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Home My WebLink AboutDIO 030 ) ) INDEX Disposal Injection Order 30 and 30A NNA#2 1. March 23,2005 2. March 30, 2005 3. May 3, 2005 4. May 3, 2005 5. May 4, 2005 6. May 19, 2005 7. May 23, 2005 Unocal's Application for an Disposal Injection Order for Deep Creek Unit NNA #2 Notice of Hearing, Affidavit of publication, e-mail Distribution list, bulk mailing Sign In Sheet for Public Hearing Transcript e-mail to operator Ltr from operator regarding application e-mail to operator Disposal Injection Order 30 and 30A ) ) -i STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Union Oil Company of California for disposal of Class II oil field wastes by underground injection in the Sterling and Beluga Formations in the Deep Creek Unit NNA No.2 Well, Section 11, T2S, R13W, S.M. IT APPEARING THAT: ) Disposal Injection Order No~ 30A ) ) Deep Creek Unit ) NNA No.2 Well ) ) Originally Issued June 1, 2005 ) Corrected and Amended ) ) June 14, 2005 1. By correspondence to the Alaska Oil and Gas Conservation Commission received on March 23, 2005, Union Oil Company of California ("Unocal") requested authorization to allow the underground injection of non-hazardous Class II oil field waste fluids into the Sterling and Beluga Formations within the Deep Creek Unit NNA No.2 ("NNA #2") well bore. 2. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on March 30, 2005 in accordance with 20 AAC 25.540. 3. The Commission did not receive any protests to the application, comments, or requests for a public hearing. 4. A hearing was held on May 3, 2005 at which Unocal provided sworn testimony addressing engineering and geologic considerations in support of the NNA #2 disposal injection order application. The record was held open to allow Unocal to provide supplemental information about the projected zone of influence from injected waste as requested by the Commission. 5. Unocal provided supplemental information addressing the zone of influence, rate of injection, and duration for NNA #2 disposal injection in a letter dated May 19, 2005. 6. Disposal Injection Order No. 30 was issued on June 1, 2005. 7. The Commission is providing this Disposal Injection Order No. 30A to supersede and replace Disposal Injection Order No. 30, clarifying the fluids authorized for injection. ) ) Page 2 of8 Disposal Injection Order 30A NNA No.2 June 14,2005 FINDINGS: 1. Location of adjacent wells (20 AAC 25.252 (c)(1) NNA #2 is planned as a near vertical well located approximately 342 feet from the south line and 420 feet from the west line of Section 11, Township 2 South, Range 13 West, Seward Meridian. The well is proposed to be drilled from an existing drilling pad located on the Kenai Peninsula approximately 6 miles east of the city of Ninilchik. NNA #1, a disposal injection well supporting Deep Creek Unit development is the only well located within 1;4 mile of the planned NNA #2. As proposed, there would be 370 to 440 feet of wellbore separation between NNA #1 and NNA #2 at the proposed injection interval. 2. Notification of Operators/Surface Owners (20 AAC 25.252 (c)(2) and 20 AAC 25.252 (c)(3)) Unocal is the only operator within 1;4 mile radius of the proposed disposal operation. The sole surface owner within a 1;4 mile radius of NNA #2 is Ninilchik Native Association, Inc. Unocal provided evidence that a copy of its application for disposal injection in NNA #2 was sent by certified mail to Ninilchik Native Association, Inc., on March 17,2005. 3. Geologic information on disposal and confining zones (20 AAC 25.252 (c)(4)) Unocal proposes to conduct disposal into the Sterling and Beluga Formations between 2,180 feet and 2,800 feet.! Disposal operations in the NNA #2 will not impact adjacent production from the Happy Valley Field as seismic and well control, including extensive testing demonstrate that NNA #1 and NNA #2 are located off structure and outside of the known productive limits of the Happy Valley Field reservoirs; and the nearest development wells are approximately 2 miles away. In the adjacent near vertical NNA #1 the Sterling Formation is present in the interval from 220 feet to 2,529 feet. Similar depths are expected in NNA #2. The Sterling Formation in the Happy Valley Field vicinity consists of thick and massive sandstones and conglomerates frequently exceeding 100 net feet in thickness interbedded with siltstones, shales, and minor amounts of thin coals. These sediments were deposited in terrestrial (fluvial, lacustrine, alluvial) environments. The sandstones typically have high permeability and porosity with common permeability's exceeding several 100 millidarcies and porosities between 25 and 30 percent. 1 All depths noted in this Order are measured depth ("MD") referenced to NNA #2 and are substantially equivalent to true vertical depth ("TVD") below ground level in this near vertical well. ) ) Page 3 of8 Disposal Injection Order 30A NNA No.2 June 14, 2005 The Beluga Formation will be present in NNA #2 from approximately 2,529 feet to total well depth at approximately 2,800 feet. The formation is comprised of thinly bedded and clay rich sediments otherwise lithologically similar to the Sterling Formation. The Beluga Formation was deposited in terrestrial environments similar to the Sterling Formation except Beluga Formation sandstones and conglomerates were deposited in predominately braided stream environments instead of fluvial systems. NNA #2 will encounter sandstones in the Beluga Formation that are generally less than 20 feet thick, have good porosities (20%+ range), but with permeability's generally below 100 millidarcies due to large amounts of depositional clay. Confining strata for the requested Sterling and Beluga Formation disposal zones consist of shales, claystones, siltstones and coal beds that range in thickness from 6 inches to more than 30 feet. Coals at the depths of the requested disposal zone in the Sterling and Beluga Formations do not behave elastically and their properties are difficult to determine from borehole logs, but UNOCAL's experiences in conducting hydraulic fracture treatments in this area suggest that coals typically act importantly as near plastic confining beds. Information provided by Unocal in their March 23, 2005 application identifies approximately 200 ft of confining lithologies between the aquifer exemption depth (1,800 feet per AEO No. 11) and the depth of uppermost planned injection perforations (2,180 feet). From offset well NNA #1, at least 350 feet of confining lithologies have been identified between the depths of 1,930 feet and 2,610 feet. 4. Evaluation of Confining Zones (20 AAC 25.252 (c)(9)) The potential to fracture through the confining lithologies at NNA #2 was modeled by a Unocal consultant. The goal of this evaluation was to predict the expected upward fracture growth for cuttings disposal at NNA #2 using worst-case assumptions. The simulation assumed continuous 2-day injection of 8,000 barrels of slurry. Four perforated intervals spread over the proposed injection interval were individually evaluated, the shallowest being 2,210 feet to 2,240 feet. Slurry make-up was assumed to have a 12 percent solids concentration with 30/50-mesh sand distribution and density of 10 pounds per gallon. Injection rate for the modeling work was 3 barrels per minute. In this worst-case model, the critical factor is vertical fracture propagation, with a critical limit being the freshwater aquifers. The fracture analysis indicates that coal and shale intervals overlying the injection intervals tend to impede the fracture height growth. For the shallowest interval evaluated, the fracture height growth under worst- case modeling does not grow above a depth of 2,180 feet. Unocal further notes that the injection assumptions included in the modeling work significantly exceed maximum estimated fluid injection per day. Unocal's study of regional stresses in the area indicate that any fractures induced in the NNA #2 disposal interval will propagate away from NNA #1. ) ) Page 4 of8 Disposal Injection Order 30A NNA No.2 June 14,2005 5. Standard Laboratory Water Analysis of the Disposal Zone (20 AAC 25.252 (c)(10)) A laboratory analysis of water produced from the Beluga formation B-40 sand in the Happy Valley #8 well (taken in January 2005) indicates total dissolved solids greater than 8,000 ppm. 6. Well Logs (20 AAC 25.252 (c)(5)) Unocal plans to drill NNA #2 beginning mid-July 2005. Commission regulation requires the submittal of well logs within 30 days of well completion. Well logs from NNA #1 are on file with the Commission. In addition, there are offset data from the Happy Valley development. 7. Demonstration of Mechanical Integrity and Disposal Zone Isolation (20 AAC 25.252 (c )(6)) Well construction for NNA #2 includes conductor pipe driven to refusal (estimated 100 feet) and production casing installed to a depth of 2,812 feet. Production casing will be cemented from total depth to surface. Unocal plans to evaluate the annulus cement with a cement mapping tool to confirm the adequacy of the cement sheath in providing isolation of the injected fluids from freshwater above 1,800 feet. NNA #2 will be equipped with tubing and packer to isolate pressure to the disposal interval. A mechanical integrity test will be conducted prior to injection; Unocal provides a proposed procedure that includes notification to the Commission, proposed test pressure, and documentation. 8. Disposal Fluid Type. Source, Volume and Compatibility with Disposal Zone (20 AAC 25.252 (c)(7)) NNA #1 injection is limited by performance to produced water and clear fluids (no solids). NNA #2 will serve as the primary drilling waste disposal well for drilling at the Happy Valley Field, and a waste disposal well for disposal of approved Class II fluids from other Unocal operated fields. Specific wastes include drilling, completion, production, and workover fluids; stimulation fluids and solids; tracer materials; rig wash fluids; glycol dehydration wastes; drilling mud slurries; naturally occurring radioactive material scale slurries; precipitation accumulating in containment areas; tank bottoms; and other fluids brought to surface and generated in connection with oil and gas development activities. Unocal estimates a maximum of 3,000 barrels per day of fluid will be injected in NNA #2. ) ) Page 5 of8 Disposal Injection Order 30A NNA No.2 June 14,2005 9. Estimated Injection Pressure (20 AAC 25.252 (c)(8)) Unocal estimates average surface injection pressure will be 650 pSlg and the maximum surface injection pressure will be 1,300 psig. 10. Aquifer Exemption (20 AAC 25.252 (c)(11)) Pursuant to a separate proceeding, an aquifer exemption has been granted, in Aquifer Exemption Order No. 11, for depths greater than 1,800 feet covering 3 specific areas within the Deep Creek Unit: A ~ mile radius around the NNA #1; All of Section 22, which includes the Happy Valley pad and associated wells; The southeast one-quarter of Section 15; and All of Section 21, which will cover a new drill site and associated wells planned by Unocal for the Deep Creek Unit. NNA #2 well falls within the ~ mile radius around NNA #1. 11. Mechanical Condition of Wells Penetrating the Disposal Zone within ~ Mile ofNNA #2 (20 AAC 25.252 (c)(12) NNA #1 is the only well penetrating the disposal zone within a ~ mile radius ofNNA #2. The top of cement in the 7-inch casing annulus of NNA #1 is approximately 5,860 feet, leaving the casing annulus open across the proposed disposal injection interval. Surface casing in NNA #1 is set and cemented at a depth below the base of the aquifer exemption interval. Approved annular disposal operations in NNA #1 below the surface casing shoe have placed nearly 175,000 barrels of drilling waste (as provided in 20 AAC 25.080) without incident. The receiving zone for annular disposal is coincident (and a subset) to the proposed disposal injection interval. CONCLUSIONS: 1. The application requirements of 20 AAC 25 .252( c) have been met. 2. The proposed well design (casing, cement, tubing and packer) for NNA #2 will provide the necessary protection for freshwater by isolating injected fluids and pressure to the wellbore and intended injection zone. Verification of well design through cement evaluation and mechanical integrity testing will be necessary prior to injection. 3. As planned, there are approximately 200 ft of confining lithologies between the aquifer exemption depth (1,800 feet per AEO No. 11) and the depth of the uppermost planned injection perforations (2,180 feet). Annular disposal of nearly 175,000 ) ) Page 6 of 8 Disposal Injection Order 30A NNA No.2 June 14,2005 barrels of drilling waste coincident to this interval in NNA #1 has proven the effective isolation of injected material from the freshwater aquifer. 4. Worst-case fracture modeling confirms that waste fluids will be contained within the receiving intervals by the confining lithologies within the Sterling Formation, cement isolation of the well bore and operating conditions. Experience from hydraulic fracture treatments and simulation has shown that shales, claystones, siltstones and coal beds are the main components of the confining interval and will impede fracture height growth. 5. Disposal injection operations in NNA #2 will be conducted at rates and pressures below those estimated to fracture through the confining zones. Therefore, oil field wastes will not enter freshwater strata. 6. Supplemental mechanical integrity demonstrations and surveillance of injection operations are appropriate to ensure waste fluids are contained within the disposal interval. Included are mechanical integrity testing, temperature surveys, monitoring of injection performance (pressures, rates), and analysis of the data for indications of anomalous events. 7. Additional information was provided that documents a zone of influence (calculated volumetric pore space available within the disposal interval) because of the NNA #2's proximity to the aquifer exemption boundary (1/4 mile around NNA #1). Using conservative estimates of effective porosity and net thickness for the receiving zones, and a realistic daily injection rate based on historical disposal injection in analogous fields on the Kenai Peninsula, NNA #2 can operate 10-plus years before wastes reach the aquifer exemption boundary. The operator should periodically review with the Commission the actual performance of disposal injection in NNA #2. NOW, THEREFORE, IT IS ORDERED THAT this Disposal Injection Order NO 30A supersedes Disposal Injection Order No. 30, and that the following rules are adopted: RULE 1: Authorized In.iection Strata for Disposal Subject to the other provisions of this order, injection of authorized fluids for purposes of underground disposal of oil field wastes is permitted into the Sterling and Beluga Formations between 2,180 feet and 2,800 feet in NNA #2. The Commission may immediately suspend, revoke, or modify this authorization if injected fluids fail to be confined within the designated injection strata. RULE 2: Authorized Fluids This authorization is limited only to Class II waste fluids as follows: produced water, drilling, completion, production and work over fluids (including stimulation fluids and solids, and tracer materials), rig wash, drilling mud slurries, NORM scale, precipitation accumulating within containment areas, tank bottoms, and glycol dehydration wastes. ) ) Page 7 of8 Disposal Injection Order 30A NNA NO.2 June 14,2005 The Commission may authorize the disposal of additional fluids not identified above on a case-by-case basis if the Commission determines they are suitable for disposal in a Class II well. RULE 3: Demonstration of Mechanical Inte2ritv The mechanical integrity of NNA #2 must be demonstrated before injection begins, and before returning the well to service following a workover affecting mechanical integrity. A Commission-witnessed mechanical integrity test must be performed after injection is commenced for the first time in NNA #2, to be scheduled when injection conditions (temperature, pressure, rate, etc.) have stabilized. Subsequent tests must be performed at least once every two years thereafter. The Commission must be notified at least 24 hours in advance to enable a representative to witness mechanical integrity tests. Unless an alternate means is approved by the Commission, mechanical integrity must be demonstrated by a tubing/casing annulus pressure test using a surface pressure of 1,500 psi or 0.25 psi/ft multiplied by the vertical depth of the packer, whichever is greater, that shows stabilizing pressure and does not change more than 10 percent during a 30 minute period. A writtern record of the results of all mechanical integrity tests must be readily available for Commission inspection. RULE 4: Well Inte2rity Failure and Confinement Whenever any pressure communication, leakage or lack of inj ection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the operator shall notify the Commission by the next business day and submit a plan of corrective action on a Form 10-403 for Commission approval. The operator shall immediately shut in the well if continued operation would be unsafe or would threaten contamination of freshwater, or if so directed by the Commission. A monthly report of daily tubing and casing annuli pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation. RULE 5: Surveillance The operator shall obtain a baseline temperature log and a baseline step rate test prior to initial injection. A subsequent temperature log must be performed 1 month after injection begins, to demonstrate the receiving zone of the injected fluids. Surface pressures and rates must be monitored continuously during injection for any indications of fracture height growth. Results of daily wellhead pressure observations in both NNA #1 and NNA #2 must be documented and available to the Commission upon request. Subsequent temperature surveys or other surveillance logging (oxygen activation, acoustic) will be based on the results of the initial and follow-up temperature surveys, and injection performance monitoring data. An annual report evaluating the performance of the disposal operation must be submitted to the Commission by July 1 of each year. The report shall include pressures, fluid volumes (disposal and clean fluid sweeps), injection rates, an assessment of fracture height growth, a description of any anomalous injection results, and a calculated zone of influence by the injection fluids. ') ) Page 8 of8 Disposal Injection Order 30A NNA No.2 June 14,2005 RULE 6: Notification of Improper Class II Iniection The operator must immediately notify the Commission if it learns of any improper Class II injection including any movement of injection fluids outside the area covered by Aquifer Exemption Order #11. Additionally, notification requirements of any other State or Federal agency remain the operator's responsibility. RULE 7: Administrative Action Unless notice and public hearing are otherwise required, the Commission may administratively waive or amend any rule stated above as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in fluid movement outside of the authorized injection zone. RULE 8: Conditions It is a condition of this authorization that operations be conducted in accordance with the rules set out in this order, with AS 31.05, and (unless specifically superseded by Commission order) with 20 AAC 25. Failure to comply with an applicable provision of AS 31.05, 20 AAC 25, or these rules may result in the sus ension or revocation of this authorization. ~~~6:ioner AS 31.05.080 provides that within 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refùses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). ~mended Orders Cook Inlet and Admin Approv~ Q)edoubt ) Subject: Amended Orders Cook Inlet and Admin Approval Redoubt From: Jody Colombie <jody _colombie@admin.state.akus> Date: Wed, 15 Jun 2005 11 :30:50 -0800 To: undisclosed-recipients:; ,mended Orders Cook Inlet and Admin Approv~' ~jdOUbt Content-Type: application/pdf ER02.001.pdf Content-Encoding: base64 Content-Type: application/pdf DI030A.pdf Content-Encoding: base64 Content-Type: application/pdf DI028A.pdf Content-Encoding: base64 ~ of2 6/15/2005 11:31 AM Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Mona Dickens Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 ) Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Schlumberger Drilling and Measurements 2525 Gambell Street #400 Anchorage, AK 99503 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 ) David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 BOise,ID 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Ivan Gillian 9649 Musket Bell Cr.