., k".. I ~.." -1-_,1 ~':~.-.S: I :1 .1 ¡H"'T~.~...,. ' ¡~,t H-'''H''~ : ~_..._"~ jCONFEk, ,~I~E: (0'. cri.~¡ No" 9l-D ~ : Halliburton Services is participe,ting in the development of the Prudtwe Bay field and in other exploration activities in that area. HaVing personnel, equip- ment and facilities in the field area constitutes the requirement for arctic heat- ing fuel. Our current arctic heating fuel usage is 6000 to 7000 gallons per month. Future needs \lJÎ11 ~ ncre3.se due to i ncrea.sed ê,cti vi ty in the area. l\~e feel that the ability to purchase fuel from Atlëmtic Richfield in the field is necessary for our operations. Very truly yours, ad~ C. fI... Lô.ne f'la.nager - /\1 askan Operati ons C.AL : r'd ~~~\ ~~: \" L \~) I)Né'C)~~~\,C: " A ..-.....-........ CompallY .~, ,~ ~.::".j \ ' .... '\ \~.~;¡ \\ \.1 ",:;; Ç) ~~) ....... ' I ". ,~.~ ~....,:::' \, ". #22 Þ ;)ea QiftmoticJe, tlKC. ) CERTIFIED AIRCRAFT AND RADIO REPAIR STATION CHARTER AND CONTRACT FLYING P. O. BOX 6-003 . ANCHORAGE, ALASKA 991502 TELEPHONE 277-0!522 \ DIR _~_-, -.---.. -C.··GEOl \~ \ . _._--~. --or-c. "ENG___Li "-f-f'-E\~I?J__í' ....-.. ...') . 'NG \ \. ... . ... ,.. \\ ~:, ~ . "-'.\"._-, I ~.' t I I .~ ". ·"<'··f..----""Jo ¡ . ,... .. "._, ----, \ ... 1,':<':~~ ì ' \ t<. "\'-c-' I ' I \" (,0"'\ \ '---'~ \ \-r;~:,:~~-J-. \....."'....,'.~...J_~ \" '''·-C \ " ':..--,----.---. 'ë () ;\'1~:: I: ':~l: February 06, 1976 Alaska Oil & Gas Conservation Carmittee 3001 Porcupine Drive Anchorage, Alaska 99501 Gentlemen : Reference your conservation Docket No. 91D concerning Atlantic Richfield Canpanies desire to increase "Flare Liroi t" at Prudhoe Bay. L~~lY<:))~":~( . .~~ Sea Airmotive, Inc. an Alaskan canpany operated by Alaskans for over 35 years in Alaska, provides regular and emergency services to all the canpanies, contractors, sub-contractors, concerned with the developemant of the North Slope fran our base of operations at Deadhorse. We are highly dependent upon ARCO in providing arctic heating fuel to run our Deadhorse facility. If we could not obtain fuel fran ARCO' s Deadhorse plant, we would be forced to obtain fuel fran rem:>te locations at a much greater cost, which could be financially detrimental to our operation. Additionally, if we were forced to acquire fuel elsewhere, 'We would be taking fran an already restricted supply allocated to other users. Therefore, 'We are in support of Atlantic Richfields viable need for increased "Flare Limit". ;¡;¡~ Kirk D. Gay --, Senior vice presidLt KDG/ph -.,,/ ¡ : '.I .. rr:J \::.,' :ì i) !- t-~ U (: .¡ ,,"...' ; . ~) [\./:.: l () i' ~ Cr::: C¡~' ~ ..o,·'V::-ì('·:": .- ~ '.... - . ~ LOCATED ON THE WEST SHORE OF LAKE HOOD #21 ) KODIAK OILFIELD HAULERS, INC. HEAD OFFICE SUITE 210 707 A STREET ANCHORAGE, ALASKA 99501 February 6, 1976 ' ALASKA OIL AND GAS CONSERVATION COMMITTEE 3001 Porcupine Drive Anchorage, Alaska 99501 Re: Conservati~n Order 91 D Gentlemen: We would like to take this opportunity to add our input to the above conservation hearing. As a contractor on the North Slope we are vitally interested in this proceeding. Kodiak Oilfield Haulers, Inc. is a common carrier with a fleet of approximately 70 vehicles of various sizes on the North Slope. We presently are moving the vast majority of the drilling rigs on the Slope as well as various supplies required to drill wells. Kodiak Oilfield Haulers, Inc. is presently buying about 100,000 gallons of fuel per month from the Arco topping plant. If we were to be cut off from this supply we would be faced with trucking fuel from Fairbanks at an estimated increase on cost of 50 cents per gallon. This cost would, of course, be passed on to the customer and eventually, the consumer. We are also concerned about the supply in Fairbanks as we have no use pattern established in Fairbanks and could very well have problems buying this amount of fuel. Sincerely, KODIAK OILFIELD HAULERS, INC. d ¿~~r. V~: c. Tay~ - President ç- .-:-.;:¡ -", \ -é"~¡ \~ íf~ \;:~ )t\ ":'8 \b \ \).1 u~\ \:0; I~ ' \ \' '"'\., ' \\:" (I qy!V) ~. FI:.li ..1 \.../1 '. JCT:rh O~ Ot) \:~[) (,/\3 DtV1S\Ct'-\ ; ...." . h~(C_\··¡0"\·-:"7 (W'''''''IIIh~~'C'1o!..:I. "':":'j'f.. \'~ f ..' ,...,'.' "" ~. ".,_Di ,'Ç. 1- ",~ ---.L~: .~f.oL 'I~ .'--. L..~', tNG '../.-.... . I 1 r::~I~I··--· 'l~~fl;;fT~ ,.--_I.'·\~ I I..... ../"5 1-' \/.·.·,,1 ) ("''', ¡~ ...."',.,' '.. t I" ';, . "\[ .-.......'" - c.." .-.-1 ':. I '~I[:;.'~.":.;.I~_( ./1_=/ ;;~~q,~,=j -\ \f,.. ~'J J #20 ) ~ 1WO'^"" NANA ~~\Yl]~®~H~~íJÆl ~Y!~íJ~lYI~9 ~~©D I 4706 HARDING DRIVE, ANCHORAGE, ALASKA 99503 TELEPHONE (907) 274-8315 OR (907) 274-8712 February? (, 1976 Mr. O.K. Gilbreth Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Re; Case No~ 9l~D Natural Gas Dear Mr. Gilbreth: The NANA Regional Corporation, through its wholly-owned subsidiary, NANA Development Corporation', is the owner of Arctic utilities, a certificated electric utility serving Deadhorse, Alaska. NANA Environmental Systems, of which I am President and General Manager, is also actively engaged in the Prudhoe Bay/ Deadhorse Area. We are under contract to the North Slope Borough to design, construct and operate areawide water, sewer and solid waste utilities to serve the industrial development now taking place. Our plans involves the construction of a large building which will house a conveying system, mill, storage, and incin- erators for garbage and refuse a sewage treatmenú system; and a water storage and treatment plant. NANA plans to expand the capability of Arctic Utilities within the next six months to include two 800 KW and two 2500 KW turbogenerators to serve our expanding customer base. At present, we are utilising diesel to operate our genera- tors, but the most economical operation would require the use of natural gas both as a fuel for our turbines and for firing our two large incinerators for the solid waste system and the single incinerator for disposing of sewage sludge. Yi Œr~B~~~7: J DIV1SH;N 0/ (~.L AND GAS ANCHOj{ Aí~~. Page 2 Mr. O.K. Gilbreth We estimate a need for three (3) million standard cubic feet of natural gas per day for Arctic utilities. Your efforts and consideration in this matter are sincerely appreciated. The need for arewide water, sewer, solid waste and electrical utilities in the DeadhorsejPrudhoe Bay area is a documented fact and the availability of natural gas would make the service more economical for all concerned. Sincerely, N~~RO~AL SYSTEMS, ~~ENSL~ preSidentEY INC. trJLHjmj b cc: Jack Roderick, DNR John Schaeffer, Jr., NANA ~C-~\ r~,' n~ re r, \\q re Nl" ~. ~ :I¿ L"::! ~U LÇ J \,~' lb ~ ! 1"'\1 ....#' ~~ r: ç t:\ n .f)~ q""":: ~ ! ..... '.. .J .. ¡, ¡ Ii DiViSiON Of' \¡'";L àA~l) GAS ANCHnRA!~p. #19 ') . ~ ) Public Notice State of Alaska Department of Natural Resources Division of Oil and Gas Alaska Oil and Gas Conservation Committee The hearing record of Conservation Order No. 91-0 closed on December 23, 1975 at the end of the public hearing pertaining to the application of Atlantic Richfield Company for an increase in the amount of casinghead gas flared from the Prudhoe Bay Crude Oil Topping Plant. ARCO requested an amount not to exceed an average of 6000 MCF per day, on a monthly average basis from December 1,1975 through December31~1976. Two solicited and three unsolicited letters have been received after the close of the hearing which offer opinions and data which seem to be pertinent to the record of the hearing and which can not be entered in the record unless the hearing is reopened. Notice is hereby given that the record of Conservation Order 91-0 is reopened from December 23, 1976 until 4:30 PM on February 17, 1976~ Any party wishing to submit additional comments in writing during this period may do so. All letters which have been received will b.e available for inspection at the Division offices at the address given below and will become part of the record of the hearing. ~ 11.. -tJI t . Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Publish January 21, 1976 ·····,,',&:S4:vu.~LJ;:.·.···..·,,"'.. ,', ..,. ~':..,..,AtJ8.~ri~r.S'.·J9r~.~é~¡'d9P~~\.·,!·.",:,~:;.,,;',.,,'....,'..:';:.:,.':' ",'.1 'By\":wql~a~,, 1:I.f.~Jq,,(s}', .... .. '.' ,>",I"J, < , 'BU'B::<J'an.:.l4~l'2&, ':;:'F~þ;,'4:;I;J~7'6 ,', :\,,",' I.,..~. ".::.:~.,a..,':.··.r,'.;.t.....m,;;r.£..~.~. r..~..'~,;o.i.;..,;.~.:~.~,;p.;,'.:~,..r.'.¡,~.is,',l~' j ,."..... ,.,', .·.'D,ivisidn'ofQil'andyas '."t'. ';"'" "."':':','1"',' 'Alas,kaOil'år4':Gas'~':'·,>::. ..,': .,. I, ,.. > ",:!,I:'Con~~~atipIipommitÚ~e:.,':''r' 1".,;".:,..;,.1 ,·.'·',·The ,·,heé3f:il1g.re~iø:',:9t;¢H~s,~rya~¡'P? ' , OrdeF~.Ç):·,91'"qclp~,qJqn~;\9~B,~w9~r',.~3;:.. : Ii ....'.' 1975,,:~~,.:,t~~~nd IO~"',~~ß~:!,~~þ,~:c,,'Q~anI)~::, '>,,1.,' )>;ert9:1mng~o.'.' t~~apþl~¢:~~:WQ{9~ì~t~aq~; 1""," ~1~,J~lC~fie~9,ç~~P~I}Y:J9~i\~H<1fl;~J¡ea$e ~I,';: :,lft th~.'a~?U~tof<:~~I.1~;~g¡~~~~~\~re9, ¡, '. 'from.t:hePr\1clhoe,:,:Ba" ,.JJ~:.,:,g~lr9Pr 'I"~;' I.,:.". '....'.',.'. ..,p. J~., .g.·..·:,.',:';¡,Pla.' .·.n.....~./.'.'. '..'..' ,.1:,-... R.. c.',.... 0. '..'....'.'.,'...,". ;:I.:..:.:r,'::~.'.., 9,'...,:,·~,;.·',·~.".;,,,~~.,,,;.'~.fi ~i(.(;r;I.·,·~.ij...~,.. :.". ::.:I.Î~.:" ),':, '~mount.q~t:; ,tQ' ~;!'c~e~ JPl¡:¡~¥~J¡a,$~'I:I,O¡l, .:/i }. I," 6000, 1VIÇFp~r:daY'il'pn!;aJmRQ:tbl ,J ,,,,er~:: ::{~;;)I(j;':1¡\f'" !:>I; ·äg~:,;þ.~~is·,.:frc),m;"P'ec, .',.. ,,¡ ,1~ >:I('\:"i';'ï~~)'i:'.r:', ¡,;'~r,v~~'~~:~t¡~' .ø~;~O;'"~f' :",J:".w."..'e..,h..,:..',~.~.J,.~.'~. g,:.!fem,.:.,.þ.v.....i.¢.:.,.'.r,.o.,:,'ø.i,..~..~.e....".~.:.~.~;~.·.,n.~lg.'·.:.:,.·. ·....:~.;!,':./1.:~k.~.~. :.... ...;:.;.'...:.\,','.1.':""..'.~.:..... ~~.';.'.'.,'.'.,.. I cord;·öf::the,.:hearing, and" . ,a,Dfiht :':", ::,!I;;~:'jl :,,',~ ·~~~!iii!iji~~i.. >J~ ',~r~:;; I reopeµ.ed froß,1 P~~e~.¥I": 2~!'\~~m~,;'}1p,~ll",."I::.""/:;:' , ..~:30 ,·p;rnt· q~':'F.eb~11!:\rY,,~~7;;":'t~~~~I.'i~ny ". ,::\,";;':~," , partY;:~"W1S,h.111g,',.:~o.'r·s,µ,þl)1~~il·ßd~~i~p~1.;" :ç.("<~.'., comIn:~l1ts: 'm'Yf1"l~~rgª,~IJ~~,,~'~tt~~i:H~I"i~:,"r /'~"'};:'. . ;od, ~~y::dç:~oo' Al~lf~tt~,r~ y.¡:þlÇ~':::þ.~¥:~ .~':: i,~",'~\' ", I :,' .. ~e....,.en..........:.r~.çe.l.....v.·. ~.d. ..1, ".W1... .....,.l..l...'..:...b.......'.e;.....,.::...\.'..~...~......y,. .1".~,~..'...~.":a,..;.p...'J,'.~,...',:~.;;t.r~.P:.r...,.,.\.'".'.'. .'.:...:.. "~.' '. .'...'..·:..I.·.,'fJ.·.i~... .'.....'...... ...1 ' . inspection:,:. a~.,tb~~, D~~I¡:~~~~:~:~,f~~~~.~',:~t ',~~, ' :1 ~heaøaress g1Ven)~l~v.!~':if5:,na;:~w~ll,b.~; ;.';~ ~'" . ,~ome, part,.o~:\ther.e~rg;;Ä~:'1~.R~~~~~rl:~.:,,'~. .:' ·,-TI}~ma~,R.M:arshall',ljJ~~;(1~~~'~' :":;,,.' ..., "'1", '. :E~ecutlv«:'~ecret!lry:/;.:::'!'::':, .":. ,:,: '. ':"> ;,.:,1: fE ..' Alaska 01laJ'ld q~S,:i(; . .' .. '0"",:..' of, ,,co~ervatiQI.lC?mptli.~~~e '. ..:: ,..... ,QS, tie: .~OOl:pro<:uplneDnye',.:: ' ....., ,. as- I Anchor~ge,~laska~~~~l. "I ."., '........ '-'.. .'./;, ..' I,."; P.tJB:Jan·21,;1976:: ..~., ",'-- ) , . .~,Ii,i'.. led ANGf{OItAGRSCHOØl.I)IST~ICT' " ~. .'.' led, ,', '4600DeBarrÅvenue '..'" .~.¡.~..., ;he t-nchprage; Al~ka;"9959~... . '....." as- 'INVITATlON'I'O'BID '.' :he NOTICE .ISIiEREBY'GIVEN'that ,n the Anchor..geSchQOI Di~¡J'i~tW¡U: J f, yo \ 10 consid~r.bidsfor~h~ pµrcl1ase. 9f: . '.:'¡ ~ INPUSTRlN- ARTSSUP;¡>L\ES ified ( rty ..... 'H' .... '.... .., " .., :he Bids, must besubmitted'insingl~ . ... :'. :e4 çqpY,c¡m·tl1e Bid Fornl.<.s) p~vided... .~no . W·.··I···I··I· ,·0 '-..IA. ..----..Ä,nd\o¡:ai!~11me ... ..,. ~.. ,...:.-,,' '~'J"'.", ',"" , .....,':'.....,.,.:.-..,< #18 ,{ Alyeska pie!Jio.! 1835 SOUTH BRAGAW STREET (99504). P.O. BOX 4-Z (99509), ANCHORAGE. ALASKA, TELEPHONE (907) 278-1611. TELEX 090.25.127 January 19, 1976 State of Alaska Department of Natural Resources 3001 Porcupine Drive Anchorage, Alaska 99501 !......'---.¡",. [i'; 1[' !,y\ .1 \.,~, 1'''' . .' r. i ~¡ ~ /;. ~,; ~ q E~?¡) .... ¡..,.. Ii: ~ Attention: Mr. Hoyle H. Hamilton Gentlemen: Your letter of January 6 to Mr. E. L. Patton, has been forwarded to this office for reply. We have carefully reviewed the questions you asked concerning the impact on Alyeska operations, if Atlantic Richfield (ARCa) were unable to con- tinue supplying diesel fuel for the Project. Our answers are summarized below. 1. If the diesel fuel supplied to Alyeska from the ARCa Topping Plant at Prudhoe Bay were terminated, Alyeska does not have an alternative source of supply identified. It is our under- standing from the Federal Energy Office that Arctic Diesel fuel is in short supply on the West Coast. During the 60-day spring breakup period (which normally begins about the first week of April and ends in early June), Alyeska is especially dependent on the 1.2 million gallons per month it receives from the ARCa Topping Plant. Even with this supply, all construction needs are not met. Fuel has to be flown into the North Slope region to meet our needs...particularly in view of the State Commissioner of Highways request for assistance in minimizing the number of heavily loaded trucks on State roads during the breakup period. Also, as you are aware, barge shipments simply cannot be relied upon. Thus, the ARCa Topping Plant is an essential cðmponent in our fuel supply chain. 2. As indicated in response to your first question, Alyeska has not identified an alternative source of supply. We currently use three (3) major suppliers to meet Project needs, which peaked to 8-9 million gallons per month during November 1975. In supplying Project requirements during 1975, we have found that the available intrastate transportation network for moving fuel to and from Fairbanks was limited. Since the Alaska Railroad did not have enough tank cars within the State to move fuel for the Project, Alyeska made arrangements to provide thirty-20,000 gallon tank cars for our suppliers use. If Alyeska had to rely on an alternative source to the ARCa Topping Plant, we believe Alyeska operations would be hampered... Mr. Hoyle H. Hamilton -2- January 19, 1976 not only because of fuel availability, but also because of limitations within the State transportation network (particular- ly during the spring breakup period and immediately thereafter when we refill our storage tanks after they have been drawn down). Prolonged problems could lead to a delay in the Project completion. 3. In our opinion, use of an alternative source could also create supply problems within the State. If extreme cold weather should remain, there even could be some shortages. During November- December 1975, Golden Valley Electric Association (GVEA) experienced a shortage of fuel. Fuel destined for Alyeska use was diverted to GVEA and to other users during this period. One of our suppliers (who normally supplies 1.7 million gallons per month to Alyeska) could only supply about 70 percent of its commitment because of cold weather demand by other users. The availability of ARCO diesel fuel from its Slope Topping Plant made it possible to maintain our fuel supply with minimum dis- ruption. In our opinion, if ARCO fuel does not remain available to Alyeska, diesel shortages could occur in many areas through- out the State. I hope the above has answered your questions on the relationship between the Alyeska construction effort and the continuing need for diesel fuel from the ARCO Topping Plant. At this time, the ARCO plant at Prudhoe Bay is one of the limited fuel sources that can supply our unique requirements. We are using all of them. If there are any more questions, please do not hesitate to contact me or my staff. Very truly yours, ~IPELINE SERVICE COMPANY H. E"~ Contracts and Materials Management HED:bj cc E. L. Patton P. DeMay #17 1/14/76 note to Alaska Oil & Gas Conservat1onCommittee: Pleåsedto rea.d that you are giving the matter below some serious thought. If you are' C;}onoerned about adequate dies~l fuel sapp1. if flarwg is curtailed, I'm sure Tesoro's North Kenai ref,inery can handle that easily with B:~i~:. dcen~;.: ..;;nX:lontry?; ;~.:~~,i:o~~:.mo~..ex ~. ve :~~~~.~.:...~ ,o~.r l~IUIIS ncrease Intl!t~'ìAII\9^,nt4~ Thç ~tate s 011 ~nd Gas Con- Arco meets its own North sent formal requests to the ding on thelinformation they testimony to ~ incorpora~e servatlOn Committee has not Slope needs, plus those of BP F ,e d e r a.1 Ene r g Y receive "we may open the in the record, he pointed QU1 made a de~ision on allowing Alaska, operator for the'other Administration and toAlyeska hearing up again." and would allow public cQl11 A. t,.lantic. RiChfie. ld Co. to flare h, a.lf of t. he Prudhoe Bay..field, to determine wha1, ShO. rtages That \Wuld a.ltow ad7.'t, ional menton. that testimOny. . ¡ ,up [to six million cubic feet of and supplies 40,000 gallons a would result if Arco were for- K '@, C ~. I, I 5"/7 t;.. T({Wl . , ga,s a day at its Prudhoe Bay day to Alyeska Pipeline Ser- ced by the state to cut off or ' crude oil topping plant. vice .Co. for pipeline-related reduce its s~pply of diesel fuel Areo now has permission to activities at its northern cam- to Alyeska. , -, flare up to four million cubic, ps. ' feet a day, but'has indicated it, .. ,I That volume .of fuel would" m~y be necessary to burn a N atur,al gas IS. produ~ed have to b~ supplied some othet greater volume if it is to meet along with the Arctic heatmg way,. and It :-vas ~rought up at a the, demand for diesel fuel on ..fuel and Arco ~0:-v has ~ need pubhc hearmg here last month the North Slope. for only fou~'mllhon c~blc feet that shortag~s would resu~t The topping plant produces a a. day.' ~eavmg. a max~mum of elsewhere 10 . the .stat,e If prQduct called Arctic heating Sl~ mIlhon cubic feet a day that Alyeska had to obtam diesel fuel which is used to heatcam- will h~ve to be flared, when the fuel elsewhere. ps on the North Slope and as plant IS at peak volume. . Hamilton said the commit- diesel fuel to operate equip- Hoyle Hamilton, acting tee expects some answers this ment, including some drilling chairman of the Conservation week from both the FEA and rigs. Committee, said the state has Alyeska, and ,. he said depen- /1/10, 7/~£~/d~/7k; -?~ IBi . '--'-,...".--..-.-. _. - -- - '. -., - #16 J 11.... ~ I \ t l~r::~' , I <' ,', FEDERAL ENERGY ADMINISTRATION ;,.:j \ ANCHORAGE OFFICE L' 605 WEST FOURTH AVENUE FEDERAL BUILDING. ROOM G11 ANCHORAGE. ALASKA 99501 , . ~ ,., H l' 0·J ~ w . ,'I Mr. Hoyle H. Hamilton State of Alaska Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, AK 99501 \' ,;~ ~:" ¡:::'" , -<i..í.1rL.D.!J';. '-...: '.., 14 January 1976 f-í ((..,' C, (...:L (~{'ì G ( _ I] '-- \~ ! I ,..../ Dear Sir: This is in response to your letter dated 6 January 1976, concerning Alantic Richfield's application to you for an increase in flared volumes of gas at their Prudhoe Bay Topping Plant. The inplication is that, should ARCO's application be denied, their production capacity would be reduced to the extent that Alyeska Pipeline Service Company's North Slope requirements of about 1,000,000 gallons of Arctic Diesel per month would have to be provided from an alternate source. I will address your three questions in order. 1. Alternate Source: FEA cannot, at this time, identify an in-state reserve of Arctic Diesel (-60 F pour-point) sufficentto meet an additional one million gallons per month requirement. Of the four major suppliers of this product in Alaska, one is currently operating at an allocation fraction less than 1.0. Two of the others are reassessing their supply vs commitment posture with the possibility of having to go to a reduced allocation fraction. We have been in contact with FEA Region X Headquarters in Seattle, Washington, and have determined that there is no reported excess of Arctic Diesel on the West Coast. Any ad- ditional product to meet Alyeska's needs would most likely have to come from the Gulf Coast area. 2. Supply Interruptibility: Deliveries to the North Slope would be subject to availibility of transportation vehicles (marine, rail and highway), and, of course, the vagaries of the weather. Another important consideration in this regard is the physical limitation imposed by bulk storage availibility at each intermediate location. 3. Priority: Current FEA regulations stipulate that energy production has an allocation level of 100% of current requirements (as reduced by application of the supplier's allocation fraction). If this volume were diverted from current in-state resources, supplier's allocation fractions would certainly reflect the impact of such an assignment, and critical shortages could very well develop. One point that you do not discuss in your letter that might be taken into consideration is the question of total energy efficiency. There is no question that flaring gas at the topping plant is a non-productive use of an irreplaceable natural resource. That energy loss should, however, be compared to the total .-.. .-", 2 energy that would be required to move sufficient volumes of fuel from alternate supply- sources up to the construction site. It appears that a pragmatic trade-off must be considered. Please contact me if I can be of any further assistance in this matter. Sin5"~(.Á :-// L~~~~¿y ~\eputy Regional Administrator cc: Alaska State Office of Energy #15 - '-... tUiU :bjsn cc: Peter DeMay " ' . Vice President,. Project Management ..... n', ....ì_.... ---.~~ _......_~-'.' :_"':'~~-::7_.~.' =-- _.--:-:--=-:-;.._............~~.....:..:-:::.::.:.;.;~......,-_.__._..:..::.:.~.::~.'~...,..._.,..,-:-:.... ., ~, J Sincerely, ;' ~..¿.~/ "r ,. t::r7¿::~rt: ¿/y. /!h~.yü£$~ P .', Hoyle H. Hamilton Cha1nnan Alaska 011 and Gas Conservation Committee , " .. . ;' '. ,\ . '~t ,.'(' ~ .' l' i. ' , . 2..",. If an alternative diesel source is available. what is the source? ~lould Alyeska's operations be hampered by using an al ter~at1ve source?'::" 3. In your opinion. would the use of an alternative source create a diesel shortage in SOIne area of the State? A timely response wo~ld be appreciated since à rul1n9 must be made on ,,\ ¡ Atlantic Richfield's application by January 23, 1976. .- " V " If the diesel fuel ·supplied to Alyeska from the topping plant at Prudhoe Bay was terminated, does Alyeska have an alternative source? ' 1,: I,', ¡: : 'i ,:; ;,1. The Alaska State Oil and Gas Conservation Comnittee. of which I am Chatrman, held a hearing on December 23, 1975, to consider Atlantic Richfield's request to flare anadditfonal volume of gas from their crude 011 topping plant at Prudhoe Bay. Atlantic Richfield testified that if their request was not granted, they would be unable to continue to supply Alyeska with diesel fuel. They testified that they are currently supply1ng about 1.000.000 gallons per month of diesel, to Alyeska. " ~ To aid our Committee 1nrul1ng on this matter, the following i nformat1 on would be helpful: . ,: ;: E. L. Patton President Alyeska Pipeline Service Company 1835 Bragaw Ancho~age, Alaska.. 99504 Dear Mr. Patton:-! : .o,,,..}~.r.. January 6. 1976 ) i~. ') ., ·.·"....~,\...,.¡..tji¡Ííli¡""^·,.., ',î..1t:: ~..l,.. ':;1.1 'lr::l\.~·lt'r'r:~:¡t!$',\\OO·~·¡,/t,-".'J\I1I1· :...., .1,1:' '1 i ¡UI."'-'''>" -' 1 , ""'~: \";. y . ','" I' ',J u #14 ~ _-::.:,/ì I., ~, . ,...r-;,. .,Õ."'.·>=;.-.,,"~,""·-'" .:,,','. ;,....,",','~J.:.".:. ·,."'.rlDl..,, ø~ ."..,',. . "lit: (. Ó c:t~-f "èV . "-" ~, n ',~ '. '" ~ "J~, .. ,,(( ~ í?:(c, v:J. ':Y liù f~· ~1 -t, d. y -'{\.' - \ 9 -t L (~ ~ ~ ... 