#5 Anchorage, AK 99507 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 North Slope Borough PO Box 69 Barrow, AK 99723 /J7a//d "/ (ç;f¢ '5 ) ) STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Union Oil ) Disposal Injection Order No. 30 Company of California for disposal ) of Class II oil field wastes by ) Deep Creek Unit underground injection in the Sterling ) NNA No.2 Well and Beluga Formations in the Deep ) Creek Unit NNA No.2 Well, Section ) 11, T2S, R13W, S.M. ) June 1, 2005 IT APPEARING THAT: 1. By correspondence to the Alaska Oil and Gas Conservation Commission received on March 23, 2005, Union Oil Company of California ("Unocal") requested authorization to allow the underground injection of non-hazardous Class II oil field waste fluids into the Sterling and Beluga Formations within the Deep Creek Unit NNA No.2 ("NNA #2") well bore. 2. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on March 30, 2005 in accordance with 20 AAC 25.540. 3. The Commission did not receive any protests to the application, comments, or requests for a public hearing. 4. A hearing was held on May 3, 2005 at which Unocal provided sworn testimony addressing engineering and geologic considerations in support of the NNA #2 disposal injection order application. The record was held open to allow Unocal to provide supplemental information about the projected zone of influence from injected waste as requested by the Commission. 5. Unocal provided supplemental information addressing the zone of influence, rate of injection, and duration for NNA #2 disposal injection in a letter dated May 19, 2005. Disposal Injection Order 30 NNA No.2 June 1, 2005 ) ) Page 2 of8 FINDINGS: 1. Location of adjacent wells (20 AAC 25.252 (c)(1) NNA #2 is planned as a near vertical well located approximately 342 feet from the south line and 420 feet from the west line of Section 11, Township 2 South, Range 13 West, Seward Meridian. The well is proposed to be drilled from an existing drilling pad located on the Kenai Peninsula approximately 6 miles east of the city of Ninilchik. NNA #1, a disposal injection well supporting Deep Creek Unit development is the only well located within 'l4 mile of the planned NNA #2 well. As proposed, there would be 370 to 440 feet of wellbore separation between NNA #1 and the NNA #2 at the proposed injection interval. 2. Notification of Operators/Surface Owners (20 AAC 25.252 (c )(2) and 20 AAC 25.252 (c)(3)) Unocal is the only operator within 'l4 mile radius of the proposed disposal operation. The sole surface owner within a 'l4 mile radius of the NNA #2 well is Ninilchik Native Association, Inc. Unocal provided evidence that a copy of its application for disposal injection in the NNA #2 well was sent by certified mail to Ninilchik Native Association, Inc., on March 17, 2005. 3. Geologic information on disposal and confining zones (20 AAC 25.252 (c)(4)) Unocal proposes to conduct disposal into the Sterling and Beluga Formations between 2,180 feet and 2,800 feet.1 Disposal operations in the NNA #2 will not impact adjacent production from the Happy Valley Field as seismic and well control, including extensive testing demonstrate that the NNA #1 and NNA #2 wells are located off structure and outside of the known productive limits of the Happy Valley Field reservoirs; and the nearest development wells are approximately 2 miles away. In the adjacent near vertical NNA #1 well the Sterling Formation is present in the interval from 220 feet to 2,529 feet. Similar depths are expected in the NNA #2. The Sterling Formation in the Happy Valley Field vicinity consists of thick and massive sandstones and conglomerates frequently exceeding 100 net feet in thickness interbedded with siltstones, shales, and minor amounts of thin coals. These sediments were deposited in terrestrial (fluvial, lacustrine, alluvial) environments. The sandstones typically have high permeability and porosity with common permeability's exceeding several 100 millidarcies and porosities between 25 and 30 percent. 1 All depths noted in this Order are measured depth ("MD") referenced to NNA #2 and are substantially equivalent to true vertical depth ("TVD") below ground level in this near vertical well. Disposal Injection Order 30 NNA No.2 June 1,2005 ) ) Page 3 of8 The Beluga Formation will be present in the NNA #2 from approximately 2,529 feet to total well depth at approximately 2,800 feet. The formation is comprised of thinly bedded and clay rich sediments otherwise lithologically similar to the Sterling Formation. The Beluga Formation was deposited in terrestrial environments similar to the Sterling Formation except Beluga Formation sandstones and conglomerates were deposited in predominately braided stream environments instead of fluvial systems. The NNA #2 will encounter sandstones in the Beluga Formation that are generally less than 20 feet thick, have good porosities (20%+ range), but with permeability's generally below 100 millidarcies due to large amounts of depositional clay. Confining strata for the requested Sterling and Beluga Formation disposal zones consist of shales, claystones, siltstones and coal beds that range in thickness from 6 inches to more than 30 feet. Coals at the depths of the requested disposal zone in the Sterling and Beluga Formations do not behave elastically and their properties are difficult to determine from borehole logs, but UNOCAL's experiences in conducting hydraulic fracture treatments in this area suggest that coals typically act importantly as near plastic confining beds. Information provided by Unocal in their March 23, 2005 application identifies approximately 200 ft of confining lithologies between the aquifer exemption depth (1,800 feet per AEO No. 11) and the depth of uppermost planned injection perforations (2,180 feet). From offset well NNA #1, at least 350 feet of confining lithologies have been identified between the depths of 1,930 feet and 2,610 feet. 4. Evaluation of Confining Zones (20 AAC 25.252 (c)(9)) The potential to fracture through the confining lithologies at the NNA #2 well was modeled by a Unocal consultant. The goal of this evaluation was to predict the expected upward fracture growth for cuttings disposal at NNA #2 using worst-case assumptions. The simulation assumed continuous 2-day injection of 8,000 barrels of slurry. Four perforated intervals spread over the proposed injection interval were individually evaluated, the shallowest being 2,210 feet to 2,240 feet. Slurry make-up was assumed to have a 12 percent solids concentration with 30/50-mesh sand distribution and density of 10 pounds per gallon. Injection rate for the modeling work was 3 barrels per minute. In this worst-case model, the critical factor is vertical fracture propagation, with a critical limit being the freshwater aquifers. The fracture analysis indicates that coal and shale intervals overlying the injection intervals tend to impede the fracture height growth. For the shallowest interval evaluated, the fracture height growth under worst- case modeling does not grow above a depth of 2,180 feet. Unocal further notes that the injection assumptions included in the modeling work significantly exceed maximum estimated fluid injection per day. Unocal's study of regional stresses in the area indicate that any fractures induced in the NNA #2 disposal interval will propagate away from the NNA #1 well. ") Disposal Injection Order 30 NNA No.2 June 1,2005 ) Page 4 of8 5. Standard Laboratory Water Analysis of the Disposal Zone (20 AAC 25.252 (c)(10)) A laboratory analysis of water produced from the Beluga formation B-40 sand in the Happy Valley #8 well (taken in January 2005) indicates total dissolved solids greater than 8,000 ppm. 6. Well Logs (20 AAC 25.252 (c)(5)) Unocal plans to drill the NNA #2 beginning mid-July 2005. Commission regulation requires the submittal of well logs within 30 days of well completion. W ell logs from the NNA #1 are on file with the Commission. In addition, there are offset data from the Happy Valley development. 7. Demonstration of Mechanical Integrity and Disposal Zone Isolation (20 AAC 25.252 (c)(6)) Well construction for the NNA #2 includes conductor pipe driven to refusal (estimated 100 feet) and production casing installed to a depth of 2,812 feet. Production casing will be cemented from total depth to surface. Unocal plans to evaluate the annulus cement with a cement mapping tool to confirm the adequacy of the cement sheath in providing isolation of the injected fluids from freshwater above 1,800 feet. The NNA #2 will be equipped with tubing and packer to isolate pressure to the disposal interval. A mechanical integrity test will be conducted prior to injection; Unocal provides a proposed procedure that includes notification to the Commission, proposed test pressure, and documentation. 8. Disposal Fluid Type. Source. Volume and Compatibility with Disposal Zone (20 AAC 25.252 (c)(7)) NNA #1 injection is limited by performance to produced water and clear fluids (no solids). The NNA #2 will serve as the primary drilling waste disposal well for drilling at the Happy Valley Field, and a waste disposal well for disposal of approved Class II fluids from other Unocal operated fields. Specific wastes include drilling, completion, production, and workover fluids; stimulation fluids and solids; tracer materials; rig wash fluids; glycol dehydration wastes; drilling mud slurries; naturally occurring radioactive material scale slurries; tank bottoms; and other fluids brought to surface and generated in connection with oil and gas development activities. Unocal estimates a maximum of 3,000 barrels per day of fluid will be injected in the NNA #2. Disposal Injection Order 30 NNA No.2 June 1, 2005 ) ) Page 5 of8 9. Estimated Injection Pressure (20 AAC 25.252 (c)(8)) Unocal estimates average surface injection pressure will be 650 pSlg and the maximum surface injection pressure will be 1,300 psig. 10. Aquifer Exemption (20 AAC 25.252 (c)(1l)) Pursuant to a separate proceeding, an aquifer exemption has been granted, in Aquifer Exemption Order No. 11, for depths greater than 1,800 feet covering 3 specific areas within the Deep Creek Unit: A 14 mile radius around the NNA #1; All of Section 22, which includes the Happy Valley pad and associated wells; The southeast one-quarter of Section 15; and All of Section 21, which will cover a new drill site and associated wells planned by Unocal for the Deep Creek Unit. The NNA #2 well falls within the 14 mile radius around the NNA #1 well. 11. Mechanical Condition of Wells Penetrating the Disposal Zone within 14 Mile ofNNA #2 (20 AAC 25.252 (c)(12) NNA #1 is the only well penetrating the disposal zone within a 14 mile radius of the NNA #2. The top of cement in the 7-inch casing annulus of NNA #1 is approximately 5,860 feet, leaving the casing annulus open across the proposed disposal injection interval. Surface casing in the NNA #1 is set and cemented at a depth below the base of the aquifer exemption interval. Approved annular disposal operations in the NNA #1 below the surface casing shoe have placed nearly 175,000 barrels of drilling waste (as provided in 20 AAC 25.080) without incident. The receiving zone for annular disposal is coincident (and a subset) to the proposed disposal inj ection interval. CONCLUSIONS: 1. The application requirements of 20 AAC 25 .252( c) have been met. 2. The proposed well design (casing, cement, tubing and packer) for the NNA #2 will provide the necessary protection for freshwater by isolating injected fluids and pressure to the wellbore and intended injection zone. Verification of well design through cement evaluation and mechanical integrity testing will be necessary prior to injection. 3. As planned, there are approximately 200 ft of confining lithologies between the aquifer exemption depth (1,800 feet per AEO No. 11) and the depth of the uppermost planned injection perforations (2,180 feet). Annular disposal of nearly 175,000 Disposal Injection Order 30 NNA NO.2 June 1, 2005 ) ) Page 6 of8 barrels of drilling waste coincident to this interval in the NNA #1 has proven the effective isolation of injected material from the freshwater aquifer. 4. Worst-case fracture modeling confirms that waste fluids will be contained within the receiving intervals by the confining lithologies within the Sterling Formation, cement isolation of the well bore and operating conditions. Experience from hydraulic fracture treatments and simulation has shown that shales, claystones, siltstones and coal beds are the main components of the confining interval and will impede fracture height growth. 5. Disposal injection operations in the NNA #2 well will be conducted at rates and pressures below those estimated to fracture through the confining zones. Therefore, oil field wastes will not enter freshwater strata. 6. Supplemental mechanical integrity demonstrations and surveillance of injection operations are appropriate to ensure waste fluids are contained within the disposal interval. Included are mechanical integrity testing, temperature surveys, monitoring of injection performance (pressures, rates), and analysis of the data for indications of anomalous events. 7. Additional information was provided that documents a zone of influence (calculated volumetric pore space available within the disposal interval) because of the NNA #2's proximity to the aquifer exemption boundary (1/4 mile around NNA #1). Using conservative estimates of effective porosity and net thickness for the receiving zone, and a realistic daily injection rate based on historical disposal injection in analogous fields on the Kenai Peninsula, NNA #2 can operate 10-plus years before wastes reach the aquifer exemption boundary. The operator should periodically review with the Commission the actual performance of disposal injection in NNA #2. NOW, THEREFORE, IT IS ORDERED THAT: RULE 1: Authorized Iniection Strata for Disposal Subject to the other provisions of this order, injection of authorized fluids for purposes of underground disposal of oil field wastes is permitted into the Sterling and Beluga Formations between 2,180 feet and 2,800 feet in the NNA #2 well. The Commission may immediately suspend, revoke, or modify this authorization if injected fluids fail to be confined within the designated injection strata. RULE 2: Authorized Fluids This authorization is limited only to Class II waste fluids as follows: produced water, drilling, completion, production and work over fluids (including stimulation fluids and solids, and tracer materials), rig wash, drilling mud slurries, NORM scale, tank bottoms, and glycol dehydration wastes. The Commission may authorize the disposal of additional Disposal Injection Order 30 NNA NO.2 June 1, 2005 ) ) Page 7 of8 fluids not identified above on a case-by-case basis if the Commission determines they are suitable for disposal in a Class II well. RULE 3: Demonstration of Mechanical Integritv The mechanical integrity of an injection well must be demonstrated before injection begins, and before returning a well to service following a workover affecting mechanical integrity. A Commission-witnessed mechanical integrity test must be performed after injection is commenced for the first time in a well, to be scheduled when injection conditions (temperature, pressure, rate, etc.) have stabilized. Subsequent tests must be performed at least once every two years thereafter. The Commission must be notified at least 24 hours in advance to enable a representative to witness mechanical integrity tests. Unless an alternate means is approved by the Commission, mechanical integrity must be demonstrated by a tubing/casing annulus pressure test using a surface pressure of 1,500 psi or 0.25 psi/ft multiplied by the vertical depth of the packer, whichever is greater, that shows stabilizing pressure and does not change more than 10 percent during a 30 minute period. A writtern record of the results of all mechanical integrity tests must be readily available for Commission inspection. RULE 4: Well Integrity Failure and Confinement Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the operator shall notify the Commission by the next business day and submit a plan of corrective action on a Form 10-403 for Commission approval. The operator shall immediately shut in the well if continued operation would be unsafe or would threaten contamination of freshwater, or if so directed by the Commission. A monthly report of daily tubing and casing annuli pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation. RULE 5: Surveillance The operator shall obtain a baseline temperature log and a baseline step rate test prior to initial injection. A subsequent temperature log must be performed 1 month after injection begins, to demonstrate the receiving zone of the injected fluids. Surface pressures and rates must be monitored continuously during injection for any indications of fracture height growth. Results of daily wellhead pressure observations in both the NNA #1 and NNA #2 must be documented and available to the Commission upon request. Subsequent temperature surveys or other surveillance logging (oxygen activation, acoustic) will be based on the results of the initial and follow-up temperature surveys, and injection performance monitoring data. An annual report evaluating the performance of the disposal operation must be submitted to the Commission by July 1 of each year. The report shall include pressures, fluid volumes (disposal and clean fluid sweeps), injection rates, an assessment of fracture height growth, a description of any anomalous injection results, and a calculated zone of influence by the injection fluids. Disposal Injection Order 30 NNA No.2 June 1,2005 ) ) Page 8 of8 RULE 6: Notification of Improper Class II Injection The operator must immediately notify the Commission if it learns of any improper Class II injection including any movement of injection fluids outside the area covered by Aquifer Exemption Order #11. Additionally, notification requirements of any other State or Federal agency remain the operator's responsibility. RULE 7: Administrative Action Unless notice and public hearing are otherwise required, the Commission may administratively waive or amend any rule stated above as long as the change does not promote waste or jeopardize correlati ve rights, is based on sound engineering and geoscience principles, and will not result in fluid movement outside of the authorized injection zone. RULE 8: Conditions It is a condition of this authorization that operations be conducted in accordance with the rules set out in this order, with AS 31.05, and (unless specifically superseded by Commission order) with 20 AAC 25. Failure to comply with an applicable provision of AS 31.05, 20 AAC 25, or these rules may result in the sus ens ion or revocation of this authorization. ". Daniel T. Seamount, Jr., Commissioner c~oe!~~ner AS 31.05.080 provides that within 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Mona Dickens Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Penny Vadla 399 West Rìverview Avenue Soldotna, AK 99669-7714 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 ) Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Schlumberger Drilling and Measurements 2525 Gambell Street #400 Anchorage, AK 99503 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 ') David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 Boise, 10 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, W A 98119-3960 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Ivan Gillian 9649 Musket Bell Cr.#5 Anchorage, AK 99507 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 SOldotna, AK 99669-2139 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 North Slope Borough PO Box 69 Barrow, AK 99723 )10 #30 Deep Creek Unit NNA #2 Well ) ) Subject: DIO #30 Deep Creek Unit NNA #2 Well From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Wed, 01 Jun 2005 16:09:44 -0800 r-n' :":,~<,:_': :::i:: d!, '\:::!,:¡ :'<~':' :":':!?""'d'\, ":, :, - ;;!>!:i:;I?::!¡:>:'~::;I¡!::':::I":::t":'c" ~!:~;:¡), , " " "'Iii:~¡, I: f:,¡,~:):,I':', "':':::::"" i:::,~:" :~':I!'¡ I:,: ;:,'11 "':; :!.I'li::,I: J I::: :::>t:,;':,: :'i¡,i!,'::, :I;i ,'I';: I ,;,: :::':::"'. ':',: i"'" :i:':,i:>!:-';. :,,',,':::::':::/:!:::,:: :::~:::: "::::::,'::";,"" ,::ii:. :!:!:', :::~::'_ :::: <"; I .I:,I,Q,.:!"'~' Js.q:t~sø rreC1Plea SI.''I'I'''' "'",' "" ,i',' ,',,' I,,' ,', I'"~ "II" '\1 ' 'I, "',I'."'" ',1','1"1"1" "III '''I'' 'I' ,ili'''''''I"",'II:::: 'II":,', 'i 'I,"~: ,,' "~'I :,,1,. ,::':',' "::.";!/" :'; i~'''¡,: ,::::,::' :'::;'j: "1' '¡',I.',' I!;':::'<::," """:;"':1,' ': J ,""',' ':':~:?;:i::':: ,,::':"-':', : ,', . ,,:'< :I,'(:"~: ":: ':: ,"'" I II: ,;,:" I ,I , ,1':,',: ,:':':':: '>1" ,:i,:: :1; ':: ":'I,~ I,.'oi' 'I,' ;,,11' ': ',1 :,:' ': ' "",', )11 ': ,:,' :'::':Ij,':'; , ,I ',I, :!::!;¡i'::':,\"':::::,I¡:i,):;!~:¡:,, ',:::¡¡, ');;,:;~;>t, :'j:;'!I",:I!'>, ,\,,,' 10f2 6/1/2005 4:09 PM 10 #30 Deep Creek Unit NNA #2 Well J ) 20f2 6/1/2005 4:09 PM #7 Additional Info for NNA #2 DIO Application ) ) Jim - As per your request, attached is detailed information regarding the proposed directional program for the NNA #2 disposal well. My understanding is that you're going to reference TVDs in the DIO in order to be consistent. I also understand that the requested variance on the proposed packer depth will not be approved in the DIO, but will instead need to be requested via the drilling permit. We will do so when we submit that permit. Finally, I confirmed that we did mail out UnocaJ's response to the NNA #2 disposal application hearing of May 3. You should receive that letter today, I anticipate. Thanks, and let me know if there is anything else I can help with. «NNA#2 V1 Grid Rpt.pdf» J. Gary Eller Unocal Alaska Advising Completion Engineer Office: 907-263-7848 Cell: 907-351-1313 . ...... ."'......,...",.,..,,,.,,,,..,,....,...,....,,....,,,,,,..,,......,....,..""............,..,.........,....................."..,.......,.....,...,.....,,,.,,,,,..,.,,,.,,,,,,,.,,,,,,,.,,.,.,,,..,,,,,,.,.,..,,,..,...""..,......,.".,....,.. "" '" " """""""""'"'''''''''''''''''''' "" !""""""""""''''''''''''''''''''''''''''''''''''''''''''''''''''''''"""''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''1 ¡ I Content-Description: NNA#2 VI Grid Rpt.pdf'[ :NNA#2 VI Grid Rpt.pdf! Content-Type: application/octet-stream I Content-Encoding: base64 . .......1"... . .. ... . .........".................. , ... ... , .. ".. , .." .. " ". , .. , " .., , .. " .. , , .. ' , ". ' ..... , ... .. , , .... .. ... ". ..... .. ".".. . .. ,.~ .. . . ........... .............."........................... .~ 1 of 1 5/23/2005 10:02 AM ) uIIOCAL. UNOCAL ,NNA #2 NNA Pad, South Kenai Gas Field,Kenai Peninsula, Alaska ) PROPOSAL LISTING Page 1 Wellbore: NNA #2 Ver 1 Wellpath: NNA #2 Ver 1 Date Printed: 8-Mar-2005 INTEQ ; ~ __ Name NNA #2 Ver 1 Well bore . _Created __ 7-Mar-2005 Last Re~d 7-Mar-2005 Name NNA #2 Well- Government 10 Last Revised 7-Mar-2005 Name NNA #2 Grid Northina 2199427.7350 Grid Eastlna "1 229865.1390 'Slot Latitude N60 0 44.2138 . Lonaltude . W151 28 34.6704 North 391.93N East 378.50E ~ Name NNA Pad Eastina 229477.9837 Install ation NQrthing. 'I . Coord System N¡¡¡me ."" I 2199044.3730 AK-4 on NORTH AMERICAN DATUM 1927 datum North AJianment True Name South Kenai Gas Field Eastlna 269300.0040 Field" " Northina·J " Coord System NamQ_ "I North Alianment 2597449.9970 l AK-4 on NORTH AMERICAN DATUM 1927 datum True \~dr.àtl&:;; Sy:t;:lt}~~:;\;;J~¡;;1:i"~::~¡:¡;~]i:;¡;]l\\f~i~,f~ijJ:!·i:~f~~f}¡;~¡:,;i~;:;:¿~~~ÜI~~}j"~~:;:i:~~f1~: :;';1J~{UJ.~~¿t:;~j1;~%:¡¡~~!tl··:: All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 680.0ft above mean sea level) Vertical Section is from O.OON O.OOE on azimuth 35.00 degrees Bottom hole distance is 231.22 Feet on azimuth 35.00 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated ) 11:11..... UNOCAL ,NNA #2 NNA Pad, South Kenai Gas Field,Kenai Peninsula, Alaska ) PROPOSAL LISTING Page 2 Wellbore: NNA #2 Ver 1 Well path: NNA #2 Ver 1 Date Printed: 8-Mar-2005 INTEQ Wellpatti (Grid) ReJort MD[ft] Inc[deg] . Azi[deg] WD[ft] North[ft] East[ft] Dogleg Vertical Easting Northing ~-........------ ------ fdea/100ft1 SectJonfftL 0.00 0.00 0.00 0.00 O.OON O.OOE 0.00 0.00 229865.14 2199427.73 100.00 0.00 0.00 100.00 O.OON O.OOE 0.00 0.00 229865.14 2199427.73 200.00 0.00 0.00 200.00 O.OON O.OOE 0.00 0.00 229865.14 2199427.73 300.00 0.00 0.00 300.00 O.OON O.OOE 0.00 0.00 229865.14 2199427.73 400.00 0.00 0.00 400.00 O.OON O.OOE 0.00 0.00 229865.14 2199427.73 500.00 0.00 0.00 500.00 O.OON O.OOE 0.00 0.00 229865.14 2199427.73 600.00 3.00 35.00 599.95 2.14N 1.50E 3.00 2.62 229866.69 2199429.84 700.00 6.00 35.00 699.63 8.57N 6.00E 3.00 10.46 229871.33 2199436.17 800.00 6.00 35.00 799.09 17.13N 12.00E 0.00 20.92 229877.51 2199444.60 900.00 6.00 35.00 898.54 25.70N 17.99E 0.00 31.37 229883.70 2199453.02 1000.00 6.00 35.00 997.99 34.26N 23.99E 0.00 41.82 229889.88 2199461.45 1100.00 6.00 35.00 1097.44 42.82N 29.98E 0.00 52.27 229896.07 2199469.87 1200.00 6.00 35.00 1196.90 51.38N 35.98E 0.00 62.73 229902.25 2199478.30 1300.00 6.00 35.00 1296.35 59.95N 41.97E 0.00 73.18 229908.44 2199486.73 1400.00 6.00 35.00 1395.80 68.51N 47.97E 0.00 83.63 229914.62 2199495.15 1500.00 6.00 35.00 1495.25 77.07N 53.97E 0.00 94.09 229920.81 2199503.58 1600.00 6.00 35.00 1594.70 85.63N 59.96E 0.00 104.54 229926.99 2199512.01 1700.00 6.00 35.00 1694.16 94.19N 65.96E 0.00 114.99 229933.18 2199520.43 1800.00 6.00 35.00 1793.61 102.76N 71.95E 0.00 125.44 229939.36 2199528.86 1900.00 6.00 35.00 1893.06 111.32N 77.95E 0.00 135.90 229945.55 2199537.29 2000.00 6.00 35.00 1992.51 119.88N 83.94E 0.00 146.35 229951.73 2199545.71 2100.00 6.00 35.00 2091.97 128.44N 89.94E 0.00 156.80 229957.92 2199554.14 2200.00 6.00 35.00 2191.42 137.01N 95.93E 0.00 167.26 229964.10 2199562.56 2300.00 6.00 35.00 2290.87 145.57N 101.93E 0.00 177.71 229970.29 2199570.99 2400.00 6.00 35.00 2390.32 154.13N 107.93E 0.00 188.16 229976.47 2199579.42 2500.00 6.00 35.00 2489.77 162.69N 113.92E 0.00 198.61 229982.66 2199587.84 2600.00 6.00 35.00 2589.23 171.26N 119.92E 0.00 209.07 229988.84 2199596.27 2700.00 6.00 35.00 2688.68 179.82N 125.91E 0.00 219.52 229995.03 2199604.70 2800.00 6.00 35.00 2788.13 188.38N 131.91E 0.00 229.97 230001.21 2199613.12 2811.93 6.00 35.00 2800.00 189.40N 132.62E 0.00 231.22 230001.95 2199614.13 All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 680.0ft above mean sea level) Vertical Section is from O.OON O.OOE on azimuth 35.00 degrees Bottom hole distance is 231.22 Feet on azimuth 35.00 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated ) a:.:a.. UNOCAL ,NNA #2 NNA Pad, South Kenai Gas Field,Kenai Peninsula, Alaska ) PROPOSAL LISTING Page 3 Wellbore: NNA #2 Ver 1 Wellpath: NNA #2 Ver 1 Date Printed: 8-Mar-2005 INTEQ ~---_. ----. ~~--~-- Comments MDfftl TVDfft1 Northfftl Eastrftl Comment 500.00 500.00 O.OON O.OOE Kick Off Point 700.00 699.63 8.57N 6.00E End of Build 2811.93 2800.00 189.40N 132.62E TO Hole Sections Diameter Start Start Start . Start End End End Start Wellbore nnl MOfft1 lVOrft1 Northrft1 East[ftl MDfnl TVD[ftl North[ft] EasUft] 121/4 0.00 0.00 O.OON O.OOE 1950.00 1942.79 115.60N 80.94E NNA #2 Ver 1 81/2 1950.00 1942.79 115.60N 80.94E 2811.93 2800.00 189.40N 132.62E NNA #2 Ver 1 Cas Intis Name" Top Top Top" Top Shoe Shoe Shoe Shoe Well bore MOrft1 TVDIttl Northfft1 Eastrftl MDffi1 TVDfftl _~h(ftl Eastrftl 9 5/8in Casin!:l 0.00 0.00 O.OON O.OOE 1950.00 1942.79 115.60N 80.94E NNA #2 Ver 1 7.000in Casin!:l 0.00 0.00 O.OON O.OOE 2811.93 2800.00 189.40N 132.62E NNA #2 Ver 1 ---- ~-~- .--~--- Targets Name Northfftl , . EssUfl:l 1 TVDffl:l I Latitude Lonaltude ~ Eastina Norhtlna Last Revised NNA #2 189.40N 132.62E 2800.00 N60 0 46.07 W151 2832.06 230001.95 2199614.13 15-Jan-2004 All data is in Feet unless otherwise stated Coordinates are from Slot MO's are from Rig and TVO's are from Rig ( Oatum #1 680.0ft above mean sea level) Vertical Section is from O.OON O.OOE on azimuth 35.00 degrees Bottom hole distance is 231.22 Feet on azimuth 35.00 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated #6 /) ) UNOCAL8 '"co-Alaska May 19, 2005 RECEIVED MAY 2 4 2005 0'\ & Gas Cons. Commission A\aska , Anchorage -t. Gary Eller Advising Completion Engineer Unocal Alaska Tel 907-263-7848 Cell 907-351-1313 Fax 907-263-7847 E-mail: ellerg@unocal.com Commissioner John Norman Alaska Oil & Gas Conservation Commission (AOGCC) 333 West ih Avenue, Suite 100 Anchorage, AK 99501 Re: Hearing of May 3, 2005 Regarding a Disposal Injection Application for the NNA #2 Well in the Deep Creek Unit Dear Mr. Norman: A hearing was held May 3, 2005 regarding Unocal's disposal injection application for the proposed NNA #2 well in the Deep Creek Unit. During that hearing, it was pointed out that Aquifer Exemption Order #11 defines the relevant aquifer exemption area as a quarter-mile radius (i.e. 1,320 feet radius) around the NNA #1 wellbore. The planned trajectory of the NNA #2 well will place the disposal point approximately 920 feet away from the aquifer exemption boundary instead of the current 1,320 feet. The AOGCC asked Unocal to examine the 'zone of influence' around the proposed NNA #2 wellbore to determine if the injection volume in the NNA #2 should be limited or if the aerial extent of the aquifer exemption should be expanded. Zone of Influence Calculations Unocal has examined the zone of influence (ZOI) of the NNA #2 wellbore by calculating the volumetric pore space available within the disposal interval up to a radius of 920 feet. The calculation is as follows: VZOI = 0.178TT¡2cph VZOI = volume of ZOI, barrels r = radius, feet = 920 feet cp = effectiveness porosity, fraction h = net thickness, feet This equation assumes 100% water saturation and formation volume factor equal to 1.0 RB/STB for disposed fluids. Unocal used conservative estimates of 18% effective porosity and 27 feet of net thickness for the disposal intervals in the NNA #2 well. In fact, the total net thickness of the disposal intervals in the NNA #2 wellbore is expected to be greater than 80 feet, but 27 feet was assumed because that is the thickness of the single deepest disposal interval that will initially be used. Even the 920 foot radius is conservative because the likely disposal Union Oil Company of California I Unocal Alaska 909 West 9th Avenue, Anchorage. Alaska 99501 http://www.unocal.com 'f1I ) ) Commissioner John Norman, AOGCC May 19, 2005 Page 2 interval will be approximately 970 foot from the aquifer exemption boundary instead of the 920 foot estimate that was referenced in the May 3 hearing. Using 18% porosity, 27 foot thickness, and 920 foot radius yields a lOI pore volume of 2.3 million barrels. This lOI pore volume represents the volume of fluids that would have to be disposed in a 27 foot interval for fluids to extend 920 foot radially from the NNA #2 well bore. Unocal recognizes that the assumption of a radial flow distribution will not be entirely rigorous given that we expect to induce a hydraulic fracture, but it is a reasonable approximation given the number of unknowns and the degree of accuracy required for this exercise. To get perspective on this calculated lOI volume, Figure 1 presents total disposal volumes for the three major onshore gas producing fields in the Cook Inlet. The volumes presented include disposal of produced fluids as well as disposal of exempt wastes such as drilling mud and cuttings. The curve labeled 'Kenai Gas Field' includes volumes of produced fluids and drilling wastes from several other onshore gas fields, including the Ninilchik, Cannery Loop, Sterling, and Wolf Lake Units, that were actually disposed at the Kenai Gas Field. Note that the largest of these onshore gas fields is now approaching 4 million barrels disposed after 18 years of operation. The other major onshore gas fields have disposed less than 0.5 million barrels in the same time period. In comparison, the calculated lOI volume for the NNA #2 is 2.3 million barrels. Figure 1 is meant to show that it is very unlikely that the NNA #2 will ever realize disposal volumes that exceed the calculated 920 foot lOI. Nevertheless, Unocal recommends that the AOGCC limit the total disposal volume in the NNA #2 well to 2.3 million barrels until such time as the aerial extent of the aquifer exemption is expanded. Injection Rate and Duration At the May 3 hearing, the AOGCC asked Unocal to estimate the total injection volume into the NNA #2, and at that time I loosely estimated a maximum averaqe injection volume of 500 barrels per day. The disposal application references a maximum rate of 3,000 barrels per day, but that is intended as a single day peak injection rate. It is not reasonable to assume 3,000 barrels per day injection volume for an extended length of time. To demonstrate this, Figure 2 shows average daily injection rates for the previously mentioned onshore gas fields. Although 3,000 barrels per day has been exceeded on occasion, none of these analogous fields have had sustained injection rates that even approach 3,000 barrels per day. Figure 2 also supports the use of 500 barrels per day as a reasonable estimate of maximum sustained disposal rate for the NNA #2. Using the previously calculated lOI volume of 2.3 million barrels and a maximum sustained disposal rate of 500 barrels per day, Unocal estimates that the NNA #2 well will have at least a 12-year injection life. This could certainly be extended if sustained disposal rates are less than 500 barrels per day, the disposal interval thickness is greater than 27 feet, or if the aerial extent of the aquifer exemption is expanded. Union Oil Company of California I Unocal Alaska 909 West 9th Avenue, Anchorage, Alaska 99501 http://www.unocal.com ) ) Commissioner John Norman, AOGCC May 19, 2005 Page 3 Expansion of the Aerial Extent of the Aquifer Exemption It is Unocal's intent to eventually seek an expansion of the aerial extent of Aquifer Exemption Order #11 to provide, at least, a full quarter-mile radius around the NNA #2 wellbore. Expanding the aquifer exemption to a quarter-mile radius around the NNA #2 would increase the calculated ZOI to 4.7 million barrels using just a 27 foot disposal interval. Unocal does however feel strongly that AOGCC approval of the Disposal Injection Order for the NNA #2 should not be delayed pending that expansion. Unocal has presented information that justifies immediate approval of disposal injection into the proposed NNA #2 well with a volume limit of 2.3 million barrels. Unocal prefers to delay application for this expansion until after the NNA #2 disposal well is placed in service and after we better understand the constraints for defining the aerial extent of the aquifer exemption. Please contact me if I can be of further assistance. pletion Engineer cc: Steve Lambe Faye Sullivan Jim Regg, AOGCC Well Files Union Oil Company of California I Unocal Alaska 909 West 9th Avenue, Anchorage, Alaska 99501 http://www.unocal.com Total Water Disposal Volumes for Onshore Cook Inlet Gas Fields ".--- 01/01/2008 Gas Field (includes Ninilchik, Cannery Sterling, & Wolf Lake Units) Creek :r!: -Kenai Loop, - Beaver c, 4,000 3.000 3,500 01/01/2004 - Beluga River ~ ~-;'''''':.t~ .;--'-... 01/01/2000 2.500 r¡¡ ,~ 01/01/1996 (-":-', .-:-- ~~:~:-:;~ ~ ~,~ ~-~'~~-:~:-~~ ~ - ~ ""'<.[:..-=-,-"'--~"",,,--<- I 988 01/01/1992 01/01/1 o 01/01/1984 2.000 500 000 500 1 :c m :i af E :::::I Õ > c o ;; (,) CD '- .5 ñi ... o ..... "0 Total Water Disposal Rates for Onshore Cook Inlet Gas Fields .--- -' 01/01/2008 01/01/2004 01/01/2000 01/01/1996 01/01/1992 01/01/1988 8,000 7,000 6,000 " c. ~ 5,000 .Q a; .... C'G 0:: 5 4,000 ; CJ Q) :E ~ :¡ 3,000 c 2,000 1.000 0 01/01/1984 #5 Re: Calculation of Zone of Influence ) ) Subject: Re: Calculation of Zone of Influence From: James Regg <jim_regg@admin.state.ak.us> u.B(l- t5( 4--lù~ Date: Wed, 04 May 2005 14:01:21 -0800 T~: "Eller, Gary" <ellerg@unoca1.com> CC:·Winton G Aubert <winton_aubert@ad~in.state.ak.us> Gary- A calcuation of volumetric pore space in circular area was used to determine the annular disposal "zone of influence" when we were reviewing the NNA 1 DIO and associated AEO. That method was used primarily because I felt it was just as accurate as making all the assumptions required in the zone of endangering influence (ZOE) calculation found in the UIC regulations at 40 CFR 146.6(a). As shown in the UIC regulations, the ZOE calculation is r = [(2.25*K*H*t)/(S* 10^x)]^0.5 where x = (4*pi*K*H)(hw-hb*Sp Gb)/(2.3*Q) r - radius or endangering influence from injection well (length) K - hydraulic conductivity of the inj ection zone (lenth/time) H - thickness of the injection zone (length) t - time of injection S - storage coefficient (dimensionless) Q - injection rate (volume/time) hb - observed original hydrostatic head of injection zone (length) measued from the base of lowermost USDW hw - hydrostatic head if USDW (length) measured from the base of lowermost USDW Sp Gb - specific gravity of fluid in the injection zone pi - 3.1416 Not sure how you would get accurate numbers for some of the variables. Regarding your volumetric calculation, some of the assumptions do not seem to match what is in the NNA #2 application, specifically - - application says maximum 3000 bpd disposal injection; I understand it will likely be much less, but is 500 bpd avg an accurate assessment if you are producing that much water plus putting away muds/cuttings from HV or other wells being drilled in area? -I'm not familiar with the Wellhead Protection document you reference - is that an EP A publication? I had not thought of time from the perspective of how long it would take the injected fluid to adequately dilute or disperse. Solving your volumetric equation for time, using 3000 bpd from application, and 920 ft radius (NNA1 to AEO boundary, it would take 1 year (352 days for injection to reach boundary in 35 ft thick injection zone; 1708 days ifuse 170 ft thick zone). I would feel comfortable with the volumetric calculation as satifying the question posed by Commissioners during the hearing but you need to give some thought to the assumptions and input values. Please also advise what Unocal intends to do regarding AEO 11 (seek an areal expansion?) so we can factor that into the injector order. 