0 ~~~~ ~na, Alaska ø q~ 661 January 5, 1976 Alaska Oil & Gas Conservat1op.Coxn;mi;ttee ' 3001 Porcupine Drive: Anchorage, Alaska BE: ARGO's reque at to increase flaring at Prudhoe Bay (public hearing 12/23/75 Dear Members: :j ,~: I'm admittedly not an expert on gas and oil production, but as a charter stockholder in the corporation (State of A':J..aska~ that own.s this resource, I'm concerned how it is managed. I only know what I read in the newspapers and in correspondence, and have observed around Soldotna and heard at your public hearing 12/23. Apparently your Committee is making the same mistake at Frudhoe Bay (albeit on a smaller scale), that was made in Cook Inlet for seven years. That is accepting the Oil Industry' a pat annual testimony that: since there was no immediate use or market for excess casing-head gas coming up with the oil, it must be flared to achieve full oil production. Well, a.pparently increasing Legisla ti ve pressure and the nationaJl, energy crisis changed your willing acoeptance of that story in a hurry, when you finally forced the Industry to do in late 1972 what should have beel1 done in late 1965 with ,initial platform oil production: Construct gas pipelines to shore to fuel Collier Carbon's ammonia-urea plant and re-injeat the rest into the Swanson Riv~r oilfield -- even if it had to be done at a temporary financial loss, as the Industry claims and I believe. Of course, about half the gas had already been flared by then, and you still very liberally grant the platforms "emergency" flàring relief in excess of minimum safety needs (according to your 1973 flaring report on 13 platfom.s). Now at Prudhoe Bay, according to a report in the Anchorage Times (1/30/74, p.25) you quickly (by oral order) allowed AReO to increase diesel fuel production from 600 to 1200 barrels/day and flaring to 2.5 million C.F./day, which AReO spokesman Len Williams said would nearly meet the total needs of the North Slope and pipeline construction north of the Brooks ibngee This flaring it said would continue until drilling rigs were converted to gas and until utilized for camp heating. This same ~ast September man comes baCk to yoU/asking & receiving your permission to produce 2500 barrels/day of diesel fuel and flare4 million CoF./day for the same ~eeds above (Anchorage Times, 12/18/75, p.39), and now (12/23) is asking to flare an additional 2 million CQFo/dayo Is that good planning for a giant corporation? Hardlyo Why haven't they oonverted more than 2 drilling rigs to gas in the last two years for instance; or why haven't they piped the excess gas from the topping plant to a re-injection field ")7 being de'veloped nearby? 1þ /ø# K L.. g~fv .{ i ! I ~ .,) t/lí¡4--- Page 2 to Alaska --q< 1 &: Gas Conservation Committee ~ 15/76 Furthermorer-'~~~ 3/15/74 letter to Robert WfJ;..,--,,~ then President of the Alaska Conservation Society (who made a gas flaring inquiry at -my request), from Homer Burrell, ex-chaiman of your committee, Burrell had this to say: "This excess flare should almost entirely cease by the end of 1974, with the gas being beneficially utilized as fuel for drilling rigs (rigs must be converted from diesel to gas :fuel). The proposed order will provide that we may restrict oil production rates by the end of 1974 if' the gas is not then beneficially utilized II 4) Does that sound ~redible today? Hardly. In view of the above conflicting evidence alone (I won't bore you wi th more), I now advocate that ARCO' s present request to flare the additional 2 million C.F./day be denied, and last September's permission to flare 4 million C.Fe/day be withdr~wn as soon as possibl~~ If this huge Industry has so little foresight, initiative, or concern for utilizing or reinjecting what they admit themselves is a. valuable resource, I say <~'J!:it _ let them truck or fly in the additional diesel fuel necessary to continue \ íJ I-~ 1-Z /--7 ~~"'G$' v operations up there until they do. Perhaps when it starts to cost ~ something directly, they will wake up to the :fact tha. t you really mean what your name implies, and 011 & Gas Conservation Committee. Id even wonder how you manage to circumvent State law prohibiting :tlaringe Atter observing most of your 12/23 public hearing without an obvious opportunity to ask the above questions, I have these suggestions to make: announce your hearings with something more conspicious than a small legal ad (like the Times 12/18/75 story "Arco Asks State for Flare Okay1f); hold your hearings in a more convenient location than at your hard to find building at 3001 Porcupine Drive, which even my cab driver couldn't locate (like the A.PoU.C. hearing room in the MacKay Building);; encourage & allow the public to participate more, instead of listening most of the time to lengthystatements between Industry & State employees,&: Committee members ; limit the continuous questioning from one person, like Jerry McCutcheon; for about an hour (good as s,om.e of his questions where); - and answer all questions tendered in presentationsJ- like many raised by the Alaska Center for the Environment's spokesman. If you continue this easy-going, liberal policy of allowing increased flaring every time the Industry comes ruShing/~ emergency, I intend to pursue the subject further, even if it means spending a lot of my personal time examining the. records in your ofi'~ jP I ~sn ~ it 8g-"i,n). S:m.cerely yours, ~~ C.C.-Alaska Conservation Society Charlie Parker Alaska Center for the. Environment P.3 .-As I said before, much to .Bur.rell' s and others indignation, it appears to me the Sta.te t s policy is to keep the,U}.e,yimum oil flo~ at a minim~ cost to get the maximum royal t:y and tax income Ðer year, and to hèll with conserving the relatively worthless gaø. Right? #13 ,íÜ) h~ (G Œ IJ W jE ¡ ri'ì J'- \ ¡ i ! J l\ f-H~'T ') <) ¡ q 7 r t ':-~j "-, ,-,: c. J ~.J ! _'.. :) 1220 nF" Street Anchorage, Alaska 99.501 December 23rd, 197.5 , ~ ¡~)\w; L -~"'-'"i"- /f;"? ./ .7;... 7 /;J IcÞl(:/~",'/ /-(7' " r,¡ / ¿- .-øb-ÞÞ/ _.~ <o_~;.% ~/;& /-7 ,.~¡·t.__.- j- - / " - f . r~ ~ ~ .: l\i'J:J ~i~S ~:._~.\I L~~1 ~&i~!-~, ~~ ;~ ) ~ ð'\ -\. \- ~ '" Rt(d \ h -eðl v iJ1 ~ iNti$' C/6S c: d ---.:::.. (.(" \ ,(11 { Ij\. v , -_.,.A.-~~~!..~. 4 ......... ."~.",, ~ L·· 41 .AJa ska Oil and Gas Conservation Committee 11n -«are of Division of Oil and Gas, Alaska Department of Natural Resources 3001 Porcupine Drive Anchorage, Alaska 99501 \' 'j (..'. 0 0.1 ¡.1 -}) -;-\'" - Gentlemen: I hope that this letter is not received too late to be included in the public hearing record an the application by Atlantic Richfield Co. to flare up to six million cubic feet of natural gas a day at its crude oil topping plant at Prudhoe Bay. If it is not, I request that it be included in the public hearing record on this matter. I am absolutely opposed to such a profligate waste of ~laskan natural resources as is proposed by A'rco. I am very surprised that this company would even have the effrontery to apply for permission to conduct such an irresponsible action. I urge you to reject this application, and inform Arco that the State refuses to permit any such senseless and irresponsible waste of energy resources produced within the State's b01.U1daries. Arco should in this case, and in all similar future cases, be required to either: (a) reinject, (b) use, in as efficient a manner as is possible under the particular circumstances, (c) or transport to a point at which the gas can be used or sold. I am, Sincerely, ~~r¿ ./ Gerald R. Brookman #12 I ~ ' \..~,../' . '; ..;',.\' '! Îfrb/è /-JedY/;"l Ðeceh1'/:;er 2_~ ... /91J~. J ß;H~""YVa'¡mt1 ()vdev#-9/-D . . .". ... ."", , ,¡ iJ.. ð v 15 a !!R.I> "II/' . , . ..G4-,S~ '.. ..' . cJ~j¡~K .s /A(6 tE 7IJÞY ¡/tJ~J4. t 'w,. f -f :, ~o -7"1 ;5; ~T r . . .' ,k<?r¡~//?/-r~.s .. j ¿... (e:vgvJ~ ; J;y hn /'1'/ler ,j"t:~ hr- 5;;. ~ ~s: _ .,.' 6J . ;!4æTlG!.. ,dcnA/ ·.t1~Ç,:,:-rvh II-(J ,J , , (!. ~ II LJt/P'/JuJA Y/ .)IZLu : D A- 3QVY\ pe rt: c.~. I'1C,C 1.4 /f·L ..._.. · C~4/'~ë /â/'.Ker <JðM~q__ .....................-.-..........,....... ...... ...... --........---......... ./ .... ..- . ',John ;f(E¿::-D¿- ~ - "... ,'~ ,-". --. ~,.,,-, ..-.-, ,.. ,"".'.' -._..,~.,-~... ~. -----. .', ''''..''''.' .,.,. \. ..,...,...,., '''----.'. ,,,,..,.,.,......,....,.,-,-,...-. . '.'-"~~ .-..-.,.....-.-,-.,..- ".. -". . _" .., __........,. ....._..__..~""u.___"._.'..,.._ ._. . ··--..'.P..-,..-...... - --;__.'. ._...._. ~_~ . - ..- _..- '--- . -----~ -.-.-.- -.... '.--'-.-." , _... ....-.-- . #11 ) 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-D BY: L. K. Williams ATLANTIC RICHFIELD CO~œANY December 23, 1975 ) ) ) CONSERVATION FILE NO. 9l-D My name is L. K. Williams. I am Operations Manager for the North Alaska District of Atlantic Richfield Company. I have held that position since May, 1972. My responsibilities cover, among other things, the operation of the crude oil topping plant that is the subject of this hearing. At an earlier hearing before this Committee on January 25, 1974 (pertaining to Conservation File 9l-A)I presented, and the Committee accepted, my qualification statement. There have been no changes in my status since then. By Conservation Order 9l-C you limited the volumes of casinghead flare gas from the Prudhoe Bay crude oil topping plant in two ways - (1) the volume of crude oil produced for plant use would not exceed a monthly average of 13,000 barrels per day, and (2) the volume of casinghead gas flared would not exceed a monthly average of 4,000 MCF per day through January 15, 1976 dropping at that time to 3,200 MCF per day. By our pending application, we are not asking for any additional throughput rate, but we are requesting permission to flare up to 2,000 MCF per day more than is currently authorized by Conservation Order 9l-C, and we are further requesting that you eliminate the automatic decrease in the limit now scheduled for January 15, 1976. I want to now emphasize two significant points. First, we are seeking temporary authority to expire at the end of 1976 - not permanent authority. Second, we are not representing we will actually flare the additional 2,000 MCF per day for the entire twelve months. To the contrary, as indicated ) ) by our application, the actual volumes flared are expected to be less than our application calls for most of the time. Also we are activelý considering the feasibility of altering our construction schedule in a way that will reduce the need to flare sooner. We selected the 2,000 MCF figure on the basis of our worst expectations instead of our best hopes. One more preliminary point - I will mention few, if any, facts that have not already been presented to the Committee in earlier hearings, applications and reports pertaining to Conservation File 91 in explaining our request for higher limits. Nevertheless, I will attempt to summarize and refer to many of those facts in a helpful way, but without being unduly repetitious. Now I will attempt to explain our need·for the increased limits. I will do this from three perspectives. First, I will briefly summarize the past events that have led to this hearing. I will then review the future of the plant, Arctic Heating Fuel demand, and beneficial gas use, as we see it. Finally, I will discuss some alternatives for dealing with the situation and our assessment of each. I. PAST The volume of excess casinghead gas produced by the topping plant results from a number of variables. Perhaps the most obvious and direct are: (a) the capacity of the plant, (b) the demands for its products on the North Slope, and (c) the available beneficial uses for the casinghead gas. Since plant startup, all three of these factors have increased and more than expected in some cases. -2- ) ) A. The Capacity of the Plant When our initial application was submitted to the Oil & Gas Conservation Committee prior to plant startup, the "design maximum crude input capacity" was 5,000 BOPD, but the actual capacity was projected to be lower due to downstream residual injection limitations. Such limitations were purely mechanical, resulting mainly from the fact that we were using the dually completed'Sag River State No. 1 well for both supply and injection. This limitation ended when we commenced using No. 1-1 as the producing well and No. 1-3 as the injection well. At that point, the Plant's capacity was, in fact, the design capacity of 5,000 BOPD. By "design capacity" we mean the plant manufacturer's guaranteed design inlet rate. During the early life of the plant, we processed up to 5,000 BOPD, but never attempted to determine its absolute limit as there was no need to do so. In June of 1973, with permission from the Committee, we conducted a throughput capacity test of the plant and were able to stabilize at about 5,800 BOPD. Thereafter, we made test-indicated minor modifications in the plant and with fine-tuning increased its capacity to a maximum throughput approaching 7,000 BOPD. On October 11, 1975 the plant was doubled. Since then, the crude production rate into the doubled plant has averaged about 12,000 BOPD and the production of Arctic Diesel Fuel has averaged about 110,000 gallons per day. The inlet rate to the plant has been less than design while waiting for the No. 1-7 ,..rell to be completed. Thus, the first main variable mentioned earlier - the capacity of the plant - has increased from less than 5,000 BOPD to at least 12,000 BOPD and we expect it to handle 13,000 BOPD. -3- ') ) B. Demand for Arctic Heating Fuel Demand for Arctic Heating Fuel has continued to escalate since the summer of 1973. We have typically summated estimat~s of individual companies to arrive at a total estimate for the North Slope. Atlantic, Alyeska and BP are the principal users of the fuel although there are a number of smaller users which we take into account to arrive at a total for the· North Slope. We have found that individual needs have been usually underestimated and further that additional, smaller users continue to ask for fuel. During the latter part of this year the barging season created some unusual problems related to fuel demands as well as the other wellknown problems. A fuel barge was included in the 1975 barge effort but it never got to Prudhoe. Its purpose was to refuel the tugs prior to their return to Seattle. Naturally, these needs had to come from the plant. The barges not making Prudhoe returned to Seward, Valdez and Anchorage. Their cargo is being trucked to Prudhoe over the Alyeska haul road. So far, about 3,000 truckloads have been offloaded at Prudhoe and these trucks had to be refueled there for the return trip south. As we have gained experience, we have made more realistic fuel demand estimates and should be able to make reasonably accurate demand forecasts with the exception of the unexpected such as this year's barge effort. c. Beneficial Uses of Gas Since the early days of the plant, we have added to the beneficial uses of gas. Our original use was for the Atlantic Operations Center. We have subsequently added uses such as two drilling rigs, the partially expanded Operations Center, heating for the }iain Construction Camp, Flow Station No. I and Flow Station No.2. In the near future there will be additional units heated at the main construction camp and the gas-fired incinerator will be put into service. Unfortunately we -4- ) ) will not be adding the major part of our Operations Center expansion to the beneficial use list since it did not make Prudhoe because of our barge problems. Other smaller uses such as warehouses, shops and the like will be delayed because the necessary material has not arrived or scheduling has been altered to accommodate other more significant schedule changes. In summary, we have been able to increase the beneficial uses of the produced casinghead gas from about 500 MCF per day to about 4,500 MCF per day, but we have not been able to do so fast enough to keep up with the increases in the demands for the Arctic Heating Fuel. And that, in general terms, explains how we arrived at this point. Now I would like to look to the future and explain what I believe these three variables will do. II. FUTURE A. Capacity of the Plant The expanded plant has processed a maximum of about 12,300 BOPD. We fully expect it to handle its design capacity of 13,000 BOPD. It may be possible that the plant will handle more than 13,000 BOPD with some modification and fine-tuning, with experience. From 13,000 BOPD we can make about 118,000 gallons of Arctic Heating Fuel per day. B. Demand for Arctic Heating Fuel We expect Arctic Heating Fuel demand to average about 110,000 gallons per day during 1976. This will largely be determined by Alyeska's needs. They are projecting needs varying up to 40,000 gallons per day depending on time of year. -5- ) ) Their demand projection falls to about 20,000 gallons per day by the end of 1976 and subsequently is expected to be quite small. During 1977, we think total demand will average about 75,000 gallons per day although we have not attempted to make a firm estimate yet for 1977. c. Beneficial Uses of Gas The time period fer which we must be concerned about beneficial use of gas extends until July 1, 1977 - the projected startup date for the pipeline. After the field is on production, the mode of operation for the crude oil topping plant will change. We will then take our crude oil inlet to t~e plant ·from the oil gathering system and will not be processing casinghead gas in the plant. Our gas needs at that time will be provided by the Field Fuel Gas System. The Field Fuel Gas System is scheduled to be operational October 1, 1976. When this system becomes operational, we will be able to put gas from the high pressure separator at the crude oii topping plant into the system. This will take the majority of the excess gas going td flare. There will still be some low pressure gas off of the second stage separator going to flare but the volume will be small. Although we expect an October 1, 1976 operational date for the Field Fuel Gas System, our requested authority for flare extends through the end of the year to provide some leeway for shakedown of the plant. During the time frame from now through the next nine months, we have projected beneficial use varying from 4,100 MCF per day to 6,400 }ICF per day depending on time of year. These volumes are based on uses previously discussed. ~6- ) ) III. ALTERNATIVES Up to this point, I have spoken of those things of which I am reasonably' confident will happen. I will now discuss briefly some other possibilities in which I do not have the same confidence. A. Accelerate Construction of Permanent Field Fuel Line System The first alternative I will mention is under active consideration; that is, to accelerate the construction of the permanent field fuel line system. The Field Fuel Gas System includes lines which will run from the Field Fuel Ga~ Unit located in the northern part of the field to the center part of the field. The lines will carry gas to Atlantic's and BP's major installations in the field and to Alyeska's first four pump stations. This line system is being laid now; however, it is not scheduled for completion until the summer of 1976. We are now investigating the feasibility of accelerating this construction. If we can improve the schedule, it may be possible to provide gas to BP's generating plant for fuel earlier than October 1, 1976. There are five hurdles which must be overcome to make this alternative worthwhile. They are: 1. BP must be able to accommodate fuel gas in which dew point depression is less than their design. 2. The lines have been engineered to use concrete in the anchoring system. Concret~ installation on the North Slope in the winter is difficult - to impossible. This problem must be solved. 3. The lines are scheduled to be hydrostatically tested with water next summer. The testing problem for winter must be solved. -7- ) ) 4. We must define the impact of laying other lines on the same pipeline support system if there is already an existing line in service. 5. We must define the acceleration impact on the total construction schedule. B. Reinjection This is not a viable alternative, since injection equipment could not be installed in time to satisfy our needs. It is mentioned here because there have been numerous discussions about this subject in the past. c. Reduce Production The only merit to the third and final alternative I will mention is simplicity. We can reduce the production of the plant to the levels necessary to meet the limits already prescribed by Conservation Order 91-C. That would reduce the volume of the Arctic Heating Fuel output by 5,000 to 33,000 gallons per day, depending on time of year. If we did that, we could still meet our own requirements. But we have reason to believe this would trigger a chain of events that could prove to be unfortunate for others in the State. We are currently delivering about 1,000,000 gallons per month of Arctic Heating Fuel to Alyeska Pipeline which, in turn, delivers the fuel to its contractors. Obviously, if we cut back Alyeska's supply by the above amounts, then Alyeska and its contractors would be forced to look for other sources. It is my understanding that the Alyeska project has certain Federal "priorities" that would enable its contractors to acquire fuel at the front of the line from those other sources of fuel. -8- ) ) Therefore, it appears that if we solved our own casinghead gas problem by cutting back on our production, we would likely create shortages -for other parties in other parts of the State. I do not purport to have firsthand knowledge of how severe those problems would be. However, a fairly recent event convinces me that it could be serious. Last month, it was reported that the major electric utility in the Fairbanks area came within a couple of days of having to idle one-half of its generating capacity due to a shortage of fuel. Several parties, including the military, came to the rescue in various ways. One of those parties was Alyeska which, as we understand it, released 1,000,000 gallons of its fuel allocation to the utility. Alyeska is making up that 1,000,000 gallons from our topping plant. What we hope to avoid is the reverse of that process which would require Alyeska to go to other sources for fuel that it could no longer obtain from our plant. That concludes my direct testimony. Thank you. -9- ) [029J December 23, 1975 9 AM MR. HAMILTON: lid like to call the hearing to order this morning. My name is Hoyle Hamilton. I am chairman of the Oil and Gas Conservation Committee. To my left is Harry Kugler who is a member of the Conservation Committee. To my right is Tom Marshall, Executive Secretary of the Committee. lid like to point out first of all the Smoking Prohibited signs. Due to a new State law while holding public meetings there will be no smoking. The reason for the hearing today is in regard to the application by Atlantic Richfield requesting changes in Conservation Order No. 91-C. At this time lid like Tom Marshall to read the advertisement we put in the paper regarding this requested change. MR. MARSHALL: This public notice was published December 8, 1975 in the Anchorage Daily News. Conservation File No. 91-0: "Notice is hereby given that an application was received from Atlantic Richfield Company on December 1, 1975 applying for an order pursuant to Title 11, Alaska Administrative Code, Section 22.540, requesting changes in the Conservation Order No. 91-C to permit operation of the subject crude oil topping plant at a throughput rate not to exceed an average of 13,000 barrels per day on a monthly basis and to increase the volume of casinghead gas flared to an amount not to exceed an average of 6000 Mcf per day on a monthly basis from December 1,1975 through December 31,1976. The operator states that this increase in flaring of casinghead gas is needed until construction is completed on projects which will permit increased beneficial use of casinghead gas. Progress of con- struction was slowed by the failure of some marine barges to arrive at Prudhoe Bay docks due to unusually severe ice conditions. 1- ) ) The Committee may include an administrative approval provision to increase or decrease the amount of casinghead gas flared, the throughput volume or the term of the time period depending on cir- cumstances which appear to have changed greatly since the topping plnat operation commenced. Parties who may be aggrieved if the requested order is issued are allowed 10 days from the date of this publication in which to file a protest and request for hearing. Place of filing is 3001 Porcupine Drive, Anchorage, Alaska 99501. If such a protest is timely filed, a hearing on the matter will be held at the above address at 9:00 AM, December 23, 1975, at which protestants and others may be heard. If no such protest is timely filed, the Committee will consider the issuance of the order without a hearing. II Signed Thomas R. Marshall, Jr., Executive Secretary, Alaska Oil and Gas Conservation Committee. MR. HAMILTON: Two letters of protest were received and at this time I would like Tom Marshall to cite these letters and these letters will be made a record of this hearing. MR. MARSHALL: Dated December 10, a letter of protest was received from Jerry McCutcheon, Box 2340, Anchorage, Alaska 99510 and a letter was also received from Mr. Peter Scholes, Coordinator, Alaska Center for the Environ- ment, 913 W. 6th Avenue, Anchorage, Alaska 99501. MR. HAMILTON: Thank you, Tom. The procedure we will follow today, we will hear testimony first. Then those testifying will be sworn in. Following the testimony, we will hear statements, either oral or written, and then after 2- 1 ) ) that we will open it up to questions from the audience and I want these questions directed to the Committee at that time. It is my understanding that the applicant, Atlantic Richfield, has some testimony to offer today and we would like to ask them if they are ready to present that testimony. MR. WILLIAMS: I will read the prepared testimony. My name is L. K. Hilliams. I am Operations Manager. . . MR. MARSHALL: Pardon me. MR. HAMILTON: If this is going to be technical testimony, we would like the witness to give his qualifications if he hasn't been qualified before in front of the Committee. MR. SCOTT: Mr. Williams has been qualified earlier and we will refer to that, but I assume you would like to swear him in. MR. HAMILTON: Yes, we will swear him in. MR. MARSHALL: Would you please stand and raise your right hand. In the matter 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: Thank you. You may be seated. MR. WILLIAMS: Why don't I start again? My name is L. K. Williams. I am Operations Manager for the North Alaska District of Atlantic Richfield Company. I have held that position since May, 1972. My responsibilities cover, among other things, the operation of the crude oil topping plant that is the subject of this hearing. At an earlier hearing before this Committee on January 25, 1974 (pertaining to Conservation File 91-A) I presented, and the Committee accepted, my qualifications statement. There have been no changes in my status since then. 3- ,) [143] By Conservation Order 91-C you limited the volumes of casinghead flare gas from the Prudhoe Bay crude oil topping plant in two ways: (1) the volume of crude oil produced for plant use would not exceed a monthly average of 13,000 barrels per day, and (2) the volume of casinghead gas flared would not exceed a monthly average of 4,000 MCF per day through January 15, 1976 dropping at that time to 3,200 MCF per day. By our pending' application, we are not asking for any additional throughput rate, but we are requesting permission to flare up to 2,000 MCF per day more than is currently authorized by Conservation Order 91-C and we are further requesting that you eliminate the automatic decrease in the limit now scheduled for January 15, 1976. I want tQ now emphasize two significant points. First, we are seeking temporary authority to expire at the end of 1976 - not permanent authority. Second, we are not representing we will actually flare the additional 2,000 MCF per day for the entire twelve months. To the contrary, as indicated by our application, the actual volumes flared are expected to be less than our application calls for most of the time. Also we are actively considering the feasibility of altering our construction schedule in a way that will reduce the need to flare sooner. We selected the 2,000 MCF figure on the basis of our worst expectations instead of our best hopes. One more preliminary point - I will mention few, if any facts that have not already been presented to the Committee in earlier hearings, applications and reports pertaining to Conservation File 91 in explaining our request for higher limits. Nevertheless, I will attempt to summarize and refer to many of those facts in a helpful way, but without being unduly repetitious. 4- } Now I will attempt to explain our need for the increased limits. I will do this from three perspectives. First, I will briefly summarize the past events that have led to this hearing. I will then review the future of the plant, Arctic Heating Fuel demand, and beneficial gas use, as we see it. Finally, I will discuss some alternatives for dealing with the situation and our assessment of each. I. PAST The volume of excess casinghead gas produced by the topping plant results from a number of variables. Perhaps the most obvious and direct are: (a) the capacity of the plant, (b) the demands for its products on the North Slope, and (c) the available beneficial uses for the casinghead gas. Since plant startup, all three of these factors have increased and more than expected in some cases. A. Capacity of the Plant When our initial application was submitted to the Oil and Gas Conservation Committee prior to plant startup, the "design maximum crude input capacity" was 5,000 BOPD, but the actual capacity was projected to be lower due to downstream residual injection limitations. Such limitations were purely mechanical, resulting mainly from the fact that we were using the dually com- pleted Sag River State No.1 well for both supply and injection. This limitation ended when we commenced using No. 1-1 as the producing well and No. 1-3 as the injection well. At that point, the Plant's capacity was, in fact, the design capacity of 5,000 BOPD. By design capacity we mean the plant manufacturer's guaranteed design inlet rate. During the early life of the plant, we processed up to 5,000 Bbls. per day, but never attempted to determine its absolute limit as there was no need to do so. 5- i' ) In June of 1973, with permission from the Committee, we conducted a throughput capacity test of the plant and were able to stabilize at about 5,800 BOPD. Thereafter we made test-indicated minor modifications in the plant and with fine tuning increased its cap'acity to a maximum throughput approaching 7,000 BOPD. [216] On October 11,1975, the plant was doubled. Since then, the crude production rate into the doubled plant has averaged about 12,000 BOPD and the production of Arctic Diesel Fuel has averaged about 110,000 gallons per day. The inlet rate to the plant has been less than design while waiting for the No. 1-7 well to be completed. Thus, the first main variable mentioned earlier - the capacity of the plant - has increased from less than 5,000 BOPD to at least 12,000 BOPD and we expect it to handle 13,000 BOPD. B. Demand for Arctic Heating Fuel Demand for Arctic Heating Fuel has continued to escalate since the summer of 1973. We have typically summated estimates of individual companies to arrive at a total estimate for the North Slope. Atlantic, Alyeska and BP are the principal users of the fuel although there are a number of smaller users which we take into account to arrive at a total for the North Slope. We have found that individual needs have been usually underestimated and further that additional smaller users continue to ask for fuel. During the latter part of this year the barging season created some unusual problems related to fuel demands as well as the other well known problems. A fuel barge was included in the 1975 barge effort, but it never got to Prudhoe. Its purpose was to refuel the tugs prior to their return to Seattle. Naturally, these needs had to come from the plant. The barges not making Prudhoe returned to Seward, Valdez and Anchorage. Their cargo is being trucked to Prudhoe over the Alyeska 6- ) ) haul road. So far, about 3,000 truckloads have been offloaded at Prudhoe and these trucks had to be refueled there for the return trip south. As we have gained experience, we have made more realistic fuel demand estimates and should be able to make reasonably accurate demand forecasts with the exception of the unexpected such as this year's barge effort. C. Beneficial Uses of Gas Since the early days of the plant, we have added to the beneficial uses of gas. Our original use was for the Atlantic Operations Center. We have subsequently added uses such as two drilling rigs, the partially expanded Operations Center, heating for the Main Construction Camp, Flow Station No. and Flow Station No.2. In the near future there will be additional units heated at the main construction camp and the gas-fired incinerator will be put into service. Unfortunately we will not be adding the major part of our Operations Center expansion to the beneficial use list since it did not make Prudhoe because of our barge problems. Other smaller uses such as warehouses, shops and the like will be delayed because the necessary material has not arrived or scheduling has been altered to accomodate other more significant schedule changes. In summary, we have been able to increase the beneficial uses of the produced casinghead gas from about 500 MCF per day to about 4,500 MCF per day, but we have not been able to do so fast enough to keep up with the increases in the demands for the Arctic Heating Fuel. And that, in general terms explains how we arrived at this point. Now I would like to look to the future and explain what I believe these three variables will do. 7- ) II. FUTURE A. Capacity of the Plant The expanded plant has processed a maximum of about 12,300 s~po. We fully expect it to handle its design capacity of 13,000 SOPO. It may be possible that the plant will handle more than 13,000 s~po with some modifi- cation and fine-tuning, with experience. From 13,000 s~po we can make about 118,000 gallons of Arctic Heating Fuel per day. B. Demand for Arctic Heating Fuel We expect Arctic Heating Fuel demand to average about 110,000 gallons per day during 1976. This will largely be determined by Alyeska's needs. They are projecting needs varying up to 40,000 gallons per day depending on time of year. Their dem~nd projection falls to about 20,000 gallons per day by the end of 1976 and subsequently is expected to be quite small. During 1977, we think total demand will average about 75,000 gallons per day although we have not attempted to make a firm estimate yet for 1977. C. Beneficial Uses of Gas The time period for which we must be concerned about beneficial use of gas extends until July 1, 1977 - the projected startup date for the pipeline. After the field is on production, the mode of operation for the crude oil topping plant will change. We will then take our crude oil inlet to the plant from the oil gathering system and will not be processing casinghead gas in the plant. Our gas needs at that time will be provided by the Field Fuel Gas System. The Field Fuel Gas System is scheduled to be operational October 1, 1976. When this system becomes operational, we will be able to put gas from the high pressure separator at the crude oil topping plant into the system. This 8- ) ) will take the majority of the excess gas going to flare. There will still be some low pressure gas off of the second stage separator going to flare but the volume will be small. Although we expect an October 1,1976 opera- tional date for the Field Fuel Gas System, our requested authority for flare extends through the end of the year to provide some leeway for shakedown of the plant. During the time frame from now t~rough the next nine months, we have projected beneficial use varying from 4,100 MCF per day to 6,400 MCF per day depending on time of year. These volumes are based on uses previously discussed. [323J III. ALTERNATIVES Up to this point, I have spoken of those things of which I am reasonably confident will happen. I will now discuss briefly some other possibilities in which I do not have the same confidence. A. Accelerate Construction of Permanent Field Fuel Line System The first alternative I will mention is under active consideration, that is to accelerate the construction of the permanent field fuel line system. The Field Fuel Gas System includes lines which will run from the Field Fuel Gas Unit located in the northern part of the field to the center part of the field. The lines will carry gas to Atlantic's and BP's major installa- tions in the field and to Alyeska's first four pump stations. This line system is being laid now, however, it is not scheduled for completion until the summer of 1976. We are now investigating the feasibility of accelerating this construction. If we can improve the schedule, it may be possible to provide gas to BP's generating plant for fuel earlier than October 1, 1976. 9- " ) There are five hurdles which must be overcome to make this alternative worth- while. They are: 1 . BP must be able to accommodate fuel gas in which dew point depression is less than their design. 2. The lines have been engineered to use concrete in the anchoring system. Concrete installation on the North Slope in the winter is difficult to impossible. This problem must be solved. 3. The lines are scheduled to be hydrostatically tested with water next summer. The testing problem for winter must be solved. 4. We must define the impact of laying other lines on the same pipeline support system if there is already an existing line in service. 5. We must define the acceleration impact on the total construction schedule. B. Reinjection This is not a viable alternative, since injection equipment could not be installed in time to satisfy our needs. It is mentioned here because there have been numerous discussions about this subject in the past. C. Reduce Production The only merit to the third and final alternative I will mention is simplicity. We can reduce the production of the plant to the levels necessary to meet the limits already prescribed by Conservation Order 9l-C. That would reduce the volume of the Arctic Heating Fuel output by 5,000 to 33,000 gallons per day, depending on time of year. 10- rf we did that, we could still meet our own requirements. But we have reason to believe this would trigger a chain of events that could prove to be unfortunate for others in the State. We are currently delivering about 1,000,000 gallons per month of Arctic Heating Fuel to Alyeska Pipeline which in turn, deli,vers the fuel to its contractors. Obviously, if we cut back A lyeska' s supply .by the above amounts, then A lyeska and its contractors would be forced to look for other sources. It is my understanding that the Alyeska project has certain Federal "priorities" that would enable its con- tractors to acquire fuel at the front of the line from those other sources of fuel. Therefore, it appears that if we solved our own casinghead gas problem by cutting back on our production, we would likely create shortages for other parties in other parts of the State. r would not purport to have firsthand knowledge of how severe those problems would be. However, a fairly recent event convinces me that it could be serious. Last month, it was reported that the major electric utility in the Fairbanks area came within a couple of days of having to idle one-half of its generating capacity due to a shortage of fuel. Several parties, including the military, came to the rescue in various ways. One of those parties was Alyeska which, as we understand it, released 1,000,000 gallons of its fuel allocation to the utility. Alyeska is making up that 1,000,000 gallons from our topping plant. What we hope to avoid is the reverse of that process which would require Alyeska to go to other sources for fuel that it could no longer obtain from our plant. After having completed this yesterday, I had a call from Alyeska on another matter and we were discussing the upcoming hearing. They told me they had received a call from the FEA yesterday inquiring of them about their needs for fuel for the coming year. The FEA expressed concern that 11- ) there is a shortage not only in Alaska but on the West Coast of Arctic heating fuel which would be our primary supply for importation into Alaska. And the FEA of course had apparently enough of an interest to consult with the primary users of Arctic heating fuel in Alaska to help them solve whatever problems that they are attempting to solve. I obviously haven't had an opportunity to look into this at all, but I am sure that from one govern- mental agency to ~nother it would be appropriate possibly if you have me to help define this particular part of the question to give the local FEA office a call. That concludes my direct testimony. Thank you. MR. HAMILTON: Thank you very much. MR. MARSHALL: Mr. Williams, you touched on the problem of alternative sources of diesel fuel. Could you elaborate on what would be your alternative source for your operations, or actually you covered that in that you said that by the present rate of casinghead gas production you can cover the amount of fuel oil needed for your own operations. So really the alternative source of fuel in the event that your present casinghead gas rates that have been approved by the Committee. If this has been, if this is going to be at the present rate rather than the rate you are asking for, then do I understand that your operations in the field would not be affected? MR. WILLIAMS: That is correct. We have the ability to provide our own needs. We do not have the ability to provide our needs plus BP's needs plus Alyeska's needs on the North Slope with the existing flare limit under the conditions that are facing us today. The way that this would work would be that we would start cutting back to Alyeska and they in turn would have to go to their other alternate sources, whatever they might be, to acquire their fuel. 12- MR. MARSHALL: MR. HAMILTON: fuel? MR. WILLIAMS: In steel tankage we have 25,000 barrels. Let me correct that, we have 20,000 barrels, we use 5,000 of our 25 for storage of JP-4 so we have 20,000 barrels of Arctic Heating Fuel. BP has 20 - 25,000 barrels, 11m not confident of how much they do have, but it's in that range. Alyeska has about 45,000 barrels so that we are looking at about 90,000 barrels I'd say. [454] MR. KUGLER: Mr. Williams, I have one question here on the injection of the casinghead gas. Is there any feeling when you will have the capability to reinject that casinghead gas? MR. WILLIAMS: The casinghead gas will be injected with the initiation of production on July 1,1977. The first increment of our barge shipment for the central compression plant came up at least in part on this year's barge shipment and the reason I say in part is that we still have some modules that are frozen in in the Bay as you are aware. We are extending the second dock to reach the barges that have been frozen in. The majority of the modules that are on these barges are central compression plant modules. MR. KUGLER: And until this is all in line, you cannot inject gas. MR. WILLIAMS: That is correct. MR. KUGLER: Thank you. I had one other question. About how much of the trans-Alaska pipeline, Alyeska, is this diesel fuel supporting? How much of it is used? How far south say? MR. WILLIAMS: We supply Alyeska's needs south to Atig~n. Atigun is right at the Continental divide of the Brooks Range. I'm not confident of how far south that is from Prudhoe, possibly 125 to 150 miles. MR. KUGLER: Thank you. I see. Thank you. I have another question. What's the storage capacity that you have up there for produced 13- MR. MARSHALL: Mr. Williams, on that particular situation with the Alyeska supply, in Conservation Order No. 9l-B, we had a problem then where you were flying in fuel by large air tankers and one of these crashed, several were grounded. Now these needs of Alyeska are actually by highway contact with a year round port. Would that be a fair statement to say? MR. WILLIAMS: Yes, I don't think that Alyeska would fly fuel to the slope although I can't obviously respond for them. The haul road is now open, they are hauling fuel from Fairbanks to some spot north of the Yukon river. Assuming that they could not acquire their needs from us on the North Slope, then obviously they would have to truck the fuel from Fairbanks all the way to the North Slope. The fuel would have to be trucked in quantities of about 8,000 gallons per truck. They are acquiring about 40,000 gallons a day from us so that they would have to have a number of trucks on the road. It takes at an absolute best, I believe the most rapid turnaround we've ever seen on a truck out of Fairbanks was 22 hours, that is Fairbanks, Prudhoe, Fairbanks. That's obviously not stopping for anything other than the bare necessities. Something that cannot be averaged, which would mean that they would have to have then more than 10 trucks on the road at all times. MR. MARSHALL: At all times? MR. WILLIAMS: Yes sir. MR. HAMILTON: Due to the road conditions, is there a chance that this service could be interrupted for a period of time? MR. WILLIAMS: Oh, absolutely. There's no question about that. We had the road shut down about two weeks ago for, two to three days, I've forgotten now. We had a blow and everything was shut down. 14- MR. HAMILTON: You say they take the diesel, or it could be taken from Fair- banks, how does the diesel get to Fairbanks? MR. WILLIAMS: Itls my understanding, thatls again something that 11m not totally familiar with, but Alyeska tells me that the majority of the fuel is hauled from the Anchorage, Kenai area to Fairbanks via railroad. And apparently there are some constrictions there as well. That was one of the points I attempted to make with my direct testimony and that is, there is a domino effect from the North Slope all the way south if the needs of the North Slope are not provided by the facility that exists there. MR. MARSHALL: Then would there also in your domino arrangement be the backup of demand which if it exceeded the production from, letls say Kenai area refineries, could then require importation of diesel fuel from the south 48? MR. WILLIAMS: Arctic heating fuel is currently being imported. We are in an arctic heating fuel deficit state at the moment. MR. MARSHALL: Thank you. MR. HAMILTON: I believe you testified that by operating under the current Conservation Order No. 91-C, the volumes specified in there for gas flaring limitations, that would reduce your output of arctic diesel fuel from 5,000 to 33,000 gallons per day less than what you were asking for. Is there an average that you could give us of what that might average for the year rather than just a range? Do you have a better feeling for that? MR. WILLIAMS: I hadn't attempted to average it in that it's so dependent on what our beneficial uses are and our beneficial uses change with time. We have higher needs obviously in the winter time than we do in the summer for heating, that type of thing. Additionally we are continuing to add beneficial uses with time, or we are projecting the additional of beneficial uses with 15- time, so that if you will, this is a moving target. Now I could go back and attempt to average it, but it would take some arithmetic on my part, however. MR. HAMILTON: I thought you just might have an approximate figure you could give us at this time. [545J MR. WILLIAMS: No sir, I had not attempted to work that number. MR. MARSHALL: Mr. Williams, I have another question. When we state that in our orders that you are flaring, or permitted to flare, a certain rate, so many MCF's per day, does this include a safety pilot, a safety flare, necessary for the plant operation? MR. WILLIAMS: Actually we're including that as a part of our beneficial gas use in that we firmly believe a safety flare is required for our plant. MR. MARSHALL: And approximately how large a flare do you feel is necessary for the safety aspect? MR. WILLIAMS: That depends on, if you will, time of year, although it's not necessarily related to summer or winter. Itls related to how much flare do you need to keep a flare going in a significant wind and we have found that this will vary anywhere from say a quarter of a million a day to three or four times that much. MR. HAMILTON: Have you had your flare to be blown out? MR. WILLIAMS: On a number of occasions, yes. MR. MARSHALL: Thank you. MR. WILLIAMS: As you are aware, we do have significant winds on the slope. MR. HAMILTON: lid just like to review with you a moment on how the volumes of gas are determined that are coming off your topping plant. Correct me if I'm wrong, my understanding is that you run periodic well tests to determine gas oil ratios in your producing well, meter the gas at various points where 16- you either have a direct measurement of the gas or by subtraction of the meters you determine the disposition of that gas except for the vapor off the tanks. Is that essentially. . ? MR. WILLIAMS: With the expanded plant what we have proposed to your people is to measure the volumes coming off the first and second stage separators which is a typical way of doing it in the oil field. We used in the past [580J tests from actual PVT tests from the reservoir itself. We are now equipped to more accurately measure gas oil ratios than we've ever been equipped before ,so that is our proposed method of handling it in the future. MR. HAMILTON: Have you initiated this new method as of yet? MR. WILLIAMS: We are visiting with your people at the moment and I don't think that we have submitted any reports yet on that basis, but it is our intention to start reporting it on that basis if it is satisfactory with the Committee. MR. HAMILTON: I believe in your application to the Committee you mentioned some studies here, the feasibility studies that were being undertaken, to see if some of your projects for more beneficial use of the gas were feasible, I wonder if you could elaborate on that a little bit more? Which of these projects are you referring to and the time when the feasibility studies might be completed. MR. WILLIAMS: The prime feasibility effort that we are into now is the prospective earlier transmission of gas to BP. This is the only one that we think is really viable, although it may not be too viable because there are a number of problems associated with it and I had identified those in my direct testimony. We have looked at all of the places that we have energy requirements on the slope in an attempt to use gas wherever it was possible to do so. The prime alternative at the moment is the potential earlier transmission of gas to BP, but that does present some problems for us and we 17- ) are currently having our project engineers study that particular alternative. I have brought a map with me that I can show to you if that would help to explain some of the problems or where the lines are and that type of thing. MR. HAMILTON: Yes, if you'd like to go over those with us, we would like to. MR. WILLIAMS: How shall I do that? I have two maps. MR. KUGLER: While you are taking out the maps lid like to have the new people that have arrived late sign our attendance sheet. MR. BAXANDALL: We've got it, Harry. MR. KUGLER: Everybody signed it? Thank you. MR. MARSHALL: We can take some tacks and pin it on the wall over there possibly. MR. SCOTT: Why don't we just lay it down? We can see it a lot better up close. MR. WILLIAMS: All right. This is our conventional facilities map that only has two lines identified on it. The red line identifies at least a part of the field fuel gas system, the green line represents the oil gathering system. Immediately south of flow station no. 1, which is at this point here, we can intersect the red line after it is installed with a temporary gas line coming from the COT plant such that we can energize the portion of the line south of flow station no. lover to the Alyeska pump station and at that point, if the BP line is in, then we can further transmit the gas on to the BP power plant. Now, we are in the process at the moment of installing the lines from Alyeska pump station no. 1 towards this point of intersection south of flow station no. 1. We are concurrently laying about a 38" line which is the oil gathering line and the 24" line from the Alyeska pump station no. 1 towards flow station no. 1. This is the part that has to be accelerated if we are going to have an earlier movement of gas to BP. That is that segment and that is the point I was talking to associated with the alternative that I identified which is the acceleration project. [650J 18- ! MR. MARSHALL: Mr. Williams, at this time have you had enough time to fully access the delay that the barge movement problem resulted in this fall? I imagine this is like a Chinese puzzle, of trying to figure out what piece was on what barge and what barge failure arrival, how it would delay your overall operation. Do you feel that you're pretty firm now in your statements about the time table of the future gas beneficial uses? Is this sort of shaped up? MR. WILLIAMS: In so far as beneficial gas use is concerned, the ~rimary things which we need are already on the slope. The significant things that we have not gotten off of the barges yet are in fact the central compression plant, but we did get the field fuel gas unit per se off of the barges, so it is there. The line system, the lines, the pipe, is on the slope, so from a field fuel gas system startup standpoint, we think that we're still on schedule. As a matter of fact, to further elaborate, we have just completed what we call a recovery schedule which accommodates those changes which we think have to be made as a result of our not having gotten the materials which we had expected to get in the 1975 barges. We hope to have gotten recovered by September of 1976 for all phases of the project, which means that we're going to have to double up and do a number of things within a different time frame than we had originally scheduled. This was one of the points I made about the acceleration alternative to BP. We have a large puzzle that we've got to fit all the pieces together and we can't indiscriminately take one piece without assessing its influence on the rest of the pieces and of course, our prime objective obviously is headed towards production in 7-1-77. MR. MARSHALL: Thank you. MR. HAMILTON: In your testimony you outlined the demand for Arctic Heating Fuel on the North Slope, being largely Alyeska needs and your own needs and 19- ) ) BP needs. I don't see where it definitely states what BP's needs are. Could you tell us how much Arctic fuel they are taking from your topping plant now? MR. WILLIAMS: They are taking about 25,000 gallons a day. MR. HAMILTON: Does this meet all their requirements or do they have to bring in additional arctic fuel? MR. WILLIAMS: This meets all of BP's requirements if we have the ability to manufacture about 110,000 gallons a day. We do have that ability, we have the authority, if you will. Then we w:Îll provide the needs of Atlantic, BP, of Alyeska, and of other users associated with Prudhoe in the pipeline project south to Atigun. MR. HAMILTON: But if you had to continue working under the current order you could only supply your own needs. MR. WILLIAMS: We could supply our needs, we would supply BP's needs and depending on the time of year and the other constraints, a small part of Alyeska's needs. This was the range of 5 to 33,000 gallons that I gave you in my direct testimony. MR. HAMILTON: I see. Thank you. MR. KUGLER: Any reduction in output was suffered by Alyeska. They're the first ones? MR. WILLIAMS: Yes sir, the reason for that is that because BP has historically taken from the plant. Alyeska came along, if you will, after BP. Alyeska has priorities that others do not have. Alyeska is trucking to their next point south of Atigun, wherever that is so they are already in the business, at least in terms of trucking some of their fuel needs north of Fairbanks, whereas none of the other people up there are. Obviously, it is more efficient not to truck any further than is absolutely necessary, so therefore if needs have to be filled from other sources, they should be filled as far south as you can 20- ) ) identify that need to be rather than having to truck all the way to Prudhoe because obviously that is a very inefficient use of men, machines, fuel, whatever. MR. HAMILTON: How are they taking your diesel fuel then that they use, are they taking it in trucks? MR. WILLIAMS: Yes. MR. HAMILTON: Okay. That's all the questions that the Committee has of you at the present time. We'd like for you to standby in case some other questions come up. MR. SCOTT: One item of business here, if I may, I'd like to request the Committee to make a part of the record of this hearing three things: (1) All of the records pertaining to Conservation Order No. 91, 9l-A, B, C, and of course D. (2) Secondly, all of the production reports routinely submitted to the Division pertaining to the plant; (3) And thirdly, the map that was presented to you a few minutes ago. MR. MARSHALL: We'll just call that Exhibit A, Mr. Scott. Arco Exhibit A. MR. HAMILTON: We will make the production records and previous records per- taining to this part of the record as you requested. MR. MARSHALL: One question, Mr. Scott, do you happen to have a reduced size copy of this map available? My reason for asking is that we find that our records which have newspaper size exhibits tend to get folded, refolded and eventually practically, well, have a more limited use. MR. SCOTT: I think that may be the reduced size, but actually the portion that is pertinent to the testimony, we will be glad to make a copy of just that portion of it that pertains to the testimony and I think that will take care of that,problem. 21- MR. MARSHALL: We would really appreciate if you could give us that portion of reduced size. MR. HAMILTON: At this time lid like to ask, is there anyone else in the audience that would like to present testimony at this time? MR. McCUTCHEON: At what juncture do we get to examine the witness? MR. HAMILTON: That will come at the very end. You will be able to ask questions. As I mentioned previously, we would like those questions directed to the Committee instead of the witnesses. MR. McCUTCHEON: Is that the procedure that is called for in your rules and regulations? MR. HAMILTON: That is the procedure that we are following, yes. MR. McCUTCHEON: Is that called for in your regulations?" MR. HAMILTON: I donlt recall if we have a procedure. . . important. MR. SCOTT: May I comment? This is probably from an excess of caution but Could we have someone to determine that? I think itls rather [745J MR. McCUTCHEON: it's usually something we usually say for the sake of preserving certain rights at hearings where protests have been filed. Frequently we have, you know there are questions asked that are technically objectionable for one reason or another and we generally prefer to answer them anyway. But there are certain places where we have to draw the line. I think in earlier hearings we've only had to do that where someone asked about confidential proprietary information and that sort of thing. Sometimes questions go beyond the scope of the call of the hearing, or they come from somebody who we feel lacks standing to assert a question. All I want to say is we will forebear and ignore most of those grounds if and when they crop up and the only purpose 22- , of this statement is to point out that in cooperating in that fashion we're not waiving our right to refuse to answer any particular question that happens to come along. As far as the legal question has been presented, the only thing I can recall is that this question has been determined at earlier hearings with the Committee's counsel from the Attorney General's office and it determined that I think at the prior hearings the question was whether it's proper to require questions to be submitted in writing to the Committee and then the Committee relay them as they see fit and all I can recall is the AG's office determined that was proper. I wouldn't proport to give you scripture and verse on that right now, but.. . MR. ~1ARSHALL: Hoyle, may I just throw in a little comment here. This hearing is held by the Oil and Gas Conservation Committee and our principle purpose of course is to hear any objections or statements from the public at a hearing of this type, however, since we are responsible for maintaining order, it is just good common practice to have a Chairman who accepts the questions and if they are pertinent, transmit them to the person who is seeking an application. This has always been our practice. MR. HAMILTON: And I may add that this is the practice we are going to follow today. MR. McCUTCHEON: Mr. Chairman, you did not answer my question. Is it in your rules? Now, that's the one that counts. Would you please send someone out to find out. That's the part that counts. If it's not in your rules, then that raises another issue. Let's find out what's in your rules. You don't object to finding out what's in your rules, do you? MR. HAMILTON: I think we've answered that question. MR. McCUTCHEON: You have not answered the rule of that question. I have seen no rules here. I have seen no one citing the rules. 23- J MR. HAMILTON: You havenlt identified yourself. MR. McCUTCHEON: My name is Jerry McCutcheon. MR. HAMILTON: Thank you, Mr. McCutcheon. We are going to proceed along the lines that I have outlined here and if you have an objection to that. . . MR. McCUTCHEON: I have an objection to that. I have requested to see the procedure according to the rules. Now if you donlt have rules, that's one thing. If you do have the rules, let's find them and determine if that's the correct procedure to follow according to the rules. MR. HAMILTON: Well, as I say, we are going to proceed along the lines that I have outlined and you can voice your objection if you object to that. MR. McCUTCHEON: I have voiced my objection. MR. HAMILTON: Fine. Weill accept that for the record. Is there any other testimony at this time? MR. SCHOLES: lid like to present a statement. MR. HAMILTON: Okay. The statements will follow. lid like to get any testimony at this time. Okay, if there's no more testimony, are there any statements, either written or oral, that you want to be presented? Yes. Okay, identify yourself. MR. SCHOLES: Am I close enough to the microphone to get this on the record? MR. HAMILTON: If you speak up, I believe it will be MR. KUGLER: Yes, youlre coming through loud and clear. r~R . SCHOLES: My name is Peter Scholes and I am an Anchorage resident and work as staff for the Alaska Center for the Environment. The Center is located at 913 West Sixth Avenue and is funded by roughly 400 dues-paying members and various grants. 24- ) My presence here today is the direct result of an anonymous phone call I received about three months ago. The caller chastised me and the Center for not taking an active interest in Conservation Order No. 9l-C. So, here I am today to make amends and to learn about the work of the Oil and Gas [800J Conservation Committee and to question ARCO's most recent application in a series of five Conservation orders regarding its operation of one, and later two, crude oil topping plants at Prudhoe Bay. Having gone through the files on Conservation Orders 91 through 91-0, I am aware of the distinction between expert and inexpert witnesses. The distinction has merit to the extent that it establishes the credentials of people whose education and work experience qualifies them to talk about technical matters related to petroleum geology, engineering, etc. I am not an expert in that sense and therefore I am quite willing to ask dumb questions in my efforts to force the experts to address things unmentioned and to probe what has not been probed. There are two primary environmental considerations involved in Conserva- tion Order No. 91-0: (1) The inpact that the increased production and consumption of fossil fuels, particularly the flaring of natural gas, will have on the Prudhoe Bay environment; and (2) The net effect of the proposed action with respect to the goal of resource conservation. The first consideration is probably of minor importance. The flaring of 2000 to 2800 more MCF per day of casinghead gas, as opposed to reinjecting it, is unlikely to significantly effect the ambient air quality of Prudhoe 25- ) ! Bay. Parenthetically, I should mention my lack of confidence in the Department of Enviromental Conservation's monitoring and enforcement efforts at Prudhoe Bay, but I don't think thatls important for this Committee today. The issue of resource conservation is the key environmental issue involved in the applied for conservation order. And, here rather than pretend to understand the situation better than the experts, I would like to pose a series of questions that have come out of my hurried reading of Conservation File Numbers 91, 91-A, -B, -C, and -D. The first point that becomes apparent in reading the files is that the need for natural gas at Prudhoe Bay rises at a much slower rate than the need for refined, liquid petroleum products. And at this juncture, I might add that it also rises more rapidly than does the use of liquid fuels that could be made from natural gas such as methane. lid like you to consider the facts in this case: In 1970, ARCO asked for approval to operate a crude oil topping plant with a maximum input of 5000 barrels per day and to flare 2600 MCF per day of casinghead gas. I believe that 2600 MCF figure was to go down to as little as 1750 MCFD during periods of peak consumption. And I believe that the plant actually operated for several years at a rate lower than 5000 barrels per day. I believe it was 2750 barrels. And that was in Conservation Order No. 91. In January, 1974, ARCa asked for approval to operate its crude oil topping plant with an input of 6300 barrels per day and to flare 2500 MCF casinghead gas per day. In November of 1974 ARCO asked to raise its topping plant throughput from 6300 barrels per day to 7200 BOPD and asked to increase the amount of casinghead gas flared to 3200 MCF per day. 26- [830] ) ) In August of 1975, ARCO asked for approval to operate it1s second topping plant, bringing the overall input to 13,000 barrels per day, and ARCO asked for permission to flare 4000 MCF per day from September 15 of this year through January 15, 1976 and to reduce that amount of flaring to 3200 MCF per day on a monthly average basis from January 16 of 176 until January 1 of 1977. And now, ARCO is asking to continue to operate at 13,000 barrels input per day, but to increase its flaring to 6000 MCF per day until the end of 1976. [845J The volume of gas flared has increased slightly more rapidly than the quantity of crude oil input to the plant. The second point that strikes the reader of the conservation file on this plant is that AReO is continually promising to use the casinghead gas, but always falls farther behind. On September 19, 1969, we have this statement: liAs much as possible, all casinghead gas production will be used primarily as fuel for the topping plant unit operation and secondarily as fuel for the base camp power generation and heating facility. II On January 22,1971, this statement: IIWe anticipate the installation of sufficient compressor capacity to inject, along with unused fraction of crude oil, whatever volume of gas is not at that time being beneficially used. To the extent the compressor capacity is not available for any reason and the gas is not otherwise being used beneficially, AReO would not object to curtailment of the production of the topping plant to its present level of 2750 barrels per day. II 27- J In Conservation Order No. 91-A, dated January 25, 1974, the Committee stated this conclusion: IINo beneficial use for or reinjection of the entire 2500 MCF per day on excess casinghead gas will be feasible during 1974, however it is anticipated that the excess will be beneficially utilized thereafter. II In Conservation Order No. 91-B, dated November 19, 1974, the Committee sta ted: IIStudies are currently underway to increase the beneficial use of casinghead gas produced in the topping plant operation. II In September of 1975 ARCO admitted to having undercalled by a factor of two for 1975 and 1976 its estimate for Arctic heating fuel, and again it said: liThe building of an addition to the base camp and a new construction camp is currently underway to increase the beneficial use of casinghead gas produced in the topping plant operation. II I submit to you that the request of ARCO to increase the volume of gas it flares is rooted in a much more substantial problem than the failure of barges to get through this year. And this is the point at which I can only ask questions. Why, when the barges don't arrive, does the need for liquid fuels rise or stay the same, while the need for natural gas declines? And why did ARCO overestimate its need for natural gas to operate its fueled drilling rigs and main construction camp? There was no overestimate of the need for liquid fuel. 28- ') J How can ARCO argue that it needs a gravel causeway to unload barges in the winter, thus preventing it from falling behind its ~chedule for field development and turn around and say it is behind schedule and therefore needs to flare more gas? It is just not clear what relationship exists between the need for fossil fuels and the failure of the barges to arrive. Further, I lack information regarding how ARCO established priorities for. off-loading the barges. Our real concern is not tied to the volume of gas being flared at Prudhoe Bay. ,The difference between 6 million cubic feet per day and zero over the [886J course of the year amounts to roughly one day of throughput for the proposed natural gas pipeline. And. we are unable to debate the impact of current extraction and reinjection on the future output of the oil field. Our concern is with ARCO's apparent nonchalance when the issue is natural. gas as opposed to crude oil conservation. Perhaps ARCQ'smost baffling statement in this regard, is this statement made in January of 1974: "We are not now convinced that our existing pumps could handle the added residual volume plus the higher pressure required if the incremental gas wer.e added to the injection stream. In any case, we could not get the necessary compression 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 com- pression equipment would have no further utility. II Let us ask the unanswered questions: Why wasn't the compression equipment bought, or at least ordered in 1970 or 1969? Why doesn't ARCO know what its pumps can handle and why wasn't this matter thought of earlier? Why will there be no need for compression equipment after the field fuel gas 29- } system is operational? Won't there still be a need to reinject s~mè tiä~ at least until the gas pipeline is built and to maintain field pressure? What is the field fuel gas plant and system? I believe that has been dis- cussed this morning. And what is going to be done with the gas in that system? And I think perhaps most importantly, is ARCa willing to commit itself to a time for completion? In conclusion, we feel there is a. definite need for the State of Alaska to allow ARCa to develop and produce its Prudhoe Bay oil and gas in an environ- mentally sound and energy efficient manner. Looking at trends and patterns over a six year period, we see mismanagement and poor planning on the part of ARCa. Therefore before Conservation Order No. 91-0 is finally approved, we would like to recommend that it be perhaps temporarily approved with these conditions: (1) That ARCa draft detailed project plans and completion dates, ~V\J"\~ to layout in more detail what is and has been in the past a broad-~* policy to consume, transport and reinject all natural gas produced at Prudhoe Bay. By broad-bush policy I mean that ARCa has frequently paid lip service to the idea of being able to consume, transport or reinject casinghead gas, but to date the amount of gas flared is increased at every turn. (2) I think secondly the Conservation Commitee should evaluate various proposals for supplying Prudhoe Bay with needed fossil fuels during field development and operation. By evaluation, we mean an analysis in terms of net energy cost in dollars and cents of getting necessary fossil fuels to Prudhoe Bay. We hope that particular attention would be paid to the use of casinghead natural gas in fulfilling the fossil fuel needs. 