10f3 5/4/20052:01 PM Re: Calculation of Zone of Influence 'J -' Jim Regg AOGCC Eller, Gary wrote: Jim - I could use your guidance in regard to responding to today's hearing on the NNA #2 DIO application. I have searched for EPA references to the "Zone of Influence". The most helpful item that I have found thus far is a 1993 document entitled "Wellhead Protection: A Guide for Small Communities". Among other things, this document describes the various methods to "delineate a wellhead protection area." As I understand it, a wellhead protection area is a defined buffer zone placed around drinking water supply wells and UIC disposal wells. It seems to me that this "wellhead protection area" is very analogous to or even synonymous with the "zone of influence". One of the methods described for delineating the wellhead protection area is "Calculated Fixed Radii", described by the following equation: r = [(Q * t)/(pi * phi * h)]^0.5 r = calculated fixed radius, feet Q = pumping rate (cubic feet per year) t = time period, years pi = 3.14156 phi = porosity, fraction h = height, feet This equation is nothing more than a calculation of volumetric pore space within a circular area, with the only interesting twist being the time period chosen. Here is what was written about the choice of time period: "The time period is chosen by estimating the time necessary to clean up ground water contamination before it reaches a well, or to allow adequate dilution or dispersion of contaminants (e.g. 5 years)." Fora first pass, rough estimate of ZOI at the NNA #2, I assumed the following criteria: Q = 500 bbl/day = 1,024,738 cubic feet per year t = 10 years (In a case study from Enid, Oklahoma described in the text, the local Board stipulated the use of a 10-year time frame for UIC disposal of oilfield brines.) phi = 0.25 h = 30 feet The calculation yields r = 659 feet, which is well within the 920' distance to the edge of the Aquifer Exemption boundary at the NNA #2 location. Obviously I need to do a little more research to make sure my assumptions are correct, but at a first pass my assumptions seem conservative. For instance, we expect to encounter over 150' of high quality sand that is suitable for disposal whereas I have assumed a single 30' interval. Comments? 20f3 5/4/2005 2:01PM Re: Calculation of Zone of Influence J ) J. Gary Eller U nocal Alaska Advising Completion Engineer Office: 907-263-7848 Cell: 907-351-1313 30f3 5/4/20052:01 PM #4 ) ) 1 ALASKA OIL AND GAS CONSERVATION COMMISSION ) 2 Before Commissioners: John K. Norman, Chairman Daniel T. Seamount Cathy Foerster 3 4 In the Matter of the Application 5 of UNION OIL OF' CALIFORNIA for a Disposal Injection Order, 6 Deep Creek unit, NNA #2 7 8 ALASKA OIL and GAS CONSERVATION COMMISSION Anchorage, Alaska 9 May 3, 2005 9:00 o'clock a.m. 10 PUBLIC HEARING 11 BEFORE: John K. Norman, Chair Daniel T. Seamount, Commissioner 12 13 ) 14 15 16 17 18 19 20 21 22 23 24 25 RECEIVED MAY 1 I 2005 ) ."J Alaska Oil & Gas Cons, Commission Anchorage ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) /.1 ) ) TABLE OF CONTENTS Opening Remarks by Chair Norman 03 Disclosure by Commissioner Seamount . . . . . . . . . .......... . . . . 04 Testimony of Gary Eller . . . . . . . . . . . . 06 ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ') , ) PRO C E E DIN G S Tape 1 0015 (on record - 9:02 a.m.) CHAIR NORMAN: Good morning. I'd like to call this hearing to order. This is a hearing on the application of union oil of California for a Disposal Injection Order to allow the underground disposal by injection of Class II oil field wastes into what is proposed as in the NNA #2 well. The location being in section 11, Township 2 South, Range 13 West Seward Meridian. with me today is commissioner Dan Seamount. Two commissioners being present there is a quorum present today. And there is a transcript being made of these proceedings that will be available upon request to any parties. I would ask people when you're testifying to please remember that it is being transcribed and state your name clearly so we can help the Court Reporter capture what is said. Notice of this hearing was published on March the 30th, 2005 in the Anchorage Daily News. Review of the file indicates that we received no objections or comments. We are proceeding in this matter in accordance with section 20 Alaska Administrative Code -- Title 20 Alaska Administrative Code, section 25.540. We will be receiving sworn testimony. If any person does not wish to be sworn we will honor that request. However, the commission does give greater weight to sworn testimony than to unsworn testimony. 3 ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) Also, if anyone wishes to be qualified as an expert or is testifying as an expert it will be necessary to state your qualifications and then the Commission will determine whether to qualify you as an expert. We will proceed at ~his·£i~e -~ let me first ask, Commissioner Seamount, do you have any preliminary matters that we should discuss before we proceed to hear from the applicant? COMMISSIONER SEAMOUNT: Chairman Norman, in past hearings involving Unocal I've disclosed my previous experience with the field, the unit that we're going to be talking about today. Should I do that again? CHAIR NORMAN: Yes, this being a separate proceeding..... COMMISSIONER SEAMOUNT: Okay. CHAIR NORMAN: .....you should make any disclosures that would be applicable to this matter. COMMISSIONER SEAMOUNT: Okay. I used to work for Unocal. I worked in the Rocky Mountains from 1988 till 1993 when I was transferred to Unocal's office in Anchorage and I worked there until 2000 when I was appointed AOGCC Commissioner. From 1999 until I resigned from Unocal I worked on a team which developed gas prospects on the Kenai peninsula in the Cook Inlet. One of the prospects I was involved with was the Deep Creek prospect which became Happy Valley field since its discovery after I left Unocal. While I worked the prospect I recommended leasing acreage, evaluating the geology and estimating its volumetric reserves. My experience with the prospect will in no way impair my ability to make a fair and impartial decision on this matter. 4 ') 1 2 3 4 5 6 7 8 9 10 11 12 -, 13 ) 14 15 16 17 18 19 20 21 22 23 24 25 \. !~ ) , And under the rule of necessity I will have to participate in order to have a quorum of two and that's my disclosure for today. CHAIR NORMAN: Very well. Although I would state that if there is any objection at all f6proceeding we do have the option to continue the proceeding. Commissioner Cathy Foerster was delayed by a flight change in Los Angeles and she will be here in the next few days so there is a possibility right now without renoticing to simply recess and -- until commissioner Forester is here. And so if any persons in the room have a concern about commission Seamount proceeding, and I'm not implying there is any concern, he's indicated that he could rule fairly and impartially in this matter and I believe that to be the case based on what I know and have reviewed, but I do want everyone to know that there is that option and that if we have a question about it, why, we can recess and then reconvene as soon as Commissioner Cathy Forester is here. Let me ask, are there any persons present right now that have any concerns about Commission Seamount hearing this matter? Okay. The Chair notes that no objections have been posed and the Chair then makes a finding that Commissioner Seamount can proceed fairly and impartially in this matter. We'll now hear from the applicant first and I will first ask you to state your name. MR. ELLER: My name is Gary Eller. CHAIR NORMAN: And, Mr. Eller, could you raise your right 5 6 submitted and approved for the NNA #1 disposal well. Other including applications -- the previous application that was I worked on several disposal wells in the Cook Inlet area which it involves, you know, short term injection. In addition done quite a bit of fracture stimulation of producing wells MR. ELLER: In the course of completion engineering I've .....particular Class II, Class II fluids? CHAIR NORMAN: MR. ELLER: certainly. have had with injection wells and in..... CHAIR NORMAN: And could you address what experience you seven years drilling, production and completion engineering. Texas and here in Alaska working in the Cook Inlet for the last capacities as a petroleum engineer in the Gulf of Mexico, East Louisiana. I've served for the last 17 years in various in the Discipline of Petroleum Engineering in the state of Texas A & M University. I have a registered petroleum engineer of Science in the Discipline of Petroleum Engineering from MR. ELLER: I have a Bachelors Degree and Masters Degree CHAIR NORMAN: Please, then state your qualifications. as an expert witness in petroleum engineering. for purposes of this hearing, I believe should be established employee of Union oil Company of California, Unocal. And, I, MR. ELLER: As I said, my name is Gary Eller. I'm an TESTIMONY BY GARY ELLER CHAIR NORMAN: Please proceed. MR. ELLER: I do. (Oath Administered) hand, please? ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 } 7 disposal wells in the Kenai gas field, two or three different disposal wells, Class II wells that I have worked with there as well. CHAIR NORMAN: Commissioner Seamount, any questions? COMMISSIONER SEAMOUNT: No, questions. I feel he's..... CHAIR NORMAN: Okay. COMMISSIONER SEAMOUNT: .....qualified. CHAIR NORMAN: Okay. We will accept your qualifications as a petroleum engineer and your experience is noted in the area of working with injections in formations. MR. ELLER: Yes, sir. CHAIR NORMAN: Please proceed then. MR. ELLER: Commissioners, Unocal has drafted this proposed well, the NNA #2. Unocal's intent is that we'll keep the NNA #1 well in service as a disposal well and this NNA #2 will be in some sense a redundant system for us. The present NNA #1 disposal well is -- it's perfectly adequate and performing quite well for disposal of produced liquids and clear fluids. There's several reason it's not particularly well suited for disposal of solid waste such as drill cuttings and mud so that establishes the two primary reasons for Unocal's desire to drill the NNA #2 both as a redundant well for disposal of produced fluids and the more primary reason would be a place to dispose of solid cuttings and such. We've considered the -- evaluated the well logs and the geology of the area. The proposed depth, disposal inter- the disposal interval is expected to be very suitable for ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) 8 CHAIR NORMAN: Yes. COMMISSIONER SEAMOUNT: Okay. MR. ELLER: Yeah, that's right, 2,180 to 2,800 feet measured depth is the requested interval. COMMISSIONER SEAMOUNT: And are there any productive zones within that interval? MR. ELLER: There are no productive zones within that interval. COMMISSIONER SEAMOUNT: Okay, thank you, Mr. Eller. Should we take a recess or invite people just to ask questions? I mean, what's proper? MR. ELLER: Just let me confirm that that's accurate, if you don't mind. COMMISSIONER SEAMOUNT: Now this is automatically on the record, right, so we don't have to -- okay. containment of drill cuttings and injected fluids both from an operation standpoint of ease of disposal while still providing adequate protection of fresh waters and the environment. CHAIR NORMAN: Questions, commissioner Seamount? COMMISSIONER SEAMOUNT: What is the disposal depths interval? It's clearly a..... MR. ELLER: The aquifer exemption..... COMMISSIONER SEAMOUNT: .....large internal, correct? MR. ELLER: .....is at 1,800 feet. The specific disposal depth -- if you'll allow me to check my notes here -- that we've requested -- we requested an interval from 2,180 feet to 2,800 feet measured depth. COMMISSIONER SEAMOUNT: Okay. ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) 1 2 3 4 5 6 7 8 9 10 11 12 } 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) CHAIR NORMAN: I think it would be most efficient if we'll go through and finish here and I don't anticipate being long, take a recess and we'll collected everything and I think that will be most efficient for Unocal if we proceed that way. Could you in your testimony address the confining layers? That is in your application which is part of the record, but..... MR. ELLER: Absolutely. CHAIR NORMAN: .....1 would like some discussion on the -- in the written testimony. MR. ELLER: The confining layers -- there are numerous confining layers. They consist of thick coals, tighter siltstones and claystones and shales. It's been my experience in fracture stimulation in the Cook Inlet area as well as the model the fracture models support this as well, that these coals in particular act -- serve as blunting layers and very fine confining layers for hydraulic communication. And they're -- you know, coals are prolific in this area and there are several that have been identified in the application that are quite significant and expected to serve as confining layers. In the NNA #1 wellbore that -- Unocal conducted a permitted annular (ph) disposal operations in that well for some period of time and that annular disposal was going into a similar depth within the permitted internal depth in there and would note that that was a -- it served (ph) for a long period of time and very adequately as a disposal interval. We had numerous temperature logs in there that confirmed that the fluids were staying contained where they were expected 9 ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) ) and the injection pressures on those never approached any level that would give cause or concern about the -- a breach of the confining layers. COMMISSIONER SEAMOUNT: Very good. CHAIR NORMAN: What is it about the characteristics of the receiving formation in the NNA #2 that makes it better suited to receive cuttings in contrast to #1? MR. ELLER: Well, the primary is the -- there's two things. The much better formation permeability of shallow than we have down deep. The existing disposal internal in the NNA #1 is about 6,200 feet deep and the -- you know, my expectation of the permeabl- -- permeability there is, you know, on the high side, perhaps, 10 millidarcy rock. In comparison the shallow zones that we'll be -- that we propose to dispose into are sterling sands and Upper Beluga sands and the formation permeability is expected to be in the hundreds of millidarcies in all likelihood, so there's greatly enhanced leak-off of fluids that it cannot build the confining pressure or net pressure sufficient to break through the boundaries. It just allows -- it just leaks off so fast. Secondly is the depth of interval since it's so much shallower it is -- there's it takes less pressure to pump into it as opposed to something at 6,000 feet. So in that sense it's -- you know, from an operations standpoint it's going to be easier to -- easier mechanically to pump into that. CHAIR NORMAN: And could you address a little more the con- -- I'm -- I'm understanding that the NNA #2 would be somewhat of a back-up, some redundancy, is that right? 10 11 MR. ELLER: Not necessarily, sir. If there are questions there is another representative of Unocal here that expertise MR. ELLER: yeah..... CHAIR NORMAN: The primary disposal will -- excuse me, primary disposal will still occur in the NNA 1 and under what conditions would you revert to using NNA 2? MR. ELLER: That is our intent that we would continue to use the NNA #1 for liquids disposal from the -- from production operations at the Happy Valley field. The conditions which we would use the NNA #2 would be, first of all I've already said that for any type of solids disposal, site (ph) drilling operations, we would automatically go to the NNA #2. Other than that it would be in some way that we saw some event at the NNA #1 that gave us cause for concern about the continued injection in that well or our operations, our pressures got to be basically intolerable. We reach peak pressures, injection pressures there just because of the tightness of the formation or mechanically if something were to happy. That's what I anticipate, commissioner, you know, in practice given that the NNA #2 were available there could be some other circumstance that I can't anticipate right now that would cause them to desire to inject in the #2 well, but that that's -- that would be the intent. CHAIR NORMAN: Thank you. Any further questions of this witness? Mr. Eller, will Unocal have other witnesses right now to call? ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) 12 I'd ask you to remember that you remain under Oath and do you acknowledge that you understand you remain under Oath? MR. ELLER: Yes, sir, I understand that. CHAIR NORMAN: We'll go off the record. (Off record - 9:20 a.m.) (On record - 9:52. a.m.) CHAIR NORMAN: We're back on the record. The time is approximately 10:52 (sic) a.m. The Commission has taken a brief recess and we still have before us Mr. Gary Eller who has indicated that he would be prepared to answer questions. Mr. Eller has previously acknowledge his understanding that he remains under Oath. Mr. Eller, thank you for your patience and the length of time doesn't necessarily mean that we have a lot of questions. In fact, often it means we're eliminating questions as we talk and discard things, but I think it will help to go through a few items with you. MR. ELLER: Commissioner, if I may interrupt, I beg your pardon, but during the recess I've also given some more thought to your question that you asked about the utility of the #1 disposal well..... CHAIR NORMAN: Um-hum. Commission Seamount what we will do is take an approximate let's say 10 minute recess and that way we'll collect our questions to avoid overlap and then we will recall you. And in the drilling and -- and completion aspect of the well if there are questions that are appropriate to that, but..... CHAIR NORMAN: Okay. Then if there's no objection by ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ELLER: .....versus the #2 and I'd like to revisit that for a second if I may? I'm been thinking about that some. CHAIR NORMAN: Please, go ahead. MR. ELLER: The #2 well will certainly -- certainly the expectation is it's going to be a much easier well to dispose into and so while -- you know, I stand by my original comments that our intent is to continue to use the #1 for fluids and use the #2 well for solids. It's not hard to imagine that you get in a scenario where the #2 well becomes the primary well for all fluids and solids and the #1 well, the existing well takes the back-up role. You know, it's just hard for me to say exactly what will happen, but it's sure not hard to imagine that it would be desirous to use the #2 well to its full extent. CHAIR NORMAN: Sure, I understand that. I appreciate that comment then. And then picking up on that then as we're imagining then what would -- what volume might -- what ultimate volume of fluid would you imagine might go into the NNA 2 if you were to speculate or imagine? MR. ELLER: It would be speculation for sure. You know, currently at the Happy Valley field we produce roughly 50 barrels of water a day so in my wildest assessment we might get up to -- you know, with additional drilling and fracture stimulation we might get to, say, 500 barrels a day, that's the most I could realistically envision. On cuttings injection, you know, that volume varies anywhere from 4,000 barrels up to as high as 9,000 barrels per well so, you know, without benefits of a calculator or anything 13 ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) III ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) like that in front of me -- and let's say the well life out there goes another, you know, I'll guess 15 years, you know, you can -- I'd have to get somebody else to punch that out on a calculator for me, but that's -- that is that's really just very much off the top of my head, Commissioner,..... CHAIR NORMAN: I understand. MR. ELLER: .....but, you know, spel- -- whatever that adds up to that would be my estimation. The number of additional wells we have out there it could be as many as a dozen I'll say, but, you know, this -- our intent is that this NNA #2 well will serve as a long term, capacity well for other drill cuttings and other development that may happen on that South Kenai Peninsula area so, you know, certainly the volume of cuttings disposal could go, you know, beyond what I've -- what I've just described. CHAIR NORMAN: Have any calculations concerning zone of influence around NNA #2 been done with..... MR. ELLER: No, sir. By zone of influence you mean how far the..... CHAIR NORMAN: Yes, how far the..... MR. ELLER: No, sir,..... CHAIR NORMAN: .....fluid might plume up? MR. ELLER: .....nothing like that. CHAIR NORMAN: By way of just background for a question that I think all of us need to keep an eye on, Unocal and certainly the Commission, is that our existing Aquifer Exemption Order #11 has an area that's a radius of a quarter mile measured out from NNA #1, not 2,..... 