3a- ) ) (3) And finally I think there should be another opportunity for public input when ARCO's plans and the Conservation Committee's evaluations are completed. The public can't even comment intelligently until industry and government give it something to base its comments on. We thank you for this opportunity to present a statement. [928J MR. HAMILTON: Thank you, Mr. Scholes. MR. MARSHALL: Mr. Scholes, may I ask you a question? Would you repeat your third point again? MR. SCHOLES: My third point is that when the Conservation committee completes its evaluation of fossil fuel needs for Prudhoe Bay and when ARCa completes its proposals with dates for use of casinghead natural gas, we would like another public hearing so that we can then evaluate the findings of the Committee and the reports of ARCO. MR. MARSHALL: Thank you. MR. HAMILTON: Thank you, Mr. Scholes. Are there any other statements at this time? How about questions? Yes. MR. McCUTCHEON: I have a question. I will direct my question to Mr. Scott. I believe that that gentleman there. . . Is that correct? MR. HAMILTON: I would prefer that you ask me the question. MR. McCUTCHEON: I'll ask you the question then. MR. HAMILTON: All right. MR. McCUTCHEON: All right. Would you ask Mr. Scott? Mr. Scott, this is from the record, "Frankly gentlemen, if you grant our request as the result of this hearing, we will never come back and say, okay, that's a precedent, a crack in the door on the flaring question. II I believe that was four or five years ago, Mr. Scott. Is that correct? Would you ask him that question? 31- ) J MR. HAMILTON: Mr. Scott, would you care to answer that question? [945J MR. SCOTT: Yes. I don't claim to have perfect recall, but I do recall the context in which a statement along that line was made. At that time as I recall the Prudhoe Bay field rules hearings had not been completed. The Prudhoe Bay field rules had not taken the final form they have now. The Cook Inlet flaring hearings I don't believe had occurred either for that matter, I know they hadn't and there had been some concern expressed by Representatives of the State, I know of at least one member of the Attorney General's office, I'm not sure about the Committee, you may recall better than I on this, Mr. Marshall. At that time the question of whether or to what extent flaring would be permitted in the Prudhoe Bay field when it went on full scale pro- duction, that was a policy question that hadn't quite been firmed up by the Field rules or by the other related hearings and there was some concern and as I recall, it wasn't the greatest concern in the world, but there was some concern to saying, "Now, wait a minute, if we, we realize that that's oranges and apples, and that the flaring in the topping plant is like a, is miniscule compared to the total field operation, but we don't want you to come back later and say by granting us this flaring permit for the little topping plant that's it's a precedent for the full scale operation. II As I recall I made a statement in which I intended to waive absolutely and forever our right to argue that the flaring permit issued for the topping plant operation would be any type of a precedent for any subsequent applications, if any, that pertained to the full scale operation. Since then of course, you've written the Field Rules. As you know our plans for the field include compression and reinjection facilities to reinject gas unless and until it1s transported to markets. I might add that the record also shows that you did cut the production of the plant back to the 32- I~l operational level at that time, but, yes, it was an accurate statement in that context. MR. HAMILTON: Thank you, Mr. Scott. Mr. McCutcheon, do you have another question? MR. McCUTCHEON: Mr. Chairman, I have another question for Mr. Scott. Mr. Scott, wasn't Rule 8 in existence in about 1969 long before you ever made that statement and wasn't the Rule No. 8, of Conservation Order No. 83-B for those Prudhoe Bay, Saddlerochit oil pools states as follows: liThe venting or flaring of gas is prohibited except as may be authorized by the Committee in case of emergency or operational necessity. II MR. HAMILTON: Mr. Scott, would you care to reply to that? MR. SCOTT: Yes, the answer to that question is no. Rule 8 was adopted sometime after our initial application. MR. McCUTCHEON: Mr. Chairman, my question was in regards to his statement, not to his initial application in 1969. MR. SCOTT: If I have the sequence down just right, the Rule 8 was in effect at the time of the. . . You're correct, Rule 8 became effective on January 12, 1970 and at the time of the hearing, we've had several hearings as you well know on this topping plant, I think the hearing that Mr. McCutcheon is referring to was on May 19, 1970 and in fact I think our application at that time was for permission to flare under Rule 8. It was an application under Rule 8 and the question was whether it was an operational necessity. Now without admitting anything about the propriety of the decision that resulted from that hearing, as I recall the Committee essentially concluded it was not an operational necessity at that time primarily because of the delays in the issuance of the pipeline permit and there just wasn't a need for the fuel at that time. 33- MR. MARSHALL: That's correct. We have a Conservation Order No. 91, our fourth appearance states, Rule No.8 of Conservation Order No. 83-8 Prudhoe Bay, Saddlerochit Oil Pool states as follows: liThe venting or flaring of gas is prohibited except as may be authorized by the Committee in case of emergency or operational necessity. II And if the question is of a question of timing, that is correct. Rule 8 was in existence at the time Conservation Order No. 91 was written. MR. McCUTCHEON: Mr. Chairman, my next question is for Mr. Williams. And I suppose that the question, the first which should be the first question that anybody in a semi-judicial process, any judge would ask and that is, Mr. Williams, what are you doing back here after 7 years of operational "necessity" askin.g for furtherance of the same procedure which the legislature laid down in 1969 and 68 and 69 to the State's Division of Natural Resources that there was going to be no flaring on the North Slope. Now, just exactly what are we doing back here 7 years later still at the same question? Why hasn't this problem been resolved? MR. HAMILTON: Mr. Williams, do you care to comment? MR. SCOTT: Excuse me. This is John Scott for the record. Let me, excuse me, Mr. McCutcheon, I think that may be little more of a, it's not a legal question, but it's one of those with a legal assumption behind it. We really of course are not prepared to address ourselves to the legal questions of what the law doesn't or doesn't mean. The Committee of course arrives at those decisions on the basis of its own counsel as we do, but let me make an observation here that I think probably, at least it helps my perspective on this a little. We're not here entirely because of wrong guesses. The statement has been made 34- ) that ARC 0 made some bad estimates. I actually think that as Mr. Williams has pointed out, the estimates that he took into account were not all his own, they were estimates of other major users and their estimates in turn were based on the estimates of who knows how many contractors. I sort of have the feeling that if everybody in this room traded at the same service station and that service station asked us all to estimate our fuel requirements for the next year, we'd miss it a little bit. I 'don't think Mr. Williams has a whole lot to apolÓgize for in that area, but there have been some other variables over which we have made some wrong guesses and in reviewing Conservation File No. 91 of the files of the Committee that initially of course, there were several unexpected things that happened. I think the first one was the issuance of the pipeline permit didn't come off, didn't occur when anybody expected it to and nobody dreamed at that point that it would issue as late as it did and that it would take an act of Congress to bring it about. I say nobody did, maybe a ti'ny minority here and there, but we certainly didn't. Secondly, the embargo occurred that created a fuel shortage that, although we've sort of suppressed the memories of it right now, created a very, much of a panic situation in Alaska. And in fact, in November of 1973, at the direction of,the Governor, the Commis- sioner of Natural Resources, the Chief Ënqineer for the Division of Oil and Gas, contacted our company to determine (1) maximum capacity of the plant, (2) whether that capacity could be increased, and (3) worked on possibilities for getting any surpluses to other parts of the State. So the issuance of the pipeline permit and the embargo were two matters over which I don't think our operations people claim to have a lot of control. Mr. Marshall, you've mentioned the fact that the Hercules crash stopped, interrupted [1045J 35- ) , the airlift operations for the fuel. I think one of our applications quickly followed and was based on that incident. Then, of course, we're all still mindful of the interruption of the barges due to the severe ice conditions and now, as mentioned earlier, there is an indication that the FEA is having a problem allocating enough fuel because of supply problems from the West Coast, but we leave it to your discretion to check on that. We don't know that much about it. All I'm saying is we, Mr. Williams has mentioned three variables all right, but they've been affected by some other variables that Mother Nature has more to do with and other parties have more to do with than we do. That perhaps is an oversimplyfied review but the question of what we're doing here and now and why we've missed out on a few guesses. I hope at least that helps on the perspective of all that. MR. HAMILTON: Are there any more questions? MR. McCUTCHEON: Mr. Chairman, the next question. In short, Mr. Scott, are you saying that all these reasons are reasons why in 7 years you couldn't get a reinjection plant together for natural gas when you know you're going to have to reinject it? MR. HAMILTON: Mr. Scott, do you care to reply? MR. SCOTT: Obviously, my answers are based on what already appears on record, not being qualified to be an expert witness, but yes, I think in a sense it does. The first time we came here nobody ever dreamed that the fuel injection, that the field wouldn't even be on production by today. We didn't have the foggiest idea that we were talking about 7 years or 6 years or 5 years at that time, so I think it's just a pretty simple situation where hindsight gives us 20 - 20 vision. We didn't have the foggiest idea that we were talking about that much time that far back. 36- ) ) MR. HAMILTON: Any more questions? MR. McCUTCHEON: Mr. Chairman, Mr. Scott, is it not correct that the demand on the North Slope is based upon activity, the activity would have been the same regardless of the time frame; the fact that you happen to have a number of years interval in which you could design the line is really not material. The question is that you are supplying an activity that took place. Is this not correct? [1070] MR. HAMILTON: Mr. Scott, do you care to respond to that? MR. SCOTT: I'm not sure I fully understand it. I think, though, that Mr. Williams testimony and the balance of the record of Conservation Order No. 91 indicates that the level of activity is only one of many, many variables that affects our ability to project the volume of arctic heating fuel that will be needed and, number 2, the amount of casinghead gas that can be used. The level of activity. . . we've already, I won't again repeat what you've already heard, the level of activity of course and the timing of the activity has varied greatly by, for example, the barging. The things that would have come by barge and brought their own fuel as Mr. Williams mentioned didn't make it, so now we are talking about 3,000 truckloads turnaround. Yes, that's a level of activity that has not been the same as we expected, but again, a lot of that activity, the fuel needs created by that activity, were going to be supplied in other ways. The Hercules were going to supply some, the barges were going to supply some. Again, these things have already been mentioned. So, I don't remember the exact form of the question, but I think that it's fair to say that there are other variables and our ability to predict that one variable is far short of perfect and I'm sure always will be. MR. HAMILTON: Mr. Singletary, did you want to. . ? 37- ) MR. SINGLETARY: Mr. Chairman, may I respond in part to that question if I may? Mark Singletary. While this has been stated before previously on a number of occasions, I think it's well that, for this gentleman, to maybe reiterate the simple fact that we are not marketing arctic diesel or heating fuel, we never have. This is a topping plant facility that was initially designed to take care of Atlantic Richfield Company's field development, nothing more. We didn't build it, put it up, to take care of Alyeska's needs or other contractor's needs, or BP's needs and in fact, what we have been faced with over the years, simply has been a situation of circumstance whereby demands have been made on us ,from time to time by Alyeska, contractors, air- line carriers, BP, but we did not seek those markets, we do not seek them today, and what we have been endeavoring to do is to take care of those needs as they have developed, particularly so in cases where those needs also compliment and serve our own needs in the development of that field and the completion of the TAPS project. So it's not simply a case of guess work on our part. If we were outfitting a refinery and had been, then we would have conducted numerous studies on who the natural consumers would be, we would have contacted them, talked with them, but we've never sought those markets, those have merely developed over the years as TAPS got underway, as development of the field got underway. I think that's a very important aspect in determining why we have been required to come back to this Committee over the years and seek this additional authority. It's our attempt to make the best of a very bad situation and again, as Mr. Scott reiterated, and made note, hindsight again provides us with that vision which we would have liked to have had beforehand. Thank you. MR. HAMILTON: Thank you, Mr. Singletary. Are there any more questions? 38- J } MR. McCUTCHEON: My question is for Mr. Singletary, Mr. Chairman. Mr. Singletary, wouldn't you say that the delay of the pipeline with respect to having reinjection equipment in place should have left you better prepared and this delay of the pipeline should have given you more time to act pru- dently and to discuss among yourselves as to who was going to do what on the slope? Such as Atlantic Richfield is to be operator for all the gas on the North Slope, for the vartous other major operators up there? If you came to that decision, shouldn't these things have been worked out in that period of time? Shouldnltthis have left you in a much better place in time rather than if you hadn't had this delay and it was compressed one thing upon the other. Here you had this long delay, shouldn't that have left you better prepared? MR. HAMILTON: Would you care to comment on that Mr. Singletary? MR. SINGLETARY: Well, I think that I can only observe that again, 100kin9 back over events of the past, possibly we should have initiated some efforts to determine whether or not we would be called upon to respond, however I can only state that I believe that our efforts were directed towards the solution of a myriad of problems, technical and otherwise, and that fuel oil, fuel needs and requirements back in the late '60's and even early 70's occupied a very low priority in everyone's mind. It was not until early 70ls that this country was faced and agreed that it faced possibly a serious fuel shortage in the near term. While I can't confirm what the record looks like in that regard, I can only say yes, possibly we could have done a better job but the priorities then, at least in our view, did not extend to, or include the matter of fuel. We anticipated it would be there and others would take care of their needs and requirements, we would take care of our own and take care of the needs of our contractors, however, it didn't develop that way. The pattern evolved in a little different way as the years went on. [lllOJ 39- ) MR. HAMILTON: Thank you, Mr. Singletary. Any more questions? MR. McCUTCHEON: Mr. Chairman, this question is for Mr. Singletary, but if he's not able to answer it, why Mr. Williams. What is the current price that you are charging for what I'm sure that you call it arctic heating fuel in your report, is that correct? MR. McCUTCHEON: MR. HAMILTON: Would you care to respond? . . What are you charging for that to the other operators? [1125J MR. SINGLETARY: 11m certainly not in a position, Mr. Williams might be. MR. WILLIAMS: It's 65¢ per gallon. I might add a bit to that, in effect we're selling it to ourselves. MR. McCUTCHEON: And this includes 65¢ a gallon to BP, Alyeska, to Exxon, to all the rest of the operators. Okay. Mr. Chairman, this question, that's about half of the price it would be if it had to be flown in, barged in or trucked in, is that about right? MR. HAMILTON: Is that a question? MR. McCUTCHEON: Yes. MR. HAMILTON: Would any of you, Atlantic Richfield, care to comment on that? MR. WILLIAMS: Well, we're talking about three different numbers. It's really not'lo~ical to barge in and attempt to store a year's supply of fuel. We have storage space, I don't know how big they would be, but that's not an appropriate solution. MR. McCUTCHEON: To shorten it up, Mr. Chairman, my question is what is the price? What's the price it would be if this plant did not exits? MR. WILLIAMS: Lately on the North Slope, I suspect that if it were acquirable in Fairbanks for 42 or 43¢, it would probably cost 30, 35¢ to truck it to Prudhoe, so trucking from Fairbanks would be say 75¢, I don't know. 40- ) MR. McCUTCHEON: Then it's about fair market value, is that correct? MR. WILLIAMS: It's in that ball park, yes. MR. McCUTCHEON: This question goes to Mr. Williams, Mr. Chairman. What is the value of the gas at Prudhoe Bay, is it more than 75¢, is it less than 75¢ an MCF? MR. HAMILTON: Would you care to comment on that? MR. SCOTT: Well, in a way. We've encountered questions before about values at hearings, under, proceedings related to Conservation Order No. 91 pointed out that actually they're clearly beyond, we as you well know, gentlemen, we've asked you to take, in early days asked you to take economic matters into consideration. You've indicated that for the most part your concept of the terms emergency and operational necessity don't permit that and to a large extent prices, and values and market prices are beyond the scope of the hearing. In addition to that, they have been the subject of litigation between the State and industry. They are the subject of discussions and other administrative proceedings between another Division of the Department of Natural Resources and our company, so we generally have tried to avoid and have avoided, both you and us, getting into questions about values of these matters because they are replete with opportunities to discuss things that frankly are not Mr. Williams' responsibilities and in a sense not yours. So we just, without trying to be uncooperative, would just not care to get into into the economic value question. MR. SINGLETARY: Mr. Chairman, I might supplement a little comment by referring the Committee, those present, and Mr. McCutcheon who was present at the time, to the recently concluded hearings of the joint gas pipeline im- pact committee at which this subject was addressed, at least by some, and we 41- ) J are certainly not in a position to secondguess the testimony offered by those at that hearing as to what the value of Prudhoe Bay gas mayor may not [1186J be in terms of wellhead. MR. HAMILTON: Thank you. I might add a comment to that. There's been a lot of discussion on what the wellhead value of Prudhoe Bay gas and also what the oil might be, anywhere 11ve heard from zero to no value at the wellhead up to over a $1.00 so I. . . MR. McCUTCHEON: Mr. Chairman, I'm aware of those facts. My question is a continuation of other questions that have been asked along this line, so 1111 repeat it and they can say that they don't want to answer or they can say that they don't know or some answer like that. I would like some kind of an affirmative answer even if it's an answer of no answer. Mr. Chairman, I ask you to ask a member of ARCO, is the wellhead value of the Prudhoe Bay gas more or less than 75¢? MR. HAMILTON: I can ask them that question, Mr. McCutcheon, and if they want to reply to that, fine, if they object to it, that's fine, but quite specially that's the best. Would anyone care to . . MR. SCOTT: Mr. Chairman, I submit that that question is irrevelant and we should not be required to elaborate on a point in a issue which ågain,~as discussed at length in another proceeding with, again, members of this Committee and Mr. McCutcheon attended. To the extent the answers afforded that Committee, were not sufficient for Mr. McCutcheon and otherls purposes, I can only express regret, but we are not in a position to elaborate further. MR. HAMILTON: Thank you. MR. McCUTCHEON: Mr. Chairman, I hate to belabor the point, the value of the asset being wasted on the North Slope is of consideration to a Conservation 42- ) organization which I, or Conservation Committee Board, such as yours, it is of interest to the people of Alaska. We want to know what is being wasted and those parameters are very logical parameters. Now, so I wish to dispute the gentleman from ARCO in regard to that subject, so I will repeat myself again, and Mr. Chairman, would you ask ARCO to, they can either say they do not wish to answer or they don't know, or yes or no. MR. SINGLETARY: Mr. Chairman, to the extent my answer suggested that I do not consider the value of the product relevant, I express regret. We are in the business of disposing of, selling, marketing, utilizing oil and gas. Our position is that we are endeavoring to make the best of a bad situation. We have no desire or interest in flaring gas on the North Slope or any other place. We are satisfied that that gas is a valuable commodity which will be marketed in time from Prudhoe. In terms of endeavoring to quantify what the value will be at this stage, however, again we're just not in a position to elaborate further. MR. HAMILTON: Thank you. Any more questions? MR. McCUTCHEON: Yes, I have a question. For the record, I believe that the value of the gas is pertinent to this hearing. I will accept the answer that he does not wish to reply. MR. HAMILTON: Mr. Scott indicates that he would like to reply to your question. MR. SCOTT: I'd just like to comment on it. I think we have another oranges and apples situation here. This Committee obviously is concerned with whether a particular natural resource should be saved or wasted or under what circum- stances and how it can be disposed of. In that sense the Committee is called upon to ask, is it valuable? Is it useful? Might it be needed someday? The Conservation part of the question I submit however that this Committee is 43- ) , not concerned with the market value, the fluctuating price of commodities. Those are two rather distinct different concepts of the term value and they've been rather carefully divided between the Division of Oil and Gas and the Division of Lands and others. 