14 15 MR. ELLER: Um-hum. (Affirmative) CHAIR NORMAN: .....so the 2 well as I recall is three to 400 feet offset from that meaning..... MR. ELLER: Yeah. CHAIR NORMAN: .....that you're closer -- you're 400 feet closer to the -- to the..... MR. ELLER: To the bulb or to the..... CHAIR NORMAN: .....boundary, the radius -- or the circum- circumscription of the area. Based on what you have indicated that it would not be hard to imagine the NNA #2 becoming the injection well of choice and based upon the projections you've made, do you think right now that that will be contained within the area of that Aquifer Exemption Order? MR. ELLER: Well, once again, Commissioner, that -- I'd really have to think about that a little bit more then I could probably spell out right now. I can say that the nature of the #2 well being I've already -- as I've already mentioned being higher permeability and stuff, I expect much more -- a much more radial type of injection pattern than I do in the NNA #1. As tight at the NNA #1 is we're certainly, you know, developing, you know, a frac (ph) of some length..... CHAIR NORMAN: Um-hum. MR. ELLER: .....and so it's going to be more of a line source type of pattern, you know, an elongated pattern than I would expect in the NNA #2, but I'd venture to say it's going to take, you know, some pretty rigorous engineering assessment to try and ascertain what you asked at any greater detail. ) ) } 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) 16 CHAIR NORMAN: Okay. without belaboring the point I just want to make sure that Unocal understands that our Injection Orders must first be proceeded by an Aquifer Exemption Order. We can't be injecting into without an underlying Aquifer Exemption Order, so the Injection Order is only as good as the underlying Aquifer Exemption Order and the Aquifer Exemption Order is one-quarter mile around NNA #1. And that's even tighter when you get to NNA #2 because you're closer to the radius, so this could become a concern. I don't know if it is now and when we all originally considered this we were looking at NNA being a well and the conditions that existed then and this being adequate. Now there's been a change of plans so I'd ask you to think about whether we may need to re-examine this because it is inherent in the Order that you cannot be injecting outside the area of the Aquifer Exemption Order, so this is going to have to be calculated. The Commission is going to have to keep an eye on it and Unocal is and right now I am a little concerned 'cause I don't know exactly how we'll monitor that. I'll stop there and let Commissioner Seamount -- see if he has questions? COMMISSIONER SEAMOUNT: I have no questions other than did you said 9,000 barrels of cuttings per well? MR. ELLER: As many as,..... COMMISSIONER SEAMOUNT: Okay. MR. ELLER: .....yeah. COMMISSIONER SEAMOUNT: And then 12 wells in this project and you're also going to use these disposal wells for other ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) 17 to tell you that, but I just don't want to see us all get into to let us know. You're the operator there and it isn't for us enlarging the Aquifer Exemption, but that would be your choice is that conditions permitting it may be necessary to consider something that we're going to have to put a watch on and I'm not sure right now exactly how we'll do that in our Order. There are a number of obvious alternatives and one of them of injection was much deeper, also. So I think that it's delineated by NNA #1 being the center and the NNA -- the zone then we have a change of conditions because that area is word, imagine that if the #2 well did become the well of choice I would ask you to take a look at that area and, to use your questions other than, Mr. Eller, as we're about to recess here Okay. I don't see anything and I have no further have into the record in order to finish adjudicating this? indicate to me if you think there's anything more we need to CHAIR NORMAN: I think I'd ask the Staff present just to right now, but I have no further questions. that quarter mile, but that's just a bar napkin calculation .....that may start impinging upon COMMISSIONER SEAMOUNT: MR. ELLER: You bet. that may run up into volumes after 10 or 15 years..... 9,000 barrels per well is only 108,000 barrels to produce water kind of minimal 'cause 12 wells, cuttings would be sor- COMMISSIONER SEAMOUNT: It would seem to me that the projects, exactly so, yeah. MR. ELLER: That's right, other South Kenai drilling projects on -- in Cook Inlet? ) ) ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) '" ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 ) ) a box when we find fluids getting outside that area. Is there anything finally that you -- do you have anything that you'd like to say before we adjourn the meeting? MR. ELLER: No, sir. CHAIR NORMAN: Okay. Commìssioner Seamount, anything more? COMMISSIONER SEAMOUNT: I have nothing. CHAIR NORMAN: Okay. Well, again, I commend Unocal. I'm always impressed with your packet, the exhibits are thorough. It's clear and easy to follow and so I want you to know the Commission does appreciate that. We see a lot of filings and I would rank yours -- your work I would say it's excellent work and we appreciate it. MR. ELLER: Thank you. Thank you. CHAIR NORMAN: without objection then we will adjourn at the time is approximately 10:05 a.m. (Recessed - 10:05 a.m.) 0930 18 ) 1 2 3 4 5 6 7 8 9 10 11 12 ) 13 14 15 16 17 18 19 20 21 22 23 24 25 J\ ) ) C E R T I F I CAT E UNITED STATES OF AMERICA ) ) ss. STATE OF ALASKA ) I, Rebecca Nelms, Notary Public in and for the State of Alaska, residing at Anchorage, Alaska, and Reporter for R & R Court Reporters, Inc., do hereby certify: THAT the annexed and foregoing Public Hearing In the Matter of the Application of UNION OIL OF CALIFORNIA for a Disposal Injection Order, Deep Creek unit, NNA #2 was taken by Suzan Olson on the 3rd day of May, 2005, commencing at the hour of 9:00 a.m., at the Alaska oil and Gas Conservation Commission, Anchorage, Alaska; THAT this Hearing Transcript, as heretofore annexed, is a true and correct transcription of the proceedings taken and transcribed by Suzan Olson; IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal this 11th day of May, 2005. ~~(v~~ Notary Public in and for Alaska My Commission Expires: 10/10/06 #3 tJa NO ýl!5 NO ''f QS' *:ò€iCC ~C ÆQsGC- ¡qNCtlGJ~E I ,q.1¿ , C¡Q5bl¡ t::¡ð7 ~3 7'37 91)<7 lJJ.$1 1 -fj ~ ~~\ ~,~~~\.. t\\)Q) ~'f'-~q ~t. '\~S\)\ ~~l-'L\bs-l~~~ TESTIFY (Yes or No) ADDRESS/PHONE NUMBER NNA #2 May 3, 2005 9:00 AM ç-&~" Lq, wt ~ C. Jï¡,¡ í<~'1 úJ \ ¡~Y\. AA1er=!- Bðh t~u (PLEASE PRINT) \3~'(,\ 8\~'( NAME - AFFILIATION STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION ) ) #2 STATE OF ALASKA ., NOTICE TO PUBLISHER l' ,) ADVERTISING ORDER NO. ADVERTISING ORDER ~,~'~,~9~~'?,~:~R'I,~~~',,~i~~~DRE:~'~,',1 ': ,,;'::, ,:¡'¡:¡;,.' '''::',,'''!:'' i,,':,!:,!:', '",::"" :,', ',',"", : ,I, ,','I,':'::': 'i"!:, ,""<,', :,,~:',:;:¡:!':'I:' ",'::'.:::::,':.:': , "":'i::::::b,'J!:¡' INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO" CERTIFIED AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATIACHED COPY OF ADVERTISEMENT MUST BE SUBMITIED WITH INVOICE AO-02514035 F AOGCC R 333 W 7th Ave, Ste 100 o Anchorage, AK 99501 M AGENCY CONTACT DATE OF A.O. J odv Colombie PHONE March 29~ 2005 PCN (907) 793 -1 ??1 DATES ADVERTISEMENT REQUIRED: ¿ Anchorage Daily News PO Box 149001 Anchorage, AK 99514 March 30, 2005 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Type of Advertisement X Legal D Display Advertisement to be published was e-mailed D Classified DOther (Specify) SEE ATTACHED SEND INVOICE IN TRIPLICATE AOGCC, 333 W. 7th Ave., Suite 100 TO Anchorage. AK 99:)01 AMOUNT DATE TOTAL OF PAGE 1 OF ALL PAGES$ 2 PAGES COMMENTS REF TYPE NUMBER 1 VEN 2 ARD 02910 3 4 ~I~ 6Mnll~T ~v ~~ P~M I~ 6~~T ~v NMR DIST LlQ 05 02140100 73451 2 3 R~QUISITIOrY:,~, ,()hiL, ,.._ ¡J L--() ~W'')¡t~./ DIVISION APPROVAL: ) ) Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of Union Oil of California ("UNOCAL") for a Disposal Injection Order to allow the underground disposal by inj ection of Class II oil field wastes into proposed Unocal NNA #2 well, located in Section 11, Township 2 South, Range 13 West, Seward Meridian. Unocal by application dated March 21, 2005 and received by the Commission on March 23, 2005 has requested the Commission issue an order in conformance with 20 AAC 25.252 to allow the underground disposal by injection of Class II oil field wastes into the Sterling and Beluga Sands between the measured depths of 2,180 feet and 2,800 feet in the Unocal NNA #2 well. The Unocal NNA #2 well will be a vertical well located 348 feet from the West Line and 406 feet from the south Line of Section 11, T2S, R13W S.M. The Commission has tentatively set a public hearing on this application for May 3, 2005 at 9:00 am at the Alaska Oil and Gas Conservation Commission at 333 West ih Avenue, Suite 100, Anchorage, Alaska 99501. A person may request that the tentatively scheduled hearing be held by filing a written request with the Commission no later than 4:30 pm on April 19, 2005. If a request for a hearing is not timely filed, the Commission may consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call 793-1221. In addition, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West ih Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on May 2, 2005 except that if the Commission decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the May 3, 2005 hearing. / Published Date: March 30, 2005 ADN AO# 02514035 ) Anchorage Daily News Affidavit of Publication ') 1001 Northway Drive, Anchorage, AK 99508 PRICE OTHER OTHER OTHER OTHER OTHER GRAND AD# DATE PO ACCOUNT PER DAY CHARGES CHARGES #2 CHARGES #3 CHARGES #4 CHARGES #5 TOTAL 449530 03/30/2005 02514035 STOF0330 $182.40 $182.40 $0.00 $0.00 $0.00 $0.00 $0.00 $182.40 r .-- I -~........~_...-., --.... .-- Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission STATE OF ALASKA THIRD JUDICIAL DISTRICT IJfvtle &. ;) tJ()j- Re:The application of Union Oil of California ("UNOCAL") for.a Disposal Injection Order to al·· low the underground disposal by inlection of Class II oil field wastes Into proposed Unocal NNA #2 well, located in Section 11, Township 2 South, Range 13 West, Seward Meridian. Unocal by application dated March 21, 2005 andre· celved by the Commission on March 23, 2005 has requested the Commission issue an order incon-. formance with 20 AAC 25.252 to .allow the under· ground disposal by injection of Class II oil field wastes into .the.Sterlingand BelugaSandsþetween the measured depths of 2,180 feet and 2,800 feet in the Unocal NNA #2 well. The Unocal NNA #2 well wi II be a ve,rtica I well located 348 feet ·from the West Line .and 406 feet from the .south Line of See, tion 11, T2S, R13W S.M. i The Commission has tentativelY set a public hear· ~~~~~¿~~~ a8j¡I~C~Ji~a~0~~~~r3~a2t~~5n a¿:~O~fS~i~~ . . at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. A person may request that the h~nta' ~~~e ~~qSU~~~~ilfhd t~~aé~~~;s~;~ d n~~~;~~nfh~n~~~ö pm on April 19, 2005. If a request for a hearing is not timely filed, the Commission may consider the issuance of an or· der without a hearing; TO learn if the Commission 1 will hold the pUblic hearing, please call 793·1221. In addition, a person may submit written com· .1 I ments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Writ- ten comments must be received no later than 4:30 pm on May 2, 2005 except that if the Commission decides to hold a public hearing, written protest or comments must be received no later than the con- clusion of the May 3, 2005 hearing. If yOU are a person with a disability who may need special accommodations in order to comment or to attend the pUblic hearing, please contact Jody Co· lombie at 793·1221. Teresita Peralta, being first duly sworn on oath deposes and says that she is an advertising representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on the above dates and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed ( YrJ~4tL Subscribed and sworn to me before this date: I John K. Norman Chairman Notary Public in and for the State of Alaska. Third Division. Anchorage, Alaska ¡. C MMISSION EXPIRES: fJr/ J. ) J/lo 7 , ? "7 /' \ \ l (( ( ({ ( ((I ~ . .' . \\ \ ßERLt 1'/'1",.- d11hu#t;f /) J~00~UÚ ,t~~:.;~i~~1:T~ ~ .\' ¿f1 A> . . (J) -.=. ~. ~....... - ,J-.. :;.(,- :;:0-' b.~. .- , :::...-;21" . - -Vþ:¡ .c . :::: - ~. (I) ~11..1 "'" ::. "0 ~ ..",~.., . s ~ "'~~A' ~,p:A~ ~ "."'T' !J" .' ~":\" ..,. ....) It::," . . .' ~. :\' ;.1,,1.1' """.fIJI~: ~ "" '.IJIJJJJJJ)¡)) ADN AO# 02514035 Publish: March 30, 2005 02-902 (Rev. 3/94) Publishe )ginal Copies: Department Fiscal, Departm:r-eceiving AO.FRM STATE OF ALASKA ADVERTISING ORDER ,,:§',~¡;i~@1Tq~:f9~1~)r91.~5":AÐQ,~~SS,' ",..:,,:", r"I'i,;",~,: :,::,:1'("(:' "":",1:,',1,,' ".:i;i:",':::','I<:,:::',I::,!r,,'i.' ;:",1:',> ,"I':~: .::,:I;'!;',:':;"" "';',:,'1;:':;'" :':::: ',: '~F ",' 'i',~:¡,,::,¡:,,:¡ F AOGCC R 333 West ih Avenue. Suite 100 o A nr,h(\r~ap A K QQ~() 1 M 907-793-1221 NOTICE TO PUBLISHER ADVERTISING ORDER NO. INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COpy OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE AO-02514035 AGENCY CONTACT DATEOFAQ Jodv Colomhie March ).9. ?005 PHONE PCN (907) 793 -1 ??1 DATES ADVERTISEMENT REQUIRED: T o Anchorage Daily News PO Box 149001 Anchorage, AK 99514 March 30, 2005 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: United states of America AFFIDAVIT OF PUBLICATION REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. ATTACH PROOF OF PUBLICATION HERE. division. Before me, the undersigned, a notary public this day personally appeared who, being first duly sworn, according to law, says that he/she is the of Published at in said division and state of and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2005, and thereafter for _ consecutive days, the last publication appearing on the _ day of , 2005, and that the rate charged thereon is not in excess of the rate charged private individuals. Subscribed and sworn to before me This _ day of 2005, Notary public for state of My commission expires 02-90 I (Rev. 3/94) AO.FRM ~e: Public Notice ) ') Subject: Re: Public Notice From: "Kirby, Kimberly" <KKirby@adn.com> Date: Tue, 29 Mar 2005 15:54:52 -0900 to:',Jö4yÇ:çlol1lbie' -<jdªY2Çºldriiþi~@ªdwin.,~tªt~~,*.11~:> " Hi Jody: Following is the confirmation information on your legal notice. Please review and let me know if you have any questions or need additional information. Account Number: STOF 0330 Legal Ad Number: 449530 Publication Date(s): March 30, 2005 Your Reference or PO#: 02514035 Cost of Legal Notice: $182.40 Additional Charges: Web Link: E-Mail Ling: Bolding: Total Cost To Place Legal Notice: $182.40 Your Legal Notice Will Appear On The Web: www.adn.com: XXXX Your Legal Notice Will Not Appear On The Web www.adn.com: Thank You, Kim Kirby Anchorage Daily News Legal Classified Representative E-Mail: legalads@adn.com Phone: (907) 257-4296 Fax: (907) 279-8170 On 3/29/05 11:43 AM, "Jody Colombie" <jody colombie@admj..n.state.ak.us> wrote: I Thank you! 1 of 1 3/29/2005 4: 15 PM Public Notice NNA #2 Well '\) ) Subject: Public Notice NNA #2 Well From: Jody Colombie <jody _colombie@admin.state.ak.us> Date: Tue, 29 Mar 2005 11 :51 :21 -0900 , I II; , ',',,:'. .':<' ",::,,:,,;~:::;,;:, :<i¡, "'J,.¡ ?" ;' "":',,}<., '1~1:?':'i:':~::\:>::, ,:::::,::,:>, ,';::" '"I, :,<1:,:' :<:<:'::. ":,:, ',~:::::: <,/ ¡,',';;;,: ":"'<' ,:::,,~I ' , 1'""'",,0,,, :" ':" un, dI, SC", 1o,' , se, ,'d-, r., eCIpIen,ts: ,",:', "',,"',',',',,, ':,,':,','.,,"," ";,',,','.'.',',1,',':,',' """"":""",':':,',, "" ""',""',',,',, ",i"':"'.',,,' ,:1.:"" "'."";""'" "I, !,',,', ",'"1,:",,,':',:,',', ',' :'":,:'""" ",,',1,.:,: " ',','":,, ''',',,'', '" ",',',1,1,:'" ,', :, ' ", :,,1, ",:,','",',' :' ,,', ".,1','",',: , ,I I, ' " , I I I I, , I ,'I' I I" " I , 'I ", , I , I , "I I I' , ' , , ' I, ' : " i: 1,1' I ' ! : , I : I" I I ' , I :, I, ,'''' ' I :", I ~ ! : , I , ' ' , Ii", ,I' I , , I ' " I: ,',¡ i ,I ,I, ' , I , I ' , ' I" : : ' 'I,' , , ' ' " , ' :' , " , " ,I ' , , ' I : , ' " I', ' ' ': , " , , :, ',i' ,I I of2 3/29/2005 4: 15 PM )ublic Notice NNA #2 Well ) ) 20f2 3/29/2005 4: 15 PM >ublic Notice ) ,~ ) Subject: Public Notice From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Tue, 29 Mar 2005 11 :43 :36 -0900 T():, ·Legal'Ads)\nqhotagê:I)~i1YNe:Ws.~legå~ad~@adh.þom>' Thank you! ¡mmm..1 Content-Type: application/msword i I nna2 DIO publIc notice. doc; C E d· b 64 I - - - ¡ ontent- nco 109: ase ! .1.... .... ..... ....................... ................................ .... Content-Type: applicationlmsword ' Ad Order form.doc Content-Encoding: base64 1 of 1 3/29/2005 4: 15 PM Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Mona Dickens Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 ) Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Schlumberger Drilling and Measurements 2525 Gambell Street #400 Anchorage, AK 99503 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 ) David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 Boise, ID 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Ivan Gillian 9649 Musket Bell Cr.#5 Anchorage, AK 99507 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 North Slope Borough PO Box 69 Barrow, AK 99723 4/ )-c--é- '/-- ~//. ¿1? #1 ) ) UNOCALe :,:¡¡iWil~lr Alaska APPLICATION FOR A DISPOSAL INJECTION ORDER DEEP CREEK UNIT, NNA #2 .......- MARCH 2005 ,) ) ) Application for Disposal Injection Order - NNA #2 List of Tables and Figures Figures Figure 1 - Cook Inlet Regional Overview Figure 2 - NNA #2 Local Vicinity Figure 3 - Surface Parcels within One-Quarter Mile of the NNA #2 Figure 4 - Deep Creek Unit Boundaries Attachments Attachment 1 - Affidavit of Notification of Surface Owners Attachment 2 - Proposed Schematic Diagram of the Unocal NNA #2 Attachment 3 - Description of Proposed Wellbore Construction Attachment 4 - Mechanical Integrity Test Procedure Attachment 5 - Independent Evaluation of Confining Zones Attachment 6 - Analysis of Produced Water from the Beluga B-40 Sand Attachlnent 7 - Aquifer Exemption Order # 11 Attachment 8 - Wellbore Schematic Diagram of the NNA #1 Attachment 9 - NNA #2 Proposed Directional Program Attachment 10 - Wellbore Separation Between NNA #2 and NNA #1 ) Appendices Appendix A - Complete Text of20 AAC 25.252 RECEIVED MAR 2 8 2005 Alaska Oil & Gas Cons. Commission Anchorage ) ", ) ) ) APPLICATION FOR A DISPOSAL INJECTION ORDER DEEP CREEK UNIT, NNA #2 WELL OPERATED BY UNION OIL COMPANY This application was prepared in accordance with the requirements of Alaska Oil and Gas Conservation Commission (AOGCC) Statute 20 AAC 25.252, Underground Disposal Of Oil Field Wastes And Underground Storage Of Hydrocarbons effective November 7, 1999. Introduction Union Oil Company (Unocal) is applying for a disposal injection order to allow for the underground disposal of oil field wastes in the proposed NNA #2 well in the Deep Creek Unit (Section 11, T2S, R13W, Seward Meridian). The injection order would approve disposal of Class II oil field wastes via injection through the Unocal NNA #2 well into Sterling and Beluga Sand intervals from 2,180 to 2,800 feet MD. The NNA #2 well will be designed and drilled specifically as a Class II well suitable for the disposal of oil field wastes as defined in 40 C.F.R. 144.6(b) (USEPA, 1998). Unocal has conducted modeling that demonstrates that the proposed disposal operation will not allow the movement of oil field wastes from the disposal intervals into sources of freshwater. The construction of the NNA #2 well will isolate the disposal zone and protect freshwater resources. Unocal will also conduct testing to confirm the mechanical integrity of the production casing in well NNA #2. Unocal is seeking contingent approval of this disposal injection application pending verification that the NNA #2 well construction is adequate for Class II disposal operations. ) Deep Creek Unit The Unocal NNA pad in the Deep Creek Unit (DCU) is located on the Kenai Peninsula approximately six miles east of the city of Ninilchik (see Figures 1 and 2). Fourteen wells have been drilled in the DCU as of March 1, 2005. Five of these wells are currently producing and two have been permanently abandoned. One well, the NNA #1, was converted into a Class II disposal well in December 2004. Table 1 summarizes the status of wells within the DCU as of March 2005. Figure 3 shows that the only well within a quarter-mile of the Unocal NNA #2 is the NNA #1 disposal well. The NNA #1 well is currently serving as the Class II disposal well for produced liquids from the nearby Happy Valley field. Unocal proposes to drill the NNA #2 well for the primary purpose of disposing of Class II solid wastes with the secondary purpose of providing backup disposal of Class Illiquid wastes. ) .