11m not arguing the point, I'm just telling you what our bottomline conclusion is on that point. Again, we're not prepared to go any further on the question of market value. [1230] MR. HAMILTON: Thank you, Mr. Scott. Any other questions? MR. McCUTCHEON: Mr. Chairman, my next question is for Mr. Williams. You stated that the flare has gone out a number of times and just yesterday I read testimony to the effect, at least at that time, the flare had never blown out and they were using an average of 400 MCF per day. Could you give me the dates that this flare has blown out? MR. HAMILTON: Mr. Williams, do you care to respond to that? MR. WILLIAMS: I can't respond possibly to that. How can I recall dates, all I know is that it's been reported to me that the flare has blown out. I can't remember a specific date. MR. McCUTCHEON: Mr. Chairman, my question is for Mr. Williams. Apparently then it is of no great significance when the flare blows out, that it can be started relatively easily? Is that correct? [1245J MR. HAMILTON: Mr. McCutcheon, I don't see where pursuing this line is . relevant to the hearing regarding whether or not the flare blows out occassionally. If it can be operated safely I presume that that is the main consideration. MR. McCUTCHEON: Mr. Chairman, I will note that you wish not to pursue this and I wish the record to note that this line of questionin9 was pursued before at another hearing on this file 91 shall we call it. ~1y next question 44- } is for Mr. Williams. What is the fuel line gathering system, what does it serve and who all are tied into it and when does it become operational? MR. HAMILTON: Mr. Williams, do you care to respond? MR. WILLIAMS: Yes, and I thought I did that once before. Weill have to get back to our maps. MR. McCUTCHEON: No, verbally is sufficient. MR. WILLIAMS: The field fuel gas system is designed to serve the operator's needs in Prudhoe Bay and MR. McCUTCHEON: Excuse me, Mr. Chairman, I don't mean to interrupt, but operator's needs do you mean as for the consumption of gas or for the production of gas or distribution of gas? I don't understand which operator's need. Which way do you mean that? MR. WILLIAMS: The field fuel gas system is to provide fuel needs to the two operators in Prudhoe Bay and to the first four pump stations of Alyeska. Pump Station No. obviously being the most widely used pump station. It is to be initiated 10-1-76. The field fuel gas system was on the 1975 barges. Fortunately we got it all, we are in the process of installinq the field fuel gas unit now and we have just started laying the field fuel gas lines. We intend to produce from the gas cap into the field fuel gas system to provide fuel gas for the field and for Alyeska's needs until pro- duction is initiated from the field on 7-1-77. At that point in time, the gas that will be casinghead gas that will be processed in the flow stations will be then transmitted to the central compression plant for the process of field fuel gas unit for distribution to those three needs that I identified. MR. HAMILTON: Thank you, Mr. Williams. MR. McCUTCHEON: Mr. Chairman, . . . MR. HAMILTON: If the questioning is going to continue for awhile, we might considering having a small break here. 45- ) ) MR. McCUTCHEON: Could I ask you if you have a reservoir engineer here? MR. HAMILTON: I think Atlantic Richfield testified to that. Do you have any more questions? MR. McCUTCHEON: Oh, yes. MR. HAMILTON: Okay, fine. Well, let's have a ten minute break and come back at, say 5 minutes after 11. [1275J PART II MR. HAMILTON: The hearing is now reconvened and we are opening it up to questions from the floor. MR. McCUTCHEON: Mr. Chairman, for the record, my name is Jerry McCutcheon. I can be reached at Box 2340, Anchorage, Alaska 99510. I say that because I noticed in the previous records, all of a sudden we'd have somebody's name as Smith show up in the record and no identification, where he came from, who he was, and no possible way of ever contacting him. So I thought it might be useful to have that. Mr. Chairman, I believe we were at the question, Mr. Williams had just responded to various parts of the fuel line gathering system. Mr. Williams, as I understand what you said, now for the second time, I did not hear any reinjection facilities mentioned in the fuel line gathering system. Is that correct? MR. HAMILTON: Mr. Williams, do you want to respond to that? MR. WILLIAMS: Yes, I'd be happy to. You asked about the field fuel system which is not a part of the injection system. We have what we call the central compression plant which will take gas from the 6 flow stations that are scheduled for the field and will reinject the gas back into the gas cap of the reservoir. The gas needs that we have for field fuel will be processed and taken from the gas stream before reinjection. 46- ,.) J MR. HAMILTON: Thank you. MR. McCUTCHEON: Mr. Chairman, then you have two systems, is that correct, Mr. Williams? MR. HAMILTON: Mr. Williams, do you care to respond? MR. WILLIAMS: I guess that's right in effect. MR. McCUTCHEON: When is this reinjection system to come on? MR. WILLIAMS: 7-1-77. MR. McCUTCHEON: Not before then? MR. WILLIAMS: No, sir, because. MR. HAMILTON: ~1r. Williams, may I just clarify a point? Is it to come on stream at the time that you start producing a well down the Alaska pipeline? MR. WILLIAMS: Yes, that's a part of the entire process that will occur at that point in time. MR. HAMILTON: And the 7-1-77 date that you are assuming, that's the time the pipeline will start up. MR. WILLIAMS: That's what we are hoping will occur. We are shooting for 7-1-77 as the initiation of all production through the pipeline. MR. HAMILTON: Fine, thank you. MR. WILLIAMS: Simultaneously with that there will be gas injection into the gas cap. MR. HAMILTON: Thank you. MR. McCUTCHEON: Mr. Chairman, in the field fuel line gathering system, is there any other operator that is going to put gas into that system? Is it just ARCO? MR. WILLIAMS: Maybe it would be appropriate for me at this particular point in time, Mr. Chairman, to attempt to identify the oil and the gas flow in the field. I'm asking you a question. MR. HAMILTON: If you would like to. MR. WILLIAMS: I don't know. Possibly that would clarify some of this. 47- ) ) MR. McCUTCHEON: Mr. Chairman, I would appreciate that. MR. HAMILTON: Fine, if you would. MR. WILLIAMS: Well, I'm not very well equipped to do this. Do you mind if I take this to the board? MR. HAMILTON: No, that would be fine. MR. WILLIAMS: Let me use another map. Do you have a large map like this one? Yes? I think that would be helpful. MR. HAMILTON: While we're waiting I might say that if we reach 11 :30 and still have further questions, we will adjourn and reconvene at 1:30 this afternoon. MR. SCHOLES: Mr. Chairman, could I ask a question while we are waiting? MR. HAMILTON: Yes. MR. SCHOLES: It's a matter of clarification. I am not sure I fully understand the difference between the 7-1-77 date and 10-1-76 date. MR. HAMILTON: That's stated in Atlantic Richfield's testimony? MR. SCHOLES: Right, it says here on page 6, the field fuel gas system is scheduled to be operational 10-1-76. MR. SCOTT: Mr. Chairman, if I may. I think that is a good question, but I don't think Mr. Williams heard it. He was working on the exhibit. MR. HAMILTON: Would you repeat your question, Mr. Scholes? MR. SCHOLES: Yes. I'd like to know the distinction between the 7-1-77 date and the 10-1-76 date. MR. WILLIAMS: May I respond to that when I get the map up. MR. HAMILTON: Fine. MR. WILLIAMS: Mr. Kugler, do you want to rearrange your microphone or. . ? MR. KUGLER: I think I can pick you up from there. 48- J J [1335J MR. WILLIAMS: Let me explain the plan of operation for the Prudhoe Bay oil field and then I will back up and specifically answer the question that was given. The Prudhoe Bay oil field will be developed first by drilling wells from what we call drill sites and I apologize for the size of the map. I did not anticipate getting into this kind of a discussion. They are identified as the little yellow blobs on this map. We will be drilling from four to as many as, say 20 wells from each of the drill sites. A drill site is a gravel plat- form. From the drill site we will drill directional holes such that we will cover the aerial extent of the reservoir placing the bottom of the well, if you will, in a perimeter around each of the drill sites. We will produce all of the products that come from the well, from the drill site, to a facility which we call a flow station. At the flow station we will separate the oil from the gas from the water. Let me trace for you the oil. You can It see it very well on this small scale map but there will be an oil gathering line running across the eastern side of the field, which is the Atlantic operated side of the field, to Alyeska Pump Station No.1. The pipe- line does roughly this. There will be on the western side of the field an addi- tional three flow stations that will be operated by BP and the process there will be essentially the same as the process on the east side of the field, so let me refer just to the east side of the field in that welve got in essence a mirror image on the west side of the field. So we have the oil then after it is separated pumped to pump station no.l where it will start its route south. The water that is separated at the flow station initially will be injected into water injection wells adjacent to each of the flow stations. The gas that is separated at the flow stations will be gathered and taken to what we call our central gas plant. Again, I will repeat that it is a mirror image from the other side of the field. 49- ) ) At the central gas plant area, we will process fuel, we will process gas for fuel through what we call our field fuel gas unit. That gas will be trans- mitted back down this course here and distributed to either side of the field for the use of Atlantic, BP and Alyeska. Now to clarify the two things. 7-1-77 is the scheduled startup of operations tnthe field and for the pipe- line. 10-1-76 is the scheduled startup for the field fuel gas system. This is the first thing that we need to start up to begin the process of bringing the field on stream. The gas that is p.rocessed in the field fuel gas unit as of 10-1-76 is going to come from the wells that are currently being drilled on a pad right here which is our central gas injection plant. We are in the process of drilling ten wells which will receive the gas from all of the pump stations and which will be injected back into the reservoir. That injection into the reservoir will continue until there is a gas sale, when- ever that may be, we don't know when it will be. The reason that we have to take gas. . . MR. HAMILTON: Pardon me, Mr. Williams, I believe Mr. McCutcheon has a question. MR. McCUTCHEON: You're injecting it then I gather then in the gas cap, is that correct? MR. WILLIAMS: Yes, sir. MR. McCUTCHEON: Thank you. MR. WILLIAMS: That is the reason for the location of the facility. The reason for producing gas from what will be gas injection wells as of 10-1-76 is because this is the only source of sufficient gas available to us to process through the plant and to start supplying all of the needs that we have here. 50- ) ) Now the point that I had made in the direct testimony was that this system is scheduled to be operational 10-1-76 in that we can supplement the gas going into this system and actually reduce the amount of gas that would come out of one of our injection wells by the amount that ,we can tie into the system from the COT plant. Now, Iwill elaborate on one other point. The way that we are using gas now from the COT plant we have a line that runs in an easterly/direction and we have various taps coming off of it. We have a ,line running in an westerly direction and we have taps coming off of it. We have then a gas that is beneficially used here, gas that is beneficially used here, as well as the gas that is used in the base area here. MR. HAMILTON: Thank you, Mr. Williams. Are there any other questions at this point, Mr. McCutcheon? [1400J MR. McCUTCHEON: Mr. Chairman, Mr. Williams, how much gas will you produce per day out of the gas cap? MR. WILLIAMS: Well, 1111 need some clarification on this. At what point in time are we talking about? MR. McCUTCHEON: After 10-1-76. Between 10-1-76 and theoretically, or hopefully, 7-1-77. MR. WILLIAMS: I donlt recall that number precisely, but I would anticipate that it would probably be in the range of 10 to 15 million cubic feet of gas per day. At this point in time, see we are not. . . MR. McCUTCHEON: That would not be too much, 2 and 1/2 times about what you want to flare now? 51- ) MR. WILLIAMS: Well, may I comment on that? The six million is an absolute maximum number. It is not a,number that would be sustained on the day that they commence. Wehaveabsolutely.no, all, our testimony identifies this matter. The gas that would be leftin'75 can be cut back by whatever we can supplement into it from the COT plant assuming we can meet our timing of 10-1-76. MR. HAMILTON: Thank you, Mr. Williams. Are there any more questions from the audience? MR. McCUTCHEON: Mr., Cha i rman, this is for Mr. Wi 11 i ams. ~1r. Wi 11 i ams, does ARCO have a well, or I should say a field stimulation model and a well stimulation model of your, of the overall picture and of also the particular well that you are reinjecting in now and the well that you have previously reinjected in? MR. HAMILTON: Pardon me, Mr. McCutcheon, do you mean simulation model? MR. McCUTCHEON: Simulation model. MR. HAMILTON: Would you care to . . ? MR. SCOTT: 11m not sure whether we want to object to the question, except that we're not asking for any change in our authority with respect to reinjection, this matter has been covered as you can recall, in great detail at earlier hearings, will be covered again in the future, 11m sure, when we submit our plan of operation for the field and at various other times. To some extent it requires a reservoir engineer which is expertise Mr. Williams doesn't claim. If we did cover the subject, I think we might be here at least the rest of this day. 11m sure the chairman of the Committee may be the most qualified person in the room to answer the question, anyway, when you. . and the questions it pertains to, so I guess just pointing those things out, I would prefer not to get into that area. I'll leave it to your discretion. 52- ) ) MR. HAMILTON: Mr. McCutcheon, I don't know what point you are trying to arrive at, but discussions of simulation studies right now of the gas cap I don't think are too relevant to this hearing. MR. McCUTCHEON: I didn't ask for the gas cap. I asked for the field itself as pertains to ARCO, I asked also for the wells that they were reinjecting in, the well that they are going to reinject into, or are reinjecting into now, and the well that was previously reinjected into and it is relevant. The question was asked before and I find nothing in the file to indicate that there was ever an answer given. There was one small diagram which looks like an eight leaf clover and that was the extent of it. MR. HAMILTON: May I ask you, they are relevant to what extent? MR. McCUTCHEON: Well, the question was raised last time and was raised, and a serious question was posed that there was a void, we're voiding at the rate, unfortunately I can't find the number but it was something about five cubic feet per barrel produced and it seemed extraordinarily high tome. Oh, "we have now received your October report and shows according to our calculations that approximately 4.4 barrels of net reservoir space are being voided for each barrel of output from the plant. This does not seem to be a prudent practice to the Committee. Further reinjection of all produced gas in excess to that beneficially used will be a consideration in granting any extension." I never saw a reply and I saw no information to that and so what I am doing is posing the same question that was posed before in a previous hearing. MR. HAMILTON: Would you like to reply to that? MR. SCOTT: I'd like to point out two things. The call of that hearing that followed that letter, that letter pertained to, was alt0gether different from the call of this hearing and I submit that it is still well beyond the scope of this one. I might add the substance called for, but the question doesn't 53- ) ) trouble us except that nobody here purports to be qualified to get into that and the call of the hearing certainly doesn't reach it. But I might point out that in the file it indicates that there was a great deal of testimony on that subject at a subsequent hearing on May 19, 1970 and of course it has been mentioned at hearings since. I'm sorry that I don't recall the witness's name but he was an Engineer from our Dallas, I believe he was from our research center in Dallas that came up to testify for that hearing. He presented rather extensive testimony on the subject, as a matter of fact. But~again, our, hesitancy to get into that area is based on a number of considerations, not the least of which it is not really pertinent to why we are here today and we didn't bring the types of experts you need to get into that area, and thirdly, it would take one whole heck of a long time to cover the subject. MR. HAMILTON: Do you have any further questions? MR. McCUTCHEON: Mr. Chairman, Mr. Scott, would that person's name have been Mr. Skaggs? MR. SCOTT: I believe that's correct. I'm not sure, I'm pretty sure. MR. McCUTCHEON: Mr. Chairman, I submit again I have read the files that are available and there is, unless the files now are missing, I find nothing of any substance in the files on discussion of this subject and I believe that the letter I b:elieve signed by Homer Burrell who said that it is of serious importance and I certainly believe that that answer should be had before an extension of any further flaring is at the Slope. There should be an answer to it. MR. HAMILTON: Is that a statement you want read into the record or are you formulating a question? 54- ) "' MR. McCUTCHEON: Well I suppose that the witness's reply to my question is argumentative and I suppose that I'm saying that it is asa matter of fact relevant to the testimony here and it does concern conservation and the question should be answered and I b.elieve that this Gas and Oil Conservation Committee will have to postpone any action until such time as it has an adequate answer to that question. I ,wil 1 proceed on, I don't bel ieve I am going to get an answer. My next question, Mr. Chairman, and I will direct it to Mr. Williams. With the material that you are reinjecting into the well, residual crude,being.only l/lOth as likely to move under the same pressure as the crude, virgin crude in the reservoir, are you not going to find you are liable to windup with some traps, some material left behind? MR. HAMILTON: Mr. McCutcheon, are you testifying as an expert witness, or are you posing a question? MR. McCUTCHEON: 11m posing a question. MR. HAMILTON: Would you state that question again, please? MR. McCUTCHEON: Mr. Chairman, my question is for Mr. Williams. Mr. ~Jilliams, with the fact that the residual crude that you are reinjecting into a well has only l/lOth of the mobility as does other virgin crude, are you not liable to be facing some serious reservoir problems when you go to extract crude at a future date? Will not the virgin crude so to speak, poke a hole in it, go to the well and that become the main route? MR. HAMILTON: Mr. McCutcheon, I believe Atlantic Richfield has testified they do not have a reservoir engineer present to answer questions of that nature, but I can assure you the Conservation Committee will consider possibilities of any reservoir damage, if that's what you are inferring. 55- MR. McCUTCHEON: Well, I guess 1111 direct my next question to you then. Will there then be in this report when these findings cpme Oijt, some statement as ~ L1494J to the effect and how that ten times as more viscous residual crude will be obtained out from the field and what the effects will be. Are you saying that your Division will then put a reply in this results of this hearing? MR. SCOTT: Mr. Chairman, may I comment on that? MR. HAMILTON: Yes. MR. SCOTT: This is from the record. Conservation Order No. 91, dated June 15, 1970 contains a number of findings, one of which is, the reservoir model simulator calculations indicate that injection of the unused fractions of crude oil in the Prudhoe Bay Sadl erochi t Oil Pool will not reduce ul timate recovery. of ei ther the injected fractions or the virgin crude in the Pool. I am not suggesting that the Committee does not have this matter under, doesn't continually monitor it and will have no further hearings or questions on it, but at least in so far as this record is concerned, that issue has been, the findings, well the question as I understand it, is will the Committee make such a finding, and I just merely point out the Committee already has. MR. HAMILTON: Thank you, Mr. Scott, for pointing that out. MR. McCUTCHEON:' Mr. Chairman, again I want to point out that in the records I could find no where this problem was addressed. Now maybe it was addressed someplace and maybe that someplace is now missing. Now if there is more material which addresses the subject other than just somebody saying well, this is the way we see it, lid appreciate having it. But I can find no addressing of that material at all and I think it's quite relevant. Particulary since the question was raised by the Committee itself. I will go on to the next question. Mr. Williams, Mr. Chairman, what measuring devices do you have for measuring the quantities of oil produced on the North Slope and will you 56- } have anything different than you have today within the next six months, within the next year, within the next two years? MR. HAMILTON: I might ask you Mr. McCutcheon, you are talking about the entire measurement and the entire production of the entire field, or the topping plant? MR. McCUTCHEON: The measurement from the topping plant, the measurement from the producing well. MR. HAMILTON: Mr. Williams, would you care to comment on that? MR. WILLIAMS: Well, we have meters, 11m not sure what we are searching for here. MR. McCUTCHEON: You do have the meters and you are able to read those two figures today, is that correct? MR. WILLIAMS: Yes, we have meters for both gas and oil. MR. r,1cCUTCHEON': All ri ght, it was my unders tand i ng as of yes terday that you were not able to read the gas. MR. WILLIAMS: As a matter of fact, I believe that one of the Division of Oil and Gas representatives is up there today calibrating those with our people. MR. HAMILTON: He was up there. He has returned. We have just recently calibrated your new meters you put in at the topping plant. MR. McCUTCHEON: Mr. Chairman, this is not to belabor the question, but to see that the answers are there. You do now have, Mr. Williams, the ability to determine the exact amount of crude that is produced, the amount of material that comes from the topping plant, the amount of residual crude which is reinjected, the volume of gas that is measured that is used bene- ficially. You have a separate device somewhere for measuring gas that is 57- ) flared and all these items can be quantified at this present time, is that correct, Mr. Williams? MR. HAMILTON: Would you care to answer that Mr. Williams? MR. WILLIAMS: 11m not sure that I can. I will say probably. I don't know all of the metering devices and measuring devices that we've got in the system. We have the necessary metering and measuring devices to accomplish the desires or suggestions as identified by Mr. McCutcheon. I assume that they are all in service. MR. McCUTCHEON: All right, Mr. Chairman, Mr. Williams, are you saying that you can measure the amount of gas that you are flaring, and the amount of gas that you are using in beneficial uses? MR. HAMILTON~ Mr. Williams. MR. WILLIAMS: This may come from a deduction of one meter from another. We are not measuring all of the individual uses. We are measuring gas that goes into a system, that is the system to the east, or the system to the west, or we are measuring the Inlet gas. There may be some volume that we get by deduction, by subtracting one meter from another. MR. McCUTCHEON: Mr. Chairman, Mr. Williams, are you saying that you have no measuring device on the gas that is being flared? MR. HAMILTON: Mr. Williams, . MR. WILLIAMS: Well, I don't know whether we have a metering device at this particular moment on the gas going to flare. MR. HAMILTON: Mr. McCutcheon, I might comment on that. I believe earlier this year our engineers, in visiting the topping plant, drew a diagram of the metering facilities and as I recall the flare volumes were obtained by, as Mr. Williams suggested, by subtraction of one meter reading from another. 58- ) ) MR. McCUTCHEON: Mr. Chairman, is there some reason that the Gas Conservation Committee doesn't have or hasn't requested that a meter be put on so you know exactly what is being flared rather than in the manner of deduction? MR. HAMILTON: Mr. McCutcheon, for the type of metering that they are doing up there, we.have looked at the system and we think it is adequate in deter- mining where these volumes are going. Mr. Miller, John Miller, at the end of the table is one of our Petroleum Engineers. He has inspected that topping plant on numerous occasions. He could probably answer that better than I can. MR. MILLER: I think Mr. McCutcheon didn't quite understand your word deduction. MR. ~~cCUTCHEON: I understand it quite well, in all it~: significance. MR. MILLER: All he's saying is that if you have a master meter on a line, if you have a main line here and you have a master meter here, and you had another meter here, that this is the total volume, then you meter this volume and of course what is left is this here, that's the process of deduction which is adequate. MR. McCUTCHEON: I don't think it's adequate. Somehow those meters seem to get, read different things. Somehow when you don't have a meter on the flaring units, you find out an awful lot gets flared that probably was never intended to be flared. MR. WILLIAMS: Mr. Chairman, I resent that inuendo. MR. HAMILTON: Mr. McCutcheon. MR. McCUTCHEON: We can make it uglier if you wish. MR. HAMILTON: Mr. McCutcheon, if you want to present testimony as an expert witness we can certainly swear you in and listen to your qualifications. But at this time, I think that if questioning is going to continue, we will have to take a lunch break and we will reconvene at 1:30 PM. MR. McCUTCHEON: Thank you, Mr. Chairman. 59- ) ) PART III MR. HAMILTON: It's approximately 1:35 in the afternoon and the hearing is reconvened at this time. We are again open for questions from the floor at this time. MR. McCUTCHEON: Somebody might like to ask some questions besides myself. MR. HAMILTON: Are there any other parties here who would like to ask questions at this time? I guess not. MR. McCUTCHEON: Mr. Chairman, which one is the official tape? MR. HAMILTON: There's no official tape, we're going to use both of them in case we have gaps in one. MR. McCUTCHEON: Okay. Just wondered. One person almost went to the pokey over that. It seemed to be quite important. Mr. Chairman, I have a question for Mr. Williams. What is the composition of the solution gas in the wells and the gas cap? MR. HAMILTON: Mr. Williams, I don't know if he can respond to that at this time. I don't know i'f he has that data with him or not. MR. WILLIAMS: I can't respond accurately. MR. McCUTCHEON: Mr. Chairman, another question for Mr. Williams. Mr. Williams, you mentioned water injection, where will you inject the water? MR. HAMILTON: Mr. Williams, I think in your presentation on the board you were talking about water injection wells and the disposal of water. I think that's what you are probably referrinq to, isn't it Mr. McCutcheon? MR. McCUTCHEON: Well, I don't know what his answer is yet. MR. HAMILTON: What type of water injection are you referring to? 60- 1 } MR. McCUTCHEON: Well, you said something about water injection. Where do you anticipate injecting the water and now, welve raised the next question, which is this apparently is some kind of water that comes from the well in oi~ production? MR. HAMILTON: I think, correct me if 11m wrong, at that time he was talking about produced water being disposed of in injection wells, Mr. Williams, is that correct? MR. WILL.IAMS: Yes, sir. I think the comment was that I had identified the flow station that was used to separate oil, gas and water and then I attempted to identify where those streams would. go. The water would be reinjected initially at each of the flow stations, probably between 3 and 5,000 feet. It is not our intent to inject water initially back into the reservoir and particularly, at each of the flow stations. The reservoir will not produce water of substance early in its life and this will take care of a small amount of produced water. MR. HAMILTON: Thank you. MR. McCUTCHEON: Mr. Chairman, Mr. Williams, why would it not be beneficial to reinject that water back into the aquifer? MR. HAMILTON: Mr. Williams, do you care to respond to that? MR. WILLIAMS: We are studying aquifer injection now. I don't know what the results are going to be. The amount of water that we are talking about once again, in the early life of the field is quite nominal. So that from a volume standpoint, it would have very little influence on the reservoir, but water injection is a part of the planning that is currently going on, that is water injection into the reservoir. MR. HAMILTON: Mr. McCutcheon, I asked Mr. Williams to answer your question, but I don It see how it applies to the matter at hearing today, continued questioning along this line. 61- ) ) MR. McCUTCHEON: I believe it does, I believe everything having to do with the reservoir and production from the reservoir has to do with the field of conservation and this is the Alaska Oil and Gas Conservation Committee. ~le are talking about production from this reservoir and how it is to be handled, where the gas is going, where water that is coming off of itis going, where the oil is going, what effects they are going to have on the reservoir in the future, all these items are interrelated. MR. HAMILTON: I agree they are, but as far as water disposal is concerned, a small quantities of water disposal, I do not see how it effects any ruling that we might make on the crude oil topping plant at this time. MR. McCUTCHEON: Well, I can because I can foresee .all of a sudden, here we go again. Well, the water injection will get delayed, well, we don't have a well down here, well, we've got this little well over here, and it's the ~ame thing that you people have a.llowed to have happen for the last six years. Six years this thing has been going on. The last time that we had anybody sit down on anybody was Governor Hickel~, Unfortunately, he didn't stick around very long. We had some conservation get started at that particular period of time and it seems to have gone by the board. Now we Ire talking about a well to 5,000 feet. Well, why isnlt the well down to the aquifer) just put it in the aquifer and get all the equipment lined up in the proper manner. Now, all this has to do with the production of it and I believe that youlll find that you're apparently going to produce somewhere between 3.5 and 5.5 billion cubic feet out of the gas cap. Now that's a small amount, true, in relationship to the gas cap, but it's still coming off the bubble point and you're losing gas and you're decreasing the fluidity of the oil in this period of time and 11m kind of curious as to what happens to the reservoir, why this is being allowed to happen. I think this is relevant, Mr. Chairman. 62- } , MR. HAMILTON: Well, I disagree with you, Mr. McCutcheon. If you would like to proceed with some additional questions and make them pertinent to this hearing, then we'll accept those. MR. ~1cCUTCHEON: Well, I guess my next question is, during the flaring or during, Mr. Chairman, a, question for, Mr. Will iams. During the period of time apparently from '76 to '77 when the wells begin to produce you're going to draw down from the gas cap. How much gas do you believe that you'll be drawing down at that period of time, during that nine months to a year? MR. HAHILTON: I believe that question was answered earlier this morning, but I'll ask Mr. Williams again if he has an answer for that at the present time. MR. WILLIAMS: Well, I think we've got to identify two sources of gas here. One source of gas is going to be casinghead gas which doesn't come from the gas caps and that is the gas that is associated with production and flowing into the COT plant. Possibly what Mr. McCutcheon is talking about is the gas that would be produced from the gas injection well through the field fuel gas unit when we bring it on to stream in October 1, 1976. MR. McCUTCHEON: That's correct, Mr. Wi,lliams. That's it, how much are you going to take off the gas cap? MR. WILLIAMS: Now, I had said that my earlier estimate was, as I recall, 10 to 15 million cubic feet of gas a day. I'm not prepared at the moment to answer that specific question with authority, but that's my best estimate off the top of my head. MR. McCUTCHEON: Mr. Chairman, Mr. Williams, is this something that's going to be a function of time, or something that's going to be a function of use? Suppose that for some reason we cannot make the deadline of July 1, 1977 and suppose we wind up in December before the line is ready to accept oil. Does this go up or down or remain constant? 63- ) ) MR. HAMILTON: Mr. McCutcheon, I still don't feel that this question is relevant to the proceedings. MR. McCUTCHEON: It is relevant in the fact that it has to do with the amount of gas that is being drawn off of this field. MR. HAMILTON: It has to do with the overall reservoir performance, I agree, and we're not here today to study the overall reservoir performance and evaluate an operational plan. We're here to discuss the topping plant operation and it is relevant only insofar as they may be able to use some of this gas, benefi.cial use in other parts of the field in this field fuel gas system if it is implemented in time. MR. McCUTCHEON: Mr. Chairman, it is relevant to the amount of gas being withdrawn from the field before any gas in any conservation practices are being used on the field and it affects the field in the future of the field, and I think those answers should be had. MR. HAMILTON: Well, I think that the State has undertaken studies to indicate how that field will perform with various modes of operation and I think you are aware we have published a report to that effect recently and we will be undertaking some additional studies of this when other reports are forthcoming, but it's not a matter I think we should take up at this hearing at this time. MR. McCUTCHEON: All right, my next question is maybe, Mr. Chairman, you can explain to me why it's been six years and we have no injection of the gas and we continue to flare it despite the State policy which was set '69, '68, that there be no more flaring in the State, as a result of the things that transpired in Cook Inlet. Now can you tell me why your group is continuing to allow flaring and is quite willing to go ahead and allow this continued flaring? MR. HAMILTON: I think you'll find that the rulings that have been made regarding the flaring at the topping plant, each time that this subject was 64- ) ) brought up and two public hearings prior to this were held, that the rulings were at that time that it was an operational necessity that this arctic diesel fuel be provided up there. MR. McCUTCHEON: I have no further questions. MR. HAMILTON: Are there any other questions at this time from the audience? If not, . . . MR. McCUTCHEON: I have a statement. MR. HAMILTON: All right, if you care to enter a statement. MR. McCUTCHEON: This is ARCO's testimony. January 22,1971: II ~le anticipate the installing of sufficient compressor capacity to inject along with the unused fractions of the crude whatever the volume of gas is not being beneficially used. To the extent the compressor capacity is not available for any reason and the gas is not otherwise being beneficially used, Atlantic Richfield Company would not object to the curtailment of production to the topping plant to its present level of 2750 barrels a day. II MR. HAMILTON: Does that conclude your statement? MR. McCUTCHEON: No, it does not. I hope that you will consider that one must view this proceeding and all that have gone before with some skeptism with which an auditor does. That is that something very much is amiss has taken place· in the last six years during the flaring has been allowed despite the promises you've had for reinjection equipment and other things long ago. It's always something goes wrong, some reason we don't have it and the Conservation Committee always seems to acquiesce. I don't know where the existing tapes are for the preceding hearings, I am going to look for them, but from looking at the files, it appears that there must be some- thing missing because I don't have the same material the gentleman there does and in looking at some of the pages, in the files, the file is made up of 65- [1670J , ) original pages, basic original pages, but every so often you see pages missing from the file and other pages substituted" some of them from the same typewriter, some of them are copies from a different typewriter. 11m not the only one to have noticed it, it was rather obvious. There was some alteration of the minutes. I noticed that it was by the'agreement of the Board and ARCO, but no one ever asked for the agreement of the witnesses. I see all the trials and tribulations of another State agency, namely ASHA. It has a terrible record, things are missing, are not found, but we look back and what do they find, nothing to go to the Grand Jury on, just gross poor administration. Well, I suppose I 'am going to get my oar in the ,water here and say we may well find it here. ,State Assemblyman Smith I believe his name is, or Schmidt, represents the area in Corpus Christie to Austin, Texas and has more petroleum facilities than any other legislator in the United States, said that, in testimony for the Massachusetts State Legislature, that "no one in the oil industry has ever toldh;m the truth yet:'" Further, he went; on to warn the Massachusetts State Legislature, "you had better get everything nailed down soon. If you don It, the industry will have it all in twenty years. II I can't blame ARCO for what they are doing, but I do blame this Committee. That concludes my statement. MR. HAMILTON: Are there any more questions at this time, or any more statements to be read at the hearing? MR. SINGLETARY: lid like to offer one brief statement, Mr. Chairman, on behalf of Atlantic Richfield Company and that is simply that we feel the record is complete and it outlines as well as we've been able to do so the conditions under which we have been, in effect, forced and required, to come to this Committee on a reoccuring basis to secure the authority to do 66- .) ) that which was considered an operational necessity, and while we are prepared to agree that our foresight was not always what it possibly should have been, we submit the reasons given and the bases for action which we have requested on or by thi s Committee is supported by the ev·i dence and that the record will, uponrev;ew by this Cemmittee, and any others who have been priviledged to review it, sustain that position. We submit that statement at least in conclusion of.this hearing. MR. SCOTT: Let me supplement that with just one observation. For the record, this is Mr. John Scott. In reviewing Conservation File No. 91, I am afraid that I cannot concur with the conclusion that this Committee has acqui esced to each of our wi shes. On the contrary" I think the fi rst protested hearing resulted in an order, June 15, 1970, which in effect, denied us everything we were asking for. I never dreamed I would be pointing that out for any plus reasons, but. that seems to be the situation today, and there are other partial denials throughout the record, so lof course offer that observation from the record in defense of the Committee even though 11m defending the Committee with decisions with which I didn't necessarily agree at the time. In addition to that, lid just like to focus on one statement made in the direct testimony by pointing out the obvious. Atlantic Richfield Company is obviously not in the business of flaring gas. We are in the business of searching for, producing and selling gas whenever possible, so we don't lightly request the authority or get ourselves in a situation where we need to. In this instance, we Ire not in the strictest sense of the word, asking for this authority to help Atlantic Richfield Company per se. Mr. Williams stated that if we cut back on production enough to comply with the present limits prescribed by Conservation Order No. 9l-C, we could still meet our own requirements, but 67- ) it would set into effect this domino effect that would obviously deprive people in Fairbanks, perhaps Kenai, Anchorage and elsewhere in the State, of this amount of heating fuel suddenly removed from the Alaska, Alaska supply. And I think that is the perspective from which we ask, we ask that our application be considered through that particular framework. MR. HAMILTON: Thank you, Mr. Scott. Are there any other questions, or statements before we close the hearing? The hearing is closed. [1724J 68- . !" ) f ) / STATEf(ENT ON CONSERVATION ORDER 91-D REa ARCO'S TOPPING PLANTS AT PRUDHOE BAY READ TO THE ALASKA OIL & GAS CONSERVATION COMMITTEE ON DECEMBER 2), 1975 by Peter Scholes, Coordinator Alaska Center for the Environment My name is Peter Scholes. I am an Anchorage resident and work as staff for the Alaska Center for the Environment. The Center is located at 913 West Sixth Avenue and is funded by roughly 400 dues-paying members and various grants. My presence here today is the direct result of an anonymous . phone call I received about three months ago. The caller chastised me and the Center for not taking an active interest in Conser- vation Order 91-C. So, here I am today to make amends -- to learn about the work of the Oil and Gas Conservation Committee and, ~o question ARCO's most recent application in a series of five conservation orders regarding its operation of one, and later two, crude oil topping plants at Prudhoe Bay. Having gone through the files on Conservation Orders 91 thru 91-D, I am aware of the distinction between expert and inexpert witnesses. The distinction has merit to the extent that it establishes the credentials of people whose education and work experience qualifies them to talk about technical matters related to petroleum geology, engineering, etc. I am not an expert in that sense and therefore I am quite willing to ask some dumb questions in my efforts to force the experts to address things unmentioned to p~obe what has not been probed. There are two primary environmental considerations involved in Conservation Order 91-Dz (1) the impact that the increased production and consumption of fossil fuels, particularly the flaring of natural gas, will have on the Prudhoe Bay environment; and (2) the net effect of the proposed action with respect to the goal of resource conservation. '. Conservation Ordel )l-D ACE 12/23/75 P age two ) The first consideration is probably of minor importance. The flaring of 2000 to'2800 more MCF per day of casinghead gas, as opposed to reinjecting it, is unlikely to significantly effect the ambient air quality of Prudhoe Bay. Parenthetically, I should mention my lack of confidence in the Department of Env~ronmental Conservation's monitoring and enforcement efforts at Prudhoe 5ay and elsewhere in the state. ,The issue of resource conservation is the key environmental issue involved in the applied for conservation order. And, here rather than pretend to understand the situation better than the experts. I would like to pose a series of questions. These questions follow observations' made during my 'hurried reading of Conservation File Numbers 91. 91-A, -B, -C, and -D. . The first point that becomes apparent in reading the files is that the need for ~atural gas at Prudhoe rises at a much slower rate tha~ the need for~efined, liquid petroleum products.!: The possibility of using natural gas to produce liquid petroleum products, such as methane, does not seem to have been explored. Consider the facts: In 1970, ARCO asked for approval to operate a crude oil topping plant with a maximum input of 5000 barrels per day and to flare at a rate of 2600 MCFD. At that time it was anti- cipated that the volume of flared casinghead gas might go down to as little as 1750. MCFD during periods of peak consumption. I believe. the topping plant was actually operated at a rate of 2750 barrels input per day. VIn January. 1974, ARGO asked for approval to operate its crude oil topping plant with an input of 6)00 barrels per day and to flare 2500 MCFD of casinghead gas. In Nove:mber, 1974, ARGO asked to raise its topping plant throughput from 6300 barrels per day to 7200 BOPD, and asked to increase the amount of gas flared to 3200 MCFD. · Conservation Order .