ê Disposal Injection Order Application (Mod) - NNA #2 March 21, 2005 Application for a Disposallnjectlvl )order - Union Oil Company Table 1. Wells Within the Deep Creek Unit Perforated Perforated Interval Interval MD SSTVD N/A N/A N/A N/A 6,182' - 9,647' 5,495' - 8,954' 7,978' -10,730' 6,374' - 8,826' 6,784' -10,052' 5,673' - 8,907' 9,228' - 10,678' 7,922' - 9,365' 8,854' - 9,888' 8,057' - 9,070' N/A N/A 10,854'-10,882' 8,728' - 8,756' 9,998' -10,018' 7,999' - 8,018' 5,235' - 8,581' 2,737' - 5,695' 7,440' - 8,237' 5,289' - 6,031' 7,844' - 8,146' 5,644' - 6,024' 9,106' - 9,930' 7,863' - 8,687' ) Well Standard Oil Deep Creek #1 Superior Oil Happy Valley #31-22 Unocal NNA #1 Unocal Happy Valley #1 Unocal Happy Valley #2 Unocal Happy Valley #3 Unocal Happy Valley #4 Unocal Happy Valley #5 Unocal Happy Valley #6 Unocal Happy Valley #7 Unocal Happy Valley #8 Unocal Happy Valley #9 Unocal Happy Valley #10 Unocal Happy Valley #11 Permit Application Spud Date 3/19/1958 9/9/1963 12/17/2001 6/17/2003 7/15/2003 2/3/2004 2/6/2004 2/8/2004 4/7/2004 6/15/2004 7/20/2004 9/13/2004 9/27/2004 10/25/2004 " Page 2 of 7 Current Status Plugged and abandoned Plugged and abandoned Class II disposal well Producing Producing Inactive Dry hole Suspended Dry hole Dry hole Producing Producing Producing Inactive The following summarizes the contents of the NNA #2 well permit application as they apply to the requirements found in 20 AAC 25.252 (c). Complete language for 20 AAC 25.252 is included in ) Appendix A of this document. (1) Location plat. Figure 3 shows the surface locations of wells (i.e., disposal and storage wells, abandoned or other unused wells, production wells, dry holes, or any other wells) within one-quarter mile of the NNA #2 well. As shown in Figure 3, there are no wells located within one- quarter mile of the proposed location for the NNA #2 except for the NNA #1 disposal well. Figure 4 is a plat showing the boundaries of the Deep Creek Unit, the location of the proposed NNA #2 well, the other wells in the DCU, and the boundaries of the area defined under Aquifer Exemption Order #11. (2) List of operators and surface owners. Union Oil Company is the sole operator within a one-quarter mile radius of the NNA #2 well. The sole surface owner within a one-quarter mile radius of the NNA #2 well is the Ninilchik Native Association, Inc. (3) Notification of operators and surface owners. The attached affidavit (Attachment 1) certifies that the Ninilchik Native Association, Inc., the sole surface owner within a one-quarter mile radius, has been provided a copy of this application for the disposal of Class II oil field wastes in the NNA #2 well. .) Disposal Injection Order Application (Mod) - NNA #2 March 21 , 2005 ') Application for a DisposallnjectlLJI )order - Union Oil Company } ) ) Page 3 of 7 (4) Geologic Data. In the NNA #1 wellbore, the Sterling Formation exists from the base of glacial alluvium at approximately 220 feet MD to the top of the Beluga formation at 2,529 feet MD (2,524 feet TVD). The Beluga Formation exists from 2,529 feet MD to the top of the Tyonek Formation at 6,120 feet MD (6,110 feet TVD). The NNA #2 wellbore is expected to encounter these formations at similar depths. The NNA #2 will be drilled and cased to a total depth of 2,800 feet TVD in the Beluga Formation. The Sterling Formation consists of thick and massive sandstones and conglomerates interbedded with siltstones, shales, and minor amounts of thin coals that were deposited in terrestrial (fluvial, lacustrine, alluvial) systems tracts. The sand quality is generally good to excellent. The Beluga Formation is comprised of more thinly bedded shaley, occasionally conglomeratic sandstones interbedded with abundant siltstones, claystones and thin sub-bituminous coals and lignites. Reservoirs of the Beluga Formation are generally of poor quality. The proposed injection intervals are individual Sterling and Beluga Formation sands that have excellent porosity and permeability as observed in the NNA #1 wellbore. Unocal requests that the entire interval from 2,180 feet to 2,800 feet MD be approved for disposal injection in the NNA #2 wellbore. It is Unocal's intent to utilize the NNA #2 disposal well in a bottom-up fashion, so that initially injection will occur in the deepest interval that is suitable for disposal. This not only extends the operating life of the NNA #2 disposal well but reduces the opportunity for uncontained fracture growth by injecting as deep as possible in the wellbore. Confining strata for the requested Sterling and Beluga disposal zones consist of shales, claystones, siltstones, and coal beds that range in thickness from 6 inches to thirty feet or more. Coals at this depth and in the Sterling-Beluga interval do not behave elastically and their properties are difficult to determine from borehole logs, but experiences in conducting hydraulic fracture treatments in this area suggest that coals typically act as near-plastic confining beds. Unocal has identified the following significant confining intervals in the NNA #1 wellbore: · 1,930 - 2,000' MD: 70' of shale and claystone; · 2,030 - 2,110' MD: 80' of shale and claystone; · 2,130 - 2,200' MD: 70' of interbedded shale and siltstone; · 2,255 - 2,310' MD: 55' of interbedded shale and lignitic coal seams 3 - 6' thick; · 2,470 - 2,530' MD: 60' of shale and claystone; · 2,580 - 2,610' MD: 30' of lignitic coal with thin interbeds of claystone; · 2,815 - 2,865' MD: 50' of interbedded shale and siltstone; Unocal anticipates encountering these same significant confining intervals in the NNA #2 wellbore. Unocal's fracture modeling affirms that these intervals are the primary barriers to fracture growth. (5) Logs. Schlumberger's Slim Cement Mapping Tool (SCMT) will be run in the 7 inch casing of the NNA #2 well to verify the adequacy of the cement sheath in the vicinity of the proposed disposal interval. The open-hole log suite in the Unocal NNA #2 well is still being Disposal Injection Order Application (Mod) - NNA #2 March 21 , 2005 Application for a DisPOSallnjeCÌîvl)order - Union Oil Company ") Page 4 of 7 considered. The cased and open-hole well logs will be provided to the AOGCC for ) examination prior to final approval of the Disposal Injection Order. (6) Demonstrating mechanical integrity of casing and tubing. A proposed wellbore schematic diagram and a description of the proposed construction of the NNA #2 well are shown in Attachments 2 and 3. In accordance with 20 AAC 25.412(b), the 4%-inch tubing used in well NNA #2 is rated to a burst pressure of 8,430 psi which substantially exceeds the maximum anticipated injection pressure of 1,300 psi. The packer will be located at approximately 2,050 feet MD. Unocal requests a variance from 20 AAC 25.412(b) which requires that the packer be set within 200' above the top perforations. The packer will be within 200' of the requested disposal interval of 2,180 to 2,800 feet MD, but since Unocal intends to utilize the wellbore in a bottom-up fashion the initial disposal perforations may be as much as 650' below the packer. Unocal proposes to conduct routine temperature surveys between the packer and perforations to confirm that injected fluids are being confined to the appropriate intervals. The design of the casing and cement sheath will protect freshwater aquifers above 1,800 feet MD and adequately confine injected fluids to their appropriate strata. The 7 inch casing will be set at approximately 2,800 feet MD and will be cemented to surface. Attachment 4 provides detail of the casings' mechanical properties. The proposed procedure for testing the mechanical integrity of the casing and tubing after receiving the disposal injection order is provided in Attachment 4. As per 20 AAC 25.412(e), notice of a mechanical integrity test will be made prior to beginning injection to ) allow a representative of the Commission to witness the test. (7) Description of oil field wastes to be injected. This Class II well will be primarily used for the injection of drilling solids (ex: drilling mud slurries) from drilling operations in the Happy Valley field, but it will also serve to dispose of formation fluids (ex: produced water, natural gas condensates). Unocal requests permission to dispose of approved Class II fluids and solids from other Unocal operated fields besides Happy Valley. These fluids are completely compatible with fluids in this formation. Typical Class II wastes requested for injection include: drilling, completion, workover, and production fluids, glycol dehydration wastes, rig wash, drilling mud slurries, tank bottoms, NORM scale, precipitation within containment areas, formation stimulation fluids, stimulation solids, tracer materials, and other approved Class II wastes. The above listed Class II wastes would be generated from drilling, completion, workover, and production operations. Current projections estimate that a maximum of 3,000 barrels per day of fluids will be injected. (8) Estimated pressure. The estimated average injection pressure will be 650 psig and maximum anticipated injection pressure will be 1,300 psig. (9) Evaluation of confining zones. ,) Barree & Associates was contracted to model the hydraulic fracture characteristics of the planned injection operation in the NNA #2 well. The results of that work are presented in Disposal Injection Order Application (Mod) - NNA #2 March 21,2005 Application for a DisPOSallnjecth.Jf)order - Union Oil Company ) Page 5 of 7 ) Attachment 5. The primary purpose of the model was to assess confining zones protecting the freshwater intervals above 1,800 feet TVD. The simulation was designed to simulate worst-case injection conditions from a fracture containment standpoint. The worst-case scenario was simulated by assuming the following conditions: · Disposal fluids were assumed to be laden with 12% solids (i.e. 3 Ibs of solids added per gallon of fluid) with a 30/50 sand mesh size. This approximates disposal of drilling wastes in a mixture of water, drilling mud, and cuttings. Solids tend to plug permeable pore throats and increase potential for fracture height growth. · A total of 8,000 bbl of fluids were disposed in a 2-day continuous injection period. The volume of 8,000 bbl represents a high-side estimate of the volume of wastes that might be disposed during the drilling of a single Happy Valley well. Ordinarily, this volume of wastes would be disposed in batches over a two to three week period instead of continuously over two days. Injecting fluids in smaller volume batches allows more time for fluid leakoff which reduces net stress in the fracture. It should be pointed out that the simulated injection conditions exceed Unocal's projected maximum estimate of 3,000 bbl of fluids per day. · Experience has shown that adjacent coal intervals tend to impede fracture height growth in Tyonek sands. Several coals in the vicinity of the modeled sands are included in the input data of the fracture simulator. But the averaging process of the simulator tends to reduce the stress contrast between these coals and the surrounding formations, which reduces the degree of fracture containment predicted by the model. It is common for actual fracture containment to be better than predicted by the model in similar cases. ') Four different fracture simulation runs were made for four different Sterling intervals that are particularly well suited for disposal. The shallowest of these modeled intervals is the sand at 2,210 to 2,240 feet MD. All of the simulation work shows that fracture height growth is expected to be contained sufficiently by the coals and shales listed previously. Even in the shallowest proposed disposal interval, fracture height is not expected to grow above 2,180 feet MD. These worst-case models provide reasonable confidence that fractures will not propagate through the confining zones that might enable the oil field wastes to enter freshwater strata. Each of the simulator runs also show excellent lower confinement such that fractures are also not expected to grow significantly downward. No simulations were made for disposal into deeper Beluga intervals because none of the Beluga intervals in the NNA #1 well are as porous and permeable as the Sterling sands modeled. But from a fracture containment standpoint it stands to reason that confinement in the Beluga intervals would be even better because more confining zones are placed between the injection point and the freshwater aquifers. Also, the variable nature of the Beluga Formation depositional environment makes it possible that sand quality could improve somewhat at the NNA #2 location. For instance, it's possible that certain marginal Beluga sand bodies present in the NNA #1 could improve and make excellent disposal intervals in the NNA #2. Therefore Unocal desires to broadly define the disposal interval from 2,180 to 2,800 feet MD take full advantage of lithology changes at the NNA #2 location. Unocal intends to inject into the deepest, high quality disposal interval available in the NNA #2 wellbore. Disposal Injection Order Application (Mod) - NNA #2 March 21, 2005 Application for a Disposal I njectlv, )order - Union Oil Com pany ) ) " Page 6 of 7 (10) Standard Laboratory water analysis. A laboratory water analysis of formation waters from well Happy Valley #8 is provided. It is believed that the produced water in well Happy Valley #8 is predominately coming from the 8-40 Sand at 3,500 feet TVD, which is the closest available water sample to the proposed disposal interval in well NNA #2. This sample from January 2005 identified total dissolved solids (TDS) of 8,143.5 mg/I. This laboratory analysis is present in Attachment 6. (11) Freshwater exemption. Freshwater Aquifer Exemption Order #11, issued on December 7, 2004, stipulates that the aquifers below 1,800 feet TVD in a quarter-mile radius around the NNA #1 Well are exempted as provided by 20 AAC 25.440. The surface and bottom-hole locations of the proposed NNA #2 wellbore lie within a quarter-mile radius of the NNA #1 well in Section 11, T2S, R13W, Seward Meridian. A copy of Aquifer Exemption Order #11 is included as Attachment 7. (12) Well report for disposal zone. Figure 3 shows that the NNA #1 is the only well that lies within a one-quarter mile radius of the proposed NNA #2 well. A well bore schematic diagram of the NNA #1 well is included as Attachment 8. The surface location of the NNA #1 lies 117 feet away from the proposed location of the NNA #2. Surface casing in the NNA #1 is set at 2,140 feet MD and is cemented to surface, providing protection to the freshwater intervals above 1,800 feet MD. The NNA #1 well is equipped with 7 inch casing from surface to a depth of 9,926 feet MD. The top of cement in the 7 inch casing in the NNA #1 well is at 5,860 feet MD, which means that there is no cement across the proposed disposal intervals in the NNA #2. Unocal proposes to directionally drill the NNA #2 to increase the separation between the NNA #1 and NNA #2 wellbores. Attachment 9 illustrates the planned directional program of the NNA #2 compared with the actual directional data from the NNA #1. The NNA #2 well will be drilled toward the northeast whereas the NNA #1 wellbore trends toward the southwest. Attachment 10 shows the separation between the wellbores versus depth. At total depth, the NNA #2 will be over 400 feet away from the NNA #1. The regional stresses are such that fracture orientation is believed to be along a ±305 degree azimuth. If so, fractures induced in the NNA #2 disposal interval would propagate away from the NNA #1 well. In addition to drilling the NNA #2 away from the NNA #1 wellbore, Unocal proposes to conduct periodic logging in the NNA #1 wellbore to confirm that downhole communication between the two wells is not taking place. The type of log could be a temperature log, acoustic log, or oxygen-activation log. Prevention of Waste Unocal's application for Class II disposal into the NNA #1 well dated October 1, 2004 explained that extensive testing proved that there was no commercial accumulation of hydrocarbons in that part of the Happy Valley structure. That same conclusion is also valid in the NNA #2 location. Unocal attests that no waste of natural resource of the State of Alaska will occur by approval of the proposed disposal interval in the NNA #2 well. In addition, injection of drilling wastes into the ) Disposal Injection Order Application (Mod) - NNA #2 March 21, 2005 Application for a DisPOSallnjectk,)order - Union Oil Company J Page 7 of 7 formations penetrated by the NNA #2 well will not compromise any of the known gas-bearing ) reservoirs in the Happy Valley field to the south. Conclusion Unocal trusts that this application meets the requirements for a Disposal Injection Order as outlined in 20 AAC 25.252. ) ) " Disposal Injection Order Application (Mod) - NNA #2 March 21 2005 "Figure :1 ) r-ÚÑOêÃL¡ ~ COOK INLE~ w ~~, . nal Overvle " Reglo ~ N i A ~ ) ).. 5 0 10 . , Miles NAD27 Plane Zone 4, Alaska State 3/7/05 prepared by D, Rathert, 10 ~~ iÆ ~ t>, l' ) :Figure 2 ) ) lS14W r't u ~ /'1 " c'j ) 2S14W ,..,.. I.f .0 ü / L-- 3S14W ) " CI r·" '-.' ~ OIL WELL:- RD Q ) I~r " t.! ~ lS13W 1 ! lS';12W p JJ 2S13W NNA2 · (proposed) 2S12W HAPPYVALLE~ A-PAD UNOCALi> NNA2 Local Vicinity N ~ 1.5 I 0.75 0 1.5 I Miles Alaska State Plane Zone 4, NAD27 :Figure 3 All parcels within 1/4 mile of well location owned by NINILCHIK NATIVE ASSOCIATION. Distances calculated in Alaska State Plane coordinate system, NAD27 datum. NNA 2 to Deep Crk U 1: 1728 feet NNA 2 to NNA 1: 117 feet 0.25 , Miles Alaska State Plane Zone 4, NAD27 0.125 Surface Parcels within 1/4 Mile N )" o UNO CALi> NNA2 ') 22 1 5 ----- ---. :;:::! o II II/I /. .' / // / 1/ / , / I I I ;' I i // ----\ \--- \ \\ )~ \\ \ \ \\ \. \ \ \ ---_._~"----- 0.25 I ) DEEP CRK U --~--r'--__,-,..- _..,_~..-. ...,..._ ~.-.....-"._......"~._ -'--...- -'- ----- ) Figure 4 AQUIFER EXEMPTION AREA DEEP CREEK UNIT WELLS March 7, 2005 0.5 o ... Miles 0.25 .... 0.5 ) ( UNOCALe 26 27 28 -""J ¡ ¡----.-.. '::" 00z...6' DEEP CREEK UNIT HVS________"" ,""', " \-N'I ~'\ 1 23 ~~~2 I i , ~Ir I I WELLS ~ ':>"lHPPPY VALLEY A-PAD HV8 21 AQU F I:: R ',',", " "", 'HAÞpXVu'~t-22 ' '" · ""',' ,!,l ,'1::.' ·,EX6M:PTI:O'N"AREA"·~':"IY"';'""'il" ) 14 15 16 E--t H Z D,I ~ ~¡ P::;I U III µ:¡ µ:¡ o T2SR13W DEEP CRK U 1 t- Nt-J,,¡\2 ",~I. (proposed) ¥- NNA1 ¡ r"~~II~A1""~J~,,::t:.!t.,;:t.l.J:.:..t":'::"'¡M~\ì.;~j,~::¡.\ïM',~.'»I":t£Jt[.\~ihM.,j,~~..