Å-D ACE 12/23/75 page three ) l In August, 1975, ARCO asked for approval to operate a second topping plant, bringing overall input to 1),000 barrels per day. At that time, ARGO asked for permission to flare 4000 MCFD from September 15, 1975 thru January 15, 1976, and 3200 MCFD, on a monthly average basis, from January 16, 1976 unt~l January 1, 1977. And, now ARCO has asked to continue to operate at 13,000 barrels input per day, but to increase its flaring to 9000 MCFD until the end of 1976. The volume of ~as flared has increased slightly more rapidly than the .Quantity of crude oil input to the. plant. The second point that strikes the reader of the conservation files on this topping plant is that ARGO is continually promising to use, the, casinfthead gas. but always falls farther behind.. On September 19, 1969, we have this statement; "As much as possible, all casinghead gas production will be used primarily as fuel for the topping unit operation and secondarily as fuel in the base camp power generation and heating facilities. II (letter from an ARCO spokesperson to the Oil and Gas Conservation Caromi ttee~,see Conservation File #91). On January 22, 1971, an ARCO spokesperson saids "... we anticipate the installation of sufficient compressor capacity to inject, al:ong with .the unused fraction of c~e oil, whatever volume of gas is not at that time being beneficially used. To the extent that compressor capacity is not available for any reason and the gas is not otherwise being used beneficially, ARGO would not object to curtailment of the production of the topping plant to its present level of 2750 barrels per day. II (see Conservation File #91). "'. '\ .- Conservation Order ;Å-D ACE 12/23/75 page four ) In Conservation Order 91-A, dated January 25, 1974, the Conservation Committee stated this conclusions "No beneficial use for or reinjection of the entire 2500 MCFD on excess casing- head gas will be feasible during 1974, however, it is anticipated that the excess will be beneficially utilized thereafter," In Conservation Order 91-B, dated November 19, 1974, the Committee saids "Studies are currently underway to increase the beneficial use of casinghead gas produced in the topping plant operation." In September, 1975, ARca admitted to having "undercalled by a factor of two for 1975 and 1976~' its estimate for Arctic heating fuel, and again it said, "The building of an addition to the base camp and a new construction camp is currently underway to increase the beneficial use of casinghead gas produced in the topping plant operation," I submit to you that the request of ARCO to increase the volume of gas it flares is rooted in a much more substantial problem than the failure ~f the barges to get through to Prudhoe Bay this year. And, this is the point at which I can only ask questions. Why, when the barges don't arrive, does the need for liquid fuels rise or stay the same, while the need for natural gas declines? Why did A~CO overestimate its need for natural gas to operate its gas fueled drilling rigs and main construction camp? There was no overestimation of the need for liquid fuels. How can ARGO argue that it needs a gravel causeway to unload barges in the winter, thus preventing it from falling behind its schedule for field development, and then turn around and say it is behind schedule and therefore needs to flare more gas? It is · '.. Conservation Ordel l-D ACE 12/23/75 page five 'ì ) not clear what relationship exists between the need for fossil fuels and the failure of the barges to get" through this year. Further, I lack information regarding how ARGO established priorities for off-loading the barges. c Our real con$ern is not tied to the volume of gas being ;'>. flared. The difference between 6000'.MCFD and zero mul tiplied ' 'by the number of days in a year amounts to roughly one day of throughput for the ~posed natural gas pipeline. And, we are unable to debate the impact of current extraction and reinjection on the future output of the oiL field. Our concern is with ARCO's aµparent nonchalance when the issue is natural gas, as opposed to crude.oil,_ conservation. Perhaps most baffling in this regard, is this statement made by ARCO in January, 1974, "We are not now convinced that our existing pumps could handle the, added residual volume plus the higher pressure required if the incremental gas were added to the injec- tion stream. In any case, we could not get the necessary com- pression 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 utili ty." Allow me to ask' ,the unask"ed questions. Why doesn't ARCO know what its pumps .can handle? And, why wasn't the need for larger or more powerful pumps thought of earlier? Why wasn't the compression equipment bought or at least ordered in 1969 or 1970? Why would the compression equipment have no further /; ~(C',n es. . 6 utility after the field fuel gas system A operatlonal In ,197 ? Won't there still be a need to reinject some gas at least until .... " t onservation Order l-D ACE 12/23/75 page six ) the gas pipeline is built and to maintain field pressure? What is the field fuel gas plant and system? What will be done with the gas in that system? Is ARCO willing to commit itself to a time for completion of the plant and system? In conclusion, there is a definite need for the State of Alaska to force ARGO to develop and produce Prudhoe Bay oil and gas fields in an environmentally sound and energy efficient manner. Looking at trends and patterns over a six year period, we see mismanagement and poor planning on the part of ARGO. Before Conservation Order 91-D is finally approved, we would like: ,'. (1) ARCO to prepare detailed project plans and completion dates spelling out its broad-brush policy to consume, transport, or reinject all natural gas produced at Prudhoe Bay. (2) The Oil and Gas Conservation Committee to evaluate various proposals for supplying Prudhoe Bay with needed fossil fuels during field development and operation. By evaluation, we mean an anlysis in terms of net energy cost and dollars and cents. And, we hope particular attention would be paid to the use of casinghead natural gas. (3) Another opportunity for public input when the ARGO plans and Conservation Committee evaluations are completed. The public cannot even comment intelligently until industry and government give us something to. base our comments on. We thank you for this opportunity to testify and look forward to further communication. .. xxx #10 Harry W. Kygler Petro1eum Geologist HWK:bjm t~r. Peter Scholes Coordinator Alaska Cénter for the Environment 913 lies t 6th Avenue, Anchorage, Alaska 99'501 Dear Mr", Scholes: We have received your letter of December 8.1975 concern1n,g Conservation fi leNo. 91,-0. This letter is written to confirm that a hearing wi11 be held at 9:00 AM December 23, 1975 at 3001 Porcup1.ne Driye, Anchorage, ,Alask.a. Yours very truly, December 12,19'75 #9 December 12, 1915 Mr« Jerry Mc(';utcheon Box 2340 Ancb.ora:ge tAl aska 9951 {} Dear Mr.. McCutcheon: "Ie havereceivèd your 1etter of December 10.1975 concerning Conservètt1on File No. 91...D. This letter is written to confirm that 8 hearing will bè held at 9:00 AM December 23, 1975 a,t 3001 Porcupine Drive!Þ AnchÕrage, A lasta.. Yours very truly, Harry W. Kugler Petroleum Sea 1 Ð(!'i st MWK:bjm .. #8 88:F1B Bbf·IJll& '!(HC ':ì)J'Hrl' ).''1' ,~\OOO.~ .....,......_..H.... .... ,,'......_. .' ..., ... _...R...... .. .."...-...........-. "'''' '.' ".",. 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"... - . . . . ..-.- ".. -.. .. . ... .. - .~.... -~'.~.... - -.-- #7 913 WEST SIXTH AVENUE ANCHORAGE, ALASKA 99501 274-;621 ') '~"'~;~~~~~' .AI¿V¡I~' "~:1' , ." . .)- . {A r "\t~ ~ ~: . f DlR-'" ~'íHì' I --,--....-..... \ , ;, c. GEOL I · December 10. 1 :¡--c:··t.'NG·ff-- "~....' .' 975 \__._..._ .H' .',;; 1\ 1 Ei'JG ~ " ---;r···2· c~:i6~Tj :; --- r . :1 'Ct,\(; -_:,rJ ---I !;:'!C~ I Î >1") I 'I 'I-~ !.I :.' C.!>~1L·II-rl \ I 3 crC:L '1'-1 ,.... 'R:~V -- ¡-- By way of rationalizing our interest in ARCO's request to¡'--11~~~~!~ increase the volume of casinghead gas flared at Prudhoe f "~"'Ir:"':'''-~ I,a.y, I neglected to state the essential point in our letteE~"~-:..- dated December 8, 1975. FILt:: Alaska Center for the Environment Thomas R. Marshall. Jr.. Exec. Secretary Ak. Oil and Gas Conservation Committee 3001 Porcupine Dr. Anchorage, AK 99GOl REa Conservation File No. 91-D Dear Mr. Marshall. The Alaska Center for the Environment objects to the issuance of a permit to ARCO for flaring of casinghead gas at Prudhoe Bay. 'I'hank :you for advising us of our failure to make our objection clear ~n the first place. Since re ly , ;ft4U Peter Scholes Coordinator ~~[;œ~~,œ ~.. ~... i I) <lilT Jt, l " (.1 I~ .J fiS . ! ¡ ¡ ~) !)~\'::c\r ¡ ../\- :jìL .ln~) G}.) .; !'¡CHC)E.~·S:: #6 K ) ~ ~ Box 2340 Anchorage, Alaska 99510 December 10, 1975 Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 RE: File 91-D ~--.-;...-~""~~ Dear Mr 0 Marshall: This is a notice of obj ection to the issuance of a permit to Atlantic Richfield Company for the flaring of gas on the Northslopeo Sincerely, bc~ ----- ----..- -...--- .-. ill.· æ © œ ~ W." Œ 1T.! J\\ !...., I '~" ~!~ ij 1. 1 1~!75 ~' D~\·;~l;",h -..' i·, :..;!~ AND GA~ it,1\:r:HC~f:,,~.G~ #5 D!\.':':ICL-r ..:.,·:L ¡.J'~) G.\':j ;~ ~"~ C:-1, C~.' ~~ ':~, ~.~ ~ Œ,.~~~ ~ ~.~] :) t, t. ." 0 19 I ,) . ;o,b<f'1 0V1sev 1Þ Q Jr D c;/e Sincerely, p~'" ,,/ #' / I.µ</~Ci- Peter ~choles Coordinator In preparing our statement, we will contact your office seeking more information on this matter. Dear Mr. Marshall. This notice marks the second time in recent months that ARCO has requested to increase the volume of gas it f~ares at Prudhoe. 'W'hile we olai'm no expertise in this matter, we think ARCO's request deserves greater pUblic attentiçn -- for the bene!i t of educating tfie public about oil ,¡f)!eld operations, if for no other reason. I , ,~¡R ~"T" I c. GEOL·..··· ,~_..... I ~ I ~'. ENG 1'-' ...,." '-=r 1 r" '.... ',...- ',..... ','. .. j....I.I';I...,) . :.::..;.;.:,.. .'.... . ~r n\'r-: ,---' 11"~I~.~.,.,~' '.'> " ~', ';-=~.'~.':."':~.,J,: ¡~~: '\ ~ ~lI~:n ;~ , \ :. ~ .¡C: 1_" ... ~ '.. I I. .i. ;':'''1') I r ..... _....... i/ _.1'- "9.' C ,,; .' IIC\" __... .. \)~ L I 3 \.' ¡C' :ì·l ~.' "--. ,_, ..;¡~..\- f -L.:~[V ",..-- I DR0Fi--r- --dNFE~\~C.···_J- FILE: , -- ..... .. .... .~6>",,4... ". . ,.''\'~ .~ L '.: .,1/' ,'" 'rhømas R. Marshall, Jr., Exec ;:)ecretary Ak. Oil and Gas Conservation Committee 3001 Porcupine Dr. Anchorage, AK 99~Ol REI Legal Notice 116, ARca request dated Dec. 1, '1975. to increase the volume of casinghead gas flared a t Prudhoe Bay. December 8, 1975 '> (: J!J¡'Ii ~ Alaska C.enter f.or,fh..e Environment ~1i~ ~ 913 WEST SIXTH AVENUE '. !i' " I~;: .. ANCHORAGE, ALASKA 99501 ,', _'. (":"" '.'."á-:.~ 274-3621 -c;::::- . #4 " ..\~) , ') STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee Conservation File No. 91-D Re: Prudhoe Oil Pool Prudhoe Bay Field Prudhoe Bay Tòpping Plant Notice is hereby given that an application was received from the Atlantic Richfield Company on December 1, 1975, applying for an order pursuant to Title 11, Alaska Administrative Code, Section 22.540 requesting changes in Conservation Order No. 91-C to permit operation of the subject crude oil topping plant at a throughput rate not to exceed an average of 13,000 barrels per day on a monthly basis, and to increase the volume of casinghead gas flared to an amount not to exceed an average of 6,000 MCF per day, on a monthly basis from December 1, 1975 through December 31, 1976. The operator states that this increase in flaring of casinghead is needed until construction is completed on projects which will permit increased beneficial use of casinghead gas. Progress of construction was slowed by the failure of some marine barges to arrive at the Prudhoe Bay docks due to unusually severe ice conditions. The Committee may include an administrative approval provision to increase or decrease the amount of casinghead gas flared, the throughput volume or the term of the time period depending on circumstances which appear to have changed greatly since the topping plant operation commenced. Parties who may be aggrieved if the requested order is issued are allowed 10 days from the date of this publication in which to file a protest and request for hearing. place of filing is 3001 Porcupine Drive, Anchorage, Alaska 99501. If such a protest is timely filed, a hearing on the matter will be held at the above address at 9:00 Þ.J~, December 23, 1975, at which protestants and others may be heard. If no such protest is timely filed, the Committee will consider the issuance of the order without a hearing. óL.Il.IIqJß./ . Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Published December 8, 1975 r,'.- '~"~,'~~ :~;".::.'~':,':~",'~:'.~'!;-I ~'~ ~,:·"',""i~,, ,,'~' ,.:;:,';,: ~':'r,:~,:o;:' ~'~:':"~,' w~"."J<'::"''''''''',~ ~:{f~g~~!~~ftl~s~l'{'!'~'~¡' !. (DEP~TMENrQl'NA(I"Ö:M\li;·:< I;' . :~;i">IRESOUij:CES" . ·....(A",::~:::'.;,' ':.1 .;:pIVI~IO~,OF OIL¡\NDGAS:: ';',i,' .~ ':<:,:;:,,:;:, . ..;..... ...... ;.AI~~ka,Oil:an(:Ir.Gas'··· '1'<'.'·· ,'.' ·'Consèryation;Comri1ittee',. . "'." CODseryation 'Fn~ No.91~D.. 1 .\' "R~:PrudQoe()ifPoól"""" ' ',1:"\;1'; :':":i.Prtidho¢BayFißld''',' .. ..... ,,; 1,;1;'; ,<Prudhoe Bar:Toppi~g'.iP.lal1t :." -, ','," ," " "., .". "." ,.1,' ;' .,'NoticeishereÞY giventhat~n åt;pW:;,,, J., . ...çation ·wasreceiVßdJromthe. A.tla:qtic',.:"::~: f:.Richfield 'Company '. o.nDecemb~'r';'l;',..: , 1975;·élpply'ingfor. ~nord~r.purSua1it:,~9:::, Title 11, Alaska Admin,i$tr:~tiy~, Co4~;: ......... ,.' 'sectipn .22~540,' . requesting' char1'ge¡;.:¡p:',,;,; ..Cønservation Order. N.ö. 91-:C to~pµi(,,:':' , operatiQQofthe subj~ctcrµde:oiVtQP~:,:\':) '. ·..·....··..··.·Rigg,plant.at·. a· throughput .rate.nQt:r~o':,':,: '. ,: I,' ~xse~délP" average, pr ,J~ ,OOQ.barr:7~~':";I:',,'·i ,i,p~r:day on 'a monthlybasls,anc;lt~:.Jl)~'.",' "'ëre,~~~the' yolumé.· ofc~si~~l1ea~t'~~~,.'.":., . fl~'r:eq : to. all amounLnqt t~) e~c~Ø ,~gi': .......' ,'.. ,average .Qf-6,OOO· MCF·.'per:day, .·..Qlv:,a¡ ..... '. .mcu1thlybasis from 'Decem~:r .;}1~:1~:~' .: "t.º-fOl1gl1 pegem~r: 31.)976~" .' ;': ,:',.:",', ' :,.:'.The'operator states that. this>in7:", I.cr~ase "in' flaring, .of .c,a~in~h~ø,:,':l~'<':: ,.. .need~d'~n~Hcoris~tructi ~~liscom~J~:~~~:\i/' I,'" ptl,prgJects,whlch"wlt1 ·permlt¡,¡~.n-:,":: ':.,creased· beneficial useofcàshingt¡.è~d:,.. :". >:.:gas. . Progress, ofcqnstruction';Wª,s,,', :..:.sJowedbY.t~e.Jaihi~e . qf s,ome,tµ~ri~ê~ 'i, 'bargesto 'arnve 'at the Prudhoe Bay' ..... , docks due to ,\unlsuallysevel"eicecon~ ..,.... :'4iti()Il~·: .. .', '.. ........'.............,.,........:...... ...... ...... ...... .... ......:..,..,:',:,:;,: .'/,,):.i;.[4ç·..,· ..···ÇoIIµTJ.i.t~.e:'~~Y"... ...J.~ç!ij<:l~::"~I':'!i· ',;:::i'::.:::"9æiPi~~ÆlH~e:;;!~"~proy~··:..:'.·P>~9*~J9~.".;",~Q;;:ii,:i) ¡1>J~çreéi~¢·~~·... ·qecr~~~e.·..·.th~·...·.·.·ärnQ,4n~·<i9f,XL':i.: i:þ'~~~~ºghe!ld gas ·.·..flár~~,····'the.t~r:(;)..~g~'P,µ~::(,,:... ':YQ1µm~..()r the ·.t~tQ1.('jf~h~.~i1Tl~peri?qi.'.'...·.. ::,': F'\Ø~1?~~ding."·.on.·......çir¢u~'~t;im~~e~'..·.."*tµ~~,¡:t!i),:: .1'ªBP,~~r. ~() .... hav~.. ctl~nçedgre!itly ~ï1"lç~:.:,,:'li"!',: ,', "tH~l' t~ppi!,1gþlant:.()p~r"'t~oniço~m,.:.' . . ~I'1G'ed. ...... .... '. ........... .... . .'... ........ .:.. ........ ............<..... .' ...... ..'.i.' . . ··:.iJ>'arties\V~o maYbe'aggri~v~di( ~h~,:' : requested oreier.· ïSissuedarealloWßd< . :···".lO:gaysfrom,thedateofthis.,pubUça-i,,: ' · tio,nÍ11which to fil~ aprotestalldrequë::,: est for hearing. Place.offjling. is 3001:"." PorCl1pine Drive,.. Anctlórage, Alaska¡,'·: 9~501. If such a protest is timely filed;, " aheaIing on the matter will be held at th~ above ad,dress at 9.: 00 AM, Decem~. per 23; '1915, at which protestants and others maybe heard. If no suchprŒ- test ístimelyfiled. the Committee wilJ consider the issuance·' of. the order:. witho~t a hearing. : ' Thomas R. Marshall, Jr. Executive Secretary Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 9950! #3 AtlanticRichfieldCompany North Arne }rOdUCing Division North Alasl ,listrict Post Office Box 360 Anchorage, Alaska 99510 Telephone 9072775637 ') l ~~ ~". December 1, 1975 Alaska Oil & Gas Conservation Committee State of Alaska Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99504 , aJ~v~ c. o. q I - 0 Subject: Application Re: Conservation Orders 9l-A, 9l-B and 9l-C Gentlemen: The purpose of this letter is to report on the current and projected status of our crude oil topping plant operations insofar as the same relate to Conservation Orders Nos. 9l-A, 9l-B and 9l-C, and to request a further modification of such orders in view of the circumstances hereinafter mentioned. 1. We respectfully request that you refer to our previous letters dated January 11, 1974, August 15, 1975 and November 21, 1975, and that you take notice of those portions of such letters that remain perti- nent here. (Copies thereof, sans attachments, are enclosed for your convenient reference.) 2. The second topping plant was placed in service on October 11, 1975. Since then, the crude production rate into the two plants has averaged approximately 12,000 barrels per day. The production of Arctic diesel fuel has averaged approximately 110,000 gallons per day. For the entire month of October, the volume of casinghead gas flared averaged 3,864 mcf/day, on a monthly basis, even though we produced at the increased rate only 20 days of that month. For the entire month of November, the volume of casinghead gas' flared averaged approximately 4,193 mcf/day. 3. Attached hereto is a schedule of our flare estimates through September 1976. The differences from our earlier estimates are due to several factors, not the least of which is the late arrivals and non- arrivals of certain items because of the well known \ ) Alaska Oil & Gas Conservation Committee December 1, 1975 Page 2 difficulties we experienced with our barge shipments this year. But there was at least two other signi- ficant factors, viz. (i) the gas-fueled drilling rig operations have been more fuel efficient than expected and have been extensively used in workover operations, and (ii) the earlier projections for fuel consumption for the operation of the main construction camp were too high. 4. We are giving very serious consideration to the feasibility of accelerating certain construction projects that would enable us to provide gas to BP Alaska's electric generator plant. This could enable us to use virtually all gas from the topping plant. While we are activily pursuing this proposal with optimism, we have not elected to reflect this possibility in the attached flare estimates because the feasibility study is not complete. Further, assuming the feasibility of this approach, the installation of such facilities would require from three to six months. In any event, we still expect the field fuel gas plant and system to be complete during the fourth quarter of 1976. 5. Requirements for Arctic heating fuel produced from the topping plants are continuing to increase signi- ficantly due mainly to lack of alternate sources of fuel. On the basis of the foregoing, and especially those matters of public policy and concern referred to in our letter of January 11, 1974, we respectfully submit that the continued operation of the subject topping plants at current rates is imperative. Accordingly, we specifically request: (a) An immediate exception to Conservation Order No. 9l-C, allowing us to flare so much excess casinghead gas as is reasonably necessary to maintain current production rates until further notice from you, or until you have ruled on part (b) of this request, whichever first occur s; and (b) An order modifying Conservation Order Nos. 9l-A, 9l-B and 9l-C to permit operation of the subject crude oil topping plants at a throughput rate not to exceed an average of 13,000 barrels per ) ) Alaska Oil & Gas Conservation Committee December 1, 1975 Page 3 day on a monthly basis, and to increase the volume of casinghead gas flared to an amount not to exceed an average of 6,000 mcf per day on a monthly basis from the date of your order through 1976. L. K. Williams Operations Manager LKW:kek Attachments #2 '" ) STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS Alaska Oil and Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 No. E-91 0 E MER G E N C Y 0 ROE R ------- November 26, 1975 Re: Conservation File No. 91-0 Atlantic Richfield Company Prudhoe Bay Field The Atlantic Richfield Company has petitioned the Alaska Oil and Gas Conservation Committee for an emergency allowing exception to Rule 2 of Conservation Order 91-C to permit the flaring of the excess casing- head gas necessary to maintain the current combined production rate of about 12,000 barrels per day from Topping Plants 1 and 2. Delays in the barge shipment this season prevented completion of the projects which were intended to utilize the excess casinghead gas. An emergency order is hereby granted pursuant to Title II, Alaska Administrative Code, Section 22.555 permitting the flarinq of excess gas at the Crude Oil Topping Plant until until 7:00 AM December 10, 1975. /~ì? i / ì / . I~ "i 7 I ,.:/ I'" ,;' r) (p J" fk(c"iJ/ /' . Thomas R. Marshall, Jr. Executive Secretary #1 AtlanticRiGhfieldCompany North Arner' ) Pror"lcing Division North Alas¡ /stril ") Post Office Box 360 Anchorage, Alaska 99510 Telephone 9072775637 ) / November 21, 1975 ~~ x ~. f ..ø ¡:<Ø' , ~"~'é "~t,'¡"''''':~ i1" ~ ".ì:", I J!I¡¡,¡' '" " ,,~,l ().r ~,)~~ I . ,1~'rI ¡ -.",);1 ,:,(""~,,,. D ~"'''' :¡ ;:. ,',I ,f'l} " . . -' P' £ q I ) Alaska Oil & Gas Conservation Committee State of Alaska Department of Natural Resources Division of Oil and Gas 3001 Porcupine Drive Anchorage, Alaska 99504 Subject: Application RE: Conservation Order 9l-C Gentlemen: By letter dated August 15, 1975, we requested authority to increase our oil producing rate in order to accommodate the installation of a second topping plant at Prudhoe Bay. On September 18, 1975, you issued Conservation Order No. 9l-C, granting an increase to 13,000 barrels per day. The Order further allowed a casinghead gas flare volume not to exceed an average of 4,000 MCF per day, on a monthly basis, through January 15, 1976, and an average of 3,200 MCF per day, on a monthly basis, thereafter. The second topping plant was put into operation on October 11, 1975. Since that t~JJle"",-~rude rate to Topping Plants 1 and 2 .......... '-', . .'., has averaged about:~,J2, 000 ~arr~~,~_,,,P..~;r.:.ª,ª]") During October, our flare of casingheã·ër··<g·ãs"-""ãv~·raged 3,864 MCF / day, on a monthly basis, even though we produced at an increased rate for just twenty days. Due primarily to the well-known delays in barge shipments this season, we will be unable to increase the volumes of gas being beneficially used as soon as we had projected. We expect to complete a re-evaluation of thoseprojections in the next few days. Thereafter, we will promptly request an appropriate modification of Conservation Order 9l-C. Meanwhile, if present rates continue, our flare volume will exceed, by n~:S£,~e;dp.~.~...g,§!X-? the volume allowance for this month. We respectfully submit that it is imperative that current pro- duction rates be maintained. Requirements for arctic heating fuel have not diminished. To the contrary, such requirements are increasing significantly due to colder weather and lack of ) ') ') ) Alaska Oil & Gas Conservation Committee State of Alaska Department of Natural Resources Division of Oil & Gas November 21, 1975 page 2 available fuel from other sources. Specifically, we request an immediate temporary exception to Conservation Order 91-C, allowing us to flare so much excess casinghead gas as is necessary to maintain current production rates during the last five days of this month. Very truly yours, ,/ , ... 7 ø~æ-~ L. K. Williams Operations Manager Atlantic Richfield Company LKW/gr ) ) , FLARE ESTIMATES COT Plants 1 & 2 Estimated Estimated Flare Gas Volumes At Use 13,000 BPD December, 1975 4.90 5.24 January, 1976 5.80 4.34 February, 1976 6.10 l. . 04 March, 1976 6.40 3.74 April, 1976, 5.40 4.74 May, 1976 4.60 5.54 June, 1976 4.10 6.04 July, 1976 4.10 6.04 August, 1976 4.10 . 6.04 September, 1976 4.60 5.54 NOTE: 1. All volumes in MMCFD. 2. All gas production volumes based on 1st & 2nd state separator measurement.