~, ,--;'.1~.",~'~J1~t'H:\...;JlI;;;\'I!L,:'\' '-'KIA.~l1.. ¡: 11 :¡ I" DEEP CREEK UNIT i' :r"'i""';_'''~''''¡';:''':'~'''.Jl)ç'''~'':'''''rII'.c",:""''',,,,~._.,.,;;...__,,___ ~ !, f f I r 10 9 ) ) Attachment 1 ) ) ') AFFIDA VIT OF SERVICE BY MAIL STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) J. Gary Eller, an employee of Unocal, Anchorage, Alaska, being duly sworn, states that on fìy':LA.... I r , 2005, he mailed a copy of the "Application for a Disposal Injection Order for the NNA #2 Well in the Deep Creek Unit" to: Nini1chik Native Association Attn: Office Manager 701 W. 41st Ave., Suite 201 Anchorage, AK 99503 ) SUBSCRIBED AND SWORN to before me this 17 day of~ 2005. (l,U-A-cJ ~~ Notary Public in and for Alaska My commission expires: 'f - d--()~ .,"'1"· 'L j, J. . . " . ~~~~.'J' ...::-"" ·c· ,t...¡ .) .f .:,\"~,'~:;,~":' ,,:,:~\,... O\..~~touøoue~jt¿lf;~, ,~:: £iF ~~........ O-T~A- ø",,>~(\, ,<.~~;~ ~~r'" ....... Ñ R I.... "'.... ~, ~~~ ~ v: IÞ _ _ T- ~(f) ~.::~ ~ 0 . ~I ~~~: PUBL\C : ~ ~:.~~~~c::: ' ... _ _ :~' :~;"O ~~ "'{": ~.. ''','h. ....~/: '?:J~.... ~ "\::-,~, """(II!: OF p..\-.~,.." ,~i" '!{~:o;' ;;;:;:¡; ;~; "1\"\"'\~' ,) Attachment 2 ',' , ~ .1 . ) :APlunknown AOGCCunknown: FWL & 348' FSL' 406 Sec. 11, T2S, R13W, SM RT-THF: unknown RT -GL: unknown Tbg lift threads - 4W' IBT Tree cxn - 3W' Bowen cxn :Production Tubing, ppf 12.6, "%4 ) 'L-80,IBT-Mod to 2090 Completion 'Baker SABL packer at 2050- 'X-nipple at 2070- "10 = 3.813 'Wireline re-entry guide at 2090- : Directional Plan Maximum deviation = 6° 'KOP = 500 t /- Attchmnt 2 (Mod) - NNA-2 Proposed Schematic ) ATTACHMENT #2 ") Well Name: NNA #2 Field: Deep Creek Unit State: Alaska PROPOSED z z --2L ~ .. 'PBTO = 2742 'TO = 2812 Conductor: 13\", 72 ppf, K-55 driven to refusal (±100') ~ to be determined 'Proposed disposal interval = 2180' - 2800 :Production Casing, ppf, L-80 26, "7 'BTC-Mod to 2807 Cemented to surface ~ Drawn by: JGE 3/2/2005 Attachment 3 ) ') II ) Attachment 3 Well NNA #2, Deep Creek Unit Description of Proposed Wellbore Construction Casing · 7" OD, 26 ppf, L-80, BTC casing from surface to ±2,800' MD; o Burst rating - 7240 psi o Collapse rating - 5410 psi o Pipe body yield - 604,000 lbs o Joint yield- 641,000 lbs · Cement to surface o Borehole = 8~" diameter o Schlumberger SCMT log ) Production Tubing · 4~" OD, 12.6 ppf, L-80, non-upset IBT-Mod tubing run to ±2,100' MD o Burst rating - 8,430 psi o Collapse rating - 7,500 psi o Joint yield - 208,730 lbs o Tubing annulus loaded with 8.4 ppg KCl brine with corrosion inhibitor o Baker SABL packer and tubing anchor at 2,050' MD ) 1111 Attachment 4 ) ATTACHMENT 4 ,) NNA #2, Deep Creek Unit Mechanical Integrity Test Procedure Class II Disposal Well Objective: Perform a mechanical integrity test on the 7" casing in the NNA #2 well as per the regulations of20 AAC 25.412(c). Procedure: 1. Notify AOGCC representative of intent to perform MIT within 24 hours. 2. RU test pump with methanol source onto the 7" casing. RU a 2-pen chart recorder or SPIDR gauge to allow MIT to be recorded. 3. When AOGCC representative arrives, pressure test 7" casing to 1,500 psi for a l11inimum of 30 minutes. iliote: Once the 7" casing if full it should take approximately 11 gallons to pressure up to 1,500 psi. Contact Completion Engineer if excessive volume is needed to reach 1,500 psi.) 4. When MIT is complete, bleed annulus pressure to 500 psig. Document successful MIT test on appropriate AOGCC form and mail to Completion Engineer. ) }o " J. Gary Eller March 8, 2005 Attachment 5 ) ) ) ~ UNOCALi) --\:)------ UNOCAL NNA#2 Cutting Disposal Evaluation R. D. Barree Barree & Associates LLC February 5, 2005 ---...-.---.--.--...-....--.- () ) A prediction of expected fracture height growth for a cuttings disposal project in the NNA #1 well, Happy Valley field, was requested by Gary Eller of UNOCAL Alaska. Data used for the analysis were supplied by UNOCAL and consist of wellbore completion diagrams, digital well logs, and some observed injection pressure data. These data were incorporated into the analysis, along with experience gleaned from observed behavior of other Beluga- Tyonek fracture treatments. ) 1 ) ) ) ~~~c~NA #2 Disposal Zones ~>Evaluate four perforation locations · 2425-2455' · 2375-2385' · 2315-2325' · 2210-2240' +Upper zone is expected to be the best candidate +Must avoid contamination of fresh- water aquifers at 1800' ) Copyright B&A 2004 2 ) ) ) _~'---.:'''--'-:..,.-..,::..,.-.._:: '0,. 00 M:t\ ~t~~~ ::: -;-;;; ¡ "'.U -'- c'-i ::: .0· . "':~i' . f~~~;C2]::= . .. ; U." ... '.'. .:., .... I~f;~~~~~c~. L.~.~~.:.~~ ¡:::~ ~Li::. ,.~~::.: ~kÎÎ~::' 1'''-- · ... ~ "i~-< . U .- ~.'" N NA # 2 Processed Log Data Perfs: 2210-2240' Perfs: 2315-2325' Perfs: 2375-2385' Perfs: 2425-2455' Copyright 8M 2004 ) The digital log data consisted of density, resistivity, and sonic (shear and compressional) measurements across the zone of interest. The logs were processed assuming minimal tectonic influence on the in-situ stress field, and using a normal pore pressure hydrostatic gradient. Various correlations were used to cross-check the consistency of the log data. Some discrepancies were noted in the reported shear-wave arrival times in the upper section of the well (5850-6050'). The reason for the inconsistency is not clear but could be related to borehole conditions. A borehole caliper log was not included in the log suite. Because of these data problems the Poisson's Ratio calculated from DTC and lithology was used instead of that obtained from the measured VpNs ratio. The figure also shows the location of the perforation set that was assumed to be open for the cuttings disposal project. ) 3 ) ) ) Assumed Input Data for NNA # 1 0~"_!?iSposal Model + Pore pressure gradient normal (0.44 psijft) + Cuttings slurry injection rate = 3.0 bpm ~Total slurry volume = 8000 bbls + Evaluate each perf set separately +Cutting slurry density = 10 ppg . 3 Ib cuttings added per gallon . Solids Volume Fraction = 12% . Injection pressure 1800 psi at 2 bpm + Fresh water aquifers at 1800' Copyright B&A 2004 ) The assumptions used for the cutting injection project are listed in the figure. The actual grind of the cutting is not known, so a 30/50 mesh distribution of sand was used to simulate the cuttings. The base-fluid used in the model represents a dilute drilling mud, such as may be formed by adding water to the mixture of cuttings and mud solids. ) 4 5 Copyright 8M 2004 '---'i.~L_.-..:._- ,~_F-'" ,.¡-_...J ,...J I r~j "'"".m..lel·---··n............. L, [-J ~_~ 1 \ì '~ \ ----- ",,;Jr==- -11 r' I] ~ç- ,~ll\,ll! . ') Slide Generated using WINPARSE Version 2000.2.76 Data Taken From the following WinGOHFER Output file: c:\GohWin_Data\Unocal_ N NA _ Disposal\N NA-2_2425-55. bin """,------1- .;:2tIJ1r---~;---- .] I I, '] :tmr-----,--- ] I zmr--r------- -\ 'I 'mrrJ,-------- ......,.... ~~~.. ...........--... (;(11 fJ(1 ) ,- .J ~ 'mr----:-..:...-(-.:=; I '3f1r--~I:?-- ¡----I ~I... \ 1__2 "~,,n...mm~.. 1...., r-- .1 =r---------- -'¡ 1m---------- '=-_____.______J ) \·~n¡>_d""V""'O" 20OCU.76 Grot"aI«J 215/2005 12:16:06 P~1 L-1.. I L_ ,~--f~ ~ ,""I ,,-- , L~..__....J~ -1 , I ['," ,~~:., \_---- .~, 1 -II ,.....--,'-+-~_.- __ I I , ) I II 1._ ('-= ¡ l ~~ ~L_.= ,\ 1. ,-------' ,I - c= 1~=.1 _-;,,~.-,-L..:...----I I I ..., ~ t*~~_.,\.\ UNOCAL: NNA #2 1fJU{!14' WinGOHFER Input Data -4-l~~~~~~~~:~~;·~~~~¡~:~--,---.--- OXl..··.....···'''..y·....,......,·, 1'"",........"......"... 047 ) ) ) ') ¡å'W:~.. ...~. ¡~((" Perfs at 2425-2455' 1\..\I':It.:.· Ö:. "~L:¡,...':i,,((:: I GOHFER Bottom Hole Pressure (psi) A GOHFER Slurry Rate (bpm) 3500 A (,I. )111'1',!~ S\JJ'L¡~"L' PI\."~:-.;ur\· I,I""¡) -------.-~--.--- B (,( Jill:] I~ .'''IIII;Il'\.' )\1\\1' ('I'il\ \\\\'.~':¡\,I _..'_."....~....__...__'_m____ ::~ -1-~r--T----- -or ---- - ;--- :~I~k-~I~I.....~~~~~~ l_,~~_._ ~~~~- 2000- . . I _ I I - I I I 1500- '::-~-~-I-~[--~---~- 00:00 08:00 16:00 00:00 08:00 16:00 00:00 1/1/1970 \1211970 1/3/1970 I .",---' Time ') ) ) :\ I B C 3.5 -3.5 -3.0 -3.0 -2.5 -2.5 -2.0 -2.0 -1.5 -1.5 -1.0 -1.0 -0.5 -0.5 0.0 -0.0 08:00 11311970 Copyright B&A 2004 6 ) ) Mi~. UNOCAL: NNA #2 Perfs at 2425-2455' I'w,",., :",~:,,:..,,<. WinGOHFER Solids Concentration (lb/ft^2) --++-,----.---------------.---- Propp.nt Conuntr.Uon (lbIft"2) 37~1." Mlnutfl ~;"- '.g.~tI,mr... i'lW~ ""... i IWÕ;;_J111\ i """. ,,IfM~» ] 31 14~ VJ¡IIfl1P'ar.>e Ve(SIlOO 1000.1..76 GematM 215/2005 12:15:55 p", ) Slide Generated using WINPARSE Version 2000.2.76 Data Taken From the following WinGOHFER Output file: c:\GohWin_ Data\Unocal_ N NA _ Disposal\N NA-2_ 2425-55. bin ) ) .""., copyright BM 2004 7 ) ) ~~(^ Perfs at 2375-2385' '-G~~'~:~~~~~:'::~~~'~~'~"""_'_'_'- I GOHFER ßOII0111 Hole Pressure (psi) A (;OHFER Slurry Rare (bpm) 3500 ) A 'I()I ) ¡:I,: ~;;\tI !;Il'l' 'I,";',llIl" (p"¡) ~'---_._-_._--_..---- B (Il) 111·1 I~ ~!!I 1',Ii',' 1'1 "I' l 10[ I' I j h '.':11) '-"-'--'~-'--"--'."'-'-"'-" (\ I B C 3.5 -3.5 3000- 2500- ~AAAtW\.~~~~~~' 2000- 'VVI" 1500- ¡ :!~~",~~~w~~.........~~_~~1 1000~ '/ . I 500 00:00 1/111970 I 08:00 I 16:00 08:00 16:00 I 00:00 1/211970 Time ) ) LJ ....~ -3.0 -3.0 -2.5 -2.5 L....-.....- . -2.0 -2.0 -1.5 -1.5 I -1.0 -1.0 ~............................. -0.5 -0.5 0.0 -0.0 00:00 08:00 1/3/1970 1/3/1970 Copyright B&A 2004 8 ) ) UNOCAL : NNA #2 Perfs at 2375-2385' JM:(^ WinGOHFER Proppant Concentration (lb/ft^2) -H-'J~'~:~(~~'~.~~~ .:\~~,!o' OI,';'·,r..'~: ~,~,o~~~~t ~~,n~,~nU:.~o~ .(I~.2) , 3110.81 Mlnut.. ,.,\4,,,, ".,,,. ;,!III!." '"'''' ..""" VJ¡IIf11P'ðT'Se Ver.;,1(Jo:I'1 2000.1. 76 ~~ 1,/5'/2005 t2:22: 17 PM Copyright B&A 2004 ) Slide Generated using WIN PARSE Version 2000.2.76 Data Taken From the following WinGOHFER Output file: c:\GohWin _ Data\Unocal_N NA _ Disposal\N NA-2 _2375-85. bin ) 9 ) ) f_Ú~. Perfs at 2315-2325' --G~'~~:~~~~\"'~~-~'~'~'~~~:~-------_·· I (ìOHFER 13011001 Hole Pressure (psi) A GOHFER Slurry Rale (bpm) 3500 A (;(HII I'J~ ~IIILI\\' 1'1\"",111',' (¡Ic,i\ .----.~-- B l,C,)/II·II{ ~mLI\·'.' ¡¡¡(II'l '\III,/II-,;',dl ) ;\ I B C 3.5 -3.5 -3.0 -3.0 -2.5 -2.5 -2.0 -2.0 3000- .---.----.-----".. --'- '"-----.-.---.-.-.--..,-- ,_._._--_...._~--,._.- -_._..._~-,._.__._--------_._.. ----. ---.-.,-.-- -----,-....--. 2500- 2000~"""-- L 1500- ...: AI -1f'1' 1000- 500 00:00 1/1/1970 ) I OH:OO I 16:00 :_VL-~'("" .,-~ _-4 .A.,~' : ---.- r I 00:00 1/2111)7() I 08:00 I 16:00 Time -1.5 -1.5 -1.0 -1.0 -0.5 -0.5 I 0.0 -0.0 00:00 08:00 1131\970 1;:1/1970 Copyright B&A 2004 10 ) ) Mt+\ UNOCAL: NNA #2 Perfs at 2315-2325' 1\,~"". ,,>: i~'~.~i.",,, WinGOHFER Proppant Concentration (Ib/ft^ 2) -(-:]-,--.---...--.----- Proppant Conuntr.tlon «lblftI\2) 311$.&1 Mlnut.. :t"., .... .......... 1~'\t'II~W , ,;" iii;~ I :'Æ~ w",. I ""'" i ,o~,....,.t"H ""'" \'I',o""=V.""o,, 2000.2.76 ~at<d 215/2005 1:~5:2':J PM ) Slide Generated using WINPARSE Version 2000.2.76 Data Taken From the following WinGOHFER Output file: c:\GohWin_Data\Unocal_N NA_Disposal\N NA-2_2315-25. bin ) ) """" Copyright 8M 2004 11 ) ) t~^ Perfs at 2210-2240' --'b~~~~'~~~~~~~:~~~--' 1 (ìOHFER BOllom Hole Prcssw'c (psi) A ('OHFER Slurry RalC (bpm) 3500 ) A ~I( )IIJ'I',I~ >'\111';1\\: 'r~':";l!!l' (I\~I" "----'.-.~.-.--,,.-.--.-.----.- B í;I,'IIII''{ :-;1I11';I,,,,jll¡'I'('tq1\·(.II',~';d) -..., --- :\1 B C 3.5 -3.5 3000- 2500- :. ~...rv-~1 2000~ r 1500- - ~'L-l- -r~~"\-~- I _.~. :' I 1000- I --~-- ._--_..~- _----i---_.__....._ '----___ 500 00:00 1/1/\9711 I i 08:00 , 16:00 I 00:00 1/2119711 I 16:00 I 08:00 Time ) ) I 00:00 11311970 -3.0 -3.0 -2.5 -2.5 -2.0 -2.0 -1.5 -1.5 -1.0 -1.0 -0.5 -0.5 0.0 -0.0 08:00 !/J/II)7) Copyright 8M 2004 12 ) ) , UNOCAL : NNA #2 Perfs at 2210-2240' I~~ WinGOHFER Proppant Concentration (lb/ft^2) _-(::¡.--¡~::.~~._.-\_,"~.....i"~''''.'; Propp.n~~~,n~~ntr.tto" Ubltt^2) 3119.81 Mnu~. . " 1~~~P!I~I:,~',It~~'~:t~ , '" , . """ ï . ".". i H~17r.A ..ÎlII11 ,·~¡¡'ì~. IU!l?~1 ,,,..,, \:'Jlrr1IP'a~' V~~'t'~ 2OO0.l,"76 Gème1fð'œd 2,.!Sl200S ~ :.:g2,:,N p~.~ ) Slide Generated using WIN PARSE Version 2000.2.76 Data Taken From the following WinGOHFER Output file: c:\GohWin_ Data\Unocal_ N NA _ Disposal\N NA-2_221 0-40. bin ) ) "'>0'" Copyright B&A 2004 13 ) ') ) Comments on NNA #2 Cuttings -()~~,_~njection Disposal Project · Coals at this depth and in the Beluga-Tyonek interval do not behave elastically and their properties are difficult to determine from borehole logs · Experience in conducting hydraulic fracture treatments in this interval suggest that coals typically act as near-plastic confining beds · The best candidates for disposal injection are the bottom perfs at 2425-2455' and the top perfs at 2210-2240' '*' The lower two sets of perfs (2425-55' and 2375-85') can be combined for disposal as these fracs tend to grow together in any case ~> Surface treating pressure should be monitored regularly to watch for sharp drops in pressure that may indicate height-growth events .' Gradual increases in surface pressure may results from wellbore fill-up of solids that can be moderated by frequent water flushes Copyrighl 8M 2004 ,) Four sets of potential disposal perfs have been evaluated. Any of the potential injection zones is capable of accepting the required 8000 bbls of slurry without danger of height growth into fresh-water aquifers. The lower sets of perfs place more coals between the injection point and the aquifers and therefore provide more margin of safety. However, even the shallowest perf set appears to be safe in terms of height growth and containment. ) 14 Attachment 6 ) ) ) West Coast Region 5125 Boylan Street Bakersfield, CA 83308 (661) 325-4138 Lab Team Leader - Sheila Hernandez (432) 495-7240 Water Analysis Report by Baker Petrolite Company: UNOCAL ALASKA RESOURCES Region: ALASKA Area: KENAI, AK Lease/Platform: HAPPY VALLEY Entity (or well #): 8 Formation: UNKNOWN SCRUBBER Sample Point: Summary Sampling Date: Analysis Date: Analyst: 1/22/05 1/31/05 SALLY MOORE Anions Chloride: Bicarbonate: Carbonate: Sulfate: Phosphate: Borate: Silicate: ') TDS (mg/I or g/m3): 8143.5 Density (g/cm3, tonne/m3): 1.007 Anion/Cation Ratio: 1.0000001 Carbon Dioxide: Oxygen: Comments: 340 PPM Hydrogen Sulfide: pH at time of sampling: pH at time of analysis: pH used in Calculation: Sales RDT: 31104 Account Manager: TODD STONE (907) 283-4634 Sample #: 235564 Analysis ID #: 48146 Analysis of Sample 235564 @ 75 of mg/l meq/l Cations mg/I meq/I 3443.0 97.11 Sodium: 1625.0 70.68 1280.0 20.98 Magnesium: 21.0 1.73 0.0 O. Calcium: 50.0 2.5 20.0 0.42 Strontium: 8.0 0.18 Barium: 7.5 0.11 Iron: 11.0 0.4 Potassium: 1678.0 42.91 Aluminum: 0.5 PPM Chromium: Copper: Lead: 7.84 Manganese: 7.84 Nickel: Conditions Values Calculated atthe Given Conditions - Amounts of Scale in Ib/1000 bbl Gauge Calcite Gypsum Anhydrite Celestite Barite CO2 Temp Press. CaC03 CaSO 4"2'2 0 CaSO 4 SrS04 BaSO 4 Press of psi Index Amount Index Amount Index Amount Index Amou nt Index Amount psi 80 0 0.76 25.73 -2.97 0.00 -3.04 0.00 -2.00 0.00 1.07 3.82 0.23 100 0 0.84 28.86 -2.99 0.00 -2.99 0.00 -1.98 0.00 0.92 3.82 0.33 120 0 0.92 31.64 -2.99 0.00 -2.92 0.00 -1.96 0.00 0.80 3.48 0.46 140 0 1.00 34.07 -2.99 0.00 -2.82 0.00 -1.92 0.00 0.71 3.48 0.64 Note 1: When assessing the severity of the scale problem, both the saturation index (51) and amount of scale must be considered. Note 2: Precipitation of each scale is considered separately. Total scale will be less than the sum of the amounts of the five scales. Note 3: The reported C02 pressure is actually the calculated C02 fugacity. It is usually nearly the same as the C02 partial pressure. } ) ) ) Scale Predictions from Baker Petrolite Analysis of Sample 235564 @ 75 of for UNOCAL ALASKA RESOURCES, 1/31/05 Calcite - CaC03 Barite - BaS04 2 - - 350 2 - - 350 1.8 - » 1.8 - » 1.6 - - 300 3 1.6 - - 300 3 1.4 - 0 1.4 - 0 >< I: >< I: (þ 1.2 - - 250 :J CI) 1.2 - - 250 ~ 'C .... 'tJ o.¿~-o-- -= 1 - 0-----0-- -D 0 .E 0 0.8 C - - c - 200 en I: H 200 en 0 0.6 - 0 .2 0.6 - 0 ~ 0.4 - II) ë 0.4 - II) ~ - 150 CD - 150 CD ::J 0.2 - :J 0.2 - .... 0 ~ .... 0 ~ c?j C'G ~0.2 80 1:;:01 00 en -0.28J - 100 100 120 0 100 120 16.0 0 -0.4 - 0 -0.4 - 0 ~0.6 - - 50 0 -0.6 - - 50 0 tT tT ~0.8 . . . !:!: -0.8 - !:!: -1 - -0 -1 j · · 0 Temperature in OF Temperature in of Gypsum - CaS04*2H20 Anhydrite - CaS04 2 - - 350 2 - - 350 1.8 - » 1.8 - » 1.6 - - 300 3 1.6 - - 300 3 1.4 - 0 1.4 - 0 >< I: >< I: (þ 1.2 - - 250 :J CI) 1.2 - - 250 :J ) 'C 1 ~ .... 'tJ .... -= 0 .E 1 - 0 0.8 - - 0.8 - - c - 200 en I: - 200 en 0 0.6 - 0 0 0.6 - 0 :;:; 0.4 - II) .. 0.4 - II) i! - 150 CD e - 150 ëÐ == 0.2 - :J 0.2 - - o ,.. ~ Zi 0 ~ CI:I - 100 en -0.2 SJ 1:;:0100 ...a. -0.28J ..... 100 120 0 100 120 16.0 0 -0.4 - 0 -0.4 - 0 -0.6 - - 50 0 -0.6 - - 50 0 tT 0" -0.8 - 2: -0.8 - !:!: -1 . . . . 0 -1 . · · ..0 Temperature in of Temperature in of Carbon Dioxide Partial Pressure Celestite - SrS04 0.7 - 2 - - 350 ëñ 1.8 - » Co 1.6 - - 300 3 ë 1.4 - 0 >< I: :J CI) 1.2 - - 250 ~ en 'tJ en .E 1 - 0 e 0.8 - - a. I: - 200 en ñi 0 0.6 - 0 ;:; 0.4 - II) :e e - 150 CD CI:I :J 0.2 - a. .... 0 ~ C'G N en -0.28J - 100 0 0.1 - 100 120 1·0 0 u -0.4 - 0 -0.6 - - 50 0 0 0" -0.8 - !:!: 80 100 120 140 -1 . · · . 0 Temperature in of Temperature in OF ) Attachment 7 ,. " . ') ) ) STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: THE REQUEST OF UNION OIL COMPANY of CALIFORNIA for an Aquifer Exemption Order for portions of the Deep Creek Unit in Township 2 South, Range 13 West, Seward Meridian, Kenai Peninsula. ) Aquifer Exemption Order No. 11 ) ) Sterling and Beluga Formations ) Deep Creek Unit ) ) December 7,2004 ) IT APPEARING THAT: 1. Union Oil Company of California ("UNOCAL") submitted an .application for aquifer exemption order dated August 4, 2004, for portions of 15 governmental sections within the Deep Creek Unit ("DCU") on the Kenai Pepinsula (within Township 2S, Range 13W, Seward Meridian); 2. The Alaska Oil and Gas Conservation Commission ("Commission") published a public hearing notice in the Anchorage Daily News on August 6, 2004, with a tentative hearing date of September 16, 2004; 3. Cook Inlet Keeper, a membership based w~tershed protectiö!1 organization, requested a public hearing and a one-week extension of the date to file comments by letter dated August 14, 2004, which request was granted; . 4. The September 16, 2004 public hearing was continued to September 30, 2004; 5. At the September 30, 2004 hearing, Unocal provided sworn testimony addressing engineering· and geologic considerations in support of the DCU aquifer exemption order application; Cook Inlet Keeper provided public comment at the hearing; and following the hearing the record was held open to allow Unocal and Cook Inlet Keeper to provide certain additional information and clarifications requested by the Commission; 6. On October 5, 2004 Unocal amended its request for an aquifer exemption, contracting the proposed aquifer exemption area within Township 2S, Range 13W of the Seward Meridian to: A one quarter mile radius around the NN A # 1 well in Section 11; All of Section 22 which includes the existing Happy Valley development drillsite and associated wells; The southeast one-quarter of Section 15; and All of Section 21 ; '~ )il ") ) Aquifer Exemption Order 11 Deep Creek Unit December 7, 2004 Page 2 7. Cook Inlet Keeper provided technical and process questions by letter dated October 7, 2004, and included as an attachment a letter from the Ninilchik Traditional Council concerning protection of ground water resources in· the vicinity of DCU and depth of drinking water wells; 8. The Commission has jurisdiction in this matter under AS 31.05.030(h), 20 AAC 25.440, and 40 CPR 147, Subpart C - Alaska; 9. The Commission submitted a copy of Unocal's Aquifer Exemption application and related documents to the U.S. Environmental Protection Agency, Region 10, ("EP A Region 1 0") on October 15, 2004 and a draft of this aquifer exemption order was sent to EP A Region lOon October 26, 2004; 10. In correspondence dated November 19, 2004, EPA Region 10 concurred with the proposed aquifer exemption order for the DCU; and 11. Unocal also submitted a Disposal Injection Order ("DIO") application for converting the near vertical wellNNA No.1 to disposal service within the DCU. This application was received October 4, 2004 and public review was initiated October 8, 2004. FINDINGS: 1. Extent of Aquifer Exemption Area.1 ) The Deep Creek Unit ("DCU") is located on the Kenai Peninsula approximately six miles southeast of the city ofNinilchik, Alaska. Development operations are underway to begin regular gas production from the Happy Valley drillsite by the end of 2004. There are two plugged and abandoned oil exploratory wells, one shut in gas exploratory well, and ten delineation and production gas wells that have been drilled in the DCU. As noted in the DIO application, the Unocal NNA No.1 well located on a pad approximately two miles north of the Happy Valley gas production pad is proposed for conversion to disposal injection service. Supporting .data have been provided in the record for an aquifer exemption covering an area within Township 2S, Range 13W, Seward Meridian, specifically described as: A one quarter mile radius around the NNA #1 well in Section 11; All of Section 22 which includes the existing Happy Valley development drillsite and associated wells; The southeast one-quarter of Section 15; and All of Section 21. ,) 1 All depths noted in this Order are true vertical depth ("TVD") below ground level. ) Aquifer Exemption Order 11 Deep Creek Unit December 7, 2004 Page 3 2. Geology and Groundwater Hydrology. The stratigraphic column on the Kenai Peninsula includes clastic rocks of Quaternary through Tertiary age that lie unconfonnably on top of .Mesozoic Age basement rocks. Glacial Pleistocene shallow sand and gravel reservoirs serve as underground sources of drinking water for much of the Kenai Peninsula and are locally over 800 feet thick. Current control from oil and gas wells within the DCU indicates these fresh water aquifers may range to a depth of 1,000 feet in the vicinity of the NNA No.1 and Happy Valley drill sites. Gravel rich deposits with very desirable aquifer properties range to 300 feet deep in this area. The value of this aquifer system has long been recognized and hydrocarbon exploration and production wells on the Kenai Peninsula have been cased and cemented across this freshwater zone during drilling operations to avoid any possibility of contamination. ) Below this freshwat~r zone lies the Kenai Group that includes the Beluga and Tyonek fonnations, mainly· consisting of a series of reservoir and non-reservoir lacustrine and fluvial-derived· rocks. . The Beluga F onnation is several thousand feet thick and occurs at depths greater than 2,000 feet in the DCU. This fonnation is comprised of thinly laminated sandstones, siltstones, shales and coals. Individual sandstone beds within the Beluga Fonnation are generally less than 30 feet thick, resulting in a heterogeneous sequence of rocks with very poor or no vertical' connectivity or penneability. In the area considered for aquifer exemption, the top of the Beluga Fonnation is at a depth of approximately 2,400 feet and marked by locally oontinuous, 75-foot thick shale. The entire Beluga Fonnation interval can be expected to act as a confining zone for the underlying Tyonek Fonnation. 3. Fonnation Water Salinity. Well.logs from two DCU wells provide data for fonnation water salinity calculations: the Deep Creek No.1 (drilled 1958 within Section 15) and the NNA No.1 (drilled 2001 within Section 11). Fonnation water salinities calculated by a third party contract petrophysicist working for Unocal used estimation techniques described in EP A guidance document "Survey of Methods to Detennine Total Dissolved Solids Concentrations", (KED A Project No. 30-956). A comparison with a produced water sample from the Tyonek Fonnation in the Unocal NNA No.1 well showed good agreement with the log derived values. The results of this work indicate fonnation water salinities in the DCU are greater than 3,000ppm and less than 10,000 ppm at depths greater than 1,800 feet. The Commission independently verified Unocal's analysis using data from the NNA No. 1 well, chosen because of its good data quality. The Commission analysis also utilized the EPA methodology. Comparing the results of Unocal and Commission analyses demonstrates good agreement (see graph "Salinity Detenninations - NNA No.1; the correlation line in the graph is a second order polynomial fit to the Commission salinity calculations. ) ) a. Drinking water in the area comes largely from glacial sediments in this area. b. Below a depth of approximately 1,000 feet, water salinities increase unifonnly to a value of approximately 3,000 ppm at 1,800 feet. c. The transition from consistently low salinities below 1,000 feet to continuously increasing salinities above 1,000 feet indicates a lack of hydraulic connectivity between the two fonnation water salinity regimes. d. The salinity trend shown in the graph confonns to known stratigraphic conditions in the DCU area, with low salinity fonnation waters occUITing in Glacial Pleistocene and possibly minor portions of the Upper Sterling F onnation sediments. Findings from the Commission's analysis ofDCU salinity data are as follows: Measured depth I · AOGCC RWA iii UNOCAL RWA -Poly. (AOGCC RWA) I 2500 2000 1500 1000 500 ) 500 1500 i' Q. !!:. b 2000 :5 ¡¡¡ ø 2500 3000 3500 4000 Salinity Determinations - NNA No.1 Page 4 Aquifer Exemption Order 11 Deep Creek Unit December 7, 2004 ) ) ) ) ) Aquifer Exemption Order 11 Deep Creek Unit December 7,2004 Page 5 ) 4. Suitability ofDCU Sediments Below 1.800 feet as Drinking Water Aquifers. Regulation 20 AAC 25.440 (a)(l)(B)"Freshwater Aquifer Exemption" provides that the Commission may grant a aquifer exemption regardless of salinity if the aquifer "is situated at a depth or location that makes recovery of water for drinking purposes economically or technologically impractical". Unocal has presented three reasons in support of an aquifer exemption below 1,800 feet. First, the area has plentiful groundwater available from the surface to a depth of approximately 1,000 feet with the most permeable and therefore desirable sediments within 300 feet of the surface. Using the NNA No.1 well as a geographic datum, information about water wells available from the Department of Natural Resources is summarized in the following table: ) Water Well Depth Within 10-miles ofNNA No.1 88 ft 292 ft Oft 87 Depth Within approximately 2-miles ofNNA No.1 47 ft 50 ft 45 ft 3* Average Maximum Minimum No. of Wells * 3 water wells are slightly more than 2 miles from the NNA No.1. In a post hearing submittal, Mr. Bruce Oskolkoff, Environmental Program Director for the Ninilchik Traditional Council, has asserted that some water wells in the vicinity of the DCU exist to a depth of 800 feet. Second, the groundwater below 1,800 feet depth is predominately between 3,000 and 10,000 ppm total dissolved solids. Given the demonstrated abundance of drinkable water at shallow depths, recovery of drinking water with such quality from below 1,800 feet is highly impractical due to drilling and treatment costs. Third, mud logs from wells drilled to date in the DCU show that hydrocarbon gas, primarily methane, occurs in increasing quantities (non-commercial) throughout the Kenai Group below depths of 1,300 feet. The presence of gas below 1,300 feet in the DCU is due to trapping of the gas within the DCU anticlinal structure. This is demonstrated by wells that are high on the structure having greater methane concentrations than those on the flanks of the anticline. ) CONCLUSIONS: 1. Those portions of freshwater aquifers occurring below approximately 1,000 feet within the DCU do not currently serve as a source of drinking water. All known and foreseeable ground water consumption from the DCU vicinity is consistent with usable ground water resources occurring above 1,000 feet; ) } Aquifer Exemption Order 11 Deep Creek Unit December 7, 2004 Page 6 ) 3. Those portions of freshwater aquifers occurring below 1,800 feet within the DCU contain salinities and hydrocarbon gases, and are situated at depths, that make recovery of these waters for drinking water purposes economically impractical; Those portions of aquifers occurring below 1,800 feet within the DCU cannot reasonably be expected to serve as underground sources of drinking water; and Those portions of aquifers occurring within a ~ mile radius around the NNA No. 1 wellbore in section 11, the S.B. 1/4 of Section 15, all of Section 21 and all of Section 22 in T2S, R13W, Seward Meridian and below 1,800 feet qualify as exempt freshwater aquifers under 20 AAC 25.440(a)(1)(A), 20 AAC 25.440(a)(1)(B), and 20 AAC 25.440(a)(2). 2. 4. NOW, THEREFORE, IT IS ORDERED THAT the aquifers or portions of aquifers occurring below 1,800 feet TVD in the following areas within T2S, R13W, Seward Meridian, are exempt as provided by 20 AAC 25.440: A one quarter mile radius around the NNA No.1' well in Section 11; All of Section 22 which includes the existing Happy Valley development drillsite and associated wells; The southeast one-quarter of Section 15; and All of Section 21. ) Note that this Order does not authorize the injection of any fluids within the exemption area; and, the Commission will require the applicant to demonstrate the existence of an adequate confining layer above tbe zone of proposed injection before authorizing any injection of fluids into the exempt area. DONE at Anchorage, Alaska, and dated December 7,2004. John Norman, Chairman Alaska Oil and Gas Conservation Commission Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission '~ ,. AS 31.05.080 provides that within 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., lOth day after the application for rehearing was filed). Attachment 8 ) t UNOCALe API: 50-133-20507 AOGCC: 201-215 510' FWL & 272' FSL Sec. 11, T2S, R13W, SM RT-THF: 17.88' RT-GL: 16.6' Tbg lift threads - 3W' IBT Tree cxn - 2W' Bowen cxn ) Production Tubino: 3%", 9.2 ppf, L-80, IBT -Mod with SCC to 9586' Completion - Chemical injection sidepocket mandrel at 1953' (?) - Baker 70-40 SC-1 packer at 6097' - Baker CMU sliding sleeve at 6151 (open) 2.813" X-profile - X-nipple at 6191' ID = 2.813" - Baker 70-40 SC-1 packer at 9405' - Baker CMD sliding sleeve at 9426' (closed) 2.813" X-profile XX plug installed 3/18/04, capped w/ 20' of SafeCarb 500 - Baker 85-40 F-1 packer at 9565' - X-nipple at 9578' ID = 2.813" - Wireline re-entry guide at 9586' pirectional Data: vertical hole Attchmnt 8 - NNA-1 schematic 6-25-2004 ) ATTACHMENT #8 ) ~ :8: Z X. -X- - - - ~ -~- Z :8: X / .... = :8: Z ~ ~ ~ ~ PBTD = 9406' TD = 10,590' Well Name: NNA #1 Field: Deep Creek Unit State: Alaska Conductor: 13%",61 ppf, K-55 to 71' ~ Surface Casing: 9%", 47 ppf, L-80, BTC to 2140' Cmnt with 145 bbl of 12.8 ppg lead and 48 bbl of 15.8 ppg tail"G" - Perfs: T-5 6182' - 6222' (12 spf, 1/30/02) T-7 6473' - 6493' (6 spf, 4/29/04) T-12 6752' - 6772' (6 spf, 4/29/04) T-90a 9170' - 9183' (6 spf, 4/29/04) T-100 9206' - 9234' (6 spf, 4/29/04) T-105 9268' - 9278' (6 spf, 4/29/04) 9486' - 9526' (Isolated, perf'd 1/26/02) 9607' - 9647' (isolated, perf'd 4/3/02) - Production Casino: 7", 29 ppf, L-80, BTC to 9926' Cmnt with 172 bbl of 11.0 ppg LiteCrete lead and 66 bbl of 15.8 ppg "G" tail. Production Liner: 3%", 9.2 ppf, L-80, ST-L liner from 9801' - 10578' Baker ZXP packer, HMC liner hanger & tieback sleeve at 9801' Cemented with 35 bbl of 15.8 ppg "G" Drawn by: JGE June 25, 2004 Attacllment 9 ) ¢:: -320 0 IX) II § -160 <L> I ro -0 u en 160 320 480 640 800 ~ 960 Q) J!! :š" 1120 C. j 1280 (,) ~ 1440 ~ ~ 1600 '- ~ I 1760 V 1920 - 9 5/8in Casing 2080 2240 2400 2560 2720 ) UNOCAL Location: Kenai Peninsula, Alaska Field: South Kenai Gas Field Installation: NNA Pad ) Slot: NNA #2 Well: NNA #2 Well bore: NNA #2 Ver 1 -200 -160 -120 Scale 1 em = 20 ft <- West (feet): East (feet) -> 40 -80 -40 Point WELL PROFILE DATA MD Inc AzI TVD North East degl1001t V. Sect Tie on 0.00 0.00 0.00 0.00 0.00 0.00 End 01 Hold SOO.OO 0.00 0.00 SOO.OO 0.00 0.00 Kick Off Point End of Build/Turn 700.00 6.00 35.00 699.63 8.57 6.00 3.00 0.00 0.00 0.00 0.00 3.00 10.46 T.D. & End of Hold 2811.93 6.00 35.00 2800.00 189.40 132.62 0.00 231.22 End of Build 6'6:: Vo 7.000in Casing j l TD NNA.2 Ve, 11 NNA #2 2880 ) 3040 -160 -0 160 320 480 YcØñiçal6Section (feet) -> Azimuth 35.00 with reference 0.00 N, 0.00 E from NNA #2 ó'6:: ó'Q 'S7ó'Q 6'Q Vo Vo V Vo 7500 8000 8500 9000 9500 INNA #11 "ill BAKER HUGHES INTEQ o 80 120 NNA #2 7.000in Casing 2000 9 5/8in Casing 1500 500 1000 1500 2000 'S7Q J>6:: J>Q ~6:: Vo Vo Vo Vo 160 200 240 200 160 120 80 40 o -40 ^ I -80 Z o ;1- :::r - -120-::;; CD CD .... - - -160 - -200 - -240 - -280 - -320 U> - -360 £ CD o - -400 3 II I\J o - -440 ~ Created by: Planner Date plotted: B-Mar-200S Plot reference is NNA #2 Ver 1. Ref well path is NNA #2 Ver 1. Coordinates are in feet reference NNA #2. True Vertical Depths are reference Rig Datum. Measured Depths are reference Rig Datum. Rig Datum: Datum #1 Rig Datum to mean sea level: 680.00 ft. Plot North is aligned to TRUE North. Attachment 10 3,000 -- - --' I I I 500 o -I I Measured Depth [ft] 0 I I I I I I I 2,500 I I I I I I I 1 ,500 I I I 2,000 I I I I I 1 ,000 I I I We II bore Separation Between NNA #1 and NNA #2 '-" o¡:; C'O ~ C'O 0- OJ V') OJ 200- +J C OJ U o +J ~ OJ +J C ð 1 00 - c o g 300- 400- 500 Appendix A ) ) 20 AAC 25.252 APPENDIX A UNDERGROUND DISPOSAL OF OilFIELD WASTES AND UNDERGROUND ) STORAGE OF HYDROCARBONS. (a) The underground disposal of oil field wastes and the underground storage of hydrocarbons are prohibited except as ordered by the commission under this section. In response to a letter of application for injection filed by an operator, the commission will issue an order authorizing the underground disposal of oil field wastes that the commission determines are suitable for disposal in a Class \I well, as defined in 40 C.F.R. 144.6(b) as revised as of July 1, 1998, which is adopted by reference, or the underground storage of hydrocarbons. An order authorizing disposal or storage wells remains valid unless revoked by the commission. (b) The operator has the burden of demonstrating that the proposed disposal or storage operation will not allow the movement of oil field wastes or hydrocarbons into sources of freshwater. Disposal or storage wells must be cased and the casing cemented in a manner that will isolate the disposal or storage zone and protect oil, gas, and freshwater sources. (c) An application for underground disposal Qr storage must include (1) a plat showing the location of all proposed disposal and storage wells, abandoned or other unused wells, production wells, dry holes, and any other wells within one-quarter mile of each proposed disposal or storage well; (2) a list of all operators and surface owners within a one-quarter mile radius of each proposed disposal or storage well; ) (3) an affidavit showing that the operators and surface owners within a one-quarter mile radius have been provided a copy of the application for disposal or storage; (4) the name, description, depth, and thickness of the formation into which fluids are to be disposed or stored and appropriate geological data on the disposal or storage zone an'd confining zones, ." including lithologic descriptions and geologic names; (5) logs of the disposal or storage wells, if not already on file, or other similar information; (6) a description of the proposed method for demonstrating the mechanical integrity of the casing and tubing under 20 AAC 25.412 and for demonstrating that fluids will not move behind casing beyond the approved disposal or storage zone, and a description of (A) the casing of the disposal or storage wells, if the wells are existing; or (B) the proposed casing program, if the disposal or storage wells are new; (7) a statement as to the type of oil field wastes to be disposed or hydrocarbons stored, their composition, their source, the estimated maximum amounts to be disposed or stored daily, and the compatibility of fluids to be disposed or stored with the disposal or storage zone; (8) the estimated average and maximum injection pressure; ) .' (9) evidence to support a commission finding that the proposed disposal or storage operation will not initiate or propagate fractures through the confining zones that might enable the oil field wastes or stored hydrocarbons to enter freshwater strata; (10) a standard laboratory water analysis, or the results of another method acceptable to the commission, to determine the quality of the water within the formation into which disposal or storage is proposed; (11) a reference to any aJµ~Cable freshwater exemption issued in accofJance with 20 AAC 25.440; and ) (12) a report on the mechanical condition of each well that has penetrated the disposal or storage zone within a one-quarter mile radius of a disposal or storage well. (d) The mechanical integrity of a disposal or storage well must be demonstrated under 20 AAC 25.412 before disposal or storage operations are begun, after a well workover affecting mechanical integrity is conducted, and at least once every four years. To confirm continued mechanical integrity, the operator shall monitor the injection pressure and rate and the pressure in the casing-tubing annulus during actual disposal or storage operations. The monitored data must be reported monthly on the Monthly Injection Report (Form 10-406). (e) If an injection rate, operating pressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer, the operator shall notify the commission by the next working day and shall implement corrective action or increased surveillance as the commission requires to ensure protection of freshwater. (f) The commission will require additional mechanical integrity tests if the commission considers them prudent for conservation purposes or protection of freshwater. (g) Modifications of existing or pending disposal or storage operations will be approved by the commission, in its discretion, under 20 AAC 25.507, upon application containing sufficient detail to evaluate the proposed modification. No modification will be approved unless. the applicant proves to the commission that the modification will not allow the movement of fluids into sources of freshwater. (h) If wells, including freshwater wells or other borings, are located within a òne-quarter mile radius of the disposal or storage well, area possible means for oil field wastes or hydrocarbons to move into sources of freshwater, and are under the control of ) (1) the operator, the operator shall ensure that the wells are properly repaired, plugged, or otherwise modified to prevent the movement of oil field wastes or hydrocarbons in,to sources of freshwater; or (2) a person other than the operator, the commission will not issue an order under (a) of this section to the operator until the operator presents evidence to the commission's satisfaction that the person who controls the wells has properly repaired, plugged, or otherwise modified the wells to prevent the movement of oil field wastes or hydrocarbons into sources of freshwater. (i) The commission will publish notice of the disposal or storage application and will provide opportunity for a hearing in accordance with 20 MC 25.540. (j) If disposal or storage operations are not begun within 24 months after the approval date, the injection approval will expire unless an application for extension is approved by the commission. (k) The annular disposal of drilling wastes approved under 20 MC 25.080 is an operation incidental to drilling a well and is not a disposal operation subject to this section. (I) This section does not apply to underground disposal that is regulated under 40 C.F.R. 147.101 by the United States Environmental Protection Agency. History - Eff. 4/2/86, Register 97; am 11/7/99, Register 152 Authority